What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-03 compared with 2022-07-25 · 155 added, 141 removed, 800 unchanged (27% of the section changed)

3 unchanged sentences

(Dollars in thousands)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Unaudited) (Audited)

36 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

20 unchanged sentences

Other operating income (loss), net 790 61 1,050 ( 610 )

Operating income 21,490 7,633 46,939 23,319

Gain on involuntary conversion of property, plant and equipment — 186 — 186

Operating income (loss) ( 12,244 ) 8,153 34,695 31,472

Other income (expense):

2 unchanged sentences

Total other expense ( 13,908 ) ( 14,110 ) ( 39,185 ) ( 40,373 )

Net income before taxes 8,643 ( 5,677 ) 21,662 ( 2,944 )

Net loss before taxes ( 26,152 ) ( 5,957 ) ( 4,490 ) ( 8,901 )

Income tax expense ( 1,891 ) ( 954 ) ( 5,469 ) ( 2,111 )

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

Less general partner's interest in net income ( 132 ) 132 ( 362 ) 82

Less income allocable to unvested restricted units ( 21 ) 20 ( 51 ) 10

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

Net income per unit attributable to limited partners - basic $ 0.17 $ ( 0.17 ) $ 0.46 $ ( 0.10 )

Net income per unit attributable to limited partners - diluted $ 0.17 $ ( 0.17 ) $ 0.46 $ ( 0.10 )

Net loss ( 28,043 ) ( 6,911 ) ( 9,959 ) ( 11,012 )

Less general partner's interest in net loss 561 138 199 220

Less loss allocable to unvested restricted units 90 20 39 30

Limited partners' interest in net loss $ ( 27,392 ) $ ( 6,753 ) $ ( 9,721 ) $ ( 10,762 )

Net loss per unit attributable to limited partners - basic $ ( 0.71 ) $ ( 0.17 ) $ ( 0.25 ) $ ( 0.28 )

Net loss per unit attributable to limited partners - diluted $ ( 0.71 ) $ ( 0.17 ) $ ( 0.25 ) $ ( 0.28 )

Weighted average limited partner units - basic 38,726,388 38,687,874 38,725,933 38,689,434

6 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

13 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

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

Net loss $ ( 28,043 ) $ ( 6,911 ) $ ( 9,959 ) $ ( 11,012 )

Changes in fair values of commodity cash flow hedges — ( 5,999 ) — ( 5,999 )

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

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

Commodity cash flow hedging (gains) reclassified to earnings ( 167 ) — ( 816 ) —

Comprehensive loss $ ( 28,210 ) $ ( 12,910 ) $ ( 10,775 ) $ ( 17,011 )

See accompanying notes to consolidated and condensed financial statements.

6 unchanged sentences

Balances - January 1, 2021 38,851,174 $ ( 48,776 ) $ 1,905 $ — $ ( 46,871 )

Net income — ( 4,019 ) ( 82 ) — ( 4,101 )

Net loss — ( 10,792 ) ( 220 ) — ( 11,012 )

Issuance of restricted units 42,168 — — — —

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

General partner contribution — — — — —

Cash distributions — ( 581 ) ( 12 ) — ( 593 )

1 unchanged sentence

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

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

Gain recognized in AOCI on commodity cash flow hedges — — — ( 5,999 ) ( 5,999 )

Balances - September 30, 2021 38,802,750 $ ( 59,830 ) $ 1,673 $ ( 5,999 ) $ ( 64,156 )

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

Net income — 17,722 362 — 18,084

Net loss — ( 9,760 ) ( 199 ) — ( 9,959 )

Issuance of restricted units 48,000 — — — —

2 unchanged sentences

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

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 )

Balances - September 30, 2022 38,850,750 $ ( 60,894 ) $ 1,677 $ — $ ( 59,217 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

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

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

Net loss $ ( 9,959 ) $ ( 11,012 )

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

Depreciation and amortization 43,007 42,862

2 unchanged sentences

(Gain) loss on sale of property, plant and equipment, net ( 1,050 ) 610

Gain on involuntary conversion of property, plant and equipment — ( 186 )

