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Item 1. Financial Statements

2024-04-23 compared with 2023-10-24 · 163 added, 330 removed, 611 unchanged (45% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(Unaudited) (Audited)

15 unchanged sentences

Liabilities and Partners’ Capital (Deficit)

Current installments of long-term debt and finance lease obligations $ — $ 9

Trade and other accounts payable $ 58,995 $ 51,653

15 unchanged sentences

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

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Terminalling and storage * $ 22,517 $ 20,858

17 unchanged sentences

Total costs and expenses 163,143 226,636

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

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

Other operating income (loss), net 208 ( 388 )

Operating income 17,895 17,505

Other income (expense):

3 unchanged sentences

Total other expense ( 13,826 ) ( 20,756 )

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

Net income (loss) before taxes 4,069 ( 3,251 )

Income tax expense ( 796 ) ( 1,835 )

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

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

Less loss allocable to unvested restricted units 4 90 16 39

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

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

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

Net income (loss) 3,273 ( 5,086 )

Less general partner's interest in net income (loss) ( 65 ) 102

Less income (loss) allocable to unvested restricted units ( 12 ) 16

Limited partners' interest in net income (loss) $ 3,196 $ ( 4,968 )

Net income (loss) per unit attributable to limited partners - basic $ 0.08 $ ( 0.13 )

Net income (loss) per unit attributable to limited partners - diluted $ 0.08 $ ( 0.13 )

Weighted average limited partner units - basic 38,828,737 38,769,794

6 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

Three Months Ended

Terminalling and storage $ 18,549 $ 17,502

11 unchanged sentences

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

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

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

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

See accompanying notes to consolidated and condensed financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)

1 unchanged sentence

Partners’ Capital (Deficit)

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

Common Limited General Partner Amount

Units Amount Total

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

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

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

Unit-based compensation — 37 — — 37

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

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

3 unchanged sentences

Unit-based compensation — 52 — 52

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

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

Partners’ Capital (Deficit)

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

Common Limited General Partner Amount

Units Amount Total

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

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

Issuance of restricted units — — — — —

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

Unit-based compensation — 46 — — 46

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

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

Balances - December 31, 2023 38,914,806 $ ( 66,182 ) $ 1,558 $ ( 64,624 )

3 unchanged sentences

Unit-based compensation — 54 — 54

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

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

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

Balances - March 31, 2024 39,001,086 $ ( 63,115 ) $ 1,619 $ ( 61,496 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

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

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

Net income (loss) $ 3,273 $ ( 5,086 )

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

Depreciation and amortization 12,649 12,901

4 unchanged sentences

Loss on extinguishment of debt — 5,121

Derivative income — ( 901 )

Net cash paid for commodity derivatives — 85

Non cash unit-based compensation 54 52

10 unchanged sentences

Change in other non-current assets and liabilities 249 228

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

Net cash provided by operating activities 10,109 49,264

Cash flows from investing activities:

8 unchanged sentences

Payment of debt issuance costs ( 15 ) ( 13,622 )

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

Cash distributions paid ( 199 ) ( 198 )

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

March 31, 2024

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

14 unchanged sentences

Results for such interim periods are not necessarily indicative of the results of operations for the full year.

These financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated and condensed financial statements in conformity with U.S.

1 unchanged sentence

NEW ACCOUNTING PRONOUNCEMENTS

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

There were no new accounting pronouncements applicable to the Partnership during the three months ended March 31, 2024.

EXIT OF BUTANE OPTIMIZATION BUSINESS

6 unchanged sentences

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Products revenue $ 56,889

1 unchanged sentence

Selling, general and administrative expenses 372

$ — $ ( 20,032 ) $ ( 2,255 ) $ ( 15,280 )

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

March 31, 2024

The following table disaggregates our revenue by major source:

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

2023 2022 2023 2022

Three Months Ended March 31,

Terminalling and storage segment

24 unchanged sentences

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.

Specialty Products Segment

Natural Gas Liquids ("NGL") revenue is recognized when title is transferred, which is generally when the product is delivered by truck, rail, or pipeline to the Partnership's NGL customers or when the customer picks up the product from our

Transportation Segment

Revenue related to land transportation is recognized for line hauls based on a mileage rate.

For contracted trips, revenue is recognized upon completion of the particular trip.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

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

March 31, 2024

Revenue related to marine transportation is recognized for time charters based on a per day rate.

For contracted trips, revenue is recognized upon completion of the particular trip.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Sulfur Services Segment

3 unchanged sentences

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Transportation Segment

Revenue related to land transportation is recognized for line hauls based on a mileage rate.

For contracted trips, revenue is recognized upon completion of the particular trip.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Revenue related to marine transportation is recognized for time charters based on a per day rate.

For contracted trips, revenue is recognized upon completion of the particular trip.

The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Specialty Products Segment

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, but can vary based on the specific terms of the contract.

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

The table below includes estimated minimum revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period.

3 unchanged sentences

Throughput and storage $ 33,122 $ 45,448 $ 46,749 $ 48,152 $ 49,662 $ 157,964 $ 381,097

Sulfur services

Product sales 4,250 5,666 4,691 295 — — 14,902

Service revenues 10,431 13,908 13,908 — — — 38,247

Specialty Products

NGL product sales 4,846 6,431 3,736 — — — 15,013

Sulfur services

Sulfur product sales 4,699 18,796 18,796 4,391 296 — 46,978

Total $ 52,649 $ 71,453 $ 69,084 $ 48,447 $ 49,662 $ 157,964 $ 449,259

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

September 30,

Components of inventories at March 31, 2024 and December 31, 2023 were as follows:

2024 December 31,

8 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

September 30,

March 31, 2024

At March 31, 2024 and December 31, 2023, long-term debt consisted of the following:

2024 December 31,

$ 175,000 Credit facility at variable interest rate ( 8.93 % 1 weighted average at September 30, 2023), due February 2027 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,535 and $ 1,086 , respectively 2,4

$ 175,000 Credit facility at variable interest rate ( 8.68 % 1 weighted average at March 31, 2024), due February 2027 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 3,039 and $ 3,292 , respectively 2

$ 46,961 $ 39,208

$ 400,000 Senior notes, 11.5 % interest, net of unamortized debt issuance costs of $ 7,737 and $ 8,235 , respectively, including unamortized premium of $ 9,200 and $ 9,800 , respectively, due February 2028, secured 2

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

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

383,063 381,965

Total 430,024 421,173

1 unchanged sentence

Total long-term debt, net of current portion $ 430,024 $ 421,173

Current installments of finance lease obligations $ — $ 9

Finance lease obligations — —

Total finance lease obligations $ — $ 9

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.

1 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 September 30, 2023 were at Adjusted Term SOFR plus an applicable margin.

All amounts outstanding at March 31, 2024 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 September 30, 2023 is 3.50 %.

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

The applicable margin for SOFR borrowings at March 31, 2024 is 3.25 %.

The applicable margin for SOFR borrowings effective April 17, 2024 is 3.25 %.

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

3 unchanged sentences

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

2 The Partnership was in compliance with all debt covenants as of September 30, 2023 and December 31, 2022, respectively.

3 On February 8, 2023, the Partnership completed the sale of $ 400,000 in aggregate principal amount of 11.500 % senior secured second lien notes due 2028 (the “2028 Notes”).

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;

make investments;

incur or guarantee additional indebtedness or issue preferred units;

and consolidate, merge or transfer all or substantially all of its assets.

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.

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.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

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

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

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

2 The Partnership was in compliance with all debt covenants as of March 31, 2024 and December 31, 2023, respectively.

The Partnership paid cash interest in the amount of $ 24,653 and $ 22,177 for the three months ended March 31, 2024 and 2023, respectively.

Capitalized interest was $ 142 and $ 4 for the three months ended March 31, 2024 and 2023, respectively.

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.

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

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

2 unchanged sentences

Our 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.

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

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

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

2023 2022 2023 2022

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

The components of lease expense for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Operating lease cost $ 4,939 $ 3,187

5 unchanged sentences

Total lease cost $ 6,152 $ 4,954

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

September 30,

Supplemental balance sheet information related to leases at March 31, 2024 and December 31, 2023 was as follows:

2024 December 31, 2023

4 unchanged sentences

Total operating lease liabilities $ 58,430 $ 60,585

Finance Leases

Property, plant and equipment, at cost $ — $ 83

Accumulated depreciation — ( 44 )

Property, plant and equipment, net $ — $ 39

Current installments of finance lease obligations $ — $ 9

Finance lease obligations — —

Total finance lease obligations $ — $ 9

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

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

Operating Leases Finance Leases

Year 1 $ 18,175 $ —

For the three months ended March 31, 2024, the Partnership incurred new operating leases, primarily related to land and marine transportation assets and renewed existing operating leases set to expire, primarily related to marine transportation assets.

The Partnership’s future minimum lease obligations as of March 31, 2024 consist of the following:

Operating Leases

Year 1 $ 19,881

3 unchanged sentences

Thereafter 5,136

Total 70,402 —

Less amounts representing interest costs ( 14,796 )

1 unchanged sentence

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee.

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

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of March 31, 2024 are as follows:

2024 - $ 17,036 ;

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

March 31, 2024

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:

September 30,

2024 December 31, 2023

4 unchanged sentences

Operating lease liabilities 14,824 14,901

Other 219 495

$ 26,057 $ 41,499

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

September 30, 2023

March 31, 2024

Asset retirement obligations as of December 31, 2023 $ 5,182

10 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Partnership’s results of operations could be materially impacted by changes in commodity prices and interest rates.

In an effort to manage its exposure to these risks, the Partnership periodically enters into various derivative instruments, including commodity and interest rate hedges.

At the time derivative contracts are entered into, the Partnership assesses whether the nature of the instrument qualifies for hedge accounting treatment according to the requirements of ASC 815 – Derivatives and Hedging .

For those transactions designated as hedging instruments for accounting purposes, the Partnership documents all relationships between hedging instruments and hedged items, as well as our risk-management objective and strategy for undertaking the various hedge transactions.

The Partnership also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flows or fair value of hedged items.

All derivatives and hedging instruments are included on the balance sheet as an asset or a liability measured at fair value.

Changes in fair value for hedging instruments are recognized on the balance sheet through Accumulated Other Comprehensive Income ("AOCI").

Settlements related to effective hedging relationships will be reclassified from AOCI to earnings during the period in which the hedged transactions are reflected on the income statement.

From time to time, derivatives designated for hedge accounting may be closed prior to contract expiration.

The accounting treatment of closed positions depends on whether the closure occurred due to the hedged transaction occurring early or if the hedged transaction is still expected to occur as originally forecasted.

For hedged transactions that occur early, the closure results in the realized gain or loss from closure being recognized in the same period the accelerated hedged transaction affects earnings.

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 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.

Changes in fair value for derivatives not designated as hedges are recognized as gains and losses in the earnings of the periods in which they occur.

(a) Commodity Derivative Instruments

The Partnership from time to time has used derivatives to manage the risk of commodity price fluctuation.

Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price.

The Partnership has established a hedging policy and monitors and manages the commodity market risk associated with potential commodity risk exposure.

In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.

The Partnership enters into hedging transactions to protect a portion of its commodity price risk exposure.

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

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

For information regarding gains and losses on commodity derivative instruments, see "Tabular Presentation of Gains and Losses on Derivative Instruments" below.

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

The following table summarizes the gain (loss) recognized in AOCI at September 30, 2023 and December 31, 2022, respectively, and the gain reclassified from AOCI into earnings during the three months ended September 30, 2023 and 2022, respectively, for derivative financial instruments designated as cash flow hedges:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income

2023 2022 2023 2022

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

Total $ — $ — $ — $ 167

The following table summarizes the gain (loss) recognized in AOCI at September 30, 2023 and December 31, 2022, respectively, and the gain reclassified from AOCI into earnings during the nine months ended September 30, 2023 and 2022, respectively, for derivative financial instruments designated as cash flow hedges:

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

Reclassified from AOCI into Income Amount of Gain (Loss) Reclassified from AOCI into Income

2023 2022 2023 2022

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

Total $ — $ — $ — $ 816

March 31, 2024

PARTNERS' CAPITAL (DEFICIT)

As of September 30, 2023, Partners’ capital (deficit) consisted of 38,914,806 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

As of March 31, 2024, Partners’ capital (deficit) consisted of 39,001,086 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

Martin Resource Management Corporation, through subsidiaries, owned 6,114,532 of the Partnership's common limited partner units representing approximately 15.7 % of the Partnership's outstanding common limited partner units.

8 unchanged sentences

This excess of the purchase price over the historical cost of the net assets received has resulted in cumulative distributions of $ 289,019 reflected as reductions to Partners' capital.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

Distributions of Available Cash

12 unchanged sentences

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

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

2023 2022 2023 2022

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

Three Months Ended March 31,

Net income (loss) $ 3,273 $ ( 5,086 )

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

1 unchanged sentence

General partner interest in undistributed income (loss) 61 ( 106 )

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

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

Less income (loss) allocable to unvested restricted units 12 ( 16 )

Limited partners’ interest in net income (loss) $ 3,196 $ ( 4,968 )

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Basic weighted average limited partner units outstanding

3 unchanged sentences

38,836,165 38,769,794

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

All common unit equivalents were antidilutive for the three and nine months ended September 30, 2023 and 2022 because the limited partners were allocated a net loss in this period.

All common unit equivalents were antidilutive for the three months ended March 31, 2023 because the limited partners were allocated a net loss in this period.

UNIT BASED AWARDS - LONG-TERM INCENTIVE PLANS

1 unchanged sentence

Amounts recognized in operating expense and selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:

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

2023 2022 2023 2022

Three Months Ended March 31,

Restricted unit Awards

5 unchanged sentences

Total unit-based compensation expense $ ( 120 ) $ 451

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

Long-Term Incentive Plans

11 unchanged sentences

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

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

control of the Partnership (as defined in the Plan), the award will vest in full and be paid in cash no later than the 30 th day following the date of the change of control;

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

5 unchanged sentences

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

All of the Partnership's outstanding phantom unit awards at September 30, 2023 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.

All of the Partnership's outstanding phantom unit awards at March 31, 2024 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.

Compensation expense for the phantom awards is based on the fair value of the units as of the balance sheet date as further discussed below, and such costs are recognized ratably over the service period of the awards.

As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future periods for these awards will vary.

As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

periods for these awards will vary.

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

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

As of March 31, 2024, there was a total of $ 3,722 of unrecognized compensation costs related to non-vested phantom unit awards.

These costs are expected to be recognized over a remaining life of 2.06 years.

14 unchanged sentences

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

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

performance period.

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

PBRUs which vest are payable in common units.

2 unchanged sentences

Restricted units issued to employees generally vest in equal annual installments over three years of service.

All of the Partnership's outstanding restricted unit awards at September 30, 2023 met the criteria to be treated under equity classification.

All of the Partnership's outstanding restricted unit awards at March 31, 2024 met the criteria to be treated under equity classification.

In February 2024, the Partnership issued 28,760 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP.

These restricted common units vest in equal installments of 7,190 units on January 24, 2025, 2026, 2027, and 2028.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

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

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

A summary of the restricted unit activity for the three months ended March 31, 2024 is provided below:

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

5 unchanged sentences

Aggregate intrinsic value, end of period $ 432

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

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

2023 2022 2023 2022

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2024 and 2023 is provided below:

Three Months Ended March 31,

Aggregate intrinsic value of units vested $ 46 $ 89

Fair value of units vested 168 178

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

As of March 31, 2024, there was $ 425 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 2.97 years.

RELATED PARTY TRANSACTIONS

As of September 30, 2023, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

As of March 31, 2024, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 100 % voting interest in MMGP Holdings, LLC ("Holdings"), the sole member of the Partnership's general partner.

The Partnership’s general partner, MMGP, owns a 2 % general partner interest in the Partnership.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of September 30, 2023 of approximately 15.7 % of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of March 31, 2024 of approximately 15.7 % of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

Omnibus Agreement

3 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

Non-Competition Provisions .

16 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

the Partnership declines to do so with the concurrence of the conflicts committee of the board of directors of the general partner of the Partnership (the "Conflicts Committee");

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

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

2 unchanged sentences

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

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

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

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

Effective January 1, 2024, through December 31, 2024, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $ 13,508 .

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

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

The Partnership reimbursed Martin Resource Management Corporation for $ 3,377 and $ 3,496 of indirect expenses for the three months ended March 31, 2024 and 2023, respectively.

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

14 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

Master Transportation Services Agreement

11 unchanged sentences

Martin Resource Management Corporation has agreed to indemnify MTI against all claims arising out of the negligence or willful misconduct of Martin Resource Management Corporation and its officers, employees, agents, representatives and subcontractors.

In the event a claim is the result of the joint negligence or misconduct of MTI and Martin Resource Management Corporation, indemnification obligations will be shared in proportion to each party’s allocable share of such joint negligence or misconduct.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

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

Marine Agreements

10 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 primary 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.

Effective January 1, 2024, this agreement was amended to increase the throughput rate and to establish a minimum throughput volume.

Miscellaneous Terminal Services Agreements.

3 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

Other Agreements

11 unchanged sentences

Certain of our directors or officers are owners of East Texas Mack, including entities affiliated with Ruben Martin, who owns approximately 46 % of the issued and outstanding stock of East Texas Mack.

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

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

Consulting Services Agreement.

Martin Operating Partnership L.P.

(the “Operating Partnership”) is a party to a Consulting Services Agreement with Ruben S.

Martin (the “Consulting Services Agreement”).

Pursuant to the terms of the Consulting Services Agreement, Mr.

Martin has agreed to provide business and strategic development support to the Operating Partnership, and the Operating Partnership has agreed to pay Mr.

Martin $ 263 per year for such services, which amount was paid to Mr.

Martin for each of the fiscal years ended December 31, 2022 and 2021.

The Consulting Services Agreement expired on December 31, 2022.

Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended March 31, 2024 and 2023 were $ 938 and $ 623 , respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

Storage and Services Agreement.

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

The agreement expires on April 30, 2024, but will continue on a year to year basis until terminated by either party by giving at least 90 days’ written notice prior to the end of any term.

The primary term of the agreement expires on April 30, 2024, but will continue on a year to year basis until terminated by either party by giving at least 90 days’ written notice prior to the end of any term.

Other Miscellaneous Agreements.

3 unchanged sentences

The impact of related party revenues from sales of products and services is reflected in the consolidated and condensed financial statements as follows:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

2023 2022 2023 2022

Three Months Ended March 31,

Terminalling and storage $ 18,549 $ 17,502

4 unchanged sentences

$ 27,279 $ 23,938

$ 26,090 $ 23,239 $ 82,879 $ 71,033

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Cost of products sold:

3 unchanged sentences

$ 9,584 $ 12,224

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Operating expenses:

4 unchanged sentences

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Selling, general and administrative:

5 unchanged sentences

$ 6,863 $ 8,516

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

BUSINESS SEGMENTS

6 unchanged sentences

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).

All prior period financial information has been revised to reflect these changes.

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 evaluates the performance of its reportable segments based on operating income.

There is no allocation of interest expense.

Three Months Ended September 30, 2023 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 23,973 $ ( 1,771 ) $ 22,202 $ 5,102 $ 1,357 $ 2,684

Transportation 58,541 ( 3,318 ) 55,223 3,674 3,323 1,939

Sulfur services 32,577 — 32,577 2,639 5,993 5,015

Specialty products 66,720 ( 25 ) 66,695 808 7,868 1,028

Indirect selling, general and administrative — — — — ( 3,837 ) —

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

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

Three Months Ended March 31, 2024 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 24,285 $ ( 1,768 ) $ 22,517 $ 5,395 $ 1,957 $ 7,050

7 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

Nine Months Ended September 30, 2023 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 71,798 $ ( 7,054 ) $ 64,744 $ 15,896 $ 3,657 $ 9,793

Transportation 178,875 ( 13,179 ) 165,696 11,196 11,847 5,938

Sulfur services 108,586 — 108,586 8,072 21,890 10,723

Specialty products 277,895 ( 59 ) 277,836 2,507 24,073 1,627

Indirect selling, general and administrative

— — — — ( 11,929 ) —

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

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

March 31, 2024

Three Months Ended March 31, 2023 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 23,919 $ ( 3,061 ) $ 20,858 $ 5,599 $ 64 $ 3,785

3 unchanged sentences

Indirect selling, general and administrative — — — — ( 4,198 ) —

— — — — ( 12,772 ) —

Total $ 253,814 $ ( 9,285 ) $ 244,529 $ 12,901 $ 17,505 $ 7,620

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

September 30, 2023 December 31, 2022

The Partnership's assets by reportable segment as of March 31, 2024 and December 31, 2023, are as follows:

March 31, 2024 December 31, 2023

Total assets:

11 unchanged sentences

Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory Judgment in the Chancery Court of Davidson County, Tennessee (the “Tennessee Court”), under Case No.

16-0018-BC, requesting a judicial determination that the Partnership did not owe the customer the demanded defense and indemnity

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

obligations (the “Litigation”).

16-0018-BC, requesting a judicial determination that the Partnership did not owe the customer the demanded defense and indemnity obligations (the “Litigation”).

The Marketing Lawsuits pending in federal court against the customer were transferred to the U.S.

7 unchanged sentences

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

FAIR VALUE MEASUREMENTS

18 unchanged sentences

The estimated fair value of the 2024 Notes, 2025 and 2028 Notes (collectively, the "Senior Notes") is considered Level 2, as the fair value is based upon quoted prices for identical liabilities in markets that are not active.

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Value Carrying

2028 Notes $ 383,063 $ 424,888 $ 381,965 $ 414,453

2025 Notes $ — $ — $ 290,495 $ 290,689

2028 Notes $ 380,859 $ 406,060 $ — $ —

Total $ 383,063 $ 424,888 $ 381,965 $ 414,453

5 unchanged sentences

Substantially all of the Partnership's operating subsidiaries are subsidiary guarantors of its Senior Notes and any subsidiaries other than the subsidiary guarantors are minor.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

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

2023 2022 2023 2022

Three Months Ended March 31,

Provision for income taxes $ 796 $ 1,835

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

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

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 320 and $ 376 were recorded in income tax expense for the nine months ended September 30, 2023 and 2022, respectively.

Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $ 80 and $ 120 were recorded in income tax expense for the three months ended March 31, 2024 and 2023, respectively.

Deferred taxes applicable to the Texas margin tax relating to the operation of the Partnership are immaterial.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2024

MTI, a wholly owned subsidiary of the Partnership, is subject to income taxes due to its corporate structure (the "Taxable Subsidiary").

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

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

The increase in the ETR for the income taxes during the three and nine months ended September 30, 2023 was primarily due to an increase in state income taxes as a result of full utilization of net operating losses in some states, compared to the same period in 2022.

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

A current federal income tax expense of $ 179 and $ 348 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended September 30, 2023 and 2022, respectively.

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

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

A current state income tax expense of $ 311 and $ 411 , related to the operation of the Taxable Subsidiary, was recorded for the nine months ended September 30, 2023 and 2022, respectively.

Total income tax expense of $ 716 and $ 1,715 , related to the operation of the Taxable Subsidiary, for the three months ended March 31, 2024 and 2023, respectively, resulted in an effective income tax rate ("ETR") of 15.73 % and 24.43 %, respectively.

The decrease in the provision for income taxes and the ETR for the income taxes during the three months ended March 31, 2024 was primarily due to a favorable true-up to state net operating loss carryforwards, compared to the same period in 2023.

A current federal income tax expense of $ 791 and $ 325 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2024 and 2023, respectively.

A current state income tax expense of $ 251 and $ 213 , related to the operation of the Taxable Subsidiary, was recorded for the three months ended March 31, 2024 and 2023, respectively.

With respect to MTI, income taxes are accounted for under the asset and liability method pursuant to the provisions of ASC 740 related to income taxes.

2 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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

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

A net deferred tax asset of $ 12,064 and $ 14,386 , related to the cumulative book and tax temporary differences, existed at September 30, 2023 and December 31, 2022, respectively.

A deferred tax expense (benefit) related to the MTI temporary differences of $( 326 ) and $ 1,177 was recorded for the three months ended March 31, 2024 and 2023, respectively.

A net deferred tax asset of $ 10,526 and $ 10,200 , related to the cumulative book and tax temporary differences, existed at March 31, 2024 and December 31, 2023, respectively.

All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

September 30, 2023

SUBSEQUENT EVENTS

Quarterly Distribution.

On October 18, 2023, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the third quarter of 2023, or $ 0.020 per common unit on an annualized basis, which will be paid on November 14, 2023 to unitholders of record as of November 7, 2023.

On April 17, 2024, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the first quarter of 2024, or $ 0.020 per common unit on an annualized basis, which will be paid on May 15, 2024 to unitholders of record as of May 8, 2024.

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

What changed 10-Q

Item 1. Financial Statements