What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-21 compared with 2023-03-02 · 95 added, 124 removed, 399 unchanged (35% of the section changed)

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Our four primary business lines include:

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

• Terminalling, processing, and storage services for petroleum products and by-products;

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

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

• NGL marketing, distribution, and transportation services.

• Marketing, distribution, and transportation services for NGLs and blending and packaging services for specialty lubricants and grease.

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

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Significant Recent Developments

Exit from Butane Optimization Business.

In the second quarter of 2023, we completed the previously announced exit of our butane optimization business at the conclusion of the butane selling season.

Going forward, with respect to butane, we will operate as a fee-based butane logistics business, primarily utilizing our north Louisiana underground storage assets, which have both truck and rail capability.

This logistics business will also utilize our truck transportation assets for fee-based product movements.

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

The following revenues and costs, which are included in the historical financial results for the years ended December 31, 2023 and 2022 will not be incurred under the new fee-based butane logistics business model.

Products revenue $ 70,539 $ 172,756

Cost of products sold 72,283 190,677

Selling, general and administrative expenses 512 2,094

$ (2,256) $ (20,015)

Issuance of 2028 Notes to Refinance Existing Secured Notes .

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

Exit from Butane Optimization Business.

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

Electronic Level Sulfuric Acid Joint Venture.

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

and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM.

DSM will produce and distribute ELSA.

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

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

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

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

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

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

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

Divestiture of Stockton, California Sulfur Terminal.

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

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

We expect to fund approximately $25.5 million in aggregate capital expenditures in connection with this joint venture.

As of December 31, 2023, we have funded approximately $8.6 million toward ELSA related project costs.

For more information about the potential physical effects of climate change and environmental regulation on our business, see our environmental and climate change related risk factors in Section 1A “Risk Factors.”

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Applying this impairment review methodology, no impairment was recorded during the years ended December 31, 2023 or 2022.

We recorded an impairment charge of $3.1 million and $1.3 million in our Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020.

Impairment of Goodwill

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We conduct impairment testing using present economic conditions, as well as future expectations.

Based upon the most recent annual review as of August 31, 2022, no goodwill impairment exists within our reporting units for the year ended December 31, 2022.

No goodwill impairment was recorded during the years ended December 31, 2021 or 2020.

Based upon the most recent annual review as of August 31, 2023, no goodwill impairment exists within our reporting units for the years ended December 31, 2023.

No goodwill impairment was recorded during the year ended December 31, 2022.

Our Relationship with Martin Resource Management Corporation

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

For the years ended December 31, 2022, 2021 and 2020, the board of directors of our general partner approved reimbursement amounts of $13.5 million, $14.4 million and $16.4 million, respectively, reflecting our allocable share of such expenses.

For the years ended December 31, 2023 and 2022, the board of directors of our general partner approved reimbursement amounts of $14.0 million and $13.5 million, respectively, reflecting our allocable share of such expenses.

The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

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

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

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

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

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

Distributable Cash Flow.

We define Distributable Cash Flow as Net Cash Provided by (Used in) Operating Activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital

expenditures and plant turnaround costs.

Distributable Cash Flow and Adjusted Free Cash Flow.

Distributable Cash Flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders.

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Distributable Cash Flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

Adjusted Free Cash Flow.

We define Adjusted Free Cash Flow as Distributable Cash Flow less growth capital expenditures and principal payments under finance lease obligations.

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Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2022 and 2021, which represents EBITDA, Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow

Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

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

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

Year Ended December 31,

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EBITDA 111,554 107,538

(Gain) loss on disposition of property, plant and equipment (5,669) 534

Gain on involuntary conversion of property, plant and equipment — (196)

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

Lower of cost or market and other non-cash adjustments 12,850 —

Gain on disposition of property, plant and equipment (1,373) (5,669)

Loss on extinguishment of debt 5,121 —

Lower of cost or net realizable value and other non-cash adjustments (12,850) 12,850

Unit-based compensation 163 161

Adjusted EBITDA 102,615 114,880

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

net loss associated with butane optimization business 2,256 20,015

lower of cost or net realizable value and other non-cash adjustments 12,850 (12,850)

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

$ 117,721 $ 122,045

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

Year Ended December 31,

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Lower of cost or market and other non-cash adjustments (12,850) 12,850

Loss on exchange of senior unsecured notes — —

Non-cash impact related to exchange of senior unsecured notes — —

Commodity cash flow hedging gains reclassified to earnings — 901

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Adjusted EBITDA 102,615 114,880

net loss associated with butane optimization business 2,256 20,015

lower of cost or net realizable value and other non-cash adjustments 12,850 (12,850)

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

117,721 122,045

Interest expense (60,290) (53,665)

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Amortization of deferred debt issuance costs 3,978 3,152

Amortization of discount on notes payable 2,200 —

Payments for plant turnaround costs (4,825) (5,176)

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Adjusted Free Cash Flow $ 21,732 $ 37,937

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

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

Results of Operations

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Terminalling and storage $ 95,459 $ (8,945) $ 86,514 $ 14,532 $ (8,856) $ 5,676

Natural gas liquids 398,425 (3) 398,422 (16,268) 14,415 (1,853)

Sulfur services 179,164 — 179,164 24,186 9,960 34,146

Transportation 239,275 (20,267) 219,008 41,357 (20,366) 20,991

Indirect selling, general and administrative

— — — (16,914) — (16,914)

Total $ 1,045,657 $ (26,779) $ 1,018,878 $ 51,263 $ — $ 51,263

Year Ended December 31, 2021:

Terminalling and storage $ 185,629 $ (6,597) $ 179,032 $ 15,462 $ (4,677) $ 10,785

Natural gas liquids 414,043 — 414,043 25,566 12,532 38,098

Specialty products 346,863 (86) 346,777 17,109 13,226 30,335

Sulfur services 140,995 — 140,995 17,412 13,024 30,436

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Terminalling and storage $ 92,612 $ (12,419) $ 80,193 $ 1,189 $ (12,291) $ (11,102)

Natural gas liquids 247,484 (5) 247,479 9,660 12,444 22,104

Specialty products 540,636 (123) 540,513 1,445 22,697 24,142

Sulfur services 179,164 — 179,164 24,186 9,960 34,146

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(In thousands)

Services $ 86,664 $ 81,762 $ 4,902 6%

Products 142,129 103,867 38,262 37%

Total revenues 228,793 185,629 43,164 23%

Revenues $ 95,459 $ 92,612 $ 2,847 3%

Cost of products sold 75 19 56 295%

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Other operating loss, net (359) (166) (193) (116)%

Gain on involuntary conversion of property, plant and equipment — 196 (196) (100)%

Operating income $ 14,532 $ 1,189 $ 13,343 1,122%

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Service revenues increased $2.8 million.

Revenue at our Smackover Refinery increased $3.7 million, including $2.7 million in natural gas surcharge revenue, $0.9 million in reservation fees and $0.8 million in throughput fees, offset by a decrease of $0.8 million in pipeline revenue.

In addition, revenue at our specialty terminals increased $0.7 million as a result of $0.6 million in throughput revenue and $0.1 million in service revenue.

Our shore-based terminals increased $0.5 million due to $1.0 million in throughput revenue, offset by a reduction in space rent of $0.5 million.

Products revenues.

A 31% increase in average sales price combined with a 4% increase in sales volumes at our blending and packaging facilities resulted in a $38.0 million increase in products revenues.

Revenue at our shore-based terminals increased $2.6 million, including $2.4 million in fuel throughput and $0.4 million in drilling fluids commission, offset by a reduction in space rent of $0.2 million.

In addition, revenue at our specialty terminals increased $1.9 million primarily as a result of higher throughput and storage revenue attributable to contractually prescribed, index-based fee adjustments.

Revenue at our Smackover refinery decreased $1.8 million as a result of decreased pipeline revenue of $4.6 million, offset by increases in throughput revenue of $1.1 million, reservation fees of $1.1 million and natural gas surcharge of $0.8 million.

Cost of products sold.

A 34% increase in average cost per gallon combined with a 4% increase in sales volumes at our blending and packaging facilities resulted in a $32.8 million increase in cost of goods sold.

Cost of products sold remained relatively consistent.

Operating expenses.

Operating expenses increased primarily as a result of natural gas utilities of $3.8 million and employee-related expenses of $1.6 million.

Operating expenses decreased primarily as a result of lease expense of $4.9 million and natural gas utilities of $1.1 million.

Selling, general and administrative expenses.

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Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

Depreciation and amortization decreased primarily as a result of assets being fully depreciated, offset by recent capital expenditures.

Other operating loss, net.

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

Gain on involuntary conversion of property, plant and equipment.

The $0.2 million gain for the year ended December 31, 2021 is due to insurance proceeds received related to structural damage at one of our shore-based terminals.

Transportation Segment

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Marine Transportation Revenues .

Inland and offshore revenues increased $12.2 million and $2.5 million, respectively, primarily related to higher utilization and transportation rates.

Revenue was also impacted by an increase in pass-through revenue (primarily fuel) of $5.1 million.

Inland revenues increased $7.4 million primarily related to transportation rates.

Revenue was also impacted by a decrease in pass-through revenue (primarily fuel) of $2.9 million.

Land Transportation Revenues.

Freight revenue increased primarily due to a 25% increase in load count combined with a 1% increase in total miles, which resulted in a $7.0 million increase.

Additionally, ancillary revenue increased $23.8 million .

Additionally, ancillary revenue decreased $9.8 million .

Operating expenses .

The increase in operating expenses is primarily a result of increased employee-related expenses of $24.2 million, pass through expenses (primarily fuel) of $14.0 million, insurance premiums of $2.0 million, lease expense of $1.7 million, and outside towing of $1.6 million.

The increase in operating expenses is primarily a result of increased employee-related expenses of $5.2 million, lease expense of $5.1 million, insurance premiums of $3.0 million, shop expenses of $0.7 million and outside towing of $0.7 million, offset by a decrease in pass through expenses (primarily fuel) of $6.6 million.

Selling, general and administrative expenses .

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Depreciation and amortization .

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

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

Other operating income, net.

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Services revenues.

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

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

Products revenues.

Products revenues increased $57.2 million as a result of a 43% rise in average sulfur services sales prices.

Products revenues decreased an offsetting $23.7 million due to a 12% decrease in sales volumes, primarily related to a 30% decrease in fertilizer volumes.

Products revenues decreased $51.3 million as a result of a 31% drop in average sulfur services sales prices.

Products revenues increased an offsetting $12.0 million due to a 10% rise in sales volumes, primarily related to a 20% increase in fertilizer volumes.

Cost of products sold.

An 52% increase in product cost impacted cost of products sold by $49.7 million, resulting from an increase in commodity prices.

A 12% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $18.0 million.

Margin per ton increased $9.90, or 20%.

A 33% decrease in product cost impacted cost of products sold by $42.0 million, resulting from reduced commodity prices.

A 10% increase in sales volumes resulted in an offsetting increase in cost of products sold of $8.8 million.

Margin per ton decreased $13.97, or 23%.

Operating expenses.

Operating expenses increased due to an increase in marine fuel expense of $2.1 million, outside towing of $1.2 million, insurance premiums and claims of $0.5 million, contract labor of $0.4 million, repairs and maintenance of marine assets of $0.3 million, and assist tugs of $0.3 million.

Operating expenses decreased due to a decrease in outside towing of $1.1 million, marine fuel expense of $0.7 million, insurance premiums and claims of $0.3 million, contract labor of $0.3 million, and repairs and maintenance of marine assets of $0.3 million.

Offsetting these decreases, employment expenses increased $0.4 million combined with a $0.1 million increase in utilities expense.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased $0.8 million in employee related expenses.

Selling, general and administrative expenses remained relatively consistent.

Depreciation and amortization.

Depreciation and amortization increased as a result of increased amortization of turnaround costs with a slight offset due to certain assets being fully depreciated.

Depreciation and amortization decreased as a result of the sale of Stockton assets in the third quarter of 2022, offset by recent capital expenditures.

Other operating income, net.

Other operating income, net increased $4.4 million as a result of a net gain from the disposition of property, plant and equipment during 2022.

Natural Gas Liquids Segment

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

Specialty Products Segment

Comparative Results of Operations for the Years Ended December 31, 2023 and 2022

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Other operating income (loss), net (60) 218 (278) (128)%

Operating income (loss) $ (16,268) $ 25,566 $ (41,834) (164)%

NGLs Volumes (barrels) 5,791 7,121 (1,330) (19)%

Operating income $ 17,109 $ 1,445 $ 15,664 1,084%

NGL sales volumes (Bbls) 3,681 5,791 (2,110) (36) %

Other specialty products volumes (Bbls) 367 391 (24) (6) %

Total specialty products volumes (Bbls) 4,048 6,182 (2,134) (35) %

Products revenues.

Our NGL average sales price per barrel increased $10.66, or 18%, resulting in an increase to products revenues of $75.9 million.

The increase in average sales price per barrel was a result of an increase in market prices.

Product sales volumes decreased 19%, decreasing revenues $91.5 million.

Product revenues decreased $102.2 million due to the exit of the butane optimization business in the second quarter 2023.

For the remaining products, sales volumes decreased 19%, lowering revenues by $62.9 million, primarily related to a 20% decrease in NGL sales volume.

Our average sales price per barrel decreased $8.56, or 8%, decreasing revenues by $28.7 million.

Cost of products sold .

Our average cost per barrel increased $13.81, or 26%, increasing cost of products sold by $98.3 million.

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

The decrease in sales volume of 19% resulted in a $88.4 million decrease to cost of products sold.

Our margins decreased $3.15 per barrel, or 58% during the period.

Cost of products sold decreased $118.4 million due to the exit of the butane optimization business in the second quarter 2023.

For the remaining products, the decrease in sales volumes of 19% resulted in a $56.2 million reduction to cost of products sold.

Our average cost per barrel decreased $9.63, or 10%, decreasing cost of products sold by $32.3 million.

Our margins increased $1.07 per barrel, or 11%, during the period.

Operating expenses .

Operating expenses increased $0.5 million due to increased operating costs at our underground storage facility.

Operating expenses remained relatively consistent.

Selling, general and administrative expenses .

Selling, general and administrative expenses decreased $2.0 million as a result of decreased compensation expense.

Selling, general and administrative expenses decreased primarily due to the exit of the butane optimization business in the second quarter of 2023.

Depreciation and amortization.

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

Other operating income (loss), net.

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Amortization of deferred debt issuance costs 3,978 3,152 826 26%

Amortization of debt premium — — —

Amortization of debt discount 2,200 — 2,200

Other 1,483 1,948 (465) (24)%

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Indirect selling, general and administrative expenses $ 16,030 $ 16,914 $ (884) (5)%

Indirect selling, general and administrative increased primarily due to increases in employee-related expenses of $1.2 million and professional fees of $0.3 million, offset by a $0.9 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.

Indirect selling, general and administrative expenses decreased primarily due to decreases in employee-related expenses of $1.4 million, offset by a $0.9 million increase in the indirect expenses allocated from Martin Resource Management Corporation.

Martin Resource Management Corporation allocates to us a portion of its indirect selling, general and administrative expenses for services such as accounting, treasury, clerical, engineering, legal, billing, information technology, administration of insurance, general office expenses and employee benefit plans and other general corporate overhead functions we share with Martin Resource Management Corporation's retained businesses.

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Liquidity and Capital Resources

Our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures have historically been cash flows generated by our operations, borrowings under our credit facility, and access to debt and equity capital markets, both public and private.

Our primary sources of liquidity to meet operating expenses, service our indebtedness, fund capital expenditures and pay distributions to our unitholders have historically been cash flows generated by our operations, borrowings under our credit facility and access to debt and equity capital markets, both public and private.

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

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Net cash provided by operating activities.

Net cash provided by operating activities for the year ended December 31, 2022 decreased $19.6 million primarily as a result of a decrease in operating results and non-cash items of $15.2 million combined with an unfavorable variance in changes in working capital of $5.2 million.

Net cash provided by operating activities for the year ended December 31, 2023 increased $121.3 million, primarily as a result of a favorable variance in changes in working capital of $114.0 million combined with an increase in operating results and non-cash items of $11.1 million.

Net cash used in investing activities.

Net cash used in investing activities for the year ended December 31, 2023 increased $9.0 million.

An increase in cash used of $12.2 million resulted from higher payments for capital expenditures and plant turnaround costs in 2022.

Offsetting this increase, net proceeds from the sale of property, plant and equipment increased $7.1 million.

An increase in cash used of $6.7 million resulted from higher payments for capital expenditures and plant turnaround costs in 2023 combined with a decrease of $2.3 million in net proceeds received from the sale of property, plant and equipment.

Net cash provided by (used in) financing activities.

Net cash provided by (used in) financing activities for the year ended December 31, 2022 increased $29.9 million primarily as a result of a $30.6 million increase in net proceeds from long-term debt.

Net cash (used in) provided by financing activities for the year ended December 31, 2023 decreased $112.3 million primarily as a result of a $99.3 million decrease in net borrowings from long-term debt combined with increased debt issuance costs of $14.2 million.

Total Contractual Obligations

A summary of our total contractual obligations as of December 31, 2022 is as follows (dollars in thousands):

A summary of our total contractual cash obligations as of December 31, 2023 is as follows (dollars in thousands):

Payments due by period

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Credit facility $ 42,500 $ — $ — $ 42,500 $ —

$ 171,000 $ — $ — $ 171,000 $ —

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

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

Operating leases 70,054 18,345 30,542 15,734 5,433

Finance lease obligations 9 9 — — —

Interest payable on finance lease obligations — — — — —

Interest payable on fixed long-term debt obligations 188,926 46,000 92,000 50,926 —

Total contractual cash obligations $ 701,480 $ 64,345 $ 122,542 $ 509,160 $ 5,433

1 The credit facility was amended on February 8, 2023 to extend the maturity date to February 8, 2027.

See more detailed discussion in the section captioned "Description of Our Indebtedness" below.

The interest payable under our credit facility is not reflected in the above table because such amounts depend on the outstanding balances and interest rates, which vary from time to time.

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Credit Facility

At December 31, 2022, we maintained a $275.0 million credit facility that was scheduled to mature on August 31, 2023.

At December 31, 2023, we maintained a $175.0 million credit facility that matures February 8, 2027.

As of December 31, 2023, we had $42.5 million outstanding under the credit facility and $9.2 million of outstanding irrevocable letters of credit, leaving a maximum amount available to be borrowed under our credit facility for future borrowings and letters of credit of $123.3 million.

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

During the year ended December 31, 2022, the outstanding balance of our credit facility has ranged from a low of $141.5 million to a high of $219.0 million.

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

From February 8, 2023 through December 31, 2023, the level of outstanding draws on our amended credit facility ranged from a low of $42.5 million to a high of $138.0 million.

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

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

The applicable margin for LIBOR borrowings at December 31, 2022 was 3.50%.

The applicable margin for Adjusted Term SOFR borrowings at December 31, 2023 was 3.25%.

The applicable margin for Adjusted Term SOFR borrowings at February 21, 2024 is 3.25%.

The amended credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four quarter period that ends on the last day of each fiscal quarter, that require maintenance of:

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2028 Senior Secured Notes and Indenture

Pursuant to our exchange offer (the “the Exchange Offer”) to certain eligible holders of our 7.25% senior unsecured notes due 2021 (the “2021 Notes”), we and Martin Midstream Finance Corp., our wholly owned subsidiary (collectively the "Issuers") issued $292.0 million in aggregate principal amount of the Issuers’ 11.50% senior secured second lien notes due 2025 (the "2025 Notes").

The 2025 Notes were issued to eligible holders that participated in the Exchange Offer pursuant to an indenture, dated as of August 12, 2020 (the "2025 Notes Indenture"), among the Issuers, the guarantors party thereto, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association as collateral trustee.

The 2025 Notes were guaranteed on a full, joint and several basis by each of the Partnership’s domestic restricted subsidiaries (other than Martin Midstream Finance Corp.

and Talen’s Marine & Fuel, LLC).

The 2025 Notes and the guarantees thereof were secured on a third-priority basis by a lien on substantially all assets of the Issuers and the guarantors, subject to the terms of an intercreditor agreement and certain other exceptions.

The 2025 Notes were scheduled to mature on February 28, 2025.

Interest on the 2025 Notes accrued at a rate of 11.50% per annum and was payable semi-annually in cash in arrears on February 15 and August 15 of each year.

On February 8, 2023, we used the net proceeds of the 2028 Notes to complete a tender offer for substantially all of the 2025 Notes and redeem all of the 2025 Notes that were not validly tendered.

2024 Senior Secured Notes and Indenture

Pursuant to the rights offering in connection with the Exchange Offer, the Issuers issued $53.8 million aggregate principal amount of the Issuers’ 10.00% senior secured 1.5 lien notes due 2024 (the "2024 Notes").

The 2024 Notes were issued to eligible holders that participated in the Exchange Offer pursuant to an indenture, dated as of August 12, 2020 (the "2024

Notes Indenture"), among the Issuers, the guarantors party thereto, U.S.

Bank National Association, as trustee, and U.S.

Bank National Association as collateral trustee.

The 2024 Notes were guaranteed on a full, joint and several basis by the guarantors of the 2025 Notes.

The 2024 Notes and the guarantees thereof were secured on a second-priority basis by a lien on substantially all assets of the Issuers and the guarantors, subject to the terms of an intercreditor agreement and certain other exceptions.

The 2024 Notes were scheduled to mature on February 29, 2024.

Interest on the 2024 Notes accrued at a rate of 10.00% per annum and was payable semi-annually in cash in arrears on February 15 and August 15 of each year.

On February 8, 2023, we used the net proceeds of the 2028 Notes to complete a tender offer for substantially all of the 2024 Notes and redeem all of the 2024 Notes that were not validly tendered.

2028 Senior Secured Notes and Indenture

On February 8, 2023, the Issuers issued $400.0 million aggregate principal amount of their 11.50% senior secured second lien notes due 2028 (the "2028 Notes").

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After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $109.0 million in additional amounts thereunder as of December 31, 2023.

At December 31, 2022, our credit facility was scheduled to mature on August 31, 2023.

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

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

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We are subject to interest rate risk on our credit facility due to the variable interest rate and may enter into interest rate swaps to reduce this variable rate risk.

A substantial portion of our revenues is dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winter and spring weather conditions.

The demand for NGLs is strongest during the winter heating season and refinery blending season.

A substantial portion of our revenues is dependent on sales prices of products, particularly fertilizers and NGLs, which fluctuate in part based on spring and winter weather conditions.

The demand for fertilizers is strongest during the early spring planting season.

The demand for NGLs is strongest during the winter heating season.

However, our Terminalling and Storage and Transportation business segments and the molten sulfur business are typically not impacted by seasonal fluctuations and a significant portion of our net income is derived from our Terminalling and Storage, Sulfur Services and Transportation business segments.

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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-K

Item 7. Management’s Discussion and Analysis