What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-07-25 compared with 2022-04-26 · 227 added, 70 removed, 402 unchanged (42% of the section changed)

14 unchanged sentences

Martin Resource Management Corporation is an important supplier and customer of ours.

As of March 31, 2022, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.

As of June 30, 2022, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.

Furthermore, 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"), our general partner.

14 unchanged sentences

Subsequent Events

Excess Cash Flow Offer.

On April 14, 2022, we completed the payment of an aggregate principal amount of approximately $0.6 million, or approximately 0.20%, of our 2025 Notes, pursuant to the Excess Cash Flow Offer.

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

Quarterly Distribution.

On April 20, 2022, we 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, we 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.

Critical Accounting Policies and Estimates

27 unchanged sentences

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

We reimbursed Martin Resource Management Corporation for $39.1 million of direct costs and expenses for the three months ended March 31, 2022 compared to $30.5 million for the three months ended March 31, 2021.

We reimbursed Martin Resource Management Corporation for $40.2 million of direct costs and expenses for the three months ended June 30, 2022 compared to $32.6 million for the three months ended June 30, 2021.

We reimbursed Martin Resource Management Corporation for $79.3 million of direct costs and expenses for the six months ended June 30, 2022 compared to $63.1 million for the six months ended June 30, 2021.

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

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

In each of the three months ended March 31, 2022 and 2021, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.5 million, respectively.

In each of the three months ended June 30, 2022 and 2021, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.7 million, respectively.

In each of the six months ended June 30, 2022 and 2021, the Conflicts Committee approved reimbursement amounts of $6.7 million and $7.2 million, respectively.

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

7 unchanged sentences

We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management Corporation.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 17% and 19% of our total costs and expenses during the three months ended March 31, 2022 and 2021, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 18% and 21% of our total costs and expenses during the three months ended June 30, 2022 and 2021, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 17% and 20% of our total costs and expenses during the six months ended June 30, 2022 and 2021, respectively.

Correspondingly, Martin Resource Management Corporation is one of our significant customers.

Our sales to Martin Resource Management Corporation accounted for approximately 8% and 10% of our total revenues for the three months ended March 31, 2022 and 2021, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 9% and 11% of our total revenues for the three months ended June 30, 2022 and 2021, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 9% and 10% of our total revenues for the six months ended June 30, 2022 and 2021, respectively.

For a more comprehensive discussion concerning the agreements that we have entered into with Martin Resource Management Corporation, please refer to "Item 13.

41 unchanged sentences

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

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended March 31, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and six months ended June 30, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:

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

Three Months Ended March 31,

(in thousands)

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

2022 2021 2022 2021

(in thousands) (in thousands)

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

5 unchanged sentences

Unrealized mark-to-market on commodity derivatives — 424 — 205

Lower of cost or market and other non-cash adjustments 2,242 — 2,242 —

Unit-based compensation 45 48 79 288

1 unchanged sentence

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

Three Months Ended March 31,

(in thousands)

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

2022 2021 2022 2021

(in thousands) (in thousands)

Net cash provided by operating activities $ (2,494) $ 2,231 $ 28,451 $ 6,085

2 unchanged sentences

Current income tax expense 654 252 1,274 399

Lower of cost or market and other non-cash adjustments 2,242 — 2,242 —

Commodity cash flow hedging gains reclassified to earnings (82) — 734 —

17 unchanged sentences

Results of Operations

The results of operations for the three months ended March 31, 2022 and 2021 have been derived from our consolidated and condensed financial statements.

The results of operations for the threesix months ended June 30, 2022 and 2021 have been derived from our consolidated and condensed financial statements.

We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling, general and administrative expenses, and depreciation and amortization expense from revenues.

The following table sets forth our operating revenues and operating income by segment for the three months ended March 31, 2022 and 2021.

The following table sets forth our operating revenues and operating income by segment for the three and six months ended June 30, 2022 and 2021.

