What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-04-25 compared with 2022-11-03 · 159 added, 306 removed, 333 unchanged (58% of the section changed)

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Our 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;

• NGL marketing, distribution, and transportation services.

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

The petroleum products and by-products we collect, transport, store and market are produced primarily by major and independent oil and gas companies who often turn to third parties, such as us, for the transportation and disposition of these products.

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

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

As of March 31, 2023, 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.

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Significant Recent Developments

Issuance of 2028 Notes to Refinance Existing Secured Notes .

On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 2028 Notes.

We used the proceeds of the 2028 Notes to complete the tender offers for substantially all of our 2024 Notes and 2025 Notes, redeem all 2024 Notes and 2025 Notes that were not validly tendered, repay a portion of the indebtedness under our credit facility, and pay fees and expenses in connection with the foregoing.

Simultaneously with the issuance of the 2028 Notes we amended our credit facility to, among other things, reduce the commitments thereunder from $275.0 million to $200.0 million (with further scheduled reductions to $175.0 million on June 30, 2023 and $150.0 million on June 30, 2024) and extend the scheduled maturity date of the credit facility to February 8, 2027.

Exit from Butane Optimization Business.

In January 2023, we announced that we anticipate the exit of our butane optimization business at the conclusion of the butane selling season during the second quarter of 2023.

Electronic Level Sulfuric Acid Joint Venture.

On October 19, 2022, Martin ELSA Investment LLC, our affiliate, entered into definitive agreements with Samsung C&T America, Inc.

and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM Semichem LLC (“DSM”).

DSM will produce and distribute electronic level sulfuric acid (“ELSA”).

By leveraging our existing assets located in Plainview, Texas and installing additional facilities (the “ELSA Facility”) as required, DSM will produce ELSA that meets the strict quality standards required by the recent advances in semiconductor manufacturing.

In addition to owning a 10% non-controlling interest in DSM, we will be the exclusive provider of feedstock to the ELSA Facility.

We, through our affiliate MTI, will also provide land transportation services of the ELSA produced by DSM.

The Partnership expects to fund approximately $20.0 million in aggregate capital expenditures in connection with this joint venture and the Partnership’s related services in 2023 and 2024.

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 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.

On April 19, 2023, we 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.

Critical Accounting Policies and Estimates

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Martin Resource Management Corporation is engaged in the following principal business activities:

• distributing fuel oil, asphalt, marine fuel and other liquids;

• distributing asphalt, marine fuel and other liquids;

• providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida;

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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 $40.8 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.

We reimbursed Martin Resource Management Corporation for $40.9 million of direct costs and expenses for the three months ended March 31, 2023 compared to $39.1 million for the three months ended March 31, 2022.

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 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.

In each of the three months ended March 31, 2023 and 2022, the Conflicts Committee approved reimbursement amounts of $3.5 million and $3.4 million, respectively.

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

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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 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.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 20% and 17% of our total costs and expenses during the three months ended March 31, 2023 and 2022, respectively.

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

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.

Our sales to Martin Resource Management Corporation accounted for approximately 10% and 8% of our total revenues for the three months ended March 31, 2023 and 2022, respectively.

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

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To assist management in assessing our business, we use the following non-GAAP financial measures:

earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), distributable cash flow available to common unitholders (“Distributable Cash Flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("Adjusted Free Cash Flow").

earnings before interest, taxes, and depreciation and amortization ("EBITDA"), adjusted EBITDA (as defined below), adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow available to common unitholders (“Distributable Cash Flow”), and free cash flow after growth capital expenditures and principal payments under finance lease obligations ("Adjusted Free Cash Flow").

Our management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S.

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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 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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

(in thousands) (in thousands)

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

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three months ended March 31, 2023 and 2022, which represents EBITDA, Adjusted EBITDA, Adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow:

Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA, and Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business

Three Months Ended March 31,

(in thousands)

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

Interest expense 15,657 12,429

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

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

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

Loss on extinguishment of debt 5,121 —

Lower of cost or market and other non-cash adjustments (9,133) —

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Adjusted EBITDA $ 21,735 $ 39,954

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,

net income associated with butane optimization business (305) (5,694)

lower of cost or market and other non-cash adjustments $ 9,133 $ —

Adjusted EBITDA after giving effect to the exit of the butane optimization business

$ 30,563 $ 34,260

(in thousands) (in thousands)

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

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA, Adjusted EBITDA After Giving Effect to the Exit of the Butane Optimization Business, Distributable Cash Flow, and Adjusted Free Cash Flow

Three Months Ended March 31,

(in thousands)

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

Interest expense 1

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Adjusted EBITDA 21,735 39,954

net income loss associated with butane optimization business (305) (5,694)

lower of cost or market and other non-cash adjustments 9,133 —

Adjusted EBITDA after giving effect to the exit of the butane optimization business

30,563 34,260

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

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Deferred income taxes 1,177 921

Amortization of debt discount 400 —

Amortization of deferred debt issuance costs 1,675 783

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Results of Operations

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.

The results of operations for the three months ended March 31, 2023 and 2022 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 nine months ended September 30, 2022 and 2021.

The following table sets forth our operating revenues and operating income by segment for the three months ended March 31, 2023 and 2022.

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.

Effective January 1, 2023, we reorganized our Terminalling and Storage and Natural Gas Liquids operating segments.

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

Further, our 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.

Our consolidated and condensed results of operations are presented on a comparative basis below.

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

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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

Income (Loss)

Three Months Ended September 30, 2022 (in thousands)

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

Transportation 63,514 (4,521) 58,993 12,073 (4,546) 7,527

Sulfur services 28,868 — 28,868 (6,676) 2,733 (3,943)

Natural gas liquids 80,891 — 80,891 (18,957) 2,654 (16,303)

Indirect selling, general and administrative

— — — (4,260) — (4,260)

Total $ 235,422 $ (6,117) $ 229,305 $ (12,244) $ — $ (12,244)

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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

Income (Loss)

Three Months Ended September 30, 2021 (in thousands)

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

Transportation 42,568 (3,489) 39,079 3,927 (3,497) 430

Sulfur services 30,837 — 30,837 2,282 2,252 4,534

Natural gas liquids 91,764 — 91,764 1,579 2,415 3,994

Indirect selling, general and administrative

— — — (4,074) — (4,074)

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

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

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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Income (Loss)

Nine Months Ended September 30, 2022 (in thousands)

Three Months Ended March 31, 2023 (in thousands)

Terminalling and storage $ 23,919 $ (3,061) $ 20,858 $ 3,108 $ (3,044) $ 64

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Sulfur services 35,679 — 35,679 4,553 2,851 7,404

Natural gas liquids 299,037 (3) 299,034 (12,590) 10,023 (2,567)

Specialty products 132,277 (8) 132,269 4,600 6,456 11,056

Indirect selling, general and administrative

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Income (Loss)

Nine Months Ended September 30, 2021 (in thousands)

Three Months Ended March 31, 2022 (in thousands)

Terminalling and storage $ 22,371 $ (2,974) $ 19,397 $ (112) $ (2,945) $ (3,057)

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Sulfur services 59,123 — 59,123 12,652 2,185 14,837

Natural gas liquids 257,081 — 257,081 13,360 8,378 21,738

Specialty products 154,009 (38) 153,971 10,049 5,953 16,002

Indirect selling, general and administrative

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Terminalling and Storage Segment

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

Three Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31, Variance Percent Change

(In thousands, except BBL per day)

Services $ 21,578 $ 20,628 $ 950 5 %

Products 40,571 30,598 9,973 33 %

Total revenues 62,149 51,226 10,923 21 %

Revenues $ 23,919 $ 22,371 $ 1,548 7 %

Cost of products sold 6 5 1 20 %

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3,457 (69) 3,526 5,110 %

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 %

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

Other operating loss, net (349) (43) (306) (712) %

Operating income (loss) $ 3,108 $ (112) $ 3,220 2,875 %

Shore-based throughput volumes (gallons) 43,349 13,634 29,715 218 %

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

Services revenues.

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.

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 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.

Revenues increased $1.5 million, of which $0.5 million was a result of reservation and throughput fees at our Smackover refinery.

In addition, revenue at our shore-based terminals increased $0.5 million as a result of increased throughput revenue of $0.9 million, offset by decreased space rent of $0.4 million.

Specialty terminals increased $0.4 million due to throughput revenue of $0.3 million and service revenue of $0.1 million.

Cost of products sold.

A 30% increase in average cost per gallon combined with a 3% rise in sales volumes at our blending and packaging facilities resulted in an $8.4 million increase in cost of products sold.

Costs of products sold remained relatively consistent period over period.

Operating expenses.

Operating expenses increased primarily as a result of utilities of $0.8 million and employee-related expenses of $0.5 million.

Operating expenses decreased primarily as a result of property insurance premiums of $0.9 million, offset by an increase in employee-related expenses of $0.3 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative expenses remained relatively consistent period over period.

Depreciation and amortization.

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 Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

Services $ 64,724 $ 60,945 $ 3,779 6 %

Products 110,218 75,639 34,579 46 %

Total revenues 174,942 136,584 38,358 28 %

Cost of products sold 89,150 60,318 28,832 48 %

Operating expenses 44,069 39,246 4,823 12 %

Selling, general and administrative expenses 4,961 4,495 466 10 %

Depreciation and amortization 22,084 21,150 934 4 %

14,678 11,375 3,303 29 %

Other operating income (loss), net.

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

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

Shore-based throughput volumes (guaranteed minimum) (gallons) 60,000 60,000 — — %

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

Services revenues.

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 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.

A 35% increase in average sales price and a 7% rise in sales volumes at our blending and packaging facilities resulted in a $34.5 million increase to products revenues.

Cost of products sold.

A 37% increase in average cost per gallon and a 7% rise in sales volumes at our blending and packaging facilities resulted in a $28.8 million increase in cost of products sold.

Operating expenses.

Operating expenses increased primarily as a result of utilities of $3.5 million and employee-related expenses of $1.0 million.

Selling, general and administrative 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 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 September 30, 2022 and 2021

Three Months Ended September 30, Variance Percent Change

(In thousands)

Revenues $ 63,514 $ 42,568 $ 20,946 49 %

Operating expenses 46,499 33,053 13,446 41 %

Selling, general and administrative expenses 1,962 1,920 42 2 %

Depreciation and amortization 3,598 3,710 (112) (3) %

11,455 3,885 7,570 195 %

Other operating income, net 618 42 576 1,371 %

Operating income $ 12,073 $ 3,927 $ 8,146 207 %

Marine Transportation Revenues .

Inland revenues increased $3.5 million, primarily related to higher utilization and transportation rates.

Additionally, ancillary revenue increased $1.1 million.

Land Transportation Revenues.

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 $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 .

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

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

Other operating income, net.

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

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

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Marine Transportation Revenues.

Inland revenues increased $8.6 million, primarily related to higher utilization and transportation rates.

Offshore revenues increased $2.1 million primarily due to higher utilization and transportation rates.

Additionally, ancillary revenue increased $3.7 million.

Inland revenues increased $2.8 million, primarily related to higher transportation rates.

Offshore revenues decreased $0.1 million primarily due to lower utilization related to repairs and maintenance.

Additionally, ancillary revenue decreased $0.4 million.

Land Transportation Revenues.

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Operating expenses.

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.

The increase in operating expenses is primarily a result of employee-related expenses of $4.5 million, repairs and maintenance of $1.4 million, and lease expense of $0.9 million.

Selling, general and administrative expenses.

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Depreciation and amortization.

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

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

Other operating income, net.

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Sulfur Services Segment

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

Services $ 3,085 $ 2,950 $ 135 5 %

Products 25,783 27,887 (2,104) (8) %

Total revenues 28,868 30,837 (1,969) (6) %

Cost of products sold 27,201 21,799 5,402 25 %

Operating expenses 3,978 2,849 1,129 40 %

Selling, general and administrative expenses 1,509 1,321 188 14 %

Depreciation and amortization 2,786 2,594 192 7 %

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

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) %

Fertilizer (long tons) 24 57 (33) (58) %

Total sulfur services volumes (long tons) 119 202 (83) (41) %

Services revenues.

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

Products revenues.

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.

A 112% increase in product cost impacted cost of products sold by $24.4 million, resulting from a rise in commodity prices.

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

Margin per ton decreased $42.05, or 140%.

Operating expenses.

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.

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

Depreciation and amortization.

Depreciation and amortization increased due to an increase in amortization of turnaround costs offset by 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

Comparative Results of Operations for the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31, Variance Percent Change

(In thousands)

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4,537 12,624 (8,087) (64) %

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

Other operating income, net 16 28 (12) (43) %

Operating income $ 4,553 $ 12,652 $ (8,099) (64) %

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Products revenues.

Products revenues increased $68.7 million as a result of a 72% rise in average sulfur services sales prices.

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

Products revenues decreased $8.6 million as a result of a 15% drop in average sulfur services sales prices.

Products revenues decreased $15.1 million due to a 32% decrease in sales volumes, primarily related to a 35% decrease in sulfur volumes.

Cost of products sold.

A 112% increase in product cost impacted cost of products sold by $57.9 million, resulting from a rise in commodity prices.

A 17% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $21.9 million.

An 11% decrease in product cost impacted cost of products sold by $4.1 million, resulting from a drop in commodity prices.

A 32% decrease in sales volumes resulted in an additional decrease in cost of products sold of $11.2 million.

Operating expenses.

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.

Operating expenses remained relatively consistent period over period.

Selling, general and administrative expenses.

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Depreciation and amortization.

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

Depreciation and amortization remained relatively consistent period over period.

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 September 30, 2022 and 2021

Three Months Ended September 30, Variance Percent Change

(In thousands)

Products revenues $ 80,891 $ 91,764 $ (10,873) (12) %

Cost of products sold 97,322 87,551 9,771 11 %

Operating expenses 1,210 1,088 122 11 %

Selling, general and administrative expenses 968 954 14 1 %

Depreciation and amortization 590 592 (2) — %

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

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) %

Products Revenues.

Our average sales price per barrel increased $4.61, or 7%, increasing revenues by $6.6 million.

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

Sales volumes decreased 18%, lowering revenues by $17.5 million.

Cost of products sold .

Our average cost per barrel increased $5.82, or 10%, increasing cost of products sold by $8.4 million.

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

The decrease in sales volume of 18% resulted in a $17.0 million reduction to cost of products sold.

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 increased due to brine pond operations at Martin Underground Storage.

Selling, general and administrative expenses .

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

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

Specialty Products Segment

Comparative Results of Operations for the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31, Variance Percent Change

(In thousands)

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4,659 10,049 (5,390) (54) %

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

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

Other operating loss, net (59) — (59)

Operating income $ 4,600 $ 10,049 $ (5,449) (54) %

NGL sales volumes (Bbls) 1,691 1,597 94 6 %

Other specialty products volumes (Bbls) 84 98 (14) (14) %

Total specialty products volumes (Bbls) 1,775 1,695 80 5 %

Products Revenues.

Our average sales price per barrel increased $22.96, or 43%, increasing revenues by $111.1 million.

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

Sales volumes decreased 19%, lowering revenues by $69.2 million.

Products revenues decreased $27.7 million as a result of an 18% drop in average specialty products sales prices.

Products revenues increased $6.0 million due to a 5% increase in sales volumes, primarily related to a 6% increase in NGL volumes.

Cost of products sold .

Our average cost per barrel increased $24.00, or 50%, increasing cost of products sold by $116.1 million.

The increase in average cost per barrel was the result of an increase in market prices.

The decrease in sales volume of 19% resulted in a $65.8 million reduction to cost of products sold.

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

A 15% decrease in product cost impacted cost of products sold by $20.9 million, resulting from a drop in commodity prices.

A 5% increase in sales volumes resulted in an offsetting increase in cost of products sold of $5.6 million.

Selling, general and administrative expenses .

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Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

Other operating income (loss), net.

Depreciation and amortization decreased due to certain assets becoming fully depreciated during the fourth quarter 2022.

Other operating 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 September 30, 2022 and 2021

Three Months Ended September 30, Variance Percent Change

(In thousands)

Credit facility $ 2,695 $ 2,631 $ 64 2 %

Senior notes 9,830 9,846 (16) — %

Amortization of deferred debt issuance costs 788 1,064 (276) (26) %

Other 592 564 28 5 %

Finance leases 1 5 (4) (80) %

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

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

Nine Months Ended September 30, Variance Percent Change

Interest Expense

Comparative Components of Interest Expense, Net for the Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Amortization of deferred debt issuance costs 1,675 783 892 114 %

Amortization of debt discount 400 — 400

Other 589 415 174 42 %

Finance leases — 3 (3) (100) %

Capitalized interest (4) — (4)

Total interest expense, net $ 15,657 $ 12,429 $ 3,228 26 %

Indirect Selling, General and Administrative Expenses

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

2022 2021 2022 2021

(In thousands) (In thousands)

Three Months Ended March 31, Variance Percent Change

(In thousands)

Indirect selling, general and administrative expenses $ 4,198 $ 4,122 $ 76 2 %

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.

Indirect selling, general and administrative expenses remained relatively consistent for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

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.

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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 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

(In thousands) (In thousands)

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three months ended March 31, 2023 and 2022:

Three Months Ended March 31, Variance Percent Change

(In thousands)

Conflicts Committee approved reimbursement amount

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

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

Cash Flows - Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following table details the cash flow changes between the three months ended March 31, 2023 and 2022:

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Net increase (decrease) in cash and cash equivalents $ 12 $ 260 $ (248) (95) %

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 provided by operating activities.

The increase in net cash used in operating activities for the three months ended March 31, 2023 includes a decrease in operating results and other non-cash charges of $9.6 million offset by a favorable variance in working capital of $30.5 million.

Net cash used in investing activities.

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 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.

Net cash used in investing activities for the three months ended March 31, 2023 decreased $7.1 million.

A decrease in cash used of $3.9 million resulted from lower payments for capital expenditures and plant turnaround costs in 2023.

In addition, net proceeds from the sale of property, plant and equipment increased $3.2 million.

Net cash used in financing activities.

Net cash used in financing activities for the three months ended March 31, 2023 increased primarily as a result of a $14.7 million increase in net payments of long-term borrowings.

Additionally, payments of debt issuance costs increased $13.6 million.

Total Contractual Obligations

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

A summary of our total contractual cash obligations as of March 31, 2023, is as follows:

Payments due by period

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11.5% senior secured notes, due 2028 400,000 — — 400,000 —

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

Operating leases 47,113 9,593 19,657 10,648 7,215

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Letters of Credit .

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.

At March 31, 2023, we had outstanding irrevocable letters of credit in the amount of $19.2 million, which were issued under our credit facility.

Off-Balance Sheet Arrangements.

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Credit Facility

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 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.

Obligations under the credit facility are secured by first priority liens on substantially all of our assets and those of the guarantors, including, without limitation, inventory, accounts receivable, bank accounts, marine vessels, equipment, fixed assets and the interests in our subsidiaries.

We may prepay all amounts outstanding under the credit facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements.

The credit facility requires mandatory prepayments of amounts outstanding thereunder with excess cash that exceeds $25.0 million and the net proceeds of certain asset sales, equity issuances and debt incurrences.

Indebtedness under the credit facility bears interest at our option at the Eurodollar Rate (LIBOR), with a floor for LIBOR of 1%, plus an applicable margin, or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin.

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 September 30, 2022:

At March 31, 2023, we maintained a $200.0 million credit facility that matures on February 8, 2027.

As of March 31, 2023, we had $100.0 million outstanding under the credit facility and $19.2 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 $80.8 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 $39.6 million in additional amounts thereunder as of March 31, 2023.

Effective February 8, 2023, in connection with the completion of our sale of the 2028 Notes, we amended our credit facility (the “amended credit facility”) to, among other things, reduce the commitments thereunder from $275.0 million to $200.0 million (with further scheduled reductions to $175.0 million on June 30, 2023 and $150.0 million on June 30, 2024) and extend the scheduled maturity date of the amended credit facility to February 8, 2027.

The commitments under the amended credit facility can be increased from time to time upon our request, subject to certain conditions (including the consent of the increasing lenders), up to an additional $50.0 million.

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

Prior to the credit facility amendment, the level of outstanding draws on our credit facility from January 1, 2023 through February 8, 2023 ranged from a l ow of $148.5 m illion to a high of $184.0 million.

From February 8, 2023 through March 31, 2023, the level of outstanding draws on our amended credit facility ranged from a lo w of $100.0 million to a high of $138 .0 million.

The amended credit facility is guaranteed by substantially all of our subsidiaries, other than Martin ELSA Investment LLC.

Obligations under the amended credit facility are secured by first priority liens on substantially all of our assets and those of the guarantors, including, without limitation, inventory, accounts receivable, bank accounts, marine vessels, equipment, fixed assets and the interests in certain subsidiaries.

We may prepay all amounts outstanding under the amended credit facility at any time without premium or penalty (other than customary breakage costs associated with Adjusted Term SOFR (as defined in the amended credit facility), subject to certain notice requirements.

The amended credit facility requires mandatory prepayments of amounts outstanding thereunder with excess cash that exceeds $25.0 million and the net proceeds of certain asset sales.

Indebtedness under the credit facility bears interest at our option at the Adjusted Term SOFR (as defined in the amended credit facility), plus an applicable margin, or the Alternate Base Rate (the highest of the Federal Funds Rate plus 0.50%, the one-month Adjusted Term SOFR plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin.

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

Leverage Ratio

Base Rate Loans Eurodollar

Loans Letters of Credit

ABR Loans Term SOFR Rate Loans and Letters of Credit

Less than 3.00 to 1.00 1.75 % 2.75 %

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Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00 2.50 % 3.50 %

Greater than or equal to 4.50 to 1.00 and less than 5.00 to 1.00 2.75 % 3.75 % 3.75 %

Greater than or equal to 4.50 to 1.00 2.75 % 3.75 %

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.

In addition, the credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to:

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

The applicable margin for Adjusted Term SOFR borrowings effective April 19, 2023 is 3.50%.

The amended 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, that require maintenance of:

• a minimum Interest Coverage Ratio (as defined in the amended credit facility) of 2.00:1.00;

• a maximum Total Leverage Ratio of 4.75:1.00, stepping down to 4.50:1.00 on March 31, 2025;

• a maximum First Lien Leverage Ratio (as defined in the amended credit facility) of 1.50:1.00.

In addition, the amended credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to:

(i) grant or assume liens;

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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;

(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 pro forma Total Leverage Ratio is less than 4.50:1.00, our pro forma First Lien Leverage Ratio is less than 1.00 to 1.00, and our pro forma liquidity is greater than or equal to 35% of the commitments under our amended credit facility) and certain other restricted payments;

(vii) change the nature of our business;

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and (xi) permit our joint ventures to incur indebtedness or grant certain liens.

The credit facility contains customary events of default, including, without limitation:

The amended credit facility contains customary events of default, including, without limitation:

(i) failure to pay any principal, interest, fees, expenses or other amounts when due;

(ii) failure to meet the quarterly financial covenants;

(iii) failure to observe any other agreement, obligation, or covenant in the credit facility or any related loan document, subject to cure periods for certain failures;

(iii) failure to observe any other agreement, obligation, or covenant in the amended credit facility or any related loan document, subject to cure periods for certain failures;

(iv) the failure of any representation or warranty to be materially true and correct when made;

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(viii) certain ERISA events involving us or any of our subsidiaries, in excess of a threshold amount;

(ix) a change in control (as defined in the credit facility);

(ix) a change in control (as defined in the amended credit facility);

and (x) the invalidity of any of the loan documents or the failure of any of the collateral documents to create a lien on the collateral.

The credit facility also contains certain default provisions relating to Martin Resource Management Corporation.

If Martin Resource Management Corporation no longer controls our general partner, the lenders under the credit facility may declare all amounts outstanding thereunder immediately due and payable.

In addition, an event of default by Martin Resource Management Corporation under its credit facility could independently result in an event of default under our credit facility if it is deemed to have a material adverse effect on us.

If an event of default relating to bankruptcy or other insolvency events occurs with respect to us or any of our subsidiaries, all indebtedness under our credit facility will immediately become due and payable.

If any other event of default exists under our credit facility, the lenders may terminate their commitments to lend us money, accelerate the maturity of the indebtedness outstanding under the credit facility and exercise other rights and remedies.

In addition, if any event of default exists under our credit facility, the lenders may commence foreclosure or other actions against the collateral.

Senior Secured Notes due 2025 and 2024

For a description of our 11.50% senior secured second lien notes due 2025 and 10.00% senior secured 1.5 lien notes due 2024, see "Item 7.

The amended credit facility also contains certain default provisions relating to Martin Resource Management Corporation.

If Martin Resource Management Corporation no longer controls our general partner, the lenders under the amended credit facility may declare all amounts outstanding thereunder immediately due and payable.

In addition, an event of default by Martin Resource Management Corporation under its credit facility could independently result in an event of default under our amended credit facility if it is deemed to have a material adverse effect on us.

If an event of default relating to bankruptcy or other insolvency events occurs with respect to us or any of our subsidiaries, all indebtedness under our amended credit facility will immediately become due and payable.

If any other event of default exists under our amended credit facility, the lenders may terminate their commitments to lend us money, accelerate the maturity of the indebtedness outstanding under the amended credit facility and exercise other rights and remedies.

In addition, if any event of default exists under our amended credit facility, the lenders may commence foreclosure or other actions against the collateral.

Senior Secured Notes due 2028

For a description of our 11.50% senior secured second lien notes due 2028, see "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Description of Our Long-Term Debt" in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

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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 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.

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.

On March 31, 2023, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $80.8 million under our credit facility with $100.0 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 $39.6 million in additional amounts thereunder as of March 31, 2023.

As discussed above, we amended our credit facility effective as of February 8, 2023, to, among other things, reduce the commitments thereunder from $275.0 million to $200.0 million (with further scheduled reductions to $175.0 million on June 30, 2023 and $150.0 million on June 30, 2024) and extend the scheduled maturity date of the credit facility to February 8, 2027.

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.

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.

We are in compliance with all debt covenants as of March 31, 2023 and expect to be in compliance for the next twelve months.

Interest Rate Risk

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Impact of Inflation

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

Inflation did not have a material impact on our results of operations for the three months ended March 31, 2023 or 2022.

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

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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 nine months ended September 30, 2022 or 2021.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the three months ended March 31, 2023 or 2022.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis