What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-23 compared with 2024-04-23 · 252 added, 86 removed, 349 unchanged (49% of the section changed)

14 unchanged sentences

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

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.

As of June 30, 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.

6 unchanged sentences

Significant Recent Developments

MMLP Receives Buyout Offer from Martin Resource Management.

On May 24, 2024, we announced that Martin Resource Management filed an amendment to its Schedule 13D (the “13D Amendment”) with the SEC.

The 13D Amendment disclosed that Martin Resource Management submitted a non-binding proposal to the Conflicts Committee, pursuant to which Martin Resource Management would acquire all of the outstanding Common Units of the Partnership not already owned by Martin Resource Management or its subsidiaries for a cash purchase price of $3.05 per Common Unit.

The other terms of such proposal are set forth in the 13D Amendment.

The proposed transaction is subject to several contingencies, including the approval of the Conflicts Committee and the Board of Directors, the approval by the Partnership’s unitholders, and the satisfaction of any conditions to the

consummation of a transaction set forth in any definitive agreement concerning the transaction.

There can be no assurance that definitive documentation will be executed or that any transaction will materialize on the terms described above or at all.

Galveston Bridge Allision.

During May 2024, we experienced a casualty loss of $0.5 million that represents two separate insurance deductibles under our marine transportation protection and indemnity coverage policy and our hull coverage policy stemming from a bridge allision in Galveston, Texas.

Electronic Level Sulfuric Acid Joint Venture.

4 unchanged sentences

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

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

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

We expect to fund approximately $27.0 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.

As of June 30, 2024, we have funded approximately $23.9 million toward ELSA related project costs.

Subsequent Events

Quarterly Distribution.

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.

On July 17, 2024, we declared a quarterly cash distribution of $0.005 per common unit for the second quarter of 2024, or $0.020 per common unit on an annualized basis, which will be paid on August 14, 2024, to unitholders of record as of August 7, 2024.

Critical Accounting Policies and Estimates

12 unchanged sentences

• operating a crude oil gathering business in Stephens, Arkansas;

• providing crude oil gathering, refining, and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas;

• providing crude oil gathering and marketing services of base oils, asphalt, and distillate products in Smackover, Arkansas;

• providing crude oil marketing and transportation from the well head to the end market;

12 unchanged sentences

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 $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.

We reimbursed Martin Resource Management Corporation for $42.9 million of direct costs and expenses for the three months ended June 30, 2024, compared to $38.6 million for the three months ended June 30, 2023.

We reimbursed Martin Resource Management Corporation for $82.2 million of direct costs and expenses for the six months ended June 30, 2024, compared to $79.5 million for the six months ended June 30, 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 March 31, 2024 and 2023, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.5 million, respectively.

In each of the three months ended June 30, 2024 and 2023, the Conflicts Committee approved reimbursement amounts of $3.4 million and $3.5 million, respectively.

In each of the six months ended June 30, 2024 and 2023, the Conflicts Committee approved reimbursement amounts of $6.8 million and $7.0 million, respectively.

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

7 unchanged sentences

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 26% and 20% of our total costs and expenses during the three months ended March 31, 2024 and 2023, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 28% and 24% of our total costs and expenses during the three months ended June 30, 2024 and 2023, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 27% and 21% of our total costs and expenses during the six months ended June 30, 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 March 31, 2024 and 2023, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 14% and 17% of our total revenues for the three months ended June 30, 2024 and 2023, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 15% and 13% of our total revenues for the six months ended June 30, 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.

41 unchanged sentences

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 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:

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the three and six months ended June 30, 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)

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

2024 2023 2024 2023

(in thousands) (in thousands)

Net income (loss) $ 3,780 $ 1,081 $ 7,053 $ (4,005)

3 unchanged sentences

EBITDA 32,616 29,887 63,176 55,194

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

Gain on disposition or sale of property, plant and equipment (953) (673) (1,161) (285)

Loss on extinguishment of debt — — — 5,121

7 unchanged sentences

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 March 31,

(in thousands)

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

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

2024 2023 2024 2023

(in thousands) (in thousands)

Net cash provided by operating activities $ 11,828 $ 49,510 $ 21,937 $ 98,774

Interest expense 1

20 unchanged sentences

Principal payments under finance lease obligations (1) (3) (1) (9)

Investment in DSM Semichem LLC (6,938) — (6,938) —

Expansion capital expenditures (5,450) (1,925) (11,681) (2,682)

Adjusted free cash flow $ (2,855) $ 7,809 $ (3,440) $ 16,502

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

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

Results of Operations

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

The results of operations for the three and six months ended June 30, 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 months ended March 31, 2024 and 2023.

The following table sets forth our operating revenues and operating income by segment for the three and six months ended June 30, 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.

Effective January 1, 2023, we reorganized our Terminalling and Storage and Natural Gas Liquids operating segments.

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

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).

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

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

1 unchanged sentence

Income (Loss)

Three Months Ended March 31, 2024 (in thousands)

Three Months Ended June 30, 2024 (In thousands)

Terminalling and storage $ 24,402 $ (2,027) $ 22,375 $ 3,302 $ (1,986) $ 1,316

8 unchanged sentences

Income (Loss)

Three Months Ended March 31, 2023 (in thousands)

Three Months Ended June 30, 2023 (In thousands)

Terminalling and storage $ 23,906 $ (2,222) $ 21,684 $ 4,446 $ (2,210) $ 2,236

5 unchanged sentences

Total $ 201,529 $ (5,893) $ 195,636 $ 17,329 $ — $ 17,329

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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

Income (Loss)

Six Months Ended June 30, 2024 (In thousands)

Terminalling and storage $ 48,687 $ (3,795) $ 44,892 $ 6,959 $ (3,686) $ 3,273

Transportation 123,509 (7,526) 115,983 17,867 (7,599) 10,268

Sulfur services 70,874 (1) 70,873 11,148 6,753 17,901

Specialty products 133,663 (50) 133,613 9,503 4,532 14,035

Indirect selling, general and administrative

— — — (7,655) — (7,655)

Total $ 376,733 $ (11,372) $ 365,361 $ 37,822 $ — $ 37,822

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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

Income (Loss)

Six Months Ended June 30, 2023 (In thousands)

Terminalling and storage $ 47,825 $ (5,283) $ 42,542 $ 7,554 $ (5,254) $ 2,300

Transportation 120,334 (9,861) 110,473 18,458 (9,934) 8,524

Sulfur services 76,009 — 76,009 9,839 6,058 15,897

Specialty products 211,175 (34) 211,141 7,075 9,130 16,205

Indirect selling, general and administrative

— — — (8,092) — (8,092)

Total $ 455,343 $ (15,178) $ 440,165 $ 34,834 $ — $ 34,834

Terminalling and Storage Segment

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

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

(In thousands, except BBL per day)

5 unchanged sentences

2,307 4,421 (2,114) (48) %

Other operating income, net 995 25 970 3,880 %

Operating income $ 3,302 $ 4,446 $ (1,144) (26) %

Shore-based throughput volumes (gallons) 42,491 42,434 57 — %

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

Revenues increased $0.5 million.

Revenue at our shore-based terminals increased $0.6 million, including $0.4 million in fuel throughput and $0.2 million in space rent.

In addition, revenue at our specialty terminals increased $0.5 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 increased primarily as a result of liability insurance claims of $1.4 million, repairs and maintenance of $0.2 million, operating supplies of $0.2 million and employee-related expenses of $0.5 million, offset by a decrease in natural gas utilities of $0.9 million.

Selling, general and administrative expenses.

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

Depreciation and amortization.

The increase in depreciation and amortization is primarily the result of capital expenditures offset by recent disposals.

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 Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Variance Percent Change

(In thousands, except BBL per day)

Revenues $ 48,687 $ 47,825 $ 862 2 %

Cost of products sold 42 31 11 35 %

Operating expenses 30,557 28,240 2,317 8 %

Selling, general and administrative expenses 1,102 882 220 25 %

Depreciation and amortization 11,124 10,794 330 3 %

5,862 7,878 (2,016) (26) %

Other operating income (loss), net 1,097 (324) 1,421 439 %

7 unchanged sentences

Operating expenses.

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 .

Operating expenses increased primarily as a result of liability insurance claims of $1.6 million, property insurance expense of $0.8 million, employee-related expenses of $0.8 million, repairs and maintenance of $0.4 million and operating supplies of $0.4 million.

These increases were offset by a decrease in natural gas utilities of $2.1 million.

Selling, general and administrative expenses.

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

The increase in depreciation and amortization is primarily the result of capital expenditures offset by recent disposals.

Other operating income (loss), net.

1 unchanged sentence

Transportation Segment

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

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

(In thousands)

7 unchanged sentences

Revenues for our Transportation Segment increased $3.1 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.

In our marine transportation division, inland revenues increased $0.4 million, primarily related to higher transportation rates, offset by a decrease in utilization associated with equipment repairs and regulatory inspections.

Offshore revenues increased $0.3 million, primarily related to higher transportation rates.

Additionally, there was a rise in pass-through revenue (primarily fuel) of $0.2 million.

In our land transportation division, revenue increased $2.1 million, primarily due to a $2.7 million increase in freight revenue related to a 6% increase in total miles.

Ancillary revenue decreased $0.5 million.

Operating expenses .

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.

The increase in operating expenses is primarily a result of lease expense of $1.2 million, employee-related expenses of $1.1 million, insurance premiums of $1.1 million and pass-through expenses (primarily fuel) of $0.6 million, offset by repairs and maintenance of $0.9 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 income, net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Variance Percent Change

(In thousands)

Revenues $ 123,509 $ 120,334 $ 3,175 3 %

Operating expenses 94,424 90,475 3,949 4 %

Selling, general and administrative expenses 4,727 4,530 197 4 %

Depreciation and amortization 6,857 7,522 (665) (9) %

$ 17,501 $ 17,807 $ (306) (2) %

Other operating income, net 366 651 (285) (44) %

Operating income $ 17,867 $ 18,458 $ (591) (3) %

Revenues for our Transportation Segment increased $3.2 million.

In our marine transportation division, inland revenues increased $2.7 million, primarily related to higher transportation rates, offset by a decrease in utilization associated with equipment repairs and regulatory inspections.

Offshore revenues increased $0.1 million, primarily related to higher transportation rates.

Additionally, there was a rise in pass-through revenue (primarily fuel) of $0.2 million.

In our land transportation division, revenue increased $0.2 million, primarily due to a $3.8 million increase in freight revenue related to a 5% increase in total miles.

Ancillary revenue decreased $3.6 million.

Operating expenses.

The increase in operating expenses is primarily a result of lease expense of $3.0 million, employee-related expenses of $1.1 million, insurance premiums of $1.5 million, outside hauls and towing of $0.3 million and pass-through expenses (primarily fuel) of $0.2 million, offset by repairs and maintenance of $2.4 million.

Selling, general and administrative expenses.

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

4 unchanged sentences

Sulfur Services Segment

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

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

(In thousands)

15 unchanged sentences

Products revenues.

Products revenues decreased $8.9 million as a result of a 21% decrease in sales volumes, primarily related to a 26% decrease in sulfur volumes, offset by an increase of $5.7 million due to a 15% rise in average sulfur services sales prices.

Cost of products sold.

A 21% decrease in sales volumes impacted cost of products sold by $5.9 million.

Margin per ton increased $29.35, or 65%.

Operating expenses.

Operating expenses decreased due to a reduction of $0.3 million in marine rebill expenses and $0.1 million in utilities.

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 increased primarily as a result of capital expenditures offset by recent disposals.

Other operating income (loss), net.

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

Comparative Results of Operations for the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Variance Percent Change

(In thousands)

Services $ 6,954 $ 6,715 $ 239 4 %

Products 63,920 69,294 (5,374) (8) %

Total revenues 70,874 76,009 (5,135) (7) %

Cost of products sold 44,954 52,090 (7,136) (14) %

Operating expenses 5,684 6,085 (401) (7) %

Selling, general and administrative expenses 3,020 2,579 441 17 %

Depreciation and amortization 5,760 5,433 327 6 %

11,456 9,822 1,634 17 %

Other operating income (loss), net (308) 17 (325) (1,912) %

Operating income $ 11,148 $ 9,839 $ 1,309 13 %

Sulfur (long tons) 182 197 (15) (8) %

Fertilizer (long tons) 136 134 2 1 %

Total sulfur services volumes (long tons) 318 331 (13) (4) %

Services revenues.

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

Products revenues.

Products revenues decreased $2.8 million as a result of a 4% 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.

Products revenues decreased $2.6 million due to a 4% reduction in sales volumes, primarily related to an 8% decrease in sulfur volumes.

Cost of products sold.

A 10% 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.

Margin per ton decreased $16.97, or 27%.

A 4% decrease in sales volumes resulted in a decrease in cost of products sold of $1.8 million.

Margin per ton increased $7.67, or 15%.

Operating expenses.

Operating expenses remained consistent.

Operating expenses decreased $0.4 million due to reductions of $0.3 million in utilities expense combined with $0.3 million in marine rebill expenses.

These reductions were offset by an increase of $0.1 million in employment expenses and $0.1 million in repairs and maintenance.

Selling, general and administrative expenses.

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

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

Depreciation and amortization.

3 unchanged sentences

Specialty Products Segment

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

Three Months Ended March 31, Variance Percent Change

Comparative Results of Operations for the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

(In thousands)

5 unchanged sentences

4,939 2,475 2,464 100 %

Other operating income, net 6 — 6

Operating income $ 4,945 $ 2,475 $ 2,470 100 %

NGL sales volumes (Bbls) 540 827 (287) (35) %

Other specialty products volumes (Bbls) 93 90 3 3 %

Total specialty products volumes (Bbls) 633 917 (284) (31) %

Products Revenues.

Product revenues decreased $13.6 million as a result of the exit of the butane optimization business in the second quarter 2023.

For the remaining products, sales volumes increased 3%, increasing revenues by $2.0 million, primarily related to a 3% increase in other specialty products sales volumes.

Our average sales price per barrel increased $0.08, resulting in a de minimis increase to revenue.

Cost of products sold .

Cost of products sold decreased $16.1 million as a result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, the increase in sales volumes of 3% resulted in a $1.8 million increase to cost of products sold.

Our average cost per barrel decreased $0.45, or 1%, decreasing cost of products sold by $0.3 million.

Our margins increased $0.53 per barrel, or 5%, during the period.

Operating expenses.

Operating expenses remained consistent.

Selling, general and administrative expenses .

Selling, general and administrative expenses increased $0.5 million due to employee-related expenses of $0.6 million offset by a $0.1 million reduction associated with the exit of the butane optimization business in the second quarter of 2023.

Depreciation and amortization.

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

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 Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Variance Percent Change

(In thousands)

Products revenues $ 133,663 $ 211,175 $ (77,512) (37) %

Cost of products sold 119,355 198,721 (79,366) (40) %

Operating expenses 51 32 19 59 %

Selling, general and administrative expenses 3,165 3,589 (424) (12) %

Depreciation and amortization 1,595 1,699 (104) (6) %

9,497 7,134 2,363 33 %

Other operating income (loss), net 6 (59) 65 110 %

10 unchanged sentences

For the remaining products, a 3% decrease in product cost impacted cost of products sold by $3.5 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.

A 3% reduction in sales volumes resulted in an additional decrease in cost of products sold of $3.6 million.

Operating expenses.

1 unchanged sentence

Selling, general and administrative expenses .

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.

Selling, general and administrative expenses decreased $0.4 million due to a $0.5 million reduction associated with the exit of the butane optimization business in the second quarter of 2023 offset by an increase of $0.1 million in employee-related expenses.

Depreciation and amortization.

3 unchanged sentences

Interest Expense

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

Three Months Ended March 31, Variance Percent Change

Comparative Components of Interest Expense, Net for the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

(In thousands)

4 unchanged sentences

Other 270 342 (72) (21) %

Finance leases — — —

Capitalized interest (291) (7) (284) (4,057) %

Total interest expense, net $ 14,377 $ 15,263 $ (886) (6) %

Indirect Selling, General and Administrative Expenses

Three Months Ended March 31, Variance Percent Change

Comparative Components of Interest Expense, Net for the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Variance Percent Change

(In thousands)

Credit facility $ 2,568 $ 4,725 $ (2,157) (46) %

Senior notes 22,744 21,840 904 4 %

Amortization of deferred debt issuance costs 1,539 2,435 (896) (37) %

Amortization of debt discount 1,200 1,000 200 20 %

Other 601 931 (330) (35) %

Capitalized interest (433) (11) (422) (3,836) %

Total interest expense, net $ 28,219 $ 30,920 $ (2,701) (9) %

Indirect Selling, General and Administrative Expenses

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.

Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change

2024 2023 2024 2023

(In thousands) (In thousands)

Indirect selling, general and administrative expenses $ 3,819 $ 3,894 $ (75) (2) % $ 7,655 $ 8,092 $ (437) (5) %

Indirect selling, general and administrative expenses decreased for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, as a result of a decrease in overhead expenses allocated from Martin Resource Management.

Indirect selling, general and administrative expenses decreased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, as a result of decreases in overhead expenses allocated from Martin Resource Management of $0.2 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.

1 unchanged sentence

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.

1 unchanged sentence

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 months ended March 31, 2024 and 2023:

Three Months Ended March 31, Variance Percent Change

(In thousands)

The Conflicts Committee of our general partner approved the following reimbursement amounts during the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Variance Percent Change Six Months Ended June 30, Variance Percent Change

2024 2023 2024 2023

(In thousands) (In thousands)

Conflicts Committee approved reimbursement amount

5 unchanged sentences

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

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

Cash Flows - Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The following table details the cash flow changes between the six months ended June 30, 2024 and 2023:

Six Months Ended June 30, Variance Percent Change

(In thousands)

5 unchanged sentences

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.

The decrease in net cash provided by operating activities for the six months ended June 30, 2024, includes an increase in operating results and other non-cash charges of $2.4 million, offset by an unfavorable variance in cash flows associated with changes in working capital of $79.3 million.

Net cash used in investing activities.

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

Net cash used in investing activities for the six months ended June 30, 2024, increased $23.7 million.

An increase in cash used of $13.2 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.

Further, investments in unconsolidated entities increased $6.9 million, while net proceeds from the sale of property, plant and equipment decreased $3.5 million.

Net cash (used in) provided by financing activities.

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.

Net cash (used in) provided by financing activities for the six months ended June 30, 2024, increased primarily as a result of an increase in borrowings of long-term debt of $319.9 million, offset by a decrease in repayments of long-term debt of $406.2 million.

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

Total Contractual Obligations

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

A summary of our total contractual cash obligations as of June 30, 2024, is as follows:

Payments due by period

4 unchanged sentences

Operating leases 74,031 20,795 34,607 13,884 4,745

Finance lease obligations 76 14 30 32 —

Interest payable on finance lease obligations 13 5 6 2 —

Interest payable on fixed long-term debt obligations 165,926 46,000 92,000 27,926 —

2 unchanged sentences

Letters of Credit .

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.

At June 30, 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.

2 unchanged sentences

Credit Facility

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.

At June 30, 2024, we maintained a $150.0 million credit facility that matures on February 8, 2027.

As of June 30, 2024, we had $58.0 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 $82.9 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 $82.9 million in additional amounts thereunder as of June 30, 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%.

The level of outstanding draws on our credit facility from January 1, 2024 through June 30, 2024 ranged from a low of $40.5 million to a high of $80.0 million.

The applicable margin for Adjusted Term SOFR borrowings at June 30, 2024 is 3.25%.

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

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

4 unchanged sentences

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 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.

On June 30, 2024, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $82.9 million under our credit facility with $58.0 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 $82.9 million in additional amounts thereunder as of June 30, 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.

3 unchanged sentences

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 March 31, 2024 and expect to be in compliance for the next twelve months.

We are in compliance with all debt covenants as of June 30, 2024, and expect to be in compliance for the next twelve months.

Interest Rate Risk

3 unchanged sentences

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 three months ended March 31, 2024 or 2023.

Inflation did not have a material impact on our results of operations for the six months ended June 30, 2024 or 2023.

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

5 unchanged sentences

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 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.

On June 15, 2024, the Partnership had a spill of less than 2,500 barrels of crude oil originating from the Partnership’s transfer pipeline, which connects our Sandyland Terminal to our refinery located in Smackover, Union County, Arkansas.

The Partnership is working closely with the U.S Environmental Protection Agency (“EPA”), Arkansas Department of Energy and Environment (“ADEE”), and Arkansas Game and Fish Commission to respond to the spill.

The Partnership has dedicated the necessary resources, equipment, and personnel to conduct and expedite oil recovery and cleanup activities.

As of July 15, 2024, the Partnership’s response efforts have moved from emergency response status with the EPA to remediation status, which is to be overseen by the ADEE.

A claim related to the crude oil spill has been made with and accepted by, subject to a reservation of rights, the Partnership’s insurance carriers.

The Partnership’s deductibles under the applicable insurance policies total $1.5 million and such deductible expense has been recorded by the Partnership in the Consolidated and Condensed Statements of Operations for the three and six months ended June 30, 2024.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis