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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-03-02 · 186 added, 215 removed, 1064 unchanged (27% of the section changed)

18 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 2, 2023 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting.

Basis for Opinion

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the recoverability of certain long-lived assets

As discussed in Note 2 to the consolidated financial statements, the Partnership reviews long-lived assets, such as property, plant and equipment and intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable (triggering events).

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, the Partnership measures the amount of the impairment by comparing the carrying amount to its estimated fair value.

The carrying value of property, plant and equipment at December 31, 2022 was $319,290 thousand.

We identified the evaluation of the recoverability of a certain long-lived asset group in the transportation segment as a critical audit matter.

A triggering event was identified as of an interim period in the fiscal year.

A higher degree of subjective auditor judgement was required to evaluate the forecasted revenue used in the asset group’s future undiscounted cash flows.

Specifically, the forecasted revenue was challenging to evaluate as the future undiscounted cash flows were

sensitive to minor changes in certain assumptions in the development of forecasted revenue that could have a significant effect on the Partnership’s assessment of the recoverability of the long-lived asset group.

Sufficiency of audit evidence over revenue

As discussed in Note 5 to the consolidated financial statements, the Partnership recorded approximately $798 million of revenue for the year ended December 31, 2023.

Revenue is derived from various revenue streams including throughput and storage;

land transportation, inland marine transportation and offshore marine transportation;

sulfur and fertilizer product sales, sulfur services, and natural gas liquids and lubricant product sales.

The Partnership’s processes used to record revenue differ for each of these revenue streams, as do the related information technology (IT) systems for certain of these revenue stream.

We identified the evaluation of the sufficiency of audit evidence obtained over revenue as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate such evidence due to the number of revenue streams and IT systems involved.

This included determining the revenue streams over which procedures would be performed and

evaluating the nature and extent of audit evidence obtained over each revenue stream.

The audit effort also required specialized skills and knowledge to evaluate the various IT systems.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Partnership’s long-lived asset impairment assessment process.

This included controls related to the development of the certain asset group’s future undiscounted cash flows, including the development of forecasted revenue.

We performed sensitivity analyses to assess the impact of reasonably possible changes to certain revenue assumptions.

We assessed the Partnership’s forecasted revenue by comparing to historical results, existing long-term contracts, and industry forecasts.

We examined quarterly trends of actual financial results within the most recent fiscal year and compared those trends with the asset group’s forecasted financial results.

We, with the assistance of IT professionals, applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of the revenue streams over which those procedures were performed.

For each revenue stream where procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to record revenue, and involved IT professionals, who assisted in testing certain IT applications.

For each revenue stream where procedures were performed, we assessed the recorded revenue by selecting a sample of transactions and comparing the revenue recorded for consistency with the underlying contractual documentation and comparing with the related customer payment received associated with the transactions.

In addition, we evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including the appropriateness of the nature and extent of such evidence.

We have served as the Partnership’s auditor since 2002.

Dallas, Texas

March 2, 2023

February 21, 2024

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Opinion on Internal Control Over Financial Reporting

We have audited Martin Midstream Partners L.P.

and subsidiaries' (the Partnership) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited Martin Midstream Partners L.P and subsidiaries' (the Partnership) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in capital (deficit), and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated March 2, 2023 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in capital (deficit), and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Dallas, Texas

March 2, 2023

February 21, 2024

MARTIN MIDSTREAM PARTNERS L.P.

6 unchanged sentences

Other current assets

13,633 12,908

Total current assets

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Long-term debt, net 421,173 512,871

Finance lease obligations — 9

Operating lease liabilities 45,684 26,268

4 unchanged sentences

Partners’ capital (deficit) ( 64,624 ) ( 59,445 )

Accumulated other comprehensive income — 816

Total partners’ capital (deficit)

14 unchanged sentences

Product sales:

Natural gas liquids

398,422 414,043 247,479

Specialty products 346,777 540,513 517,852

Sulfur services

127,565 166,827 133,243

Terminalling and storage

474,342 707,340 651,095

707,265 651,095 447,127

Total revenues

3 unchanged sentences

(excluding depreciation and amortization)

Natural gas liquids *

389,504 362,706 215,895

Specialty products * 305,903 503,225 443,896

Sulfur services *

2 unchanged sentences

389,680 623,306 533,098

623,306 533,098 356,926

Operating expenses *

12 unchanged sentences

( 60,290 ) ( 53,665 ) ( 54,107 )

Gain on retirement of senior unsecured notes

Loss on exchange of senior unsecured notes — — ( 8,817 )

Loss on extinguishment of debt ( 5,121 ) — —

56 ( 5 ) ( 4 )

25 unchanged sentences

(excluding depreciation and amortization)

Specialty products 35,930 39,356 27,856

Sulfur services 11,182 10,717 9,980

21 unchanged sentences

Issuance of time-based restricted units 42,168 — — — —

Forfeiture of restricted units ( 85,467 ) — — — —

General partner contribution — — 3 — 3

Cash distributions — ( 775 ) ( 16 ) — ( 791 )

Changes in fair values of commodity cash flow hedges — — — 816 816

Excess carrying value of the assets over the purchase price paid by Martin Resource Management

— ( 1,350 ) — — ( 1,350 )

Unit-based compensation — 384 — — 384

3 unchanged sentences

Issuance of time-based restricted units 48,000 — — — —

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

General partner contribution — — 3 — 3

Cash distributions — ( 777 ) ( 16 ) — ( 793 )

2 unchanged sentences

Unit-based compensation — 161 — — 161

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

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

2 unchanged sentences

Cash distributions — ( 777 ) ( 16 ) — ( 793 )

Changes in fair values of commodity cash flow hedges — — — ( 816 ) ( 816 )

Excess purchase price over carrying value of acquired assets — 374 — — 374

Unit-based compensation — 163 — — 163

11 unchanged sentences

Amortization and write-off of deferred debt issue costs 3,978 3,152 3,367

Amortization of premium on notes payable — — ( 191 )

Amortization of discount on notes payable 2,200 — —

Deferred income tax expense 4,186 5,744 2,432

1 unchanged sentence

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

Gain on retirement of senior unsecured notes — — ( 3,484 )

Non-cash impact related to exchange of senior unsecured notes — — ( 749 )

Derivative income ( 901 ) 5,593 8,209

Net cash paid for commodity derivatives 85 ( 4,984 ) ( 8,669 )

Loss on extinguishment of debt 5,121 — —

Derivative (income) loss — ( 901 ) 5,593

Net cash received (paid) for commodity derivatives — 85 ( 4,984 )

Unit-based compensation 163 161 384

16 unchanged sentences

Proceeds from involuntary conversion of property, plant and equipment — — 284

Net cash provided by (used in) investing activities ( 24,644 ) ( 19,241 ) 2,604

Net cash used in investing activities ( 33,660 ) ( 24,644 ) ( 19,241 )

Cash flows from financing activities:

19 unchanged sentences

Its four primary business lines include:

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

terminalling, processing, and storage services for petroleum products and by-products;

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

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

and NGL marketing, distribution, and transportation services.

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

The Partnership provides specialty services to major and independent oil and gas companies, independent refiners, large chemical companies, and other wholesale purchasers of certain petroleum products and by-products, with significant business concentrated around the U.S.

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Inventories are stated at the lower of cost or market.

Cost is generally determined by using the FIFO method for all inventories except lubricants, greases, lubricants packaging, fertilizer and butane inventories.

Inventories are stated at the lower of cost or net realizable value.

Cost is generally determined by using the FIFO method for all inventories except lubricants, greases, lubricants packaging, and fertilizer inventories.

Lubricants, greases, and lubricants packaging inventories cost is determined using standard cost, which approximates actual cost.

Fertilizer and butane inventory is determined using weighted average cost, which approximates actual cost.

Fertilizer inventory is determined using weighted average cost, which approximates actual cost.

MARTIN MIDSTREAM PARTNERS L.P.

4 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.

When lubricants and drilling fluids are sold by truck or rail, revenue is recognized when title is transferred, which is generally when the product leaves the Partnership's facility, depending on the specific terms of the contract.

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

Natural Gas Liquids – Revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

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

Specialty Products – 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 collects 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 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.

33 unchanged sentences

The Partnership may also elect to bypass the qualitative assessment and proceed directly to a quantitative analysis depending on the facts and circumstances.

Of the Partnership's four reporting units, the terminalling and storage, transportation, and sulfur services reporting units contain goodwill.

Of the Partnership's four reporting units, the terminalling and storage, transportation, specialty products and sulfur services reporting units all contain goodwill.

In performing a quantitative analysis, recoverability of goodwill for each reporting unit is measured using a weighting of the discounted cash flow method and two market approaches (the guideline public company method and the guideline transaction method).

49 unchanged sentences

Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable.

(n) Trade and Accrued Accounts Receivable and Allowance for Doubtful Accounts.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance for doubtful accounts is the Partnership’s best estimate of the amount of probable credit losses in the Partnership’s existing accounts receivable.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

(n) Trade and Accrued Accounts Receivable and Allowance for Doubtful Accounts.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance for doubtful accounts is the Partnership’s best estimate of the amount of probable credit losses in the Partnership’s existing accounts receivable.

(o) Deferred Catalyst Costs

23 unchanged sentences

In accordance with ASC 815-10, the Partnership records deferred hedge gains and losses on its derivative instruments that qualify as cash flow hedges as other comprehensive income (loss).

RECENT ACCOUNTING PRONOUNCEMENTS

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

Simplifying the Accounting for Income Taxes , which removes certain

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

exceptions to general principles in ASC 740 and clarifies and amends existing guidance within U.S.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures” , which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The new standard is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis.

This ASU will result in the required additional disclosures being included in the Partnership's consolidated financial statements, once adopted.

In November 2023, the FASB issued ASU 2023-07, " Improvements to Reportable Segment Disclosures" , effective for fiscal years beginning after December 15, 2023.

The ASU adds disclosure requirements about an entity's reportable segments' oversight and significant expenses on an interim and annual basis.

Early adoption is permitted.

The Partnership is currently evaluating the guidance and its impact to the financial statements.

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

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

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

DISCONTINUED OPERATIONS AND DIVESTITURES

EXIT ACTIVITIES AND DIVESTITURES

Exit from Butane Optimization Business.

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

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

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 pursuant to ASC 205.

Going forward, with respect to butane, the Partnership will operate as a fee-based butane logistics business, utilizing 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 anticipates no longer carrying butane inventory going forward, eliminating commodity risk, reducing earnings volatility, and substantially reducing working capital requirements.

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.

2023 2022 2021

Products revenue $ 70,539 $ 172,756 $ 223,290

Cost of products sold 72,283 190,677 196,475

Selling, general and administrative expenses 512 2,094 4,292

$ ( 2,256 ) $ ( 20,015 ) $ 22,523

Divestiture of Stockton, California Sulfur Terminal.

1 unchanged sentence

The divestiture of the Stockton Sulfur Terminal did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

Divestiture of Mega Lubricants.

On December 22, 2020, the Partnership completed the sale of its Mega Lubricants shored-based terminals business (“Mega Lubricants”) for $ 22,400 .

Mega Lubricants is engaged in the business of blending, manufacturing and delivering various marine application lubricants, sub-sea specialty fluids, and proprietary developed commercial and industrial products.

The Partnership recorded a gain on the disposition of $ 10,101 , which was included in " Other operating income, net " on the Partnership's Consolidated Statements of Operations.

The proceeds from the transaction were used to reduce outstanding borrowings under the Partnership’s credit facility.

The divestiture of Mega Lubricants did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The following table disaggregates our revenue by major source:

1 unchanged sentence

Terminalling and storage segment

Lubricant product sales $ 142,016 $ 103,809 $ 103,300

Throughput and storage $ 86,514 $ 80,193 $ 75,223

10 unchanged sentences

$ 140,995 $ 179,164 $ 145,042

Natural gas liquids segment

Specialty products segment

Natural gas liquids product sales $ 214,713 $ 398,422 $ 414,046

Lubricant product sales 132,064 142,091 103,806

$ 346,777 $ 540,513 $ 517,852

Total revenues $ 797,963 $ 1,018,878 $ 882,431

Revenue is measured based on a consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties where the Partnership is acting as an agent.

The Partnership recognizes revenue when the Partnership

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

satisfies a performance obligation, which typically occurs when the Partnership transfers control over a product to a customer or as the Partnership delivers a service.

The Partnership recognizes revenue when the Partnership satisfies a performance obligation, which typically occurs when the Partnership transfers control over a product to a customer or as the Partnership delivers a service.

The following is a description of the principal activities - separated by reportable segments - from which the Partnership generates revenue.

2 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.

When lubricants and drilling fluids are sold by truck or rail, revenue is recognized when title is transferred, which is either upon delivering product to the customer or when the product leaves the Partnership's facility, depending on the specific terms of the contract.

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

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

Natural Gas Liquids Segment

NGL revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

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

Specialty Products Segment

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 collects the product from our facilities.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Sulfur Services Segment

15 unchanged sentences

Throughput and storage $ 44,124 $ 45,448 $ 46,749 $ 48,152 $ 49,662 $ 157,964 $ 392,099

Natural Gas Services

Specialty Products

Natural Gas Liquids 6,449 6,431 3,736 — — — 16,616

Sulfur Services

Sulfur product sales 18,796 18,796 18,796 4,391 295 — 61,074

Product sales 13,908 13,908 13,908 — — — 41,724

Service revenues 5,366 5,366 4,391 295 — — 15,418

Total $ 69,847 $ 71,153 $ 68,784 $ 48,447 $ 49,662 $ 157,964 $ 465,857

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

5 unchanged sentences

$ 43,822 $ 109,798

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

PROPERTY, PLANT, AND EQUIPMENT

11 unchanged sentences

Furniture, fixtures and other equipment 3 - 20 years

11,726 13,727

Transportation equipment 3 - 7 years

6 unchanged sentences

Additions to property, plant and equipment included in accounts payable at December 31, 2023, 2022 and 2021 were $ 2,943 , $ 1,949 , and $ 3,229 , respectively.

Equipment purchased under capital lease obligations was $ 0 , $ 0 , and $ 83 for the years ended December 31, 2022, 2021, and 2020, respectively.

In the first quarter of 2020, the Partnership identified a triggering event related to a decline in the fair value related to the assets classified as held for sale at December 31, 2019.

As a result, an impairment charge of $ 3,052 and $ 1,300 was recorded in the Terminalling and Storage and Transportation segments, respectively, during the year ended December 31, 2020 and was recorded in "Other operating income (loss)" in the Partnership's Consolidated Statements of Operations.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

No equipment was purchased under capital lease obligations for the years ended December 31, 2023, 2022, and 2021.

The following table represents the goodwill balance by reporting unit at December 31, 2023 and 2022 as follows:

1 unchanged sentence

Terminalling and storage 1

$ 6,756 $ 10,985

Specialty products 1

Sulfur services 5,197 5,197

1 unchanged sentence

Total goodwill $ 16,671 $ 16,671

1 This change represents goodwill disposed of as part of the Partnership's divestiture of its Stockton, California Sulfur Terminal.

See Note 4 for more information.

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

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

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

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

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

The leases generally provide that all expenses related to the equipment are to be paid by the lessee.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Operating lease right of use ("ROU") assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments.

The estimated rate is based on a risk-free rate plus a risk-adjusted margin.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The Partnership's leases have remaining lease terms of 1 year to 13 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.

9 unchanged sentences

Total lease cost $ 21,810 $ 22,584 $ 19,861

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Supplemental cash flow information for the years ended December 31, 2023, 2022, and 2021 related to leases were as follows:

7 unchanged sentences

Finance leases — — 83

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

17 unchanged sentences

Finance leases — 3.61 %

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

9 unchanged sentences

Total lease liability $ 60,585 $ —

As of December 31, 2022, we have additional operating leases for land, buildings and equipment that have not yet commenced of $ 4,040 .

These operating leases will commence during the first quarter of 2023 with lease terms of 3 to 5 years.

As of December 31, 2023, the Partnership did not have any operating leases that have not yet commenced.

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.

6 unchanged sentences

subsequent years - $ 18,256 .

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

FAIR VALUE MEASUREMENTS

9 unchanged sentences

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

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

Commodity derivative contracts, net $ — $ —

There were no assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 or 2022.

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

6 unchanged sentences

The carrying amount of the credit facility approximates fair value due to the debt having a variable interest rate and is in Level 2.

The estimated fair value of the 2024 Notes and 2025

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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.

The estimated fair value of the 2024 Notes and 2025 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.

December 31, 2023 December 31, 2022

2 unchanged sentences

2025 Notes — — 290,495 290,689

2028 Notes 381,965 414,453 — —

Total $ 381,965 $ 414,453 $ 342,957 $ 344,770

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

11 unchanged sentences

For hedged transactions that are still expected to occur as originally forecasted, the closure results in the realized gain or loss being deferred until the hedged transaction affects earnings.

If it is determined that hedged transactions associated with cash flow hedges are no longer probable to occur, the gain or loss associated with the instrument is recognized immediately into earnings.

If it is determined that hedged transactions associated with cash flow hedges are no longer probable of occurring, the gain or loss associated with the instrument is recognized immediately into earnings.

From time to time, we may have derivative financial instruments for which we do not elect hedge accounting.

7 unchanged sentences

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

At December 31, 2022 and December 31, 2021, the Partnership has instruments totaling a gross notional quantity of 0 barrels.

At December 31, 2023 and 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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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

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

Derivative Assets Derivative Liabilities

Fair Values Fair Values

Balance Sheet Location

December 31, 2022 December 31, 2021 Balance Sheet Location

December 31, 2022 December 31, 2021

Derivatives designated as hedging instruments:

Commodity contracts Fair value of derivatives $ — $ — Fair value of derivatives $ — $ —

The following table summarizes the loss recognized in AOCI at December 31, 2022 and December 31, 2021, respectively, and the gain (loss) reclassified from accumulated other comprehensive loss into earnings during the year ended December 31, 2022 and December 31, 2021, respectively, for derivative financial instruments designated as cash flow hedges:

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

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

3 unchanged sentences

Total $ — $ — $ — $ 816

The following table summarizes the loss recognized in earnings for derivative instruments not designated as hedging instruments during the years ended December 31, 2022 and December 31, 2021, respectively:

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

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

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

RELATED PARTY TRANSACTIONS

2 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Partnership, and Martin Resource Management Corporation’s ownership as of December 31, 2022 of approximately 15.7 % of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of December 31, 2023 of approximately 15.7 % of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The following is a description of the Partnership’s material related party agreements:

4 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.

The Omnibus Agreement was amended further on October 17, 2023 to include lubricants and packing in the Partnership’s definition of business.

Non-Competition Provisions .

2 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;

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

◦ operating, solely for our account, the asphalt facilities in each of Hondo, South Houston and Port Neches, Texas and Omaha, Nebraska.

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

◦ operating a butane optimization business;

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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

◦ operating, solely for our account, the asphalt facilities owned by the Partnership in each of Hondo, South Houston and Port Neches, Texas and Omaha, Nebraska.

• 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;

21 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.

The Omnibus Agreement was amended further on October 17, 2023 to include lubricants and packing in the Partnership’s definition of business.

Such amendments were approved by the Conflicts Committee.

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.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

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.

Master Transportation Services Agreement

15 unchanged sentences

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

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

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

Miscellaneous Terminal Services Agreements.

12 unchanged sentences

Other Agreements

Cross Tolling Agreement.

The Partnership is a party to an amended and restated tolling agreement with Cross Oil Refining and Marketing, Inc.

("Cross") dated October 28, 2014, under which the Partnership processes crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts for Cross.

The tolling agreement

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

expires November 25, 2031.

Cross Tolling Agreement.

The Partnership is a party to an amended and restated tolling agreement with Cross Oil Refining and Marketing, Inc.

("Cross") dated October 28, 2014, under which the Partnership processes crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts for Cross.

The tolling agreement expires November 25, 2031.

Under this tolling agreement, Cross agreed to process a minimum of 6,500 barrels per day of crude oil at the facility at a fixed price per barrel.

2 unchanged sentences

Further, certain capital improvements, to the extent requested by Cross, are reimbursed through a capital recovery fee.

