What changed in this filing

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Item 1. Financial Statements

2023-04-25 compared with 2022-11-03 · 183 added, 290 removed, 665 unchanged (42% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(Unaudited) (Audited)

23 unchanged sentences

Long-term debt, net 475,237 512,871

Finance lease obligations — 9

Operating lease liabilities 27,801 26,268

3 unchanged sentences

Partners’ capital (deficit) ( 64,677 ) ( 59,445 )

Accumulated other comprehensive income (loss) — 816

Total partners’ capital (deficit) ( 64,677 ) ( 59,445 )

4 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Terminalling and storage * $ 20,858 $ 19,397

2 unchanged sentences

Product sales:

Natural gas liquids 80,891 91,764 299,034 257,081

Specialty products 132,269 153,971

Sulfur services 32,321 56,039

Terminalling and storage 40,546 30,598 110,130 75,606

164,590 210,010

3 unchanged sentences

(excluding depreciation and amortization)

Natural gas liquids * 94,668 85,137 293,350 225,862

Specialty products * 117,995 133,792

Sulfur services * 21,817 37,785

6 unchanged sentences

Other operating income (loss), net ( 388 ) 14

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

Operating income (loss) 17,505 25,449

1 unchanged sentence

Interest expense, net ( 15,657 ) ( 12,429 )

Loss on extinguishment of debt ( 5,121 ) —

Other, net 22 ( 1 )

Total other expense ( 20,756 ) ( 12,430 )

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

Net income (loss) before taxes ( 3,251 ) 13,019

Income tax expense ( 1,835 ) ( 1,541 )

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 )

Net income (loss) ( 5,086 ) 11,478

Less general partner's interest in net (income) loss 102 ( 229 )

Less (income) loss allocable to unvested restricted units 16 ( 30 )

Limited partners' interest in net income (loss) $ ( 4,968 ) $ 11,219

Net income (loss) per unit attributable to limited partners - basic $ ( 0.13 ) $ 0.29

Net income (loss) per unit attributable to limited partners - diluted $ ( 0.13 ) $ 0.29

Weighted average limited partner units - basic 38,769,794 38,722,246

6 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Three Months Ended

Terminalling and storage $ 17,502 $ 16,204

4 unchanged sentences

(excluding depreciation and amortization)

Specialty products 9,510 9,646

Sulfur services 2,708 2,676

6 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

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

Three Months Ended

Net income (loss) $ ( 5,086 ) $ 11,478

Changes in fair values of commodity cash flow hedges — ( 440 )

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

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

Comprehensive income (loss) $ ( 5,086 ) $ 11,038

See accompanying notes to consolidated and condensed financial statements.

6 unchanged sentences

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

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

Net income — 11,249 229 — 11,478

Issuance of restricted units 34,200 — — — —

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

General partner contribution — — — — —

Cash distributions — ( 194 ) ( 4 ) — ( 198 )

Unit-based compensation — 34 — — 34

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

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 )

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

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

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

Balances - January 1, 2023 38,850,750 $ ( 61,110 ) $ 1,665 $ — $ ( 59,445 )

3 unchanged sentences

Unit-based compensation — 52 — — 52

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

Excess purchase price over carrying value of acquired assets

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

Balances - March 31, 2023 38,914,806 $ ( 66,236 ) $ 1,559 $ — $ ( 64,677 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

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

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

Net income (loss) $ ( 5,086 ) $ 11,478

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

Depreciation and amortization 12,901 14,486

Amortization of deferred debt issuance costs 1,675 783

Amortization of debt discount 400 —

Deferred income tax expense 1,177 921

(Gain) loss on sale of property, plant and equipment, net 388 ( 14 )

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

Derivative (income) loss ( 901 ) 1,825

Loss on extinguishment of debt 5,121 —

Derivative income — ( 816 )

Net cash paid for commodity derivatives — ( 615 )

11 unchanged sentences

Change in other non-current assets and liabilities 228 ( 821 )

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

Net cash provided by operating activities 49,264 28,375

Cash flows from investing activities:

1 unchanged sentence

Payments for plant turnaround costs ( 229 ) ( 1,435 )

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

Proceeds from sale of property, plant and equipment 3,538 297

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

Net cash used in investing activities ( 4,218 ) ( 11,354 )

Cash flows from financing activities:

2 unchanged sentences

Proceeds from long-term debt 431,490 103,500

Purchase of treasury units — ( 17 )

Payment of debt issuance costs ( 13,622 ) ( 4 )

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

Cash distributions paid ( 198 ) ( 198 )

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

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

Net cash used in financing activities ( 45,034 ) ( 16,761 )

Net increase in cash 12 260

Cash at beginning of period 45 52

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

2 unchanged sentences

Its four primary business lines include:

terminalling, processing, storage and packaging services for petroleum products and by-products including the refining of naphthenic crude oil;

terminalling, processing, and storage services for petroleum products and by-products including the refining of naphthenic crude oil;

land and marine transportation services for petroleum products and by-products, chemicals, and specialty products;

sulfur and sulfur-based products processing, manufacturing, marketing and distribution;

and NGL marketing, distribution, and transportation services.

and specialty products, including natural gas liquids, marketing, distribution, and transportation services.

The Partnership’s unaudited consolidated and condensed financial statements have been prepared in accordance with the requirements of Form 10-Q and U.S.

10 unchanged sentences

NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

There were no new accounting pronouncements applicable to the Partnership during the three months ended March 31, 2023.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

The following table disaggregates our revenue by major source:

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

2022 2021 2022 2021

Three Months Ended March 31,

Terminalling and storage segment

Lubricant product sales $ 40,546 $ 30,598 $ 110,130 $ 75,606

Throughput and storage $ 20,858 $ 19,397

$ 20,858 $ 19,397

Natural gas liquids segment

Natural gas liquids product sales 80,891 91,764 299,034 257,081

Transportation segment

Land transportation $ 42,230 $ 35,505

Inland transportation 12,078 9,419

Offshore transportation 1,415 1,786

$ 55,723 $ 46,710

4 unchanged sentences

$ 35,679 $ 59,123

Transportation segment

Land transportation $ 45,604 $ 30,273 $ 124,089 $ 80,715

Inland transportation 11,542 7,465 31,997 20,822

Offshore transportation 1,847 1,341 5,449 2,283

Specialty products segment

Natural gas liquids product sales $ 98,222 $ 120,406

Lubricant product sales 34,047 33,565

$ 132,269 $ 153,971

6 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 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.

Throughput and storage revenue in the table above includes non-cancelable revenue arrangements that are under the scope of ASC 842, whereby the Partnership has committed certain Terminalling and Storage assets in exchange for a minimum fee.

Natural Gas Liquids Segment

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

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

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

Specialty Products Segment

Natural Gas Liquids ("NGL") revenue is recognized when title is transferred, which is generally when the product is delivered by truck, rail, or pipeline to the Partnership's NGL customers or when the customer picks up the product from our facilities.

When lubricants are sold by truck or rail, revenue is recognized when title is transferred, which is generally when the

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

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.

Sulfur Services Segment

15 unchanged sentences

Throughput and storage $ 31,755 $ 43,571 $ 44,879 $ 46,164 $ 47,549 $ 204,927 $ 418,845

Natural Gas Services

Natural Gas Liquids 1,457 5,782 5,798 5,782 3,358 — 22,177

Specialty Products

NGL product sales 4,356 5,798 5,782 3,358 — — 19,294

Sulfur services

1 unchanged sentence

Total $ 50,208 $ 68,165 $ 69,457 $ 53,913 $ 47,844 $ 204,927 $ 494,514

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

September 30,

Components of inventories at March 31, 2023 and December 31, 2022 were as follows:

2023 December 31,

Natural gas liquids $ 16,748 $ 52,462

Lubricants 27,577 28,190

Sulfur 1,605 1,541

Fertilizer 24,990 21,691

Lubricants 23,800 23,876

Other 5,697 5,914

3 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

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

September 30,

March 31, 2023

At March 31, 2023 and December 31, 2022, long-term debt consisted of the following:

2023 December 31,

$ 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

$ 200,000 Credit facility at variable interest rate ( 8.46 % 1 weighted average at March 31, 2023), due February 2027 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,710 and $ 1,086 , respectively 2,4

$ 96,289 $ 169,914

$ 400,000 Senior notes, 11.5 % interest, net of unamortized debt issuance costs of $ 9,452 and $ 0 , respectively, including unamortized premium of $ 11,600 and $ 0 , respectively, due February 2028, secured 2,3,4

$ 53,750 Senior notes due February 2024, 10.0 % interest, net of unamortized debt issuance costs of $ 0 and $ 1,288 , respectively, secured 2,3

52,176 51,317

$ 291,381 Senior notes due February 2025, 11.5 % interest, net of unamortized debt issuance costs of $ 0 and $ 886 , respectively, secured 2,3

290,390 290,667

Total 475,237 512,871

4 unchanged sentences

Total finance lease obligations $ 3 $ 9

1 Interest rate fluctuates based on LIBOR (set on the date of each advance) or the base prime rate plus an applicable margin.

1 Effective February 8, 2023, the interest rate fluctuates based on Adjusted Term SOFR (set on the date of each advance) or the alternate base rate plus an applicable margin.

The margin is set every three months.

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 September 30, 2022 is 3.00 %.

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

All amounts outstanding at March 31, 2023 were at Adjusted Term SOFR plus an applicable margin.

The applicable margin for revolving loans that are SOFR loans currently ranges from 2.75 % to 3.75 %, and the applicable margin for revolving loans that are alternate base rate loans currently ranges from 1.75 % to 2.75 %.

The applicable margin for SOFR borrowings at March 31, 2023 is 3.50 %.

The applicable margin for SOFR borrowings effective April 19, 2023 remains 3.50 %.

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

3 unchanged sentences

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

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 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;

2 The Partnership was in compliance with all debt covenants as of March 31, 2023 and December 31, 2022, respectively.

3 On February 8, 2023, the Partnership completed the sale of $ 400,000 in aggregate principal amount of 11.500 % senior secured second lien notes due 2028 (the “2028 Notes”).

The Partnership used the net proceeds of that offering to repurchase, through a tender offer and then redemption, all of the Partnership’s 1.5 lien notes due 2024 and second lien notes due 2025.

The indenture for the 2028 Notes restricts the Partnership’s ability to sell assets;

pay distributions or repurchase units or redeem or repurchase subordinated debt;

2 unchanged sentences

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

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

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.

4 Effective February 8, 2023, in connection with the completion of our sale of the 2028 Notes, we amended our credit facility to, among other things, reduce the commitments thereunder from $ 275,000 to $ 200,000 (with further scheduled reductions to $ 175,000 on June 30, 2023 and $ 150,000 on June 30, 2024) and extend the scheduled maturity date of the amended credit facility to February 8, 2027.

In conjunction with the issuance of the 2028 Notes, the Partnership recognized a loss on extinguishment of debt of $ 5,121 comprised of $ 2,827 in tender premium, $ 2,044 of unamortized debt costs and $ 250 in other expense.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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.

March 31, 2023

The Partnership paid cash interest in the amount of $ 22,177 and $ 21,851 for the three months ended March 31, 2023 and 2022, respectively.

Capitalized interest was $ 4 and $ 0 for the three months ended March 31, 2023 and 2022, 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 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

The components of lease expense for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

Operating lease cost $ 3,187 $ 2,271

5 unchanged sentences

Total lease cost $ 4,954 $ 4,962

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

Supplemental balance sheet information related to leases at March 31, 2023 and December 31, 2022 was as follows:

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

September 30,

March 31, 2023

2023 December 31, 2022

11 unchanged sentences

Total finance lease obligations $ 3 $ 9

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

The Partnership’s future minimum lease obligations as of March 31, 2023 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 September 30, 2022 are as follows:

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of March 31, 2023 are as follows:

2023 - $ 17,306 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:

September 30,

2023 December 31, 2022

7 unchanged sentences

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

September 30, 2022

March 31, 2023

Asset retirement obligations as of December 31, 2022 $ 4,992

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 unchanged sentences

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

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

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

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

10 unchanged sentences

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

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

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

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

At March 31, 2023 and December 31, 2022, there were no outstanding derivatives.

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

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

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

The following table summarizes the gain (loss) recognized in AOCI at March 31, 2023 and December 31, 2022, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended March 31, 2023 and 2022, respectively, for derivative financial instruments designated as cash flow hedges:

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

Derivative Assets Derivative Liabilities

Fair Values Fair Values

Balance Sheet Location

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 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)

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

2022 2021 2022 2021

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

Total $ — $ 816 $ 167 $ —

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:

March 31, 2023

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

3 unchanged sentences

Total $ — $ ( 440 ) $ — $ 816

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

Commodity contracts Cost of products sold $ — $ ( 941 )

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 nine months ended September 30, 2022 and 2021, respectively:

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

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

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

PARTNERS' CAPITAL (DEFICIT)

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.

As of March 31, 2023, Partners’ capital (deficit) consisted of 38,914,806 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.

8 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

Incentive Distribution Rights

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

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

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

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

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

Distributions of Available Cash

9 unchanged sentences

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

For purposes of computing diluted net income per unit, the Partnership uses the more dilutive of the two-class and if-converted methods.

Under the if-converted method, the weighted-average number of subordinated units outstanding for the period is added to the weighted-average number of common units outstanding for purposes of computing basic net income per unit and the resulting amount is compared to the diluted net income per unit computed using the two-class method.

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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:

March 31, 2023

For purposes of computing diluted net income per unit, the Partnership uses the more dilutive of the two-class and if-converted methods.

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 March 31,

Net income (loss) $ ( 5,086 ) $ 11,478

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

Distributions payable on behalf of general partner interest 4 4

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 )

General partner interest in undistributed income (loss) ( 106 ) 225

Less income (loss) allocable to unvested restricted units ( 16 ) 30

Limited partners’ interest in net income (loss) $ ( 4,968 ) $ 11,219

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Basic weighted average limited partner units outstanding

4 unchanged sentences

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.

All common unit equivalents were antidilutive for the three months ended March 31, 2023 because the limited partners were allocated a net loss in this period.

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Restricted unit Awards

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

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 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.

All of the Partnership's outstanding phantom unit awards at March 31, 2023 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.

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

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

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

As of September 30,

The estimated future cash payments of these awards are presented as liabilities within "Other

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

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

March 31, 2023

current liabilities" and "Other long-term obligations" in the Consolidated and Condensed Balance Sheets.

As of March 31, 2023, there was a total of $ 4,775 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 1.83 years.

21 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 September 30, 2022 met the criteria to be treated under equity classification.

All of the Partnership's outstanding restricted unit awards at March 31, 2023 met the criteria to be treated under equity classification.

In February 2023, the Partnership issued 21,352 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

These restricted common units vest in equal installments of 5,338 units on January 24, 2024, 2025, 2026, and 2027.

In April 2022, the Partnership issued 13,800 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

These restricted common units vest in equal installments of 4,600 units on January 24, 2023, 2024, 2025, and 2026.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

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 nine months ended September 30, 2022 is provided below:

A summary of the restricted unit activity for the three months ended March 31, 2023 is provided below:

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

5 unchanged sentences

Aggregate intrinsic value, end of period $ 391

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

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2023 and 2022 is provided below:

Three Months Ended March 31,

Aggregate intrinsic value of units vested $ 89 $ 92

Fair value of units vested 178 188

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

As of March 31, 2023, there was $ 397 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.94 years.

RELATED PARTY TRANSACTIONS

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.

As of March 31, 2023, 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 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 Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of March 31, 2023 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)

September 30, 2022

March 31, 2023

Non-Competition Provisions .

24 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

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

1 unchanged sentence

Effective January 1, 2023, through December 31, 2023, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $ 13,982 .

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 Partnership reimbursed Martin Resource Management Corporation for $ 3,496 and $ 3,373 of indirect expenses for the three months ended March 31, 2023 and 2022, respectively.

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

15 unchanged sentences

Master Transportation Services Agreement

Master Transportation Agreement.

Master Transportation Services Agreement.

Martin Transport, Inc.

8 unchanged sentences

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

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

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

subcontractors.

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

March 31, 2023

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

Marine Agreements

8 unchanged sentences

Diesel Fuel Terminal Services Agreement.

Effective January 1, 2016, the Partnership entered into a second amended and restated terminalling services agreement under which the Partnership provides terminal services to Martin Resource Management Corporation for marine fuel distribution.

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

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

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

Effective October 1, 2022, the Partnership entered into a third amended and restated terminalling services agreement under which it provides terminal services to Martin Energy Services LLC (“MES”), a wholly owned subsidiary of Martin Resource Management Corporation, for fuel distribution utilizing marine shore based terminals owned by the Partnership.

This agreement amended the existing arrangement between the Partnership and MES by eliminating any minimum throughput volume requirements and increasing the per gallon throughput fee.

The term of this agreement expires on December 31, 2023 but will continue on a year to year basis until terminated by either party by giving at least 90 days’ written notice prior to the end of any term.

Miscellaneous Terminal Services Agreements.

16 unchanged sentences

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

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended 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.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended March 31, 2023 and 2022 were $ 623 and $ 310 , respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

March 31, 2023

Consulting Services Agreement.

Martin Operating Partnership L.P.

(the “Operating Partnership”) is a party to a Consulting Services Agreement with Ruben S.

Martin (the “Consulting Services Agreement”).

Pursuant to the terms of the Consulting Services Agreement, Mr.

Martin has agreed to provide business and strategic development support to the Operating Partnership, and the Operating Partnership has agreed to pay Mr.

Martin $ 263 per year for such services, which amount was paid to Mr.

Martin for each of the fiscal years ended December 31, 2022 and 2021.

The Consulting Services Agreement expired on December 31, 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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Terminalling and storage $ 17,502 $ 16,204

1 unchanged sentence

Product sales:

Natural gas services ( 3 ) — — —

Specialty products 872 292

Sulfur services 53 29

Terminalling and storage 47 40 391 166

$ 23,938 $ 22,813

$ 23,237 $ 21,498 $ 71,024 $ 61,457

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Cost of products sold:

Specialty products $ 9,510 $ 9,646

Sulfur services 2,708 2,676

1 unchanged sentence

$ 12,224 $ 12,327

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Operating expenses:

Transportation $ 18,064 $ 15,263

Natural gas liquids 537 534 1,565 1,511

Sulfur services 1,000 1,245

1 unchanged sentence

$ 23,827 $ 21,380

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Selling, general and administrative:

Transportation $ 2,263 $ 1,965

Natural gas liquids 597 576 2,132 2,660

Specialty products 1,311 2,136

Sulfur services 1,081 996

4 unchanged sentences

The Partnership has four reportable segments:

(1) terminalling and storage, (2) transportation, (3) sulfur services and (4) natural gas liquids.

(1) terminalling and storage, (2) transportation, (3) sulfur services and (4) specialty products.

The Partnership’s reportable segments are strategic business units that offer different products and services.

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

The accounting policies of the operating segments are the same as those described in Note 2 in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022.

Effective January 1, 2023, the Partnership reorganized its Terminalling and Storage and Natural Gas Liquids operating segments.

The underground NGL storage division of the Partnership's Natural Gas Liquids operating segment was moved to the Terminalling and Storage operating segment.

Further, the Partnership's packaged lubricants and grease businesses were moved from the Terminalling and Storage operating segment to the Specialty Products operating segment (formerly named the Natural Gas Liquids segment).

All prior period financial information has been revised to reflect these changes.

In conjunction with the segment reorganization, the Partnership allocated $ 4,229 of goodwill from the Terminalling and Storage operating segment to the Specialty Products operating segment.

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

There is no allocation of interest expense.

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

Transportation 63,514 ( 4,521 ) 58,993 3,598 7,527 1,682

Sulfur services 28,868 — 28,868 2,786 ( 3,943 ) 2,204

Natural gas liquids 80,891 — 80,891 590 ( 16,303 ) 63

Indirect selling, general and administrative — — — — ( 4,260 ) —

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

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

Transportation 42,568 ( 3,489 ) 39,079 3,710 430 1,086

Sulfur services 30,837 — 30,837 2,594 4,534 1,104

Natural gas liquids 91,764 — 91,764 592 3,994 20

Indirect selling, general and administrative — — — — ( 4,074 ) —

Total $ 216,395 $ ( 5,137 ) $ 211,258 $ 13,945 $ 8,153 $ 4,297

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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

March 31, 2023

Three Months Ended March 31, 2023 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 $ 23,919 $ ( 3,061 ) $ 20,858 $ 5,599 $ 64 $ 3,785

1 unchanged sentence

Sulfur services 35,679 — 35,679 2,677 7,404 2,048

Natural gas liquids 299,037 ( 3 ) 299,034 1,785 ( 2,567 ) 720

Specialty products 132,277 ( 8 ) 132,269 863 11,056 259

Indirect selling, general and administrative

1 unchanged sentence

Total $ 253,814 $ ( 9,285 ) $ 244,529 $ 12,901 $ 17,505 $ 7,620

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

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

Terminalling and storage $ 22,371 $ ( 2,974 ) $ 19,397 $ 7,000 $ ( 3,057 ) $ 3,753

1 unchanged sentence

Sulfur services 59,123 — 59,123 2,709 14,837 1,962

Natural gas liquids 257,081 — 257,081 1,791 21,738 481

Specialty products 154,009 ( 38 ) 153,971 1,204 16,002 639

Indirect selling, general and administrative

1 unchanged sentence

Total $ 287,400 $ ( 8,199 ) $ 279,201 $ 14,486 $ 25,449 $ 9,935

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

The Partnership's assets by reportable segment as of March 31, 2023 and December 31, 2022, are as follows:

March 31, 2023 December 31, 2022

Total assets:

2 unchanged sentences

Sulfur services 113,602 110,688

Natural gas liquids 123,419 78,483

Specialty products 111,128 150,175

Total assets $ 542,875 $ 598,851

5 unchanged sentences

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

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

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

16-0018-BC, requesting a judicial determination that the Partnership did not owe the customer the demanded defense and indemnity

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

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

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

March 31, 2023

obligations (the “Litigation”).

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

18 unchanged sentences

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

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

September 30, 2022 December 31, 2021

Commodity derivative contracts, net $ — $ —

The Partnership is required to disclose estimated fair values for its financial instruments.

7 unchanged sentences

The estimated fair value of the 2024 Notes, 2025 and 2028 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.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Value Carrying

1 unchanged sentence

2025 Notes $ — $ — $ 290,495 $ 290,689

2028 Notes $ 378,948 $ 383,967 $ — $ —

Total $ 378,948 $ 383,967 $ 342,957 $ 344,770

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

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

Martin Operating Partnership L.P.

The Operating Partnership, the Partnership’s wholly-owned subsidiary, and the Partnership's other operating subsidiaries have issued in the past, and may issue in the future, unconditional guarantees of senior or subordinated debt securities of the Partnership.

2 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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

Three Months Ended March 31,

Provision for income taxes $ 1,835 $ 1,541

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 $ 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.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 120 and $ 176 were recorded in income tax expense for the three months ended March 31, 2023 and 2022, 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 $ 1,771 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.

Total income tax expense of $ 1,715 and $ 1,365 , related to the operation of the Taxable Subsidiary, for the three months ended March 31, 2023 and 2022, resulted in an effective income tax rate ("ETR") of 24.43 % and 22.03 %, respectively.

The increase in the ETR for the income taxes during the three months ended March 31, 2023 was primarily due to an increase in state income taxes as a result of full utilization of net operating losses in some states, compared to the same period in 2022.

The increase in the provision for income taxes for the three months ended March 31, 2023, compared to the same period in 2022, was primarily due to an increase in state income taxes as a result of full utilization of net operating losses in some states in the current period.

A current federal income tax expense of $ 325 and $ 320 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2023 and 2022, respectively.

A current state income tax expense of $ 213 and $ 124 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2023 and 2022, 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 $ 1,307 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.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2022

A deferred tax expense related to the MTI temporary differences of $ 1,177 and $ 921 was recorded for the three months ended March 31, 2023 and 2022, respectively.

A net deferred tax asset of $ 13,209 and $ 14,386 , related to the cumulative book and tax temporary differences, existed at March 31, 2023 and December 31, 2022, respectively.

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 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.

On April 19, 2023, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the first quarter of 2023, or $ 0.020 per common unit on an annualized basis, which will be paid on May 15, 2023 to unitholders of record as of May 8, 2023.

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