What changed in this filing

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Item 1. Financial Statements

2023-07-25 compared with 2023-04-25 · 225 added, 132 removed, 716 unchanged (33% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(Unaudited) (Audited)

34 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Terminalling and storage * $ 21,684 $ 20,423 $ 42,542 $ 39,820

40 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Terminalling and storage $ 18,077 $ 17,416 $ 35,579 $ 33,620

13 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net income (loss) $ 1,081 $ 6,606 $ ( 4,005 ) $ 18,084

Changes in fair values of commodity cash flow hedges — 167 — 167

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

Comprehensive income (loss) $ 1,081 $ 7,213 $ ( 4,005 ) $ 17,435

6 unchanged sentences

Units Amount Total

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

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

Net income — 1,059 22 — 1,081

Issuance of restricted units 34,200 — — — —

Cash distributions — ( 195 ) ( 4 ) — ( 199 )

Unit-based compensation — 38 — — 38

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 )

Balances - June 30, 2023 38,914,806 ( 65,334 ) 1,577 — $ ( 63,757 )

Balances - December 31, 2022 38,850,750 $ ( 61,110 ) $ 1,665 $ — $ ( 59,445 )

Net loss — ( 3,925 ) ( 80 ) — ( 4,005 )

2 unchanged sentences

Unit-based compensation — 90 — — 90

Balances - June 30, 2023 38,914,806 $ ( 65,334 ) $ 1,577 $ — $ ( 63,757 )

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)

(Dollars in thousands)

Partners’ Capital (Deficit)

Common Limited General Partner Amount Accumulated Other Comprehensive Income (Loss)

Units Amount Total

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

Net income — 6,473 133 — 6,606

Issuance of restricted units 13,800 — — — —

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

Unit-based compensation — 45 — — 45

Excess purchase price over carrying value of acquired assets — 65 — — 65

Loss reclassified from AOCI into income on commodity cash flow hedges — — — 440 440

Gain recognized in AOCI on commodity cash flow hedges — — — 167 167

Balances - June 30, 2022 38,850,750 $ ( 33,263 ) $ 2,242 $ 167 $ ( 30,854 )

Balances - December 31, 2021 38,802,750 $ ( 50,741 ) $ 1,888 $ 816 $ ( 48,037 )

Net income — 17,722 362 — 18,084

Issuance of restricted units 48,000 — — — —

Cash distributions — ( 388 ) ( 8 ) — ( 396 )

Unit-based compensation — 79 — — 79

Excess purchase price over carrying value of acquired assets — 65 — — 65

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

Gain recognized in AOCI on commodity cash flow hedges — — — 167 167

Balances - June 30, 2022 38,850,750 $ ( 33,263 ) $ 2,242 $ 167 $ ( 30,854 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

5 unchanged sentences

Deferred income tax expense 1,867 2,304

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

Gain on sale of property, plant and equipment, net ( 285 ) ( 260 )

Loss on extinguishment of debt 5,121 —

24 unchanged sentences

Payment of debt issuance costs ( 14,238 ) ( 26 )

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

Cash distributions paid ( 397 ) ( 396 )

Net cash used in financing activities ( 85,352 ) ( 12,915 )

Net increase in cash 12 260

Net increase (decrease) in cash 12 ( 9 )

Cash at beginning of period 45 52

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

5 unchanged sentences

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

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

and marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease.

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

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

There were no new accounting pronouncements applicable to the Partnership during the six months ended June 30, 2023.

EXIT OF BUTANE OPTIMIZATION BUSINESS

During the second quarter of 2023, the Partnership completed its previously announced exit of its butane optimization business at the conclusion of the butane selling season.

This exit did not qualify as discontinued operations in accordance with ASC 205.

Going forward, with respect to butane, the Partnership will operate as a fee-based butane logistics business, primarily continuing to utilize its north Louisiana underground storage assets, which have both truck and rail capability.

This logistics business will also utilize the Partnership's truck transportation assets for fee-based product movements.

As a result of this new business model, the Partnership will no longer carry butane inventory, enabling the Partnership to reduce commodity risk exposure, cash flow and earnings volatility, and working capital requirements.

The following revenues and costs, which are included in the financial results for all periods presented, are not expected to be incurred under the new fee-based butane logistics business model.

The butane optimization business has historically been included in the Partnership's Specialty Products operating segment.

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

2023 2022 2023 2022

Products revenue $ 13,650 $ 31,264 $ 70,539 $ 88,447

Cost of products sold 16,074 32,135 72,282 82,414

Selling, general and administrative expenses 140 71 512 1,281

$ ( 2,564 ) $ ( 942 ) $ ( 2,255 ) $ 4,752

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

The following table disaggregates our revenue by major source:

Three Months Ended March 31,

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

2023 2022 2023 2022

Terminalling and storage segment

3 unchanged sentences

Land transportation $ 40,869 $ 42,980 $ 83,099 $ 78,485

Inland transportation 12,078 9,419

Offshore transportation 1,415 1,786

Inland marine transportation 12,357 11,036 24,435 20,455

Offshore marine transportation 1,524 1,816 2,939 3,602

$ 54,750 $ 55,832 $ 110,473 $ 102,542

14 unchanged sentences

For throughput contracts, revenue is recognized based on the volume moved through the Partnership’s terminals at the contracted rate.

For storage and throughput contracts at the Partnership's underground NGL storage facility, revenue is recognized based on the volume stored and moved through the facility at the contracted rate.

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

1 unchanged sentence

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)

March 31, 2023

product leaves the Partnership's facility, depending on the specific terms of the contract.

June 30, 2023

When lubricants 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.

21 unchanged sentences

Total $ 33,519 $ 68,165 $ 69,457 $ 53,913 $ 47,844 $ 204,927 $ 477,825

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

Components of inventories at June 30, 2023 and December 31, 2022 were as follows:

2023 December 31,

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

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

June 30, 2023

At June 30, 2023 and December 31, 2022, long-term debt consisted of the following:

2023 December 31,

$ 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

$ 175,000 Credit facility at variable interest rate ( 8.85 % 1 weighted average at June 30, 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 $ 3,772 and $ 1,086 , respectively 2,4

$ 56,728 $ 169,914

10 unchanged sentences

The margin is set every three months.

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

All amounts outstanding at June 30, 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 applicable margin for SOFR borrowings at June 30, 2023 is 3.50 %.

The applicable margin for SOFR borrowings effective July 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").

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

2 The Partnership was in compliance with all debt covenants as of June 30, 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 Partnership used the proceeds of the 2028 Notes to repurchase, through a tender offer and then redemption, all of the Partnership’s 10.00 % senior secured 1.5 lien notes due 2024 (the “2024 Notes”) and 11.50 % senior secured second lien notes due 2025 (the “2025 Notes”), repay a portion of the indebtedness under the credit facility, and pay fees and expenses in connection with the foregoing.

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

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

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.

June 30, 2023

The Partnership paid cash interest in the amount of $ 2,632 and $ 2,258 for the three months ended June 30, 2023 and 2022, respectively.

Capitalized interest was $ 8 and $ 0 for the three months ended June 30, 2023 and 2022, respectively.

The Partnership paid cash interest in the amount of $ 24,808 and $ 24,109 for the six months ended June 30, 2023 and 2022, respectively.

Capitalized interest was $ 11 and $ 0 for the six months ended June 30, 2023 and 2022, respectively.

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment.

4 unchanged sentences

Our leases have remaining lease terms of 1 year to 14 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

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 months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Par tnership will exercise the option.

The components of lease expense for the three and six months ended June 30, 2023 and 2022 were as follows:

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

2023 2022 2023 2022

Operating lease cost $ 3,604 $ 2,540 $ 6,791 $ 4,811

5 unchanged sentences

Total lease cost $ 5,013 $ 5,496 $ 9,966 $ 10,457

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

Supplemental balance sheet information related to leases at June 30, 2023 and December 31, 2022 was as follows:

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

2023 December 31, 2022

11 unchanged sentences

Total finance lease obligations $ — $ 9

The Partnership’s future minimum lease obligations as of March 31, 2023 consist of the following:

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

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of June 30, 2023 are as follows:

2023 - $ 12,432 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

SUPPLEMENTAL BALANCE SHEET INFORMATION

9 unchanged sentences

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

March 31, 2023

June 30, 2023

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

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

21 unchanged sentences

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

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

At June 30, 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 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:

The following table summarizes the gain (loss) recognized in AOCI at June 30, 2023 and December 31, 2022, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the three months ended June 30, 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)

March 31, 2023

June 30, 2023

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

3 unchanged sentences

Total $ — $ 167 $ — $ ( 440 )

The following table summarizes the gain (loss) recognized in AOCI at June 30, 2023 and December 31, 2022, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the six months ended June 30, 2023 and 2022, 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

2023 2022 2023 2022

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

Total $ — $ 167 $ — $ 816

PARTNERS' CAPITAL (DEFICIT)

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.

As of June 30, 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)

June 30, 2023

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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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.

1 unchanged sentence

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,

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

2023 2022 2023 2022

Net income (loss) $ 1,081 $ 6,606 $ ( 4,005 ) $ 18,084

5 unchanged sentences

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 March 31,

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

2023 2022 2023 2022

Basic weighted average limited partner units outstanding

1 unchanged sentence

Dilutive effect of restricted units issued

5,334 21,035 — 27,496

Total weighted average limited partner diluted units outstanding

38,777,600 38,750,153 38,771,037 38,753,197

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

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 the three months ended March 31, 2023 because the limited partners were allocated a net loss in this period.

All common unit equivalents were antidilutive for the six months ended June 30, 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 March 31,

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

2023 2022 2023 2022

Restricted unit Awards

5 unchanged sentences

Total unit-based compensation expense $ ( 1,536 ) $ 1,122 $ ( 1,085 ) $ 2,060

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

Long-Term Incentive Plans

11 unchanged sentences

Generally, vesting of an award is subject to a participant remaining continuously employed with the Partnership through the vesting date.

However, if prior to the vesting date (i) a participant is terminated without cause (as defined in the award agreement) or terminates employment after the participant has attained both the age of 65 and ten years of employment (“retirement-eligible”), a prorated portion of the award will vest and be paid in cash no later than the 30 th day following such termination date (subject to a six-month delay in payment for certain retirement-eligible participants) or (ii) there is a change in control of the Partnership (as defined in the Plan), the award will vest in full and be paid in cash no later than the 30 th day following the date of the change of control;

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

following the date of the change of control;

provided, that the participant has been in continuous employment through the termination or change in control date, as applicable.

4 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 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.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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.

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

As of June 30, 2023, there was a total of $ 1,988 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 1.57 years.

17 unchanged sentences

Unvested units granted under the 2017 LTIP may or may not participate in cash distributions depending on the terms of each individual award agreement.

The performance conditions related to the PBRUs awarded on March 1, 2018 were not achieved and the Partnership treated these units as forfeited at expiration on March 31, 2021.

As such, the Partnership did not recognize compensation expense related to these units.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

The restricted units issued to directors generally vest in equal annual installments over a four-year period.

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 March 31, 2023 met the criteria to be treated under equity classification.

All of the Partnership's outstanding restricted unit awards at June 30, 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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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 three months ended March 31, 2023 is provided below:

A summary of the restricted unit activity for the six months ended June 30, 2023 is provided below:

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

5 unchanged sentences

Aggregate intrinsic value, end of period $ 306

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,

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and six months ended June 30, 2023 and 2022 is provided below:

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

2023 2022 2023 2022

Aggregate intrinsic value of units vested $ — $ — $ 89 $ 92

Fair value of units vested — — 178 188

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

As of June 30, 2023, there was $ 358 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.69 years.

RELATED PARTY TRANSACTIONS

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.

As of June 30, 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 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 Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of June 30, 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:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

Omnibus Agreement

3 unchanged sentences

The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

Non-Competition Provisions .

17 unchanged sentences

• any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of $ 5,000 or more if the Partnership has been offered the opportunity to purchase the business for fair market value and the Partnership declines to do so with the concurrence of the conflicts committee of the board of directors of the general partner of the Partnership (the "Conflicts Committee");

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

• any business that Martin Resource Management Corporation acquires or constructs where a portion of such business includes a restricted business and the fair market value of the restricted business is $ 5,000 or more and represents less than 20 % of the aggregate value of the entire business to be acquired or constructed;

2 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

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

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

In addition to the direct expenses, under the Omnibus Agreement, the Partnership is required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses.

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 $ 3,496 and $ 3,373 of indirect expenses for the three months ended March 31, 2023 and 2022, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 3,496 and $ 3,373 of indirect expenses for the three months ended June 30, 2023 and 2022, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 6,991 and $ 6,746 of indirect expenses for the six months ended June 30, 2023 and 2022, respectively.

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

14 unchanged sentences

The Omnibus Agreement, other than the indemnification provisions and the provisions limiting the amount for which the Partnership will reimburse Martin Resource Management Corporation for general and administrative services performed on its behalf, will terminate if the Partnership is no longer an affiliate of Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

Master Transportation Services Agreement

11 unchanged sentences

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 subcontractors.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

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

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.

Marine Agreements

16 unchanged sentences

Generally, the fees due under these agreements are adjusted annually based on a price index.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

Other Agreements

11 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 March 31, 2023 and 2022 were $ 623 and $ 310 , respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended June 30, 2023 and 2022 were $ 785 and $ 453 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the six months ended June 30, 2023 and 2022 were $ 1,409 and $ 763 , respectively.

Consulting Services Agreement.

7 unchanged sentences

The Consulting Services Agreement expired on December 31, 2022.

Storage and Services Agreement.

The Partnership is a party to a storage and services agreement with Martin Butane, a division of Martin Product Sales LLC (a subsidiary of Martin Resource Management Corporation), dated May 1, 2023 under which the Partnership provides storage and other services for NGLs at the Partnership's Arcadia, Louisiana underground storage facility.

The agreement expires on April 30, 2024, 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.

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 March 31,

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

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

2023 2022 2023 2022

Terminalling and storage $ 18,077 $ 17,416 $ 35,579 $ 33,620

4 unchanged sentences

7,497 96 8,422 423

$ 32,851 $ 24,975 $ 56,789 $ 47,794

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Cost of products sold:

3 unchanged sentences

$ 8,498 $ 12,801 $ 20,722 $ 25,128

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 March 31,

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

2023 2022 2023 2022

Operating expenses:

4 unchanged sentences

The impact of related party selling, general and administrative expenses is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

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

2023 2022 2023 2022

Selling, general and administrative:

5 unchanged sentences

$ 6,556 $ 7,498 $ 15,072 $ 16,306

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

BUSINESS SEGMENTS

10 unchanged sentences

There is no allocation of interest expense.

Three Months Ended June 30, 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 $ 23,906 $ ( 2,222 ) $ 21,684 $ 5,195 $ 2,236 $ 3,324

Transportation 58,395 ( 3,645 ) 54,750 3,760 5,345 2,471

Sulfur services 40,330 — 40,330 2,756 8,493 3,660

Specialty products 78,898 ( 26 ) 78,872 836 5,149 340

Indirect selling, general and administrative — — — — ( 3,894 ) —

Total $ 201,529 $ ( 5,893 ) $ 195,636 $ 12,547 $ 17,329 $ 9,795

Three Months Ended June 30, 2022 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 23,622 $ ( 3,199 ) $ 20,423 $ 7,172 $ ( 3,276 ) $ 2,613

Transportation 60,902 ( 5,070 ) 55,832 3,590 6,154 933

Sulfur services 56,953 — 56,953 2,882 12,000 1,131

Specialty products 133,818 ( 30 ) 133,788 1,156 11,002 98

Indirect selling, general and administrative — — — — ( 4,390 ) —

Total $ 275,295 $ ( 8,299 ) $ 266,996 $ 14,800 $ 21,490 $ 4,775

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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

June 30, 2023

Six Months Ended June 30, 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 $ 47,825 $ ( 5,283 ) $ 42,542 $ 10,794 $ 2,300 $ 7,109

5 unchanged sentences

Total $ 455,343 $ ( 15,178 ) $ 440,165 $ 25,448 $ 34,834 $ 17,415

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

Six Months Ended June 30, 2022 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 45,993 $ ( 6,173 ) $ 39,820 $ 14,172 $ ( 6,333 ) $ 6,365

5 unchanged sentences

Total $ 562,695 $ ( 16,498 ) $ 546,197 $ 29,286 $ 46,939 $ 14,710

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

The Partnership's assets by reportable segment as of June 30, 2023 and December 31, 2022, are as follows:

June 30, 2023 December 31, 2022

Total assets:

15 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

June 30, 2023

obligations (the “Litigation”).

7 unchanged sentences

The Partnership intends to vigorously defend the counterclaims asserted by the customer in the Litigation.

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

The trial for the Litigation is expected to be held in the first quarter of 2025.

FAIR VALUE MEASUREMENTS

18 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.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Value Carrying

12 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2023

Three Months Ended March 31,

June 30, 2023

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

2023 2022 2023 2022

Provision for income taxes $ 996 $ 2,037 $ 2,831 $ 3,578

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 $ 176 were recorded in income tax expense for the three months ended March 31, 2023 and 2022, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 80 and $ 80 were recorded in income tax expense for the three months ended June 30, 2023 and 2022, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 200 and $ 256 were recorded in income tax expense for the six months ended June 30, 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 $ 1,715 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.

Total income tax expense of $ 916 and $ 1,957 , related to the operation of the Taxable Subsidiary, for the three months ended June 30, 2023 and 2022, resulted in an effective income tax rate ("ETR") of 26.60 % and 21.58 %, respectively.

Total income tax expense of $ 2,631 and $ 3,322 , related to the operation of the Taxable Subsidiary, for the six months ended June 30, 2023 and 2022, resulted in an ETR of 25.16 % and 21.77 %, respectively.

The increase in the ETR for the income taxes during the three and six months ended June 30, 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 decrease in the provision for income taxes for both the three and six months ended June 30, 2023, compared to the same period in 2022, was primarily due to a decrease in income before income taxes in the current period.

A current federal income tax expense of $ 162 and $ 404 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2023 and 2022, respectively.

A current federal income tax expense of $ 487 and $ 723 , related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2023 and 2022, respectively.

A current state income tax expense of $ 64 and $ 170 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2023 and 2022, respectively.

A current state income tax expense of $ 277 and $ 295 , related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 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 $ 1,177 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.

A deferred tax expense related to the MTI temporary differences of $ 690 and $ 1,383 was recorded for the three months ended June 30, 2023 and 2022, respectively.

A deferred tax expense related to the MTI temporary differences of $ 1,867 and $ 2,304 was recorded for the six months ended June 30, 2023 and 2022, respectively.

A net deferred tax asset of $ 12,519 and $ 14,386 , related to the cumulative book and tax temporary differences, existed at June 30, 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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

SUBSEQUENT EVENTS

Quarterly Distribution.

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.

On July 19, 2023, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the second quarter of 2023, or $ 0.020 per common unit on an annualized basis, which will be paid on August 14, 2023 to unitholders of record as of August 7, 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