All of these fees (other than the fuel surcharge) are subject to escalation annually based upon the greater of 3 % or the increase in the Consumer Price Index for a specified annual perio d .

All of these fees (other than the fuel surcharge) are subject to escalation annually based upon an amount equal to two-thirds (2/3) times the increase in the Consumer Price Index for a specified annual perio d .

East Texas Mack Leases.

22 unchanged sentences

Product sales:

Specialty products 8,547 404 370

Sulfur services

Terminalling and storage

8,767 554 479

$ 110,181 $ 95,814 $ 83,202

The impact of related party cost of products sold is reflected in the Consolidated Statements of Operations as follows:

Cost of products sold:

Specialty products $ 35,930 $ 39,356 $ 27,856

Sulfur services

2 unchanged sentences

$ 47,187 $ 50,092 $ 37,846

$ 50,092 $ 37,846 $ 28,948

MARTIN MIDSTREAM PARTNERS L.P.

5 unchanged sentences

$ 73,866 $ 66,682 $ 55,382

Natural gas liquids

2,151 2,038 2,003

Sulfur services

7 unchanged sentences

$ 8,927 $ 7,553 $ 6,996

Natural gas liquids

2,564 4,590 2,397

Specialty products 4,152 5,565 7,414

Sulfur services

1 unchanged sentence

Terminalling and storage

3,805 3,370 3,403

Indirect overhead allocation, net of reimbursement

13 unchanged sentences

2025 - $ 593 ;

2025 - $ 309 ;

subsequent years - $ 0 .

30 unchanged sentences

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

$ 275,000 1 Credit facility at variable interest rate ( 7.81 % 1 weighted average at December 31, 2022), due August 2023 4 secured by substantially all of the Partnership’s assets, net of unamortized debt issuance costs of $ 1,086 and $ 2,613 , respectively 2

$ 175,000 1 Credit facility at variable interest rate ( 8.80 % 1 weighted average at December 31, 2023), due February 2027 4 secured by substantially all of the Partnership’s assets, net of unamortized debt issuance costs of $ 3,292 and $ 1,086 , respectively 2

$ 39,208 $ 169,914

$ 400,000 Senior notes, 11.5 % interest, net of unamortized debt issuance costs of $ 8,235 and $$ 0 , respectively, including unamortized premium of $ 9,800 and $ — , respectively, due February 2028, secured 2,3,4

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

$ 52,462 $ 51,317

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

$ 290,495 $ 290,667

Total 421,173 512,871

4 unchanged sentences

Total finance lease obligations $ — $ 9

1 At December 31, 2022, interest rates fluctuated based on LIBOR or the prime rate plus an applicable margin set on the date of each advance.

The margin above is set every three months.

Of amounts outstanding at December 31, 2022, $ 157,000 were at LIBOR plus an applicable margin of 3.25 % and $ 14,000 were at base prime rate plus an applicable margin of 2.25 %.

The credit facility was amended effective as of February 8, 2023, to, among other things, reduce the commitments to $ 200,000 (with further reductions scheduled in the future), replace LIBOR with Adjusted Term SOFR, and extend the maturity date of the commitments to February 8, 2027.

The applicable margin for Adjusted Term SOFR borrowings effective February 15, 2023 is 3.50 %;

the applicable margin for base prime rate borrowings effective February 15, 2023 is 2.50 %.

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

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

The margin is set every three months.

All amounts outstanding at December 31, 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 December 31, 2023 is 3.25 %.

The applicable margin for SOFR borrowings effective February 14, 2024 is 3.25 %.

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

make certain investments and acquisitions;

1 unchanged sentence

incur indebtedness;

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

and make certain amendments to the Omnibus Agreement.

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

3 The indentures governing the senior notes restrict the Partnership’s ability to sell assets;

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 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;

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

3 unchanged sentences

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

As of December 31, 2022, amounts outstanding under the Partnership's credit facility have been presented as non-current on the Consolidated Balance Sheets due to the successful extension of the previously scheduled maturity date of August 2023.

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

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 51,607 , $ 50,518 , and $ 51,708 for the years ended December 31, 2023, 2022 and 2021, respectively.

5 unchanged sentences

As of December 31, 2023, partners’ capital 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 partnership units representing approximately 15.7 % of the Partnership's outstanding common limited partnership units.

MMGP, the Partnership's general partner, owns the 2 % general partnership 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.

MMGP, the Partnership's general partner, owns the 2 % general partner interest.

The Partnership Agreement contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital accounts.

11 unchanged sentences

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

For the years ended December 31, 2022, 2021 and 2020, the general partner was allocated no incentive distributions.

Distributions of Available Cash

9 unchanged sentences

Accordingly, the Partnership does not allocate undistributed earnings to the general partner for the IDRs because the general partner's share of available cash is the maximum amount that the general partner would be contractually entitled to receive if all earnings for the period were distributed.

When current period distributions are in excess of earnings, the excess

When current period distributions are in excess of earnings, the excess distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of losses specified in the Partnership Agreement.

Additionally, as required under FASB ASC 260-10-45-61A, unvested share-

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of losses specified in the Partnership Agreement.

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.

based payments that entitle employees to receive non-forfeitable distributions are considered participating securities, as defined in FASB ASC 260-10-20, for earnings per unit calculations.

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

18 unchanged sentences

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the period presented.

All common unit equivalents were antidilutive for the years ended December 31, 2022, 2021 and 2020 because the limited partners were allocated a net loss in this period.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

All common unit equivalents were antidilutive for the years ended December 31, 2023, 2022 and 2021 because the limited partners were allocated a net loss in these periods.

UNIT BASED AWARDS - LONG-TERM INCENTIVE PLANS

11 unchanged sentences

Long-Term Incentive Plans

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The Partnership's general partner has long-term incentive plans for employees and directors of the general partner and its affiliates who perform services for the Partnership.

13 unchanged sentences

On July 21, 2021, 620,000 phantom units and 1,245,000 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

On April 20, 2022, the board of directors of

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

the general partner of the Partnership and the Compensation Committee approved the First Amendment to the Plan, effective as of the same date, which amendment increased the total number of phantom units available for grant under the Plan from 2,000,000 units to 5,000,000 units.

On April 20, 2022, the board of directors of the general partner of the Partnership and the Compensation Committee approved the First Amendment to the Plan, effective as of the same date, which amendment increased the total number of phantom units available for grant under the Plan from 2,000,000 units to 5,000,000 units.

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.

6 unchanged sentences

These costs are expected to be recognized over a remaining life of 2.12 years.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

The fair value of the phantom unit awards was estimated using a Monte Carlo valuation model as of the balance sheet date.

The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment.

Expected volatility was calculated based on the historical volatility of the Partnership’s common units as well as set of peer companies.

Expected volatility was calculated based on the historical volatility of the Partnership’s common units as well as a set of peer companies.

Restricted Unit Plan

16 unchanged sentences

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

In April 2022, the Partnership issued 4,600 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

These restricted common units vest in equal installments of 1,150 units on January 24, 2023, 2024, 2025, and 2026.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

On March 1, 2018, the Partnership issued 301,550 TBRUs and 317,925 PBRUs to certain employees of Martin Resource Management Corporation.

4 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

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.

4 unchanged sentences

Vested ( 47,028 ) $ 3.78

Forfeited — $ —

Non-Vested, end of year 141,390 $ 2.99

7 unchanged sentences

That cost is expected to be recognized over a weighted-average period of 3.07 years.

The components of income tax expense (benefit) from operations for the years ended December 31, 2022, 2021 and 2020 are as follows:

The components of income tax expense from operations for the years ended December 31, 2023, 2022 and 2021 are as follows:

2023 2022 2021

7 unchanged sentences

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.

The Texas margin tax is considered a state income tax and is included in income tax

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

expense on the Consolidated Statements of Operations.

The Texas margin tax is considered a state income tax and is included in income tax expense on the Consolidated Statements of Operations.

Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as income tax, and therefore, the recognition of deferred taxes applies to the margin tax.

1 unchanged sentence

State income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 440 , $ 496 and $ 300 were recorded in income tax expense for the years ended December 31, 2023, 2022 and 2021, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

Total income tax expense relating to the operation of MTI, a wholly owned C-Corporation subsidiary of the Partnership (“Taxable Subsidiary”), of $ 5,478 , $ 7,431 and $ 3,080 was recorded in income tax expense for the years ended December 31, 2023, 2022 and 2021, respectively.

15 unchanged sentences

Operating leases — 14

Interest expense 334 —

Tax loss carryforwards 861 5,432

5 unchanged sentences

Property and equipment ( 1,747 ) ( 2,956 )

Operating leases ( 11 ) —

Total deferred tax liabilities ( 1,758 ) ( 2,956 )

4 unchanged sentences

On the basis of these considerations, as of December 31, 2023, management believes it is more likely than not that the Taxable Subsidiary will realize the benefit of the existing deferred tax assets.

Federal income taxes refundable related to the operation of the Taxable Subsidiary of $ 29 and $ 374 for the years ended December 31, 2023 and 2022, respectively, are included in “Other current assets”.

"Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $ 567 and $ 451 for the years ended December 31, 2023 and

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

Federal income taxes refundable related to the operation of the Taxable Subsidiary of $ 374 and $ 70 for the years ended December 31, 2022 and 2021, respectively, are included in “Other current assets”.

"Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $ 451 and $ 304 for the years ended December 31, 2022 and 2021, respectively.

2022, respectively.

Also included in "Income taxes payable" are state income tax liabilities related to the operation of the Taxable Subsidiary of $ 85 and $ 214 for the years ended December 31, 2023 and 2022, respectively.

6 unchanged sentences

The Partnership has four reportable segments:

terminalling and storage, natural gas liquids, transportation, and sulfur services.

terminalling and storage, specialty products, transportation, and sulfur services.

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

9 unchanged sentences

Terminalling and storage $ 95,459 $ ( 8,945 ) $ 86,514 $ 21,030 $ 5,676 $ 13,168

Natural gas liquids 398,425 ( 3 ) 398,422 2,380 ( 1,853 ) 850

Specialty products 346,863 ( 86 ) 346,777 3,296 30,335 2,519

Sulfur services 140,995 — 140,995 10,690 30,436 16,851

4 unchanged sentences

Terminalling and storage $ 92,612 $ ( 12,419 ) $ 80,193 $ 26,094 $ ( 11,102 ) $ 15,308

Natural gas liquids 414,043 — 414,043 2,390 38,098 537

Specialty products 540,636 ( 123 ) 540,513 4,520 24,142 1,349

Sulfur services 179,164 — 179,164 11,099 34,146 6,857

4 unchanged sentences

Terminalling and storage $ 87,816 $ ( 12,593 ) $ 75,223 $ 25,441 $ ( 9,161 ) $ 8,354

Natural gas liquids 247,484 ( 5 ) 247,479 2,456 22,104 395

Specialty products 517,920 ( 68 ) 517,852 5,159 58,044 1,765

Sulfur services 145,042 — 145,042 10,432 32,972 7,813

2 unchanged sentences

Total $ 911,958 $ ( 29,527 ) $ 882,431 $ 56,751 $ 57,280 $ 22,929

Revenues from one customer in the Natural Gas Liquids segment was $ 177,062 , $ 140,324 and $ 74,722 for the years ended December 31, 2022, 2021 and 2020, respectively.

Revenues from one customer in the specialty products segment was $ 120,171 , $ 177,062 and $ 140,324 for the years ended December 31, 2023, 2022 and 2021, respectively.

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

2 unchanged sentences

$ 171,320 $ 184,537

Natural gas liquids

Specialty products

72,770 150,175

19 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.

1 unchanged sentence

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.

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

5 unchanged sentences

SUBSEQUENT EVENTS

Issuance of 2028 Notes to Refinance Existing Secured Notes .

On February 8, 2023, the Partnership completed the sale of $ 400,000 in aggregate principal amount of its 2028 Notes.

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

Simultaneously with the issuance of the 2028 Notes, the Partnership amended its credit facility to, among other things, reduce the commitments thereunder from $ 275,000 to $ 200,000 (with further scheduled reductions to $ 175,000 million on June 30, 2023 and $ 150,000 on June 30, 2024) and extend the scheduled maturity date of the credit facility to February 8, 2027.

Quarterly Distribution.

2 unchanged sentences

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 8. Financial Statements and Supplementary Data