The results of operations for these interim periods are not necessarily indicative of the results of operations which might be expected for the entire year.

2 unchanged sentences

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

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

1 unchanged sentence

Income (Loss)

Three Months Ended March 31, 2022 (in thousands)

Three Months Ended June 30, 2022 (in thousands)

Terminalling and storage $ 58,410 $ (1,779) $ 56,631 $ 5,153 $ (1,085) $ 4,068

8 unchanged sentences

Income (Loss)

Three Months Ended March 31, 2021 (in thousands)

Three Months Ended June 30, 2021 (in thousands)

Terminalling and storage $ 45,524 $ (1,675) $ 43,849 $ 3,698 $ (1,122) $ 2,576

5 unchanged sentences

Total $ 189,391 $ (5,098) $ 184,293 $ 7,633 $ — $ 7,633

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Six Months Ended June 30, 2022 (in thousands)

Terminalling and storage $ 112,793 $ (3,357) $ 109,436 $ 9,067 $ (2,132) $ 6,935

Transportation 112,799 (10,257) 102,542 18,231 (10,288) 7,943

Sulfur services 116,076 — 116,076 21,786 5,051 26,837

Natural gas liquids 218,146 (3) 218,143 6,367 7,369 13,736

Indirect selling, general and administrative

— — — (8,512) — (8,512)

Total $ 559,814 $ (13,617) $ 546,197 $ 46,939 $ — $ 46,939

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Six Months Ended June 30, 2021 (in thousands)

Terminalling and storage $ 85,358 $ (3,270) $ 82,088 $ 7,128 $ (2,244) $ 4,884

Transportation 72,318 (7,577) 64,741 (641) (7,571) (8,212)

Sulfur services 73,121 — 73,121 12,750 3,852 16,602

Natural gas liquids 165,317 — 165,317 11,781 5,963 17,744

Indirect selling, general and administrative

— — — (7,699) — (7,699)

Total $ 396,114 $ (10,847) $ 385,267 $ 23,319 $ — $ 23,319

Terminalling and Storage Segment

Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Variance Percent Change

(In thousands, except BBL per day)

7 unchanged sentences

5,145 3,637 1,508 41 %

Other operating income, net 8 61 (53) (87) %

Operating income $ 5,153 $ 3,698 $ 1,455 39 %

Shore-based throughput volumes (guaranteed minimum) (gallons) 20,000 20,000 — — %

Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — %

Services revenues.

Services revenues increased $1.8 million, of which $1.2 million was primarily a result of natural gas surcharge revenue, $0.2 million in reservation fees and $0.2 million in throughput fees at the Smackover refinery.

Our specialty and shore-based terminals both increased $0.1 million as a result of increased throughput revenue.

Products revenues.

A 38% increase in average sales price combined with a 4% rise in sales volumes at our blending and packaging facilities resulted in an $11.0 million increase to products revenues.

Cost of products sold.

A 34% increase in average cost per gallon combined with a 4% rise in sales volumes at our blending and packaging facilities resulted in an $8.2 million increase in cost of products sold.

Operating expenses.

Operating expenses increased primarily as a result of utilities of $1.7 million and employee-related expenses of $0.4 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily as a result of employee-related expenses.

Depreciation and amortization.

The increase in depreciation and amortization is primarily the result of capital expenditures, offset by asset disposals.

Other operating income, net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30, Variance Percent Change

(In thousands, except BBL per day)

Services $ 43,146 $ 40,317 $ 2,829 7 %

Products 69,647 45,041 24,606 55 %

Total revenues 112,793 85,358 27,435 32 %

Cost of products sold 56,152 35,700 20,452 57 %

Operating expenses 28,837 25,457 3,380 13 %

Selling, general and administrative expenses 3,365 2,967 398 13 %

Depreciation and amortization 15,337 14,101 1,236 9 %

9,102 7,133 1,969 28 %

Other operating loss, net (35) (5) (30) (600) %

3 unchanged sentences

Services revenues.

Services revenues increased $1.0 million.

The revenue from the Smackover refinery increased $0.6 primarily due to $0.2 million in contractually prescribed, index-based fee adjustments, $0.2 million in throughput fees and $0.2 million in natural gas surcharge.

In addition, the revenue from our shore-based terminals increased $0.2 million related to space rent, and specialty terminals increased related to throughput revenue of $0.1 million.

Services revenues increased $2.8 million, of which $1.4 million was a result of natural gas surcharge revenue, $0.5 million in throughput fees and $0.5 million in reservation fees at the Smackover refinery.

In addition, the revenue at our shore-based terminals increased $0.2 million related to space rent of $0.1 million and throughput revenue of $0.1 million.

The revenue at our specialty terminals increased $0.3 million as a result of increases in throughput revenue of $0.2 million and service revenue of $0.1 million.

Products revenues.

3 unchanged sentences

Operating expenses.

Operating expenses increased primarily as a result of an increase in utilities expense of $1.1 million.

Operating expenses increased primarily as a result of utilities of $2.7 million and employee-related expenses of $0.5 million.

Selling, general and administrative expenses.

5 unchanged sentences

Transportation Segment

Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Variance Percent Change

(In thousands)

4 unchanged sentences

10,996 675 10,321 1,529 %

Other operating income, net 254 21 233 1,110 %

Operating income $ 11,250 $ 696 $ 10,554 1,516 %

Marine Transportation Revenues .

Inland revenues increased $3.2 million, primarily related to higher utilization and transportation rates.

Offshore revenues increased $0.8 million primarily due to higher utilization and transportation rates.

Additionally, ancillary revenue increased $1.4 million.

Land Transportation Revenues.

Revenue increased primarily due to a 16% increase in load count combined with a 5% increase in total miles .

Operating expenses .

The increase in operating expenses is primarily a result of increases in employee-related expenses of $6.6 million, pass-through expenses (primarily fuel) of $4.3 million, repairs and maintenance of $0.6 million, insurance premiums of $0.5 million, outside towing of $0.4 million, recruitment expense of $0.2 million and lease expense of $0.2 million.

Selling, general and administrative expenses .

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

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

Other operating income, net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30, Variance Percent Change

(In thousands)

Revenues $ 112,799 $ 72,318 $ 40,481 56 %

Operating expenses 83,730 60,989 22,741 37 %

Selling, general and administrative expenses 3,958 3,658 300 8 %

Depreciation and amortization 7,163 8,329 (1,166) (14) %

$ 17,948 $ (658) $ 18,606 2,828 %

Other operating income (loss), net 283 17 266 1,565 %

5 unchanged sentences

Land Transportation Revenues.

Freight revenue increased primarily due to a 23% increase in load count combined with a 3% increase in total miles, which resulted in a $8.9 million increase.

Additionally, fuel surcharge increased $4.7 million .

Revenue increased primarily due to a 14% increase in load count combined with a 4% increase in total miles .

Operating expenses.

The increase in operating expenses is primarily a result of compensation expense of $5.0 million, pass through expenses of $3.3 million, recruitment expenses of $0.3 million, outside towing of $0.3 million and insurance premiums of $0.3 million.

The increase in operating expenses is primarily a result of employee-related expenses of $11.7 million, pass through expenses of $7.6 million, insurance premiums of $0.8 million, repairs and maintenance of $0.7 million, outside towing of $0.7 million, recruitment expenses of $0.5 million and lease expense of $0.2 million.

Selling, general and administrative expenses.

5 unchanged sentences

Sulfur Services Segment

Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Variance Percent Change

(In thousands)

16 unchanged sentences

Products revenues increased $33.5 million as a result of a 52% rise in average sulfur services sales prices.

Products revenues increased $8.5 million due to an 18% increase in sales volumes, primarily related to a 56% increase in sulfur volumes.

Products revenues decreased an offsetting $15.0 million due to a 22% decrease in sales volumes, primarily related to a 26% decrease in fertilizer volumes.

Cost of products sold.

A 54% increase in product cost impacted cost of products sold by $24.7 million, resulting from a rise in commodity prices.

An 18% increase in sales volumes resulted in an additional increase in cost of products sold of $5.9 million.

A 22% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $10.9 million.

Margin per ton increased $38.38, or 89%.

Operating expenses.

Operating expenses increased primarily due to higher marine fuel expense.

Operating expenses increased due to increases in marine fuel and lube expense of $0.6 million, outside towing of $0.4 million, marine repairs and maintenance of $0.2 million, assist tugs of $0.1 million, and contract labor of $0.1 million.

Selling, general and administrative expenses.

1 unchanged sentence

Depreciation and amortization.

Depreciation and amortization remained consistent.

Depreciation and amortization increased due to certain assets being put into service as well as an increase in amortization of turnaround costs.

Other operating income, net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30, Variance Percent Change

(In thousands)

Services $ 6,168 $ 5,899 $ 269 5 %

Products 109,908 67,222 42,686 64 %

Total revenues 116,076 73,121 42,955 59 %

Cost of products sold 78,439 47,820 30,619 64 %

Operating expenses 7,255 4,813 2,442 51 %

Selling, general and administrative expenses 3,041 2,456 585 24 %

Depreciation and amortization 5,591 5,288 303 6 %

21,750 12,744 9,006 71 %

Other operating income, net 36 6 30 500 %

Operating income $ 21,786 $ 12,750 $ 9,036 71 %

Sulfur (long tons) 232 219 13 6 %

Fertilizer (long tons) 146 179 (33) (18) %

Total sulfur services volumes (long tons) 378 398 (20) (5) %

Services revenues.

Services revenues increased slightly as a result of a contractually prescribed, index-based fee adjustment.

Products revenues.

Products revenues increased $48.5 million as a result of a 64% rise in average sulfur services sales prices.

Products revenues decreased $5.8 million due to a 5% decrease in sales volumes, primarily related to an 18% decrease in fertilizer volumes.

Cost of products sold.

A 64% increase in product cost impacted cost of products sold by $34.8 million, resulting from a rise in commodity prices.

A 5% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $4.2 million.

Operating expenses.

Operating expenses increased due to increases in marine fuel and lube expense of $1.3 million, outside towing of $0.5 million, marine repairs and maintenance of $0.2 million, assist tugs of $0.2 million, contract labor of $0.2 million, and insurance premiums and claims of $0.1 million.

Offsetting was a decrease in employee-related expenses of $0.1 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily due to higher employee-related expenses.

Depreciation and amortization.

Depreciation and amortization increased due to an increase in amortization of turnaround costs offset by a decrease in depreciation as a result of certain assets being fully depreciated in the prior period.

Other operating income, net.

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

Natural Gas Liquids Segment

Comparative Results of Operations for the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Variance Percent Change

(In thousands)

5 unchanged sentences

367 710 (343) (48) %

Other operating income (loss), net (24) 1 (25) (2,500) %

Operating income $ 343 $ 711 $ (368) (52) %

NGL sales volumes (Bbls) 1,153 1,259 (106) (8) %

Products Revenues.

Our average sales price per barrel increased $31.23, or 58%, increasing revenues by $39.3 million.

The increase in average sales price per barrel was due to a rise in commodity prices.

Sales volumes decreased 8%, lowering revenues by $9.0 million.

Cost of products sold .

Our average cost per barrel increased $31.33, or 62%, increasing cost of products sold by $39.5 million.

The increase in average cost per barrel was due to a rise in commodity prices.

The decrease in sales volume of 8% resulted in a $8.7 million reduction to cost of products sold.

Our margins declined $0.10 per barrel, or 4%, during the period.

Operating expenses .

Operating expenses remained relatively consistent.

Selling, general and administrative expenses .

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

Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

Other operating income (loss), net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30, Variance Percent Change

(In thousands)

Products revenues $ 218,146 $ 165,317 $ 52,829 32 %

Cost of products sold 206,054 146,688 59,366 40 %

Operating expenses 2,187 2,056 131 6 %

Selling, general and administrative expenses 2,319 2,904 (585) (20) %

Depreciation and amortization 1,195 1,199 (4) — %

6,391 12,470 (6,079) (49) %

Other operating loss, net (24) (689) 665 97 %

9 unchanged sentences

The decrease in sales volume of 19% resulted in a $49.0 million reduction to cost of products sold.

Our margins declined $1.08 per barrel, or 20%.

Operating expenses .

1 unchanged sentence

Selling, general and administrative expenses .

Selling, general and administrative decreased primarily as a result of lower employee related expenses.

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

Depreciation and amortization.

1 unchanged sentence

Other operating loss, net.

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

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

Interest Expense, Net

Comparative Components of Interest Expense, Net for the Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31, Variance Percent Change

Comparative Components of Interest Expense, Net for the Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30, Variance Percent Change

(In thousands)

5 unchanged sentences

Total interest expense, net $ 12,846 $ 13,309 $ (463) (3) %

Indirect Selling, General and Administrative Expenses

Three Months Ended March 31, Variance Percent Change

Comparative Components of Interest Expense, Net for the Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30, Variance Percent Change

(In thousands)

Credit facility $ 3,586 $ 4,317 $ (731) (17) %

Senior notes 19,136 19,503 (367) (2) %

Amortization of deferred debt issuance costs 1,568 1,521 47 3 %

Other 979 907 72 8 %

Finance leases 6 14 (8) (57) %

Total interest expense, net $ 25,275 $ 26,262 $ (987) (4) %

Indirect Selling, General and Administrative Expenses

Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change

2022 2021 2022 2021

Indirect selling, general and administrative expenses increased for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to an increase in employee related expenses of $0.4 million, offset by a $0.2 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.

(In thousands) (In thousands)

Indirect selling, general and administrative expenses

$ 4,390 $ 3,780 $ 610 16 % $ 8,512 $ 7,699 $ 813 11 %

Indirect selling, general and administrative expenses increased for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily due to an increase in employee-related expenses of $0.8 million, offset by a $0.2 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.

Indirect selling, general and administrative expenses increased for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an increase in employee-related expenses of $1.2 million, offset by a $0.4 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.

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

5 unchanged sentences

Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses.

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three months ended March 31, 2022 and 2021:

Three Months Ended March 31, Variance Percent Change

(In thousands)

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change

2022 2021 2022 2021

(In thousands) (In thousands)

Conflicts Committee approved reimbursement amount

5 unchanged sentences

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

Cash Flows - Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

The following table details the cash flow changes between the three months ended March 31, 2022 and 2021:

Three Months Ended March 31, Variance Percent Change

Cash Flows - Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

The following table details the cash flow changes between the six months ended June 30, 2022 and 2021:

Six Months Ended June 30, Variance Percent Change

(In thousands)

5 unchanged sentences

Net cash provided by operating activities.

The increase in net cash provided by operating activities for the three months ended March 31, 2022 includes an increase in operating results of $9.0 million and a favorable variance in working capital of $17.7 million.

Offsetting this increase was a $1.3 million decrease in other non-cash charges and an unfavorable variance in other non-current assets and liabilities of $0.9 million.

The increase in net cash provided by operating activities for the six months ended June 30, 2022 includes an increase in operating results of $22.2 million and a favorable variance in working capital of $0.3 million.

Offsetting this increase was a combined $0.1 million decrease in other non-cash charges and other non-current assets and liabilities.

Net cash used in investing activities.

Net cash used in investing activities for the three months ended March 31, 2022 increased $7.2 million.

Net cash used in investing activities for the six months ended June 30, 2022 increased $5.8 million.

A rise in cash used of $6.3 million resulted from higher payments for capital expenditures and plant turnaround costs in 2022.

Net proceeds from the sale of property, plant and equipment increased $0.3 million.

Offsetting, net proceeds from the sale of property, plant and equipment increased $0.6 million.

Net cash used in financing activities.

Net cash used in financing activities for the three months ended March 31, 2022 increased primarily as a result of a $15.7 million increase in net payments of long-term borrowings.

Net cash used in financing activities for the six months ended June 30, 2022 increased primarily as a result of a $13.8 million increase in net payments of long-term borrowings and a $1.3 million increase in cash used related to additional additional consideration paid to Martin Resource Management related to its acquisition of MTI.

Offsetting, payments of finance lease obligations decreased $2.5 million.

Total Contractual Obligations

A summary of our total contractual cash obligations as of March 31, 2022, is as follows:

A summary of our total contractual cash obligations as of June 30, 2022, is as follows:

Payments due by period

12 unchanged sentences

Letters of Credit .

At March 31, 2022, we had outstanding irrevocable letters of credit in the amount of $25.4 million, which were issued under our credit facility.

At June 30, 2022, we had outstanding irrevocable letters of credit in the amount of $39.0 million, which were issued under our credit facility.

Off-Balance Sheet Arrangements.

2 unchanged sentences

Credit Facility

At March 31, 2022, we maintained a $275.0 million credit facility that matures on August 31, 2023.

As of March 31, 2022, we had $143.0 million outstanding under the credit facility and $25.4 million of outstanding irrevocable letters of credit, leaving a maximum available amount to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $106.6 million.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $106.6 million in additional amounts thereunder as of March 31, 2022.

At June 30, 2022, we maintained a $275.0 million credit facility that matures on August 31, 2023.

As of June 30, 2022, we had $149.0 million outstanding under the credit facility and $39.0 million of outstanding irrevocable letters of credit, leaving a maximum available amount to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $87.0 million.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $87.0 million in additional amounts thereunder as of June 30, 2022.

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

During the three months ended March 31, 2022, the level of outstanding draws on our credit facility has ranged from a low of $143.0 million to a high of $177.0 million.

During the six months ended June 30, 2022, the level of outstanding draws on our credit facility has ranged from a low of $141.5 million to a high of $177.0 million.

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

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

The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our total leverage ratio (as defined in the credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows as of March 31, 2022:

Leverage Ratio

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Greater than or equal to 5.00 to 1.00 3.00 % 4.00 % 4.00 %

The applicable margin for LIBOR borrowings at March 31, 2022 is 3.50%, with a 1% floor for LIBOR.

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%, with a 1% floor for LIBOR.

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

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

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

On March 31, 2022, we had cash and cash equivalents of $0.3 million and available borrowing capacity of $106.6 million under our credit facility with $143.0 million of borrowings outstanding.

On June 30, 2022, we had cash and cash equivalents of $0.0 million and available borrowing capacity of $87.0 million under our credit facility with $149.0 million of borrowings outstanding.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $87.0 million in additional amounts thereunder as of June 30, 2022.

Our credit facility matures on August 31, 2023.

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

We are in compliance with all debt covenants as of March 31, 2022 and expect to be in compliance for the next twelve months.

We are in compliance with all debt covenants as of June 30, 2022 and expect to be in compliance for the next twelve months.

Interest Rate Risk

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Impact of Inflation

Inflation did not have a material impact on our results of operations for the three months ended March 31, 2022 or 2021.

Inflation did not have a material impact on our results of operations for the six months ended June 30, 2022 or 2021.

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

6 unchanged sentences

Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the three months ended March 31, 2022 or 2021.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the six months ended June 30, 2022 or 2021.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis