What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-07-25 · 137 added, 127 removed, 502 unchanged (34% of the section changed)

14 unchanged sentences

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

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

As of September 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

Divestiture of Stockton, California Sulfur Terminal.

On October 7, 2022, we closed on the sale of our Stockton Sulfur Terminal to Gulf Terminals LLC for net proceeds of approximately $5.25 million, which were used to reduce outstanding borrowings under our credit facility.

Quarterly Distribution.

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.

On October 19, 2022, we 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.

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 $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.

We reimbursed Martin Resource Management Corporation for $40.8 million of direct costs and expenses for the three months ended September 30, 2022 compared to $33.8 million for the three months ended September 30, 2021.

We reimbursed Martin Resource Management Corporation for $120.1 million of direct costs and expenses for the nine months ended September 30, 2022 compared to $96.9 million for the nine months ended September 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 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.

In each of the three months ended September 30, 2022 and 2021, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.6 million, respectively.

In each of the nine months ended September 30, 2022 and 2021, the Conflicts Committee approved reimbursement amounts of $10.1 million and $10.8 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 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.

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

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 18% and 19% of our total costs and expenses during the nine months ended September 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 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.

Our sales to Martin Resource Management Corporation accounted for approximately 10% and 10% of our total revenues for the three months

ended September 30, 2022 and 2021, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 9% and 10% of our total revenues for the nine months ended September 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.

17 unchanged sentences

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

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

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

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

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

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

3 unchanged sentences

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

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

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

Distributable Cash Flow.

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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 three and six months ended June 30, 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 nine months ended September 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

(in thousands) (in thousands)

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

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

Interest expense 13,906 14,110 39,181 40,372

3 unchanged sentences

(Gain) loss on disposition of property, plant and equipment (790) (61) (1,050) 610

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

Unrealized mark-to-market on commodity derivatives — (412) — (207)

2 unchanged sentences

Adjusted EBITDA $ 18,815 $ 21,487 $ 97,099 $ 74,886

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

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

Reconciliation of Net Cash Provided By (Used In) Operating Activities to Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

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

2022 2021 2022 2021

(in thousands) (in thousands)

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

Net cash used in operating activities $ (45,207) $ (18,491) $ (16,756) $ (12,406)

Interest expense 1

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Adjusted Free Cash Flow $ (4,530) $ 3,794 $ 33,944 $ 19,350

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

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

Results of Operations

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

The results of operations for the three and nine months ended September 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 and six months ended June 30, 2022 and 2021.

The following table sets forth our operating revenues and operating income by segment for the three and nine months ended September 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 June 30, 2022 Compared to the Three Months Ended June 30, 2021

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

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

1 unchanged sentence

Income (Loss)

Three Months Ended June 30, 2022 (in thousands)

Three Months Ended September 30, 2022 (in thousands)

Terminalling and storage $ 62,149 $ (1,596) $ 60,553 $ 5,576 $ (841) $ 4,735

8 unchanged sentences

Income (Loss)

Three Months Ended June 30, 2021 (in thousands)

Three Months Ended September 30, 2021 (in thousands)

Terminalling and storage $ 51,226 $ (1,648) $ 49,578 $ 4,439 $ (1,170) $ 3,269

5 unchanged sentences

Total $ 216,395 $ (5,137) $ 211,258 $ 8,153 $ — $ 8,153

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

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

1 unchanged sentence

Income (Loss)

Six Months Ended June 30, 2022 (in thousands)

Nine Months Ended September 30, 2022 (in thousands)

Terminalling and storage $ 174,942 $ (4,953) $ 169,989 $ 14,643 $ (2,973) $ 11,670

8 unchanged sentences

Income (Loss)

Six Months Ended June 30, 2021 (in thousands)

Nine Months Ended September 30, 2021 (in thousands)

Terminalling and storage $ 136,584 $ (4,918) $ 131,666 $ 11,567 $ (3,414) $ 8,153

6 unchanged sentences

Terminalling and Storage Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

8 unchanged sentences

Other operating income, net — 11 (11) (100) %

Gain on involuntary conversion of property, plant and equipment — 186 (186) (100) %

Operating income $ 5,576 $ 4,439 $ 1,137 26 %

3 unchanged sentences

Services revenues increased $1.0 million, of which $0.6 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.

In addition, the revenue at our specialty terminals increased $0.3 million as a result of $0.2 million in throughput revenue and $0.1 million in service revenues.

Offsetting these increases, our shore-based terminals decreased $0.4 million primarily related to space rent.

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.

A 29% increase in average sales price combined with a 3% rise in sales volumes at our blending and packaging facilities resulted in a $10.0 million increase to products revenues.

Cost of products sold.

3 unchanged sentences

Selling, general and administrative expenses.

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

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

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

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

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

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

7 unchanged sentences

14,678 11,375 3,303 29 %

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

Other operating income (loss), net (35) 6 (41) (683) %

Gain on involuntary conversion of property, plant and equipment — 186 (186) (100) %

Operating income $ 14,643 $ 11,567 $ 3,076 27 %

3 unchanged sentences

Services revenues increased $3.8 million, of which $1.9 million was a result of natural gas surcharge revenue, $0.7 million in throughput fees and $0.6 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.

In addition, the revenue at our specialty terminals increased $0.6 million as a result of increases in throughput revenue of $0.4 million and service revenue of $0.2 million.

Offsetting these increases, our shore-based terminals decreased $0.2 million related to space rent.

Products revenues.

5 unchanged sentences

Selling, general and administrative expenses.

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

Selling, general and administrative expenses increased primarily as a result of employee-related expenses of $0.3 million and legal expenses of $0.2 million.

Depreciation and amortization.

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

Other operating loss, net.

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

Other operating income (loss), net.

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

Transportation Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

8 unchanged sentences

Inland revenues increased $3.5 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 $1.1 million.

Land Transportation Revenues.

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

Revenue increased $9.5 million primarily due to a 29% increase in load count combined with a 13% increase in total miles.

Additionally, ancillary revenue increased $6.8 million.

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.

The increase in operating expenses is primarily a result of increases in employee-related expenses of $7.2 million, pass-through expenses (primarily fuel) of $3.3 million, repairs and maintenance of $1.3 million, lease expense of $0.7 million, insurance premiums of $0.5 million and outside towing of $0.3 million.

Selling, general and administrative expenses .

4 unchanged sentences

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

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands)

4 unchanged sentences

$ 29,403 $ 3,227 $ 26,176 811 %

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

Other operating income, net 901 59 842 1,427 %

Operating income $ 30,304 $ 3,286 $ 27,018 822 %

4 unchanged sentences

Land Transportation Revenues.

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

Revenue increased $28.1 million primarily due to a 24% increase in load count combined with a 7% increase in total miles .

Additionally, ancillary revenue increased $18.9 million.

Operating expenses.

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.

The increase in operating expenses is primarily a result of employee-related expenses of $18.8 million, pass-through expenses (primarily fuel) of $10.9 million, repairs and maintenance of $3.3 million, insurance premiums of $1.3 million, outside towing of $1.1 million and lease expense of $0.9 million.

Selling, general and administrative expenses.

2 unchanged sentences

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

Other operating income (loss), net.

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

Other operating income, net.

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

Sulfur Services Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

7 unchanged sentences

(6,606) 2,274 (8,880) (391) %

Other operating income, net 8 6 2 33 %

Operating income $ 9,134 $ 6,308 $ 2,826 45 %

Other operating income (loss), net (70) 8 (78) (975) %

Operating income (loss) $ (6,676) $ 2,282 $ (8,958) (393) %

Sulfur (long tons) 95 145 (50) (34) %

4 unchanged sentences

Products revenues.

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

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.

Products revenues decreased $18.0 million due to a 41% decrease in sales volumes, primarily related to a 58% decrease in fertilizer volumes, offset by an increase of $15.9 million as a result of a 57% rise in average sulfur services sales prices.

Cost of products sold.

1 unchanged sentence

A 41% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $19.0 million.

Margin per ton increased $38.38, or 89%.

Margin per ton decreased $42.05, or 140%.

Operating expenses.

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.

Operating expenses increased due to increases in outside towing of $0.4 million, insurance premiums and claims of $0.3 million, marine fuel and lube expense of $0.2 million, contract labor of $0.1 million, and utilities of $0.1 million, offset by a decrease in harbor agency fees of $0.1 million.

Selling, general and administrative expenses.

1 unchanged sentence

Depreciation and amortization.

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

Depreciation and amortization increased due to an increase in amortization of turnaround costs offset by certain assets being fully depreciated.

Other operating income (loss), net.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands)

7 unchanged sentences

15,144 15,018 126 1 %

Other operating income, net 36 6 30 500 %

Other operating income (loss), net (34) 14 (48) (343) %

Operating income $ 15,110 $ 15,032 $ 78 1 %

6 unchanged sentences

Products revenues increased $68.7 million as a result of a 72% 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.

Products revenues decreased $28.1 million due to a 17% decrease in sales volumes, primarily related to a 28% decrease in fertilizer volumes.

Cost of products sold.

2 unchanged sentences

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.

Operating expenses increased due to increases in marine fuel and lube expense of $1.5 million, outside towing of $0.8 million, insurance premiums and claims of $0.5 million, marine repairs and maintenance of $0.3 million, contract labor of $0.3 million, and assist tugs of $0.2 million.

Selling, general and administrative expenses.

2 unchanged sentences

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.

Other operating income (loss), net.

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

Natural Gas Liquids Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

5 unchanged sentences

(19,199) 1,579 (20,778) (1,316) %

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

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

Other operating income, net 242 — 242

Operating income (loss) $ (18,957) $ 1,579 $ (20,536) (1,301) %

NGL sales volumes (Bbls) 1,180 1,435 (255) (18) %

8 unchanged sentences

Our margins declined $1.22 per barrel, or 42%, during the period.

In addition, a non-cash net realizable value adjustment was made to inventory during the third quarter of 2022, increasing cost of products sold by $18.5 million.

Operating expenses .

Operating expenses remained relatively consistent.

Operating expenses increased due to brine pond operations at Martin Underground Storage.

Selling, general and administrative expenses .

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

Selling, general and administrative expenses remained relatively consistent.

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

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 Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands)

5 unchanged sentences

(12,808) 14,049 (26,857) (191) %

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

Operating income $ 6,367 $ 11,781 $ (5,414) (46) %

Other operating income (loss), net 218 (689) 907 132 %

Operating income (loss) $ (12,590) $ 13,360 $ (25,950) (194) %

NGL sales volumes (Bbls) 3,930 4,839 (909) (19) %

8 unchanged sentences

Our margins declined $1.03 per barrel, or 22%.

In addition, a non-cash net realizable value adjustment was made to inventory during the third quarter of 2022, increasing cost of products sold by $18.8 million.

Operating expenses .

Operating expenses remained relatively consistent.

Operating expenses increased primarily due to higher utilities, brine pond operating costs, and insurance premiums at Martin Underground Storage.

Selling, general and administrative expenses .

2 unchanged sentences

Depreciation and amortization remained relatively consistent.

Other operating loss, net.

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

Other operating income (loss), net.

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

Interest Expense, Net

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

5 unchanged sentences

Total interest expense, net $ 13,906 $ 14,110 $ (204) (1) %

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

Six Months Ended June 30, Variance Percent Change

Comparative Components of Interest Expense, Net for the Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands)

6 unchanged sentences

Indirect Selling, General and Administrative Expenses

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

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2022 2021 2022 2021

1 unchanged sentence

Indirect selling, general and administrative expenses $ 4,260 $ 4,074 $ 186 5 % $ 12,772 $ 11,773 $ 999 8 %

$ 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.

Indirect selling, general and administrative expenses increased for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in employee-related expenses of $0.3 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 nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in employee-related expenses of $1.5 million, offset by a $0.7 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 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

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

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2022 2021 2022 2021

7 unchanged sentences

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

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

Cash Flows - Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

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

Nine Months Ended September 30, Variance Percent Change

(In thousands)

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Net increase (decrease) in cash and cash equivalents $ (7) $ 1,825 $ (1,832) (100) %

Net cash provided by operating activities.

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 operating activities.

The increase in net cash used in operating activities for the nine months ended September 30, 2022 includes an increase in operating results of $1.1 million and an unfavorable variance in working capital of $7.1 million.

Offsetting this increase was a combined $1.7 million increase 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 six months ended June 30, 2022 increased $5.8 million.

Net cash used in investing activities for the nine months ended September 30, 2022 increased $9.4 million.

A rise in cash used of $11.2 million resulted from higher payments for capital expenditures and plant turnaround costs in 2022.

Offsetting, net proceeds from the sale of property, plant and equipment increased $2.0 million.

Net cash used in financing activities.

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.

Net cash provided by financing activities.

Net cash provided by financing activities for the nine months ended September 30, 2022 increased primarily as a result of a $10.2 million increase in net payments of long-term borrowings and a $1.3 million increase in cash used related to additional consideration paid to Martin Resource Management related to its acquisition of MTI.

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

Total Contractual Obligations

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

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

Payments due by period

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10.0% senior secured notes, due 2024 53,750 — 53,750 — —

Throughput commitment 1,041 1,041 — — —

Operating leases 41,167 10,899 14,194 8,617 7,457

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Letters of Credit .

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.

At September 30, 2022, we had outstanding irrevocable letters of credit in the amount of $28.8 million, which were issued under our credit facility.

Off-Balance Sheet Arrangements.

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Credit Facility

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.

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

As of September 30, 2022, we had $202.0 million outstanding under the credit facility and $28.8 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 $44.2 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 $44.2 million in additional amounts thereunder as of September 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 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.

During the nine months ended September 30, 2022, the level of outstanding draws on our credit facility has ranged from a low of $141.5 million to a high of $214.0 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 June 30, 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 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 applicable margin for LIBOR borrowings at September 30, 2022 is 3.00%, with a 1% floor for LIBOR.

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

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

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our total leverage ratio is below 3.75:1:00) and certain other restricted payments;

the nature of our business;

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in

excess of $0.005 per unit unless our total leverage ratio is below 3.75:1:00) and certain other restricted payments;

(vii) change the nature of our business;

(viii) engage in transactions with affiliates;

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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 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.

On September 30, 2022, we had cash and cash equivalents of $0.0 million and available borrowing capacity of $44.2 million under our credit facility with $202.0 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 $44.2 million in additional amounts thereunder as of September 30, 2022.

Our credit facility matures on August 31, 2023.

We are currently seeking to extend the maturity date of the credit facility, although no assurance can be given.

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

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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 June 30, 2022 and expect to be in compliance for the next twelve months.

If we are unable to extend the maturity date of the credit facility and are unable to repay the outstanding borrowings under our revolving credit facility on August 31, 2023, we would be in default under our revolving credit facility.

An event of default under our revolving credit facility would allow the lenders to declare the balance outstanding thereunder due and payable in full, which could trigger cross-defaults under other agreements, which could also result in the acceleration of those obligations by the counterparties to those agreements.

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

We are in compliance with all debt covenants as of September 30, 2022 and expect to be in compliance for the next twelve months, provided the Partnership successfully executes an extension of the maturity date of the credit facility.

Interest Rate Risk

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Impact of Inflation

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

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

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

It may also increase the costs of labor and supplies.

In the future, increasing energy prices could adversely affect our results of operations.

Diesel fuel, natural gas, chemicals and other supplies are recorded in operating expenses.

In the future, increasing energy prices for products consumed by our operations, such as diesel fuel, natural gas, chemicals, and other supplies, could adversely affect our results of operations.

An increase in price of these products would increase our operating expenses which could adversely affect net income.

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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 six months ended June 30, 2022 or 2021.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the nine months ended September 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