Derivative (income) loss ( 901 ) 1,825

12 unchanged sentences

Change in other non-current assets and liabilities 1,116 203

Net cash provided by operating activities 28,451 6,085

Net cash used in operating activities ( 16,756 ) ( 12,406 )

Cash flows from investing activities:

1 unchanged sentence

Payments for plant turnaround costs ( 4,262 ) ( 2,679 )

Proceeds from involuntary conversion of property, plant and equipment — 274

Proceeds from sale of property, plant and equipment 2,209 225

Net cash used in investing activities ( 15,545 ) ( 9,761 )

Net cash used in continuing investing activities ( 23,072 ) ( 13,629 )

Cash flows from financing activities:

6 unchanged sentences

Cash distributions paid ( 595 ) ( 593 )

Net cash used in financing activities ( 12,915 ) ( 601 )

Net cash provided by financing activities 39,821 27,860

Net increase (decrease) in cash ( 7 ) 1,825

6 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

The following table disaggregates our revenue by major source:

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

23 unchanged sentences

For the Partnership’s tolling agreement, revenue is recognized based on the contracted monthly reservation fee and throughput volumes moved through the facility.

When lubricants and drilling fluids are sold by truck or rail, revenue is recognized when title is transferred, which is either upon delivering product to the customer or when the product leaves the Partnership's facility, depending on the specific terms of the contract.

When lubricants and drilling fluids are sold by truck or rail, revenue is recognized when title is transferred, which is generally when the product leaves the Partnership's facility, depending on the specific terms of the contract.

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

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

Sulfur Services Segment

20 unchanged sentences

Total $ 16,178 $ 65,732 $ 65,362 $ 54,316 $ 51,453 $ 252,771 $ 505,812

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

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

September 30,

2022 December 31,

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

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

September 30, 2022

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

September 30,

2022 December 31,

$ 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

$ 275,000 Credit facility at variable interest rate ( 5.85 % 1 weighted average at September 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 $ 1,457 and $ 2,613 , respectively 2

$ 200,543 $ 156,887

11 unchanged sentences

The margin is set every three months.

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.

All amounts outstanding at December 31, 2021 and September 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 June 30, 2022 is 3.25 %.

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

The applicable margin for LIBOR borrowings at September 30, 2022 is 3.00 %.

The applicable margin for LIBOR borrowings effective November 2, 2022 is 3.25 %.

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 June 30, 2022 and December 31, 2021, respectively.

2 The Partnership was in compliance with all debt covenants as of September 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;

5 unchanged sentences

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)

June 30, 2022

September 30, 2022

As of September 30, 2022, the Partnership’s credit facility is due within twelve months and outstanding borrowings have therefore been presented as a current liability on the Consolidated and Condensed Balance Sheets at September 30, 2022.

If the Partnership is unable to extend the maturity date of the credit facility by August 31, 2023, the Partnership's ability to meet its obligations would be adversely affected.

Failure to extend the maturity date would result in the potential foreclosure on the collateral securing such debt, and could cause a cross-default under other agreements, which could also result in the acceleration of those obligations by the counterparties to those agreements.

Pending the successful extension of the maturity date of the credit facility, the conditions described above have raised substantial doubt about the Partnership’s ability to continue as a going concern.

The Partnership’s management is in the process of refinancing the credit facility and presently believes the measures being taken will enable the Partnership to successfully extend the maturity date of the credit facility, although no assurance can be given.

The Partnership paid cash interest in the amount of $ 22,628 and $ 22,635 for the three months ended September 30, 2022 and 2021, respectively.

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

The Partnership paid cash interest in the amount of $ 46,738 and $ 48,630 for the nine months ended September 30, 2022 and 2021, respectively.

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

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 six months ended June 30, 2022 and 2021 were as follows:

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

The components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows:

Three Months Ended September 30, Nine Months Ended September 30, 2022

2022 2021 2022 2021

6 unchanged sentences

Total lease cost $ 5,990 $ 4,867 $ 16,447 $ 15,140

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

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

September 30,

2022 December 31, 2021

11 unchanged sentences

Total finance lease obligations $ 108 $ 289

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 future minimum lease obligations as of June 30, 2022 consist of the following:

The Partnership’s future minimum lease obligations as of September 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 June 30, 2022 are as follows:

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

2022 - $ 6,549 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:

September 30,

2022 December 31, 2021

7 unchanged sentences

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

June 30, 2022

September 30, 2022

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

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

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

The Partnership has historically entered 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.

At September 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)

June 30, 2022

September 30, 2022

Derivative Assets Derivative Liabilities

1 unchanged sentence

Balance Sheet Location

June 30, 2022 December 31, 2021 Balance Sheet Location

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021 Balance Sheet Location

September 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 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:

The following table summarizes the gain (loss) recognized in AOCI at September 30, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended September 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 $ — $ 816 $ 167 $ —

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:

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

6 unchanged sentences

(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:

September 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 September 30, 2022 and 2021, respectively:

Location of Gain (Loss)

5 unchanged sentences

Total effect of derivatives not designated as hedging instruments $ — $ ( 941 )

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:

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

Location of Gain (Loss)

6 unchanged sentences

PARTNERS' CAPITAL (DEFICIT)

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.

As of September 30, 2022, Partners’ capital (deficit) 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.

11 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 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 six months ended June 30, 2022 and 2021.

The general partner was allocated no incentive distributions during the nine months ended September 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:

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

2022 2021 2022 2021

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

Less general partner’s interest in net income:

Distributions payable on behalf of general partner interest 4 4 8 8

General partner interest in undistributed earnings 128 ( 136 ) 354 ( 90 )

Less income allocable to unvested restricted units 21 ( 20 ) 51 ( 10 )

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net loss $ ( 28,043 ) $ ( 6,911 ) $ ( 9,959 ) $ ( 11,012 )

Less general partner’s interest in net loss:

Distributions payable on behalf of general partner interest 4 4 12 12

General partner interest in undistributed loss ( 565 ) ( 142 ) ( 211 ) ( 232 )

Less loss allocable to unvested restricted units ( 90 ) ( 20 ) ( 39 ) ( 30 )

Limited partners’ interest in net loss $ ( 27,392 ) $ ( 6,753 ) $ ( 9,721 ) $ ( 10,762 )

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Dilutive effect of restricted units issued

21,035 — 27,496 —

Total weighted average limited partner diluted units outstanding

1 unchanged sentence

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 periods presented.

All common unit equivalents were antidilutive for each of the three and nine months ended September 30, 2022 and 2021 because the limited partners were allocated a net loss in these periods.

UNIT BASED AWARDS - LONG-TERM INCENTIVE PLANS

1 unchanged sentence

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

Long-Term Incentive Plans

18 unchanged sentences

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 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.

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

As of September 30,

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

2022, there was a total of $ 8,359 of unrecognized compensation costs related to non-vested phantom unit awards.

22 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 June 30, 2022 met the criteria to be treated under equity classification.

All of the Partnership's outstanding restricted unit awards at September 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)

June 30, 2022

September 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 six months ended June 30, 2022 is provided below:

A summary of the restricted unit activity for the nine months ended September 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 $ 423

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,

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 nine months ended September 30, 2022 and 2021 is provided below:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

1 unchanged sentence

Fair value of units vested — — 188 1,418

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

As of September 30, 2022, there was $ 234 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.26 years.

RELATED PARTY TRANSACTIONS

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.

As of September 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 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 Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of September 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)

June 30, 2022

September 30, 2022

Non-Competition Provisions .

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 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 $ 3,652 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 Partnership reimbursed Martin Resource Management Corporation for $ 3,373 and $ 3,597 of indirect expenses for the three months ended September 30, 2022 and 2021, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 10,118 and $ 10,790 of indirect expenses for the nine months ended September 30, 2022 and 2021, respectively.

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

30 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

subcontractors.

28 unchanged sentences

Further, certain capital improvements, to the extent requested by Cross, are reimbursed through a capital recovery fee.

As of December 31, 2019, the annual capital recovery fee reimbursement of $ 2,088 expired.

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 perio d .

A lso, 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.

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

East Texas Mack Leases.

1 unchanged sentence

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 June 30, 2022 and 2021 were $ 453

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended September 30, 2022 and 2021 were $ 589 and $ 283 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the nine months ended September 30, 2022 and 2021 were $ 1,352 and $ 801 , respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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.

September 30, 2022

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Product sales:

Natural gas services ( 3 ) — — —

Sulfur services 17 28 86 87

3 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

4 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

14 unchanged sentences

There is no allocation of interest expense.

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

Three Months Ended September 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 62,149 ( 1,596 ) 60,553 6,747 4,735 5,633

4 unchanged sentences

Total $ 235,422 $ ( 6,117 ) $ 229,305 $ 13,721 $ ( 12,244 ) $ 9,582

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

Three Months Ended September 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 51,226 ( 1,648 ) 49,578 7,049 3,269 2,087

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

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

September 30, 2022

Nine Months Ended September 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 $ 174,942 $ ( 4,953 ) $ 169,989 $ 22,084 $ 11,670 $ 12,078

5 unchanged sentences

Total $ 795,236 $ ( 19,734 ) $ 775,502 $ 43,007 $ 34,695 $ 24,292

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

Nine Months Ended September 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 $ 136,584 $ ( 4,918 ) $ 131,666 $ 21,150 $ 8,153 $ 6,258

5 unchanged sentences

Total $ 612,509 $ ( 15,984 ) $ 596,525 $ 42,862 $ 31,472 $ 14,409

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

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

September 30, 2022 December 31, 2021

Total assets:

14 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 30, 2022

Judgment in the Chancery Court of Davidson County, Tennessee (the “Tennessee Court”), under Case No.

8 unchanged sentences

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.

The trial for the Litigation is expected to be held in 2024.

FAIR VALUE MEASUREMENTS

10 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Commodity derivative contracts, net $ — $ —

8 unchanged sentences

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

September 30, 2022 December 31, 2021

Value Carrying

6 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 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.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

1 unchanged sentence

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 $ 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.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 120 and $ 59 were recorded in income tax expense for the three months ended September 30, 2022 and 2021, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 376 and $ 240 were recorded in income tax expense for the nine months ended September 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 $ 1,957 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.

Total income tax expense of $ 1,771 and $ 895 , related to the operation of the Taxable Subsidiary, for the three months ended September 30, 2022 and 2021, resulted in an effective income tax rate ("ETR") of 19.94 % and 23.42 %, respectively.

Total income tax expense of $ 5,093 and $ 1,871 , related to the operation of the Taxable Subsidiary, for the nine months ended September 30, 2022 and 2021, resulted in an effective income tax rate ETR of 21.09 % and 29.51 %, respectively.

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

The increase in the provision for income taxes for both the three and nine months ended September 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 $ 348 and $ 153 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2022 and 2021, respectively.

A current federal income tax expense of $ 1,071 and $ 276 , related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 30, 2022 and 2021, respectively.

A current state income tax expense of $ 116 and $ 81 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2022 and 2021, respectively.

A current state income tax expense of $ 411 and $ 177 , related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 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 $ 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.

A deferred tax expense related to the MTI temporary differences of $ 1,307 and $ 661 was recorded for the three months ended September 30, 2022 and 2021, respectively.

A deferred tax expense related to the MTI temporary differences of $ 3,611 and $ 1,419 was recorded for the nine months ended September 30, 2022 and 2021, respectively.

A net deferred tax asset of $ 16,210 and $ 19,821 , related to the cumulative book and tax temporary differences, existed at September 30, 2022 and December 31, 2021, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2022

September 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

Divestiture of Stockton, California Sulfur Terminal.

On October 7, 2022, the Partnership closed on the sale of its Stockton Sulfur Terminal to Gulf Terminals LLC for net proceeds of approximately $ 5,250 , which were used to reduce outstanding borrowings under the Partnership's credit facility.

Quarterly Distribution.

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.

On October 19, 2022, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the third quarter of 2022, or $ 0.020 per common unit on an annualized basis, which will be paid on November 14, 2022 to unitholders of record as of November 7, 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