What changed in this filing

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Item 1. Financial Statements

2023-10-24 compared with 2023-07-25 · 144 added, 144 removed, 797 unchanged (27% of the section changed)

3 unchanged sentences

(Dollars in thousands)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(Unaudited) (Audited)

28 unchanged sentences

Partners’ capital (deficit) ( 64,979 ) ( 59,445 )

Total partners’ capital (deficit) ( 63,757 ) ( 59,445 )

Total liabilities and partners' capital (deficit) $ 507,901 $ 598,851

3 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

18 unchanged sentences

Total costs and expenses 162,804 242,339 568,420 741,857

Other operating income (loss), net 673 246 285 260

Other operating income, net 811 790 1,096 1,050

Operating income (loss) 14,704 ( 12,244 ) 49,538 34,695

4 unchanged sentences

Total other expense ( 14,977 ) ( 13,908 ) ( 50,985 ) ( 39,185 )

Net income (loss) before taxes 2,077 8,643 ( 1,174 ) 21,662

Net loss before taxes ( 273 ) ( 26,152 ) ( 1,447 ) ( 4,490 )

Income tax expense ( 788 ) ( 1,891 ) ( 3,619 ) ( 5,469 )

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

Less general partner's interest in net (income) loss ( 22 ) ( 132 ) 80 ( 362 )

Less (income) loss allocable to unvested restricted units ( 4 ) ( 21 ) 12 ( 51 )

Limited partners' interest in net income (loss) $ 1,055 $ 6,453 $ ( 3,913 ) $ 17,671

Net income (loss) per unit attributable to limited partners - basic $ 0.03 $ 0.17 $ ( 0.10 ) $ 0.46

Net income (loss) per unit attributable to limited partners - diluted $ 0.03 $ 0.17 $ ( 0.10 ) $ 0.46

Net loss ( 1,061 ) ( 28,043 ) ( 5,066 ) ( 9,959 )

Less general partner's interest in net loss 21 561 101 199

Less loss allocable to unvested restricted units 4 90 16 39

Limited partners' interest in net loss $ ( 1,036 ) $ ( 27,392 ) $ ( 4,949 ) $ ( 9,721 )

Net loss per unit attributable to limited partners - basic $ ( 0.03 ) $ ( 0.71 ) $ ( 0.13 ) $ ( 0.25 )

Net loss per unit attributable to limited partners - diluted $ ( 0.03 ) $ ( 0.71 ) $ ( 0.13 ) $ ( 0.25 )

Weighted average limited partner units - basic 38,772,266 38,726,388 38,771,451 38,725,933

6 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

14 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

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

Net loss $ ( 1,061 ) $ ( 28,043 ) $ ( 5,066 ) $ ( 9,959 )

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

Comprehensive loss $ ( 1,061 ) $ ( 28,210 ) $ ( 5,066 ) $ ( 10,775 )

See accompanying notes to consolidated and condensed financial statements.

5 unchanged sentences

Units Amount Total

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

Net income — 1,059 22 — 1,081

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

Net loss — ( 1,040 ) ( 21 ) — ( 1,061 )

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

Unit-based compensation — 37 — — 37

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

Balances - September 30, 2023 38,914,806 ( 66,531 ) 1,552 — $ ( 64,979 )

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

3 unchanged sentences

Unit-based compensation — 127 — — 127

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)

Balances - September 30, 2023 38,914,806 $ ( 66,531 ) $ 1,552 $ — $ ( 64,979 )

Partners’ Capital (Deficit)

1 unchanged sentence

Units Amount Total

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

Net income — 6,473 133 — 6,606

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

Net loss — ( 27,482 ) ( 561 ) — ( 28,043 )

Issuance of restricted units — — — — —

1 unchanged sentence

Unit-based compensation — 46 — — 46

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

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

5 unchanged sentences

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

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

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

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

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss) $ ( 4,005 ) $ 18,084

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

Net loss $ ( 5,066 ) $ ( 9,959 )

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

Depreciation and amortization 37,671 43,007

2 unchanged sentences

Deferred income tax expense 2,322 3,611

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

Gain on disposition or sale of property, plant and equipment, net ( 1,096 ) ( 1,050 )

Loss on extinguishment of debt 5,121 —

13 unchanged sentences

Change in other non-current assets and liabilities ( 1,020 ) 1,116

Net cash provided by operating activities 98,774 28,451

Net cash provided by (used in) operating activities 106,065 ( 16,756 )

Cash flows from investing activities:

10 unchanged sentences

Cash distributions paid ( 595 ) ( 595 )

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

Net cash provided by (used in) financing activities ( 83,578 ) 39,821

Net increase (decrease) in cash 9 ( 7 )

6 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

18 unchanged sentences

NEW ACCOUNTING PRONOUNCEMENTS

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

There were no new accounting pronouncements applicable to the Partnership during the nine months ended September 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.

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

This exit did not qualify as discontinued operations in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 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.

3 unchanged sentences

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,

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

2023 2022 2023 2022

6 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

The following table disaggregates our revenue by major source:

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

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

2023 2022 2023 2022

30 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 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.

22 unchanged sentences

Total $ 16,923 $ 68,816 $ 70,106 $ 54,291 $ 47,845 $ 204,927 $ 462,908

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

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

September 30,

2023 December 31,

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

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

September 30, 2023

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

September 30,

2023 December 31,

$ 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

$ 175,000 Credit facility at variable interest rate ( 8.93 % 1 weighted average at September 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 $ 3,535 and $ 1,086 , respectively 2,4

$ 58,965 $ 169,914

10 unchanged sentences

The margin is set every three months.

All amounts outstanding at June 30, 2023 were at Adjusted Term SOFR plus an applicable margin.

All amounts outstanding at September 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 June 30, 2023 is 3.50 %.

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

The applicable margin for SOFR borrowings at September 30, 2023 is 3.50 %.

The applicable margin for SOFR borrowings effective October 18, 2023 is 3.25 %.

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 June 30, 2023 and December 31, 2022, respectively.

2 The Partnership was in compliance with all debt covenants as of September 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”).

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

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.

September 30, 2023

The Partnership paid cash interest in the amount of $ 25,291 and $ 22,628 for the three months ended September 30, 2023 and 2022, respectively.

Capitalized interest was $ 18 and $ 0 for the three months ended September 30, 2023 and 2022, respectively.

The Partnership paid cash interest in the amount of $ 50,099 and $ 46,738 for the nine months ended September 30, 2023 and 2022, respectively.

Capitalized interest was $ 29 and $ 0 for the nine months ended September 30, 2023 and 2022, respectively.

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

5 unchanged sentences

The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the 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,

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

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

2023 2022 2023 2022

6 unchanged sentences

Total lease cost $ 5,906 $ 5,990 $ 15,873 $ 16,447

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

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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

September 30,

2023 December 31, 2022

11 unchanged sentences

Total finance lease obligations $ — $ 9

The Partnership’s future minimum lease obligations as of June 30, 2023 consist of the following:

For the nine months ended September 30, 2023, the Partnership incurred new operating leases, primarily related to land and marine transportation assets and renewed existing operating leases set to expire, primarily related to marine transportation assets.

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

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

2023 - $ 6,646 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:

September 30,

2023 December 31, 2022

7 unchanged sentences

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

June 30, 2023

September 30, 2023

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

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

21 unchanged sentences

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

At June 30, 2023 and December 31, 2022, there were no outstanding derivatives.

At September 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 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:

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

June 30, 2023

September 30, 2023

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

3 unchanged sentences

Total $ — $ — $ — $ 167

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:

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

4 unchanged sentences

PARTNERS' CAPITAL (DEFICIT)

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.

As of September 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.

11 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

Distributions of Available Cash

12 unchanged sentences

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

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

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

2023 2022 2023 2022

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

Net loss $ ( 1,061 ) $ ( 28,043 ) $ ( 5,066 ) $ ( 9,959 )

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

1 unchanged sentence

General partner interest in undistributed income (loss) ( 25 ) ( 565 ) ( 113 ) ( 211 )

Less income (loss) allocable to unvested restricted units 4 21 ( 12 ) 51

Limited partners’ interest in net income (loss) $ 1,055 $ 6,453 $ ( 3,913 ) $ 17,671

Less loss allocable to unvested restricted units ( 4 ) ( 90 ) ( 16 ) ( 39 )

Limited partners’ interest in net loss $ ( 1,036 ) $ ( 27,392 ) $ ( 4,949 ) $ ( 9,721 )

The following are the unit amounts used to compute the basic and diluted earnings per limited partner unit for the periods presented:

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

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

2023 2022 2023 2022

2 unchanged sentences

Dilutive effect of restricted units issued

5,334 21,035 — 27,496

Total weighted average limited partner diluted units outstanding

3 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 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 six months ended June 30, 2023 because the limited partners were allocated a net loss in this period.

All common unit equivalents were antidilutive for the three and nine months ended September 30, 2023 and 2022 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

19 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

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

following the date of the change of control;

September 30, 2023

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;

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

2 unchanged sentences

On April 20, 2022, 365,000 phantom units and 1,097,500 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

On July 19, 2023, 1,179,500 phantom units and 505,500 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

Phantom unit awards are recorded in operating expense and selling, general and administrative expense based on the fair value of the vested portion of the awards on the balance sheet date.

The fair value of these awards is updated at each balance sheet date and changes in the fair value of the vested portions of the awards are recorded as increases or decreases to compensation expense within operating expense and selling, general and administrative expense in the Consolidated and Condensed Statements of Operations.

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

1 unchanged sentence

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

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

As of September 30, 2023, there was a total of $ 5,241 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 2.37 years.

14 unchanged sentences

revenue and income measures, cash flow measures, net income before interest expense and income tax expense ("EBIT"), net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), distribution coverage metrics, expense measures, liquidity measures, market measures, corporate sustainability metrics, and other measures related to acquisitions, dispositions, operational objectives and succession planning objectives.

PBRUs are earned only upon our achievement of an objective performance measure for the performance period.

PBRUs which vest are payable in common units.

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

PBRUs are earned only upon our achievement of an objective performance measure for the

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

performance period.

PBRUs which vest are payable in common units.

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 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 June 30, 2023 met the criteria to be treated under equity classification.

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

1 unchanged sentence

The restricted units are valued at their fair value at the date of grant, which is equal to the market value of common units on such date.

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

A summary of the restricted unit activity for the nine months ended September 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 $ 396

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,

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

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

2023 2022 2023 2022

1 unchanged sentence

Fair value of units vested — — 178 188

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

As of September 30, 2023, there was $ 321 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.44 years.

RELATED PARTY TRANSACTIONS

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.

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

2 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

Omnibus Agreement

7 unchanged sentences

• providing land and marine transportation of petroleum products, by-products, and chemicals;

• distributing NGLs;

• manufacturing and selling sulfur-based fertilizer products and other sulfur-related products.

8 unchanged sentences

◦ operating an environmental consulting company;

◦ operating a butane optimization business;

◦ supplying employees and services for the operation of the Partnership's business;

1 unchanged sentence

• any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of less than $ 5,000 ;

• 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.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

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");

• 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;

5 unchanged sentences

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

The Partnership reimbursed Martin Resource Management Corporation for $ 10,487 and $ 10,118 of indirect expenses for the nine months ended September 30, 2023 and 2022, respectively.

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

17 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

Master Transportation Services Agreement

33 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 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 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.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended September 30, 2023 and 2022 were $ 952 and $ 589 , respectively.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the nine months ended September 30, 2023 and 2022 were $ 2,361 and $ 1,352 , respectively.

Consulting Services Agreement.

18 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

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

September 30, 2023

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

2023 2022 2023 2022

7 unchanged sentences

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

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

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

2023 2022 2023 2022

5 unchanged sentences

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

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

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

2023 2022 2023 2022

5 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 June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

9 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 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

Three Months Ended September 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 $ 23,973 $ ( 1,771 ) $ 22,202 $ 5,102 $ 1,357 $ 2,684

4 unchanged sentences

Total $ 181,811 $ ( 5,114 ) $ 176,697 $ 12,223 $ 14,704 $ 10,666

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

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

Terminalling and storage $ 23,034 $ ( 3,046 ) $ 19,988 $ 6,200 $ ( 3,046 ) $ 5,593

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

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

September 30, 2023

Nine Months Ended September 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 $ 71,798 $ ( 7,054 ) $ 64,744 $ 15,896 $ 3,657 $ 9,793

5 unchanged sentences

Total $ 637,154 $ ( 20,292 ) $ 616,862 $ 37,671 $ 49,538 $ 28,081

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

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

Terminalling and storage $ 69,027 $ ( 9,219 ) $ 59,808 $ 20,372 $ ( 9,379 ) $ 11,958

5 unchanged sentences

Total $ 799,594 $ ( 24,092 ) $ 775,502 $ 43,007 $ 34,695 $ 24,292

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

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

September 30, 2023 December 31, 2022

Total assets:

15 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

obligations (the “Litigation”).

3 unchanged sentences

On March 1, 2017, at the joint request of the customer and the Partnership, the Tennessee Court administratively closed the Litigation.

Recently, the customer settled the Consolidated Lawsuits.

In 2021, the customer settled the Consolidated Lawsuits.

On December 17, 2021, at the request of the customer, the Tennessee Court reopened the Litigation and the customer asserted various counterclaims against the Partnership seeking, among other things, to recover its costs of defending and settling the Consolidated Lawsuits.

22 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.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Value Carrying

12 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

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

September 30, 2023

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

2023 2022 2023 2022

1 unchanged sentence

The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 80 and $ 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.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 120 and $ 120 were recorded in income tax expense for the three months ended September 30, 2023 and 2022, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 320 and $ 376 were recorded in income tax expense for the nine months ended September 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 $ 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.

Total income tax expense of $ 668 and $ 1,771 , related to the operation of the Taxable Subsidiary, for the three months ended September 30, 2023 and 2022, resulted in an effective income tax rate ("ETR") of 23.96 % and 19.94 %, respectively.

Total income tax expense of $ 3,299 and $ 5,093 , related to the operation of the Taxable Subsidiary, for the nine months ended September 30, 2023 and 2022, resulted in an ETR of 24.88 % and 21.09 %, respectively.

The increase in the ETR for the income taxes during the three and nine months ended September 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 nine months ended September 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 $ 179 and $ 348 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2023 and 2022, respectively.

A current federal income tax expense of $ 666 and $ 1,071 , related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 30, 2023 and 2022, respectively.

A current state income tax expense of $ 33 and $ 116 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2023 and 2022, respectively.

A current state income tax expense of $ 311 and $ 411 , related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 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 $ 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.

A deferred tax expense related to the MTI temporary differences of $ 456 and $ 1,307 was recorded for the three months ended September 30, 2023 and 2022, respectively.

A deferred tax expense related to the MTI temporary differences of $ 2,322 and $ 3,611 was recorded for the nine months ended September 30, 2023 and 2022, respectively.

A net deferred tax asset of $ 12,064 and $ 14,386 , related to the cumulative book and tax temporary differences, existed at September 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.

2 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

June 30, 2023

September 30, 2023

SUBSEQUENT EVENTS

Quarterly Distribution.

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.

On October 18, 2023, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the third quarter of 2023, or $ 0.020 per common unit on an annualized basis, which will be paid on November 14, 2023 to unitholders of record as of November 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