What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-04-23 compared with 2023-10-24 · 112 added, 335 removed, 323 unchanged (58% of the section changed)

3 unchanged sentences

Our four primary business lines include:

• Terminalling, processing, and storage 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;

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Martin Resource Management Corporation is an important supplier and customer of ours.

As of September 30, 2023, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.

Furthermore, on December 28, 2021, Martin Resource Management Corporation indirectly acquired, through its wholly owned subsidiary, Martin Resource LLC, the remaining 49% voting interest (50% economic interest) in MMGP Holdings, LLC ("Holdings"), which is the sole member of Martin Midstream GP LLC ("MMGP"), our general partner.

Such interests were previously held by certain affiliated investment funds managed by Alinda Capital Partners, which sold the interests to Senterfitt Holdings Inc.

(“Senterfitt”) on November 23, 2021.

At such time, Senterfitt granted Martin Resource LLC the right to purchase such interests for a period of ten years, which right was exercised on December 28, 2021.

As a result, Martin Resource Management Corporation indirectly owns 100% of MMGP.

Martin Resource Management Corporation directs our business operations through its ownership of our general partner.

MMGP owns a 2.0% general partner interest in us, and, until November 23, 2021, MMGP owned all of our incentive distribution rights.

On November 23, 2021, MMGP contributed to us all of our incentive distribution rights for no consideration, whereupon the incentive distribution rights were cancelled and cease to exist.

As of March 31, 2024, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and 100% of MMGP Holdings, LLC ("Holdings"), which is the sole member of Martin Midstream GP LLC ("MMGP"), our general partner.

MMGP owns a 2.0% general partner interest in us.

We entered into the Omnibus Agreement that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management Corporation and our use of certain of Martin Resource Management Corporation’s trade names and trademarks.

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Significant Recent Developments

Exit from Butane Optimization Business.

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

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

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

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

The following revenues and costs, which are included in the historical financial results for the twelve months ended September 30, 2023, will not be incurred under the new fee-based butane logistics business model.

Three Months Ended December 31, Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30, Twelve Months Ended September 30,

Products revenue $ 55,912 $ 56,890 $ 13,649 $ — $ 126,451

Cost of products sold 60,338 56,208 16,074 — 132,620

Selling, general and administrative expenses 309 372 140 — 821

$ (4,735) $ 310 $ (2,565) $ — $ (6,990)

Issuance of 2028 Notes to Refinance Existing Secured Notes .

On February 8, 2023, we completed the sale of $400.0 million in aggregate principal amount of our 2028 Notes.

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

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

Electronic Level Sulfuric Acid Joint Venture.

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

The Partnership expects to fund approximately $22.5 million in aggregate capital expenditures in connection with this joint venture and the Partnership’s related services in 2023 and 2024.

For the nine months ended September 30, 2023, we have funded approximately $4.6 million toward Elsa related project costs.

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

As of March 31, 2024, we have funded approximately $13.8 million toward ELSA related project costs.

On April 1, 2024, we contributed $6.5 million to DSM, which represents the cash contribution required pursuant to DSM's limited liability agreement for our 10% non-controlling interest.

Subsequent Events

Quarterly Distribution.

On October 18, 2023, we 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, we 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.

Critical Accounting Policies and Estimates

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Changes in these estimates could materially affect our financial position, results of operations or cash flows.

See the "Critical Accounting Policies and Estimates" section in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2, "Significant Accounting Policies" in Notes to Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Our Relationship with Martin Resource Management Corporation

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We are and will continue to be closely affiliated with Martin Resource Management Corporation as a result of the following relationships.

Martin Resource Management Corporation owns approximately 15.7% of the outstanding limited partner units.

In addition, following its acquisition of the remaining 49% voting interest (50% economic interest) in Holdings, which is the sole member of MMGP, Martin Resource Management Corporation indirectly owns 100% of MMGP, our general partner.

Martin Resource Management Corporation owns approximately 15.7% of the outstanding limited partner units and indirectly owns 100% of MMGP, our general partner, through its 100% interest in Holdings, which is the sole member of MMGP.

MMGP owns a 2% general partner interest in us.

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

We reimbursed Martin Resource Management Corporation for $43.2 million of direct costs and expenses for the three months ended September 30, 2023 compared to $40.8 million for the three months ended September 30, 2022.

We reimbursed Martin Resource Management Corporation for $122.7 million of direct costs and expenses for the nine months ended September 30, 2023 compared to $120.1 million for the nine months ended September 30, 2022.

We reimbursed Martin Resource Management Corporation for $39.3 million of direct costs and expenses for the three months ended March 31, 2024 compared to $40.9 million for the three months ended March 31, 2023.

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

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

In each of the three months ended September 30, 2023 and 2022, the Conflicts Committee approved reimbursement amounts of $3.5 million and $3.4 million, respectively.

In each of the nine months ended September 30, 2023 and 2022, the Conflicts Committee approved reimbursement amounts of $10.5 million and $10.1 million, respectively.

In each of the three months ended March 31, 2024 and 2023, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.5 million, respectively.

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

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Martin Resource Management Corporation also licenses certain of its trademarks and trade names to us under the Omnibus Agreement.

These additional related party agreements include, but are not limited to, a master transportation services agreement, marine transportation agreements, terminal services agreements, a tolling agreement, and a sulfuric acid sales agency agreement.

Pursuant to the terms of the Omnibus Agreement, we are prohibited from entering into certain material agreements with Martin Resource Management Corporation without the approval of the Conflicts Committee.

For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please refer to "Item 13.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.

We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin Resource Management Corporation.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 29% and 18% of our total costs and expenses during the three months ended September 30, 2023 and 2022, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 23% and 18% of our total costs and expenses during the nine months ended September 30, 2023 and 2022, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 26% and 20% of our total costs and expenses during the three months ended March 31, 2024 and 2023, respectively.

Correspondingly, Martin Resource Management Corporation is one of our significant customers.

Our sales to Martin Resource Management Corporation accounted for approximately 15% and 10% of our total revenues for the three months ended September 30, 2023 and 2022, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 13% and 9% of our total revenues for the nine months ended September 30, 2023 and 2022, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 15% and 10% of our total revenues for the three months ended March 31, 2024 and 2023, respectively.

For a more comprehensive discussion concerning the agreements that we have entered into with Martin Resource Management Corporation, please refer to "Item 13.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Certain Relationships and Related Transactions, and Director Independence" set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.

Approval and Review of Related Party Transactions

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If the board of directors of our general partner is involved in the approval process, it determines whether to refer the matter to the Conflicts Committee of our general partner's board of directors, as constituted under our limited partnership agreement.

If a matter is referred to the Conflicts

Committee, the Conflicts Committee obtains information regarding the proposed transaction from management and determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.

If a matter is referred to the Conflicts Committee, the Conflicts Committee obtains information regarding the proposed transaction from management and determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.

If the Conflicts Committee retains such counsel or financial advisor, it considers such advice and, in the case of a financial advisor, such advisor’s opinion as to whether the transaction is fair and reasonable to us and to our unitholders.

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To compensate for these limitations, we believe that it is important to consider Net Cash Provided by (Used in) Operating Activities determined under GAAP, as well as Distributable Cash Flow and Adjusted Free Cash Flow, to evaluate our overall liquidity.

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and nine months ended September 30, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow:

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

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

2023 2022 2023 2022

(in thousands) (in thousands)

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

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three months ended March 31, 2024 and 2023, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow:

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

Three Months Ended March 31,

(in thousands)

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

Interest expense 13,842 15,657

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EBITDA 30,560 25,307

Gain on disposition or sale of property, plant and equipment (811) (790) (1,096) (1,050)

(Gain) loss on disposition or sale of property, plant and equipment (208) 388

Loss on extinguishment of debt — 5,121

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

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

2023 2022 2023 2022

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

Net cash provided by (used in) operating activities $ 10,109 $ 49,264

3 unchanged sentences

Lower of cost or net realizable value and other non-cash adjustments — (9,133)

Commodity cash flow hedging gains reclassified to earnings — 167 — 901

Net cash paid for closed commodity derivative positions included in AOCI — — — (85)

Changes in operating assets and liabilities which (provided) used cash:

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Results of Operations

The results of operations for the three and nine months ended September 30, 2023 and 2022 have been derived from our consolidated and condensed financial statements.

The results of operations for the three months ended March 31, 2024 and 2023 have been derived from our consolidated and condensed financial statements.

We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling, general and administrative expenses, and depreciation and amortization expense from revenues.

The following table sets forth our operating revenues and operating income by segment for the three and nine months ended September 30, 2023 and 2022.

The following table sets forth our operating revenues and operating income by segment for the three months ended March 31, 2024 and 2023.

The results of operations for these interim periods are not necessarily indicative of the results of operations which might be expected for the entire year.

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Further, our 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.

Our consolidated and condensed results of operations are presented on a comparative basis below.

1 unchanged sentence

These items, including interest expense and indirect selling, general and administrative expenses, are discussed following the comparative discussion of our results within each segment.

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Three Months Ended September 30, 2023 (in thousands)

Terminalling and storage $ 23,973 $ (1,771) $ 22,202 $ 3,107 $ (1,750) $ 1,357

Transportation 58,541 (3,318) 55,223 6,677 (3,354) 3,323

Sulfur services 32,577 — 32,577 2,743 3,250 5,993

Specialty products 66,720 (25) 66,695 6,014 1,854 7,868

Indirect selling, general and administrative

— — — (3,837) — (3,837)

Total $ 181,811 $ (5,114) $ 176,697 $ 14,704 $ — $ 14,704

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

after Eliminations Operating Income (Loss) Operating Income (Loss) Intersegment Eliminations Operating

Income (Loss)

Three Months Ended September 30, 2022 (in thousands)

Terminalling and storage $ 23,034 $ (3,046) $ 19,988 $ (47) $ (2,999) $ (3,046)

Transportation 63,514 (4,521) 58,993 12,073 (4,545) 7,528

Sulfur services 28,868 — 28,868 (6,676) 2,733 (3,943)

Specialty products 121,483 (27) 121,456 (13,334) 4,811 (8,523)

Indirect selling, general and administrative

— — — (4,260) — (4,260)

Total $ 236,899 $ (7,594) $ 229,305 $ (12,244) $ — $ (12,244)

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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Income (Loss)

Nine Months Ended September 30, 2023 (in thousands)

Three Months Ended March 31, 2024 (in thousands)

Terminalling and storage $ 24,285 $ (1,768) $ 22,517 $ 3,657 $ (1,700) $ 1,957

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Income (Loss)

Nine Months Ended September 30, 2022 (in thousands)

Three Months Ended March 31, 2023 (in thousands)

Terminalling and storage $ 23,919 $ (3,061) $ 20,858 $ 3,108 $ (3,044) $ 64

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Terminalling and Storage Segment

Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

Revenues $ 23,973 $ 23,034 $ 939 4 %

Cost of products sold 23 6 17 283 %

Operating expenses 15,078 16,418 (1,340) (8) %

Selling, general and administrative expenses 628 457 171 37 %

Depreciation and amortization 5,102 6,200 (1,098) (18) %

3,142 (47) 3,189 6,785 %

Other operating loss, net (35) — (35)

Operating income (loss) $ 3,107 $ (47) $ 3,154 6,711 %

Shore-based throughput volumes (gallons) 40,655 14,658 25,997 177 %

Smackover refinery throughput volumes (guaranteed minimum BBL per day) 6,500 6,500 — — %

Revenues increased $0.9 million, of which $0.8 million was primarily a result of increased fuel throughput at our shore-based terminals.

In addition, revenue at our specialty terminals increased $0.5 million primarily as a result of higher throughput and storage revenue as a result of contractually prescribed, index-based fee adjustments.

Revenue at our Smackover refinery decreased $0.7 million as a result of decreased pipeline revenue of $1.4 million, offset by increases in throughput revenue of $0.3 million and reservation fees of $0.3 million.

Operating expenses.

Operating expenses decreased primarily as a result of lease expense of $1.4 million and natural gas utilities of $0.6 million, offset by increased insurance premiums of $0.3 million and employee related expenses of $0.1 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily due to employee-related expenses.

Depreciation and amortization.

The decrease in depreciation and amortization is primarily the result of asset disposals, offset by capital expenditures.

Other operating loss, net.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Variance Percent Change

(In thousands, except BBL per day)

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3,555 3,457 98 3 %

Other operating loss, net (359) (35) (324) (926) %

Operating income (loss) $ 10,661 $ (258) $ 10,919 4,232 %

Other operating income (loss), net 102 (349) 451 129 %

Operating income $ 3,657 $ 3,108 $ 549 18 %

Shore-based throughput volumes (gallons) 45,769 43,349 2,420 6 %

Smackover refinery throughput volumes (guaranteed minimum) (BBL per day) 6,500 6,500 — — %

Revenues increased $2.8 million, of which $2.6 million was primarily a result of increased fuel throughput at our shore-based terminals.

In addition, revenue at our specialty terminals increased $1.3 million primarily as a result of higher throughput and storage revenue resulting from contractually prescribed, index-based fee adjustments.

Revenue at our Smackover refinery decreased $1.3 million as a result of decreased pipeline revenue of $4.2 million, offset by increases in natural gas surcharge revenue of $1.2 million, reservation fees of $0.9 million, and throughput revenue of $0.8 million.

Revenues increased $0.4 million.

Revenue at our shore-based terminals increased $0.9 million, including $0.5 million in fuel throughput and $0.4 million in space rent.

In addition, revenue at our specialty terminals increased $0.3 million primarily as a result of higher throughput and storage revenue.

Revenue at our Smackover refinery decreased $0.8 million primarily as a result of decreased natural gas surcharge revenue.

Operating expenses.

Operating expenses decreased primarily as a result of lease expense of $4.1 million and natural gas utilities of $0.3 million, offset by increased employee-related expenses of $0.4 million.

Operating expenses increased primarily as a result of insurance premiums of $1.1 million, repairs and maintenance of $0.4 million, operating supplies of $0.2 million and employee-related expenses of $0.2 million, offset by a decrease in natural gas utilities of $1.2 million .

Selling, general and administrative expenses.

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The decrease in depreciation and amortization is primarily the result of asset disposals, offset by capital expenditures.

Other operating loss, net.

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

Other operating income (loss), net.

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

Transportation Segment

Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Variance Percent Change

(In thousands)

Revenues $ 58,541 $ 63,514 $ (4,973) (8) %

Operating expenses 46,465 46,499 (34) — %

Selling, general and administrative expenses 2,571 1,962 609 31 %

Depreciation and amortization 3,674 3,598 76 2 %

5,831 11,455 (5,624) (49) %

Other operating income, net 846 618 228 37 %

Operating income $ 6,677 $ 12,073 $ (5,396) (45) %

Marine Transportation Revenues .

Inland revenues increased $1.4 million, primarily related to higher transportation rates, offset by a decrease in utilization associated with equipment repairs and regulatory inspections.

Additionally, there was a decline in pass-through revenue (primarily fuel) of $0.6 million.

Land Transportation Revenues.

Revenue decreased $1.8 million, primarily due to an 8% decrease in miles, offset by a 22% increase in load count.

Additionally, ancillary revenue decreased $4.0 million.

Operating expenses .

Operating expenses remained relatively consistent.

Selling, general and administrative expenses .

Selling, general and administrative expenses increased primarily due to employee-related expenses.

Depreciation and amortization.

Depreciation and amortization remained relatively consistent.

Other operating income, net.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Operating income $ 9,831 $ 9,442 $ 389 4 %

Marine Transportation Revenues.

Inland revenues increased $6.2 million, primarily related to higher transportation rates coupled with a decrease in pass-through revenue (primarily fuel) of $2.1 million.

Land Transportation Revenues.

Revenue increased $5.5 million primarily due to a 29% increase in load count combined with a 1% increase in total miles, offset by a decrease in ancillary revenue of $7.1 million.

Revenues for our Transportation Segment increased $0.1 million.

In our marine transportation division, inland revenues increased $2.3 million, primarily related to higher transportation rates, offset by a decrease in offshore revenue of $0.2 million due to downtime related to regulatory inspections.

In our land transportation division, revenue decreased $2.0 million primarily due to a decrease in ancillary revenue of $3.1 million, offset by a $1.1 million increase in freight revenue related to a 17% increase in load count combined with a 4% increase in total miles.

Operating expenses.

The increase in operating expenses is primarily a result of employee-related expenses of $4.8 million, lease expense of $3.6 million, repairs and maintenance of $2.9 million and insurance premiums of $1.2 million, offset by pass-through expenses (primarily fuel) of $5.2 million and recruitment expenses of $0.4 million.

The increase in operating expenses is primarily a result of lease expense of $1.8 million and insurance premiums of $0.6 million, offset by repairs and maintenance of $1.5 million and pass-through expenses (primarily fuel) of $0.4 million.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily due to higher employee-related expenses .

Selling, general and administrative expenses decreased primarily due to lower employee-related expenses .

Depreciation and amortization.

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

The decrease in depreciation and amortization is primarily the result of asset disposals, offset by capital expenditures.

Other operating income, net.

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Sulfur Services Segment

Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Variance Percent Change

(In thousands)

Services $ 3,358 $ 3,085 $ 273 9 %

Products 29,219 25,783 3,436 13 %

Total revenues 32,577 28,868 3,709 13 %

Cost of products sold 21,972 27,201 (5,229) (19) %

Operating expenses 3,510 3,978 (468) (12) %

Selling, general and administrative expenses 1,713 1,509 204 14 %

Depreciation and amortization 2,639 2,786 (147) (5) %

2,743 (6,606) 9,349 142 %

Other operating loss, net — (70) 70 100 %

Operating income (loss) $ 2,743 $ (6,676) $ 9,419 141 %

Sulfur (long tons) 155 95 60 63 %

Fertilizer (long tons) 58 24 34 142 %

Total sulfur services volumes (long tons) 213 119 94 79 %

Services revenues.

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

Products revenues.

Products revenues decreased $9.5 million as a result of a 37% drop in average sulfur services sales prices, offset by an increase of $12.9 million due to a 79% increase in sales volumes, primarily related to a 142% increase in fertilizer volumes.

Cost of products sold.

A 55% decrease in product cost impacted cost of products sold by $14.9 million, resulting from a drop in commodity prices.

A 79% increase in sales volumes resulted in an offsetting increase in cost of products sold of $9.7 million.

Margin per ton increased $45.94, or 386%.

Operating expenses.

Operating expenses decreased due to decreases in insurance claims of $0.3 million and outside towing of $0.2 million.

There were no other individually significant fluctuations between periods.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased primarily due to higher employee-related expenses.

Depreciation and amortization.

Depreciation and amortization decreased largely due to the sale of the Stockton assets in the fourth quarter of 2022.

Other operating loss, net.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Products revenues.

Products revenues decreased $45.7 million as a result of a 34% drop in average sulfur products sales prices.

Products revenues increased $8.5 million due to a 9% increase in sales volumes, primarily related to a 13% increase in fertilizer volumes.

Products revenues decreased $7.6 million as a result of a 24% reduction in average sulfur products sales prices.

Products revenues increased $5.5 million due to a 22% increase in sales volumes, primarily related to a 24% increase in sulfur volumes.

Cost of products sold.

A 36% decrease in product cost impacted cost of products sold by $38.0 million, resulting from a drop in commodity prices.

A 22% decrease in product cost impacted cost of products sold by $5.3 million, resulting from reduced commodity prices.

A 22% increase in sales volumes resulted in an increase in cost of products sold of $4.1 million.

1 unchanged sentence

Operating expenses.

Operating expenses decreased due to decreases in outside towing of $0.7 million, marine fuel and lube expense of $0.6 million, insurance claims of $0.5 million, and repairs and maintenance of $0.3 million offset by an increase in utilities of $0.3 million.

There were no other individually significant fluctuations between periods.

Operating expenses remained consistent.

Selling, general and administrative expenses.

1 unchanged sentence

Depreciation and amortization.

Depreciation and amortization decreased largely due to the sale of the Stockton assets in the fourth quarter of 2022.

Depreciation and amortization increased due to the amortization of higher turnaround spend in 2023 as compared to 2022.

Other operating income (loss), net.

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Specialty Products Segment

Comparative Results of Operations for the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Variance Percent Change

(In thousands)

Products revenues $ 66,720 $ 121,484 $ (54,764) (45) %

Cost of products sold 58,177 131,790 (73,613) (56) %

Operating expenses 23 26 (3) (12) %

Selling, general and administrative expenses 1,698 2,107 (409) (19) %

Depreciation and amortization 808 1,137 (329) (29) %

6,014 (13,576) 19,590 144 %

Other operating income, net — 242 (242) (100) %

Operating income (loss) $ 6,014 $ (13,334) $ 19,348 145 %

NGL sales volumes (Bbls) 509 1,180 (671) (57) %

Other specialty products volumes (Bbls) 106 110 (4) (4) %

Total specialty products volumes (Bbls) 615 1,290 (675) (52) %

Products Revenues.

Product revenues decreased $28.4 million as a result of the exit of the butane optimization business in the second quarter 2023.

For the remaining products, sales volumes decreased 26%, lowering revenues by $22.9 million, primarily related to a 29% decrease in NGL sales volumes.

Our average sales price per barrel decreased $4.19, or 4%, decreasing revenues by $3.5 million.

Cost of products sold .

Cost of products sold decreased $47.9 million as a result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, the decrease in sales volumes of 26% resulted in a $20.0 million reduction to cost of products sold.

Our average cost per barrel decreased $6.92, or 7%, decreasing cost of products sold by $5.7 million.

Our margins increased $2.72 per barrel, or 24%, during the period.

Operating expenses.

Operating expenses remained consistent.

Selling, general and administrative expenses .

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

Depreciation and amortization.

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

Other operating income, net.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, Variance Percent Change

Comparative Results of Operations for the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Product revenues decreased $56.9 million as a result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, sales volumes decreased 22%, lowering revenues by $58.8 million, primarily related to a 24% decrease in NGL sales volumes.

Products revenues decreased $26.3 million as a result of a 9% drop in average specialty products sales prices.

For the remaining products, sales volumes decreased 8%, lowering revenues by $5.4 million, primarily related to an 8% decrease in NGL sales volumes.

Products revenues decreased $3.7 million as a result of a 5% reduction in average specialty products sales prices.

Cost of products sold .

Cost of products sold decreased $56.2 million as a result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, an 11% decrease in product cost impacted cost of products sold by $29.6 million, resulting from a drop in commodity prices.

A 22% reduction in sales volumes resulted in an additional decrease in cost of products sold of $52.3 million.

For the remaining products, a 6% decrease in product cost impacted cost of products sold by $3.8 million, resulting from reduced commodity prices.

An 8% reduction in sales volumes resulted in an additional decrease in cost of products sold of $4.8 million.

Operating expenses.

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Selling, general and administrative expenses .

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

Selling, general and administrative expenses decreased $0.6 million related to lower employee-related expenses and $0.4 million due to the exit of the butane optimization business in the second quarter of 2023.

Depreciation and amortization.

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

Depreciation and amortization decreased due to certain assets becoming fully depreciated during the first quarter of 2023.

Other operating income (loss), net.

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Interest Expense

Comparative Components of Interest Expense, Net for the Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30, Variance Percent Change

(In thousands)

Credit facility $ 1,608 $ 2,695 $ (1,087) (40) %

Senior notes 11,756 9,830 1,926 20 %

Amortization of deferred debt issuance costs 771 788 (17) (2) %

Amortization of debt discount 600 — 600

Other 277 592 (315) (53) %

Finance leases — 1 (1) (100) %

Capitalized interest (18) — (18)

Total interest expense, net $ 14,994 $ 13,906 $ 1,088 8 %

Comparative Components of Interest Expense, Net for the Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30, Variance Percent Change

Comparative Components of Interest Expense, Net for the Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Other 331 589 (258) (44) %

Finance leases — 7 (7) (100) %

Capitalized interest (142) (4) (138) (3,450) %

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Indirect Selling, General and Administrative Expenses

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2023 2022 2023 2022

(In thousands) (In thousands)

Three Months Ended March 31, Variance Percent Change

(In thousands)

Indirect selling, general and administrative expenses $ 3,836 $ 4,198 $ (362) (9) %

Indirect selling, general and administrative expenses decreased for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 as a result of decreased employee-related expenses.

Indirect selling, general and administrative expenses decreased for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 as a result of decreased employee-related expenses of $1.3 million, offset by an increase in overhead expenses allocated from Martin Resource Management Corporation of $0.4 million and increased professional fees of $0.1 million.

Indirect selling, general and administrative expenses decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 as a result of decreases in overhead expenses allocated from Martin Resource Management of $0.1 million, employee-related expenses of $0.1 million, and professional fees of $0.1 million.

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

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GAAP also permits other methods for allocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment.

The allocation of these expenses between Martin Resource Management Corporation and us is subject to a number of judgments and estimates,

regardless of the method used.

The allocation of these expenses between Martin Resource Management Corporation and us is subject to a number of judgments and estimates, regardless of the method used.

We can provide no assurances that our method of allocation, in the past or in the future, is or will be the most accurate or appropriate method of allocation for these expenses.

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Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses.

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, Variance Percent Change Nine Months Ended September 30, Variance Percent Change

2023 2022 2023 2022

(In thousands) (In thousands)

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, Variance Percent Change

(In thousands)

Conflicts Committee approved reimbursement amount

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

Cash Flows - Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022

The following table details the cash flow changes between the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30, Variance Percent Change

Cash Flows - Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

The following table details the cash flow changes between the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, Variance Percent Change

(In thousands)

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Net increase (decrease) in cash and cash equivalents $ — $ 12 $ (12) (100) %

Net cash provided by (used in) operating activities.

The increase in net cash provided by operating activities for the nine months ended September 30, 2023 includes an increase in operating results and other non-cash charges of $6.6 million combined with a favorable variance in cash flows associated with changes in working capital of $116.2 million, which includes $107.3 million related to the liquidation of working capital associated with our butane optimization business and will be non-recurring in future reporting periods.

Net cash provided by operating activities.

The decrease in net cash provided by operating activities for the three months ended March 31, 2024 includes an increase in operating results and other non-cash charges of $0.2 million, offset by an unfavorable variance in cash flows associated with changes in working capital of $39.3 million.

Net cash used in investing activities.

Net cash used in investing activities for the nine months ended September 30, 2023 decreased $0.6 million.

A decrease in cash used of $2.4 million resulted from lower payments for capital expenditures and plant turnaround costs in 2023.

In addition, net proceeds from the sale of property, plant and equipment increased $3.0 million.

Net cash used in investing activities for the three months ended March 31, 2024 increased $13.2 million.

An increase in cash used of $9.9 million resulted from higher payments for capital expenditures and plant turnaround costs in 2024.

In addition, net proceeds from the sale of property, plant and equipment decreased $3.3 million.

Net cash (used in) provided by financing activities.

Net cash (used in) provided by financing activities for the nine months ended September 30, 2023 increased primarily as a result of a $110.4 million increase in net payments of long-term borrowings.

Additionally, payments of debt issuance costs increased $14.2 million.

Net cash (used in) provided by financing activities for the three months ended March 31, 2024 increased primarily as a result of a $38.7 million increase in net borrowings of long-term debt.

Additionally, payments of debt issuance costs decreased $13.6 million.

Total Contractual Obligations

A summary of our total contractual cash obligations as of September 30, 2023, is as follows:

A summary of our total contractual cash obligations as of March 31, 2024, is as follows:

Payments due by period

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Letters of Credit .

At September 30, 2023, we had outstanding irrevocable letters of credit in the amount of $9.4 million, which were issued under our credit facility.

At March 31, 2024, we had outstanding irrevocable letters of credit in the amount of $9.2 million, which were issued under our credit facility.

Off-Balance Sheet Arrangements.

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Credit Facility

At September 30, 2023, we maintained a $175.0 million credit facility that matures on February 8, 2027.

As of September 30, 2023, we had $62.5 million outstanding under the credit facility and $9.4 million of outstanding irrevocable letters of credit, leaving a maximum available amount to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $103.1 million.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $84.1 million in additional amounts thereunder as of September 30, 2023.

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

The commitments under the amended credit facility can be increased from time to time upon our request, subject to certain conditions (including the consent of the increasing lenders), up to an additional $50.0 million.

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

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

From February 8, 2023 through September 30, 2023, the level of outstanding draws on our amended credit facility ranged from a low of $57.5 million to a high of $138.0 million.

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

Obligations under the amended credit facility are secured by first priority liens on substantially all of our assets and those of the guarantors, including, without limitation, inventory, accounts receivable, bank accounts, marine vessels, equipment, fixed assets and the interests in certain subsidiaries.

We may prepay all amounts outstanding under the amended credit facility at any time without premium or penalty (other than customary breakage costs associated with Adjusted Term SOFR (as defined in the amended credit facility), subject to certain notice requirements.

The amended credit facility requires mandatory prepayments of amounts outstanding thereunder with excess cash that exceeds $25.0 million and the net proceeds of certain asset sales.

Indebtedness under the credit facility bears interest at our option at the Adjusted Term SOFR (as defined in the amended credit facility), plus an applicable margin, or the Alternate Base Rate (the highest of the Federal Funds Rate plus 0.50%, the one-month Adjusted Term SOFR plus 1.0%, or the administrative agent’s prime rate) plus an applicable margin.

We pay a per annum fee on all letters of credit issued under the amended credit facility, and we pay a commitment fee per annum on the unused revolving credit commitments under the amended credit facility.

The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on our Total Leverage Ratio (as defined in the amended credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) and are as follows:

Leverage Ratio

ABR Loans Term SOFR Rate Loans and Letters of Credit

Less than 3.00 to 1.00 1.75 % 2.75 %

Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00 2.00 % 3.00 %

Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00 2.25 % 3.25 %

Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00 2.50 % 3.50 %

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

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

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

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

• a minimum Interest Coverage Ratio (as defined in the amended credit facility) of 2.00:1.00;

• a maximum Total Leverage Ratio of 4.75:1.00, stepping down to 4.50:1.00 on March 31, 2025;

• a maximum First Lien Leverage Ratio (as defined in the amended credit facility) of 1.50:1.00.

In addition, the amended credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to:

(i) grant or assume liens;

(ii) make investments (including investments in our joint ventures) and acquisitions;

(iii) enter into certain types of hedging agreements;

(iv) incur or assume indebtedness;

(v) sell, transfer, assign or convey assets;

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our pro forma Total Leverage Ratio is less than 4.50:1.00, our pro forma First Lien Leverage Ratio is less than 1.00 to 1.00, and our pro forma liquidity is greater than or equal to 35% of the commitments under our amended credit facility) and certain other restricted payments;

(vii) change the nature of our business;

(viii) engage in transactions with affiliates;

(ix) enter into certain burdensome agreements;

(x) make certain amendments to the Omnibus Agreement and our material agreements;

and (xi) permit our joint ventures to incur indebtedness or grant certain liens.

The amended credit facility contains customary events of default, including, without limitation:

(i) failure to pay any principal, interest, fees, expenses or other amounts when due;

(ii) failure to meet the quarterly financial covenants;

(iii) failure to observe any other agreement, obligation, or covenant in the amended credit facility or any related loan document, subject to cure periods for certain failures;

(iv) the failure of any representation or warranty to be materially true and correct when made;

(v) our, or any of our subsidiaries’ default under other indebtedness that exceeds a threshold amount;

(vi) bankruptcy or other insolvency events involving us or any of our subsidiaries;

(vii) judgments against us or any of our subsidiaries, in excess of a threshold amount;

(viii) certain ERISA events involving us or any of our subsidiaries, in excess of a threshold amount;

(ix) a change in control (as defined in the amended credit facility);

and (x) the invalidity of any of the loan documents or the failure of any of the collateral documents to create a lien on the collateral.

The amended credit facility also contains certain default provisions relating to Martin Resource Management Corporation.

If Martin Resource Management Corporation no longer controls our general partner, the lenders under the amended credit facility may declare all amounts outstanding thereunder immediately due and payable.

In addition, an event of default by Martin Resource Management Corporation under its credit facility could independently result in an event of default under our amended credit facility if it is deemed to have a material adverse effect on us.

If an event of default relating to bankruptcy or other insolvency events occurs with respect to us or any of our subsidiaries, all indebtedness under our amended credit facility will immediately become due and payable.

If any other event of default exists under our amended credit facility, the lenders may terminate their commitments to lend us money, accelerate the maturity of the indebtedness outstanding under the amended credit facility and exercise other rights and remedies.

In addition, if any event of default exists under our amended credit facility, the lenders may commence foreclosure or other actions against the collateral.

At March 31, 2024, we maintained a $175.0 million credit facility that matures on February 8, 2027.

As of March 31, 2024, we had $50.0 million outstanding under the credit facility and $9.2 million of outstanding irrevocable letters of credit, leaving a maximum available amount to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $115.8 million.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $101.4 million in additional amounts thereunder as of March 31, 2024.

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

The level of outstanding draws on our credit facility from January 1, 2024 through March 31, 2024 ranged from a low of $40.5 million to a high of $66.5 million.

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

The applicable margin for Adjusted Term SOFR borrowings effective April 17, 2024 remains at 3.25%.

For a description of our credit facility, see “Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Description of Our Long-Term Debt" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.

For a description of our 2028 Notes, see "Item 7.

Capital Resources and Liquidity

Historically, we have generally satisfied our working capital requirements and funded our debt service obligations and capital expenditures with cash generated from operations and borrowings under our credit facility.

On September 30, 2023, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $103.1 million under our credit facility with $62.5 million of borrowings outstanding.

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

On March 31, 2024, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $115.8 million under our credit facility with $50.0 million of borrowings outstanding.

After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $101.4 million in additional amounts thereunder as of March 31, 2024.

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

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For a discussion of such risks, please read "Item 1A.

Risk Factors" of our Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Risk Factors" of our Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.

In addition, due to the covenants in our credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility.

We are in compliance with all debt covenants as of September 30, 2023 and expect to be in compliance for the next twelve months.

We are in compliance with all debt covenants as of March 31, 2024 and expect to be in compliance for the next twelve months.

Interest Rate Risk

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

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

However, our Terminalling and Storage

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

Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling and Storage, Sulfur Services, and Transportation business segments.

Impact of Inflation

Inflation did not have a material impact on our results of operations for the nine months ended September 30, 2023 or 2022.

Inflation did not have a material impact on our results of operations for the three months ended March 31, 2024 or 2023.

Inflation may increase the cost to acquire or replace property, plant and equipment.

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Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the nine months ended September 30, 2023 or 2022.

We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during the three months ended March 31, 2024 or 2023.

On March 6, 2024, the U.S.

Securities and Exchange Commission (“SEC”) adopted a new set of rules that require a wide range of climate-related disclosures, including material climate-related risks, information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition, Scope 1 and Scope 2 Greenhouse Gas (“GHG”) emissions on a phased-in basis by certain larger registrants when those emissions are material and the filing of an attestation report covering the same, and disclosure of the financial statement effects of severe weather events and other natural conditions including costs and losses.

Compliance dates under the final rule are phased in by registrant category.

Multiple lawsuits have been filed challenging the SEC’s new climate rules, which have been consolidated and will be heard in the U.S.

Court of Appeals for the Eighth Circuit.

On April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete.

In accordance with the requirements of the Inflation Reduction Act of 2022, on January 26, 2024, the U.S.

Environmental Protection Agency (“EPA”) published its proposed rule regarding the Waste Emissions Charge, applicable to excess methane emissions at certain oil and natural gas facilities.

Further, on March 8, 2024, the EPA published its final rules imposing new, stricter requirements for methane monitoring, reporting, and emissions control at certain oil and natural gas facilities.

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 2. Management’s Discussion and Analysis