What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-21 compared with 2024-07-23 · 149 added, 154 removed, 447 unchanged (40% of the section changed)

14 unchanged sentences

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

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.

As of September 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.

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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.

Merger Agreement.

On May 24, 2024, Martin Resource Management Corporation filed an amendment to its Schedule 13D with the SEC disclosing that Martin Resource Management Corporation made a non-binding proposal to the Board, pursuant to which Martin Resource Management Corporation would acquire all the outstanding common units of the Partnership not already owned by Martin Resource Management Corporation and its subsidiaries.

On October 3, 2024, Martin Resource Management Corporation, Merger Sub, the Partnership, and MMGP, entered into a Merger Agreement pursuant to which Merger Sub will merge with and into the Partnership, with the Partnership surviving as a wholly owned subsidiary of Martin Resource Management Corporation.

See Note 18 to our unaudited condensed consolidated financial statements for additional information.

Galveston Bridge Allision.

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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.

As of September 30, 2024, we have funded approximately $26.4 million toward ELSA related project costs.

Subsequent Events

Quarterly Distribution.

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.

On October 16, 2024, we declared a quarterly cash distribution of $0.005 per common unit for the third quarter of 2024, or $0.020 per common unit on an annualized basis, which will be paid on November 14, 2024, to unitholders of record as of November 7, 2024.

Critical Accounting Policies and Estimates

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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 $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.

We reimbursed Martin Resource Management Corporation for $46.2 million of direct costs and expenses for the three months ended September 30, 2024, compared to $43.2 million for the three months ended September 30, 2023.

We reimbursed Martin Resource Management Corporation for $128.4 million of direct costs and expenses for the nine months ended September 30, 2024, compared to $122.7 million for the nine months ended September 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 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.

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

In each of the nine months ended September 30, 2024 and 2023, the Conflicts Committee approved reimbursement amounts of $10.1 million and $10.5 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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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 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.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 31% and 29% of our total costs and expenses during the three months ended September 30, 2024 and 2023, respectively.

In the aggregate, the impact of related party transactions included in total costs and expenses accounted for approximately 29% and 23% of our total costs and expenses during the nine months ended September 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 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.

Our sales to Martin Resource Management Corporation accounted for approximately 15% and 15% of our total revenues for the three months ended September 30, 2024 and 2023, respectively.

Our sales to Martin Resource Management Corporation accounted for approximately 15% and 13% of our total revenues for the nine months ended September 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.

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

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

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

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

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Certain items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as cost of capital and historical costs of depreciable assets.

EBITDA and Adjusted EBITDA .

EBITDA, Adjusted EBITDA and Credit Adjusted EBITDA .

We define Adjusted EBITDA as EBITDA before unit-based compensation expenses, gains and losses on the disposition of property, plant and equipment, impairment and other similar non-cash adjustments.

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• our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure.

The GAAP measures most directly comparable to adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities.

Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP.

Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA in the same manner.

We define Credit Adjusted EBITDA as Adjusted EBITDA excluding net income (loss) and the lower of cost or net realizable value and other non-cash adjustments associated with the butane optimization business, which we exited during the second quarter of 2023.

Credit Adjusted EBITDA is used as a supplemental performance and liquidity measure by our management and by external users of our financial statements, such as investors, commercial banks, research analysts, and others to provide additional information regarding the calculation of, and compliance with, certain financial covenants in the Partnership’s Third Amended and Restated Credit Agreement.

The GAAP measures most directly comparable to adjusted EBITDA and Credit Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities.

Adjusted EBITDA and Credit Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), net cash provided by (used in) operating activities, or any other measure of financial performance presented in accordance with GAAP.

Adjusted EBITDA and Credit Adjusted EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate Adjusted EBITDA in the same manner.

Adjusted EBITDA does not include interest expense, income tax expense, and depreciation and amortization.

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

Adjusted Free Cash Flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects.

Adjusted Free Cash Flow is a significant performance

measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects.

We believe that Adjusted Free Cash Flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters.

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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 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 June 30, Six Months Ended June 30,

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, 2024 and 2023, which represents EBITDA, adjusted EBITDA, Credit Adjusted EBITDA, distributable cash flow, and adjusted free cash flow:

Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA, and Credit Adjusted EBITDA

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

2024 2023 2024 2023

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Loss on extinguishment of debt — — — 5,121

Equity in (earnings) loss of DSM Semichem LLC 314 — 314 —

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

3 unchanged sentences

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

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

Credit Adjusted EBITDA

$ 25,144 $ 26,170 $ 87,262 $ 88,545

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 June 30, Six Months Ended June 30,

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

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

2024 2023 2024 2023

(in thousands) (in thousands)

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

Net cash provided by (used in) operating activities $ (15,753) $ 7,291 $ 6,184 $ 106,065

Interest expense 1

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

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

Credit Adjusted EBITDA

25,144 26,170 87,262 88,545

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Results of Operations

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.

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

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

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

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

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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Income (Loss)

Three Months Ended June 30, 2024 (In thousands)

Three Months Ended September 30, 2024 (In thousands)

Terminalling and storage $ 24,414 $ (1,852) $ 22,562 $ 2,675 $ (1,761) $ 914

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Income (Loss)

Three Months Ended June 30, 2023 (In thousands)

Three Months Ended September 30, 2023 (In thousands)

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

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

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

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

Operating Revenues Intersegment Revenues Eliminations Operating Revenues

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Income (Loss)

Six Months Ended June 30, 2024 (In thousands)

Nine Months Ended September 30, 2024 (In thousands)

Terminalling and storage $ 73,101 $ (5,647) $ 67,454 $ 9,634 $ (5,447) $ 4,187

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Income (Loss)

Six Months Ended June 30, 2023 (In thousands)

Nine Months Ended September 30, 2023 (In thousands)

Terminalling and storage $ 71,798 $ (7,054) $ 64,744 $ 10,661 $ (7,004) $ 3,657

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Terminalling and Storage Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

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2,709 3,142 (433) (14) %

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

Loss on disposition or sale of property, plant and equipment (34) (35) 1 3 %

Operating income $ 2,675 $ 3,107 $ (432) (14) %

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Revenue at our shore-based terminals increased $0.6 million, including $0.5 million in fuel throughput and $0.1 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.

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

Revenue at our Smackover refinery decreased $0.8 million primarily as a result of decreased natural gas surcharge revenue due to a reduction in usage.

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.

Operating expenses decreased primarily due to lower natural gas utility expense of $0.9 million resulting from a reduction in usage.

This decrease was offset by increases in repairs and maintenance of $0.3 million across our specialty terminals, lease expense of $0.3 million related to operating equipment at our Smackover refinery, and employee-related expenses of $0.2 million.

Selling, general and administrative expenses.

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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

Comparative Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Variance Percent Change

(In thousands, except BBL per day)

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8,571 11,020 (2,449) (22) %

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

Gain (loss) on disposition or sale of property, plant and equipment 1,063 (359) 1,422 396 %

Operating income $ 9,634 $ 10,661 $ (1,027) (10) %

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Revenue at our shore-based terminals increased $2.1 million, including $1.4 million in fuel throughput and $0.7 million in space rent.

In addition, revenue at our specialty terminals increased $0.8 million, primarily as a result of higher throughput and storage revenue.

Revenue at our Smackover refinery decreased $1.6 million, primarily as a result of decreased natural gas surcharge revenue.

In addition, revenue at our specialty terminals increased $1.6 million, primarily as a result of higher throughput and service revenue.

Revenue at our Smackover refinery decreased $2.4 million, primarily as a result of decreased natural gas surcharge revenue of $2.6 million due to a decrease in usage, offset by a $0.2 million increase in reservation fees.

Operating expenses.

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.

Operating expenses increased primarily as a result of liability insurance claims of $1.6 million (crude pipeline spill), insurance premiums of $1.0 million, employee-related expenses of $1.0 million, repairs and maintenance of $0.7 million at our Smackover refinery, operating supplies of $0.6 million and lease expense of $0.2 million.

These increases were offset by a decrease in natural gas utilities of $3.0 million.

Selling, general and administrative expenses.

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

Selling, general and administrative expenses increased primarily due to higher 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 (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 June 30, 2024 and 2023

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

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8,453 5,831 2,622 45 %

Other operating income, net 260 647 (387) (60) %

Gain on disposition or sale of property, plant and equipment 130 846 (716) (85) %

Operating income $ 8,583 $ 6,677 $ 1,906 29 %

Revenues for our Transportation Segment increased $3.1 million.

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.

Revenues increased $1.7 million.

In our marine transportation division, inland revenues increased $1.8 million, primarily related to higher transportation rates and utilization.

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.

Pass-through revenue (primarily fuel) decreased $0.4 million.

In our land transportation division, freight revenue increased $1.1 million, primarily due to a 3% increase in total miles.

Ancillary revenue decreased $1.1 million.

Operating expenses .

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.

The decrease in operating expenses is primarily a result of repairs and maintenance of $1.5 million and pass-through expenses (primarily fuel) of $1.4 million, offset by increases in lease expense of $0.9 million and insurance premiums of $0.7 million.

The decrease in repairs and maintenance, as well as the increase in lease expense are related to the replacement of tractors and trailers in our land transportation division.

Selling, general and administrative expenses .

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

Selling, general and administrative expenses increased primarily due to higher 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

Comparative Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Variance Percent Change

(In thousands)

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$ 25,954 $ 23,638 $ 2,316 10 %

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

Gain on disposition or sale of property, plant and equipment 496 1,497 (1,001) (67) %

Operating income $ 26,450 $ 25,135 $ 1,315 5 %

Revenues for our Transportation Segment increased $3.2 million.

Revenues increased $4.8 million.

In our marine transportation division, inland revenues increased $4.5 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.

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

Pass-through revenue (primarily fuel) decreased $0.2 million.

In our land transportation division, freight revenue increased $4.9 million, primarily due to a 4% increase in total miles.

Ancillary revenue decreased $4.8 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.

The increase in operating expenses is primarily a result of lease expense of $3.9 million, insurance premiums of $1.6 million, employee-related expenses of $1.2 million, outside hauls of $0.4 million and insurance claims of $0.3 million, offset by decreases in repairs and maintenance of $3.9 million and pass-through expenses (primarily fuel) of $1.2 million.

The increase in lease expense, as well as the decrease in repairs and maintenance are related to the replacement of tractors and trailers in our land transportation division.

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.

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.

Sulfur Services Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

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1,251 2,743 (1,492) (54) %

Other operating income (loss), net (308) 1 (309) (30,900) %

Gain on disposition or sale of property, plant and equipment 3 — 3

Operating income $ 1,254 $ 2,743 $ (1,489) (54) %

5 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.

Product revenues decreased $7.9 million.

A decrease of $10.6 million was the result of a 33% decrease in sales volumes, primarily related to a 27% decrease in sulfur volumes due to reduced product movement on the Margaret Sue related to weather activity in the Gulf of Mexico when compared to the third quarter of 2023.

This decrease was offset by an increase of $2.6 million due to a 9% rise in average sulfur services sales prices.

Cost of products sold.

Cost of products sold decreased $6.7 million.

A 33% decrease in sales volumes impacted cost of products sold by $7.6 million.

A 4% increase in product cost impacted cost of products sold by $1.0 million, resulting from increased commodity prices.

Margin per ton increased $7.46, or 22%.

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.

Operating expenses decreased due to a reduction of $0.2 million in outside services, $0.1 million in utilities, $0.1 million in marine pass-through expenses (primarily fuel) and $0.1 million in marine operating expenses, offset by a $0.1 million increase in repairs and maintenance.

Selling, general and administrative expenses.

1 unchanged sentence

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

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

Comparative Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Variance Percent Change

(In thousands)

7 unchanged sentences

12,707 12,565 142 1 %

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

Gain (loss) on disposition or sale of property, plant and equipment (305) 17 (322) (1,894) %

Operating income $ 12,402 $ 12,582 $ (180) (1) %

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Products revenues.

Products revenues decreased $2.8 million as a result of a 4% reduction in average sulfur products sales prices.

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

Products revenues decreased $13.4 million.

A decrease of $15.3 million was primarily due to a 15% reduction in sales volumes resulting from a 16% decrease in sulfur volumes due to the Margaret Sue being out of service for regulatory inspections and maintenance.

This was offset by an increase of $1.9 million related to a 2% increase in average sulfur products sales prices.

Cost of products sold.

A 10% decrease in product cost impacted cost of products sold by $5.3 million, resulting from reduced commodity prices.

Cost of products sold decreased $13.8 million.

A 15% decrease in sales volumes resulted in a decrease in cost of products sold of $10.8 million.

A 4% decrease in product cost impacted cost of products sold by $3.0 million, resulting from reduced commodity prices.

Margin per ton increased $8.97, or 20%.

Operating expenses.

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.

Operating expenses decreased $0.8 million due to reductions of $0.4 million in utilities expense resulting from lower natural gas prices, $0.4 million in marine pass-through expenses (primarily fuel), $0.2 million in outside services, and $0.1 million in marine operating expense.

These reductions were offset by an increase of $0.2 million in repairs and maintenance and $0.1 million in employment expenses.

Selling, general and administrative expenses.

2 unchanged sentences

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

Other operating income (loss), net.

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

Specialty Products Segment

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

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3,821 6,014 (2,193) (36) %

Other operating income, net 6 — 6

Gain on disposition or sale of of property, plant and equipment 60 — 60

Operating income $ 3,881 $ 6,014 $ (2,133) (35) %

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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.

Products revenues decreased $0.5 million.

Sales volumes increased 9%, increasing revenues by $5.8 million, primarily related to a 14% increase in NGL sales volumes.

Our average sales price per barrel decreased $8.60, resulting in a $5.3 million decrease 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.

Cost of products sold increased $2.3 million.

The increase in sales volumes of 9% resulted in a $5.2 million increase to cost of products sold.

Our average cost per barrel decreased $4.78, or 5%, decreasing cost of products sold by $2.9 million.

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

Our margins decreased $3.82 per barrel, or 27%, during the period.

Operating expenses.

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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.

Selling, general and administrative expenses increased $0.4 million due to employee-related expenses.

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

Comparative Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Variance Percent Change

(In thousands)

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13,318 13,148 170 1 %

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

Gain (loss) on disposition or sale of property, plant and equipment 66 (59) 125 212 %

Operating income $ 13,384 $ 13,089 $ 295 2 %

3 unchanged sentences

Products Revenues.

Product revenues decreased $70.5 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 3%, lowering revenues by $4.0 million, primarily related to an 3% decrease in NGL sales volumes.

Products revenues decreased $77.0 million.

A decrease of $70.5 million was the result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, sales volumes increased 1%, increasing revenues by $1.7 million, primarily related to a 2% increase in NGL sales volumes.

Products revenues decreased $8.2 million as a result of a 4% reduction in average specialty products sales prices.

Cost of products sold .

Cost of products sold decreased $72.3 million as a result of the exit of the butane optimization business in the second quarter of 2023.

Cost of products sold decreased $77.1 million.

A decrease of $72.3 million was the result of the exit of the butane optimization business in the second quarter of 2023.

For the remaining products, a 3% decrease in product cost impacted cost of products sold by $6.3 million, resulting from reduced commodity prices.

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

A 1% increase in sales volumes resulted in an increase in cost of products sold of $1.5 million.

Operating expenses.

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Selling, general and administrative expenses .

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.

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

Depreciation and amortization.

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

Other operating income (loss), net.

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

Interest Expense

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

Three Months Ended June 30, Variance Percent Change

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

Three Months Ended September 30, Variance Percent Change

(In thousands)

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Other 219 277 (58) (21) %

Finance leases — — —

Capitalized interest (373) (18) (355) (1,972) %

Total interest expense, net $ 14,592 $ 14,994 $ (402) (3) %

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

Six Months Ended June 30, Variance Percent Change

Comparative Components of Interest Expense, Net for the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Variance Percent Change

(In thousands)

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Indirect Selling, General and Administrative Expenses

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

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

2024 2023 2024 2023

1 unchanged sentence

Indirect selling, general and administrative expenses $ 3,742 $ 3,837 $ (95) (2) % $ 11,397 $ 11,929 $ (532) (4) %

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.

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

Indirect selling, general and administrative expenses decreased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, as a result of decreases in overhead expenses allocated from Martin Resource Management Corporation of $0.4 million and employee-related expenses 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.

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.

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.

Other methods could result in a higher allocation of selling, general and administrative expenses to us, which would reduce our net income.

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 six months ended June 30, 2024 and 2023:

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

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

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

2024 2023 2024 2023

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

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

Cash Flows - Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

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

Nine Months Ended September 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 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.

The decrease in net cash provided by operating activities for the nine months ended September 30, 2024, includes an increase in operating results and other non-cash charges of $1.2 million.

This increase was offset by an unfavorable variance in cash flows associated with changes in working capital of $101.1 million, primarily associated with the reduction in working capital associated with the exit of the butane optimization business.

Net cash used in investing activities.

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

Net cash used in investing activities for the nine months ended September 30, 2024, increased $27.2 million.

An increase in cash used of $16.0 million resulted from higher payments for capital expenditures and plant turnaround costs in 2024.

1 unchanged sentence

Net cash (used in) provided by financing activities.

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.

Net cash (used in) provided by financing activities for the nine months ended September 30, 2024, increased primarily as a result of an decrease in borrowings of long-term debt of $293.4 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 June 30, 2024, is as follows:

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

Payments due by period

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Letters of Credit .

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.

At September 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 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.

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

As of September 30, 2024, we had $86.5 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 $54.4 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 $54.4 million in additional amounts thereunder as of September 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 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%.

The level of outstanding draws on our credit facility from January 1, 2024 through September 30, 2024 ranged from a low of $40.5 million to a high of $102.5 million.

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

The applicable margin for Adjusted Term SOFR borrowings effective October 16, 2024 is 3.50%.

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 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.

On September 30, 2024, we had cash and cash equivalents of $0.06 million and available borrowing capacity of $54.4 million under our credit facility with $86.5 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 $54.4 million in additional amounts thereunder as of September 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.

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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 June 30, 2024, and expect to be in compliance for the next twelve months.

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

Interest Rate Risk

6 unchanged sentences

Impact of Inflation

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

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

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

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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.

As of October 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.

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