What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-24 compared with 2024-02-21 · 129 added, 108 removed, 386 unchanged (38% of the section changed)

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Significant Recent Developments

Exit from Butane Optimization Business.

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

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

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

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

The following revenues and costs, which are included in the historical financial results for the years ended December 31, 2023 and 2022 will not be incurred under the new fee-based butane logistics business model.

Products revenue $ 70,539 $ 172,756

Cost of products sold 72,283 190,677

Selling, general and administrative expenses 512 2,094

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

Issuance of 2028 Notes to Refinance Existing Secured Notes .

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

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

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

Termination of Merger Agreement.

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

On December 26, 2024, Martin Resource Management Corporation and the Partnership (with the approval of the Conflicts Committee) entered into the Termination Agreement, pursuant to which the Merger Agreement was terminated.

As a result, the Merger Agreement has no further force and effect.

As a result of the termination of the Merger Agreement, the special meeting of the unitholders of the Partnership, which was to be held on December 30, 2024 for the purpose of voting on the Merger Agreement and the Merger, was cancelled.

Electronic Level Sulfuric Acid Joint Venture.

On October 19, 2022, Martin ELSA Investment LLC, our affiliate, entered into definitive agreements with Samsung C&T America, Inc.

and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM Semichem LLC (“DSM”).

DSM will produce and distribute electronic level sulfuric acid (“ELSA”).

By leveraging our existing assets located in Plainview, Texas and installing additional facilities (the “ELSA Facility”) as required, DSM will produce ELSA that meets the strict quality standards required by the recent advances in semiconductor manufacturing.

and Dongjin USA, Inc., an affiliate of Dongjin Semichem Co., Ltd., to form DSM.

DSM will produce and distribute ELSA.

By leveraging our existing assets located in Plainview, Texas and installing the ELSA Facility as required, DSM will produce ELSA that meets the strict quality standards required by the recent advances in semiconductor manufacturing.

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

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

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.

Also, in conjunction with the formation of DSM, we contributed approximately 22 acres of land.

As of December 31, 2024, we have funded approximately $27.6 million toward ELSA related project costs.

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On January 21, 2025, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2024, or $0.02 per common unit on an annualized basis, which was paid on February 14, 2025 to unitholders of record as of February 7, 2025.

Amendment to Credit Facility .

On February 13, 2025, we entered into an amendment (the “credit facility amendment”) to the credit facility (as defined below) to amended the interest coverage ratio and first lien leverage ratios for the fiscal quarters ending March 31, 2025, June 30, 2025 and September 30, 2025.

See “Liquidity and Capital Resources — Description of Our Indebtedness — Credit Facility” below.

2025 Phantom Unit Plan .

On February 11, 2025, the Board of Directors and the Compensation Committee approved the 2025 Plan, effective as of the same date.

The 2025 Plan permits the awards of phantom units and phantom unit appreciation rights to any employee or non-employee director of the Partnership, including its executive officers.

The awards may be time-based or performance-based and will be paid, if at all, in cash.

Critical Accounting Policies and Estimates

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We conduct impairment testing using present economic conditions, as well as future expectations.

Based upon the most recent annual review as of August 31, 2023, no goodwill impairment exists within our reporting units for the years ended December 31, 2023.

Based upon the most recent annual review as of August 31, 2024, no goodwill impairment exists within our reporting units for the year ended December 31, 2024.

No goodwill impairment was recorded during the year ended December 31, 2023.

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

For the years ended December 31, 2023 and 2022, the board of directors of our general partner approved reimbursement amounts of $14.0 million and $13.5 million, respectively, reflecting our allocable share of such expenses.

The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

For the years ended December 31, 2024 and 2023, the Board of Directors approved reimbursement amounts of $13.5 million and $14.0 million, respectively, reflecting our allocable share of such expenses.

The Board of Directors will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

We are required 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.

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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 .

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.

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, and transaction costs associated with business combination, merger, and divestiture activities.

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 assess:

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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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To compensate for these limitations, we believe that it is important to consider net income (loss) and net cash provided by (used in) operating activities as determined under GAAP, as well as Adjusted EBITDA, to evaluate our overall performance.

Distributable Cash Flow and Adjusted Free Cash Flow.

Distributable Cash Flow.

We define Distributable Cash Flow as Net Cash Provided by (Used in) Operating Activities less cash received (plus cash paid) for closed commodity derivative positions included in Accumulated Other Comprehensive Income (Loss), plus changes in operating assets and liabilities which (provided) used cash, less maintenance capital expenditures and plant turnaround costs.

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Distributable Cash Flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.

Adjusted Free Cash Flow.

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

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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.

Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2023 and 2022, which represents EBITDA, adjusted EBITDA, adjusted EBITDA after giving effect to the exit of the butane optimization business, distributable cash flow, and adjusted free cash flow:

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

The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2024 and 2023, which represents EBITDA, Adjusted EBITDA, Credit Adjusted EBITDA, Distributable Cash Flow, and Adjusted Free Cash Flow:

Reconciliation of Net Loss to EBITDA, Adjusted EBITDA, and Credit Adjusted EBITDA

Year Ended December 31,

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Loss on extinguishment of debt — 5,121

Transaction expenses related to the terminated Merger with Martin Resource Management Corporation 3,674 —

Equity in loss of DSM Semichem LLC 624 —

Non-cash contractual revenue deferral adjustment 221 —

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

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Adjusted EBITDA 110,605 102,615

Pro-forma adjustment related to ELSA project 2,655 —

Capitalized interest 1,153 310

Net loss associated with butane optimization business — 2,256

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

$ 114,413 $ 118,031

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

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

Year Ended December 31,

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Current income tax expense 3,943 1,732

Transaction expenses related to the terminated Merger with Martin Resource Management Corporation 3,674 —

Non-cash contractual revenue deferral adjustment 221 —

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

Commodity cash flow hedging gains reclassified to earnings — 901

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

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

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Adjusted EBITDA 110,605 102,615

Pro-forma adjustment related to ELSA project 2,655 —

Capitalized interest 1,153 310

Net loss associated with butane optimization business — 2,256

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

114,413 118,031

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

Investment in DSM Semichem LLC (6,938) —

Expansion capital expenditures (18,493) (11,034)

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9,993 14,891 (4,898) (33)%

Other operating loss, net (359) (166) (193) (116)%

Other operating income (loss), net 1,105 (359) 1,464 408%

Operating income $ 11,098 $ 14,532 $ (3,434) (24)%

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

Services revenues.

Service revenues increased $2.8 million.

Revenue at our shore-based terminals increased $2.6 million, including $2.4 million in fuel throughput and $0.4 million in drilling fluids commission, offset by a reduction in space rent of $0.2 million.

In addition, revenue at our specialty terminals increased $1.9 million primarily as a result of higher throughput and storage revenue attributable to contractually prescribed, index-based fee adjustments.

Revenue at our Smackover refinery decreased $1.8 million as a result of decreased pipeline revenue of $4.6 million, offset by increases in throughput revenue of $1.1 million, reservation fees of $1.1 million and natural gas surcharge of $0.8 million.

Revenues increased $1.1 million.

Revenue at our shore-based terminals increased $2.7 million, including $1.9 million in fuel throughput and $0.8 million in space rent.

In addition, revenue at our specialty terminals increased $1.8 million primarily as a result of higher throughput and service revenue.

Revenue at our Smackover refinery decreased $3.2 million as a result of decreases in natural gas surcharge of $3.3 million due to a reduction in usage, throughput revenue of $0.2 million and pipeline revenue of $0.1 million, offset by an increase in reservation fees of $0.3 million.

Cost of products sold.

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Operating expenses.

Operating expenses decreased primarily as a result of lease expense of $4.9 million and natural gas utilities of $1.1 million.

Operating expenses increased $3.0 million.

Expenses at our specialty terminals increased $3.6 million due to increases in insurance premiums of $1.1 million (higher rates), employee-related expenses of $1.0 million, repairs and maintenance of $1.0 million and hurricane expenses of $0.2 million.

Expenses at our Smackover refinery decreased $0.4 million, primarily due to a decrease in natural gas utilities of $3.7 million due to a reduction in usage.

This was offset by increases in insurance claims of $1.5 million (crude pipeline spill), operating supplies of $0.7 million, repairs and maintenance of $0.5 million, lease expense of $0.3 million related to operating equipment, and insurance premiums of $0.2 million (higher rates).

Selling, general and administrative expenses.

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Depreciation and amortization.

Depreciation and amortization decreased primarily as a result of assets being fully depreciated, offset by recent capital expenditures.

Other operating loss, net.

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

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

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Operating income $ 30,184 $ 33,701 $ (3,517) (10)%

Marine Transportation Revenues .

Inland revenues increased $7.4 million primarily related to transportation rates.

Revenue was also impacted by a decrease in pass-through revenue (primarily fuel) of $2.9 million.

Land Transportation Revenues.

Freight revenue increased primarily due to a 25% increase in load count combined with a 1% increase in total miles, which resulted in a $7.0 million increase.

Additionally, ancillary revenue decreased $9.8 million .

Revenues decreased $1.1 million.

In our marine transportation division, inland revenues increased $2.0 million, primarily related to higher transportation rates, offset by a decrease in utilization associated with equipment repairs and regulatory inspections.

Offshore revenues increased $0.8 million, primarily related to higher transportation rates, offset by a decrease in utilization associated with regulatory inspections.

Pass-through revenue (primarily fuel) decreased $1.1 million.

In our land transportation division, freight revenue increased $4.2 million, primarily due to a 3% increase in total miles.

Ancillary revenue (primarily fuel) decreased $6.9 million.

Operating expenses .

The increase in operating expenses is primarily a result of increased employee-related expenses of $5.2 million, lease expense of $5.1 million, insurance premiums of $3.0 million, shop expenses of $0.7 million and outside towing of $0.7 million, offset by a decrease in pass through expenses (primarily fuel) of $6.6 million.

The increase in operating expenses is primarily a result of increased lease expense of $5.1 million related to new equipment, employee-related expenses of $1.2 million, insurance premiums and claims of $1.2 million, and outside hauls and towing of $0.5 million, offset by decreases in repairs and maintenance of $4.0 million and pass through expenses (primarily fuel) of $2.8 million.

Selling, general and administrative expenses .

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

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

Depreciation and amortization .

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

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

Other operating income, net.

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18,829 17,395 1,434 8%

Other operating income, net 17 4,555 (4,538) (100)%

Other operating income (loss), net (298) 17 (315) (1,853)%

Operating income $ 18,531 $ 17,412 $ 1,119 6%

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Services revenues.

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

Services revenues increased $0.7 million associated with reservation revenue from the ELSA joint venture beginning in the fourth quarter 2024.

Additional increases were the result of a contractually prescribed, index-based fee adjustment.

Products revenues.

Products revenues decreased $51.3 million as a result of a 31% drop in average sulfur services sales prices.

Products revenues increased an offsetting $12.0 million due to a 10% rise in sales volumes, primarily related to a 20% increase in fertilizer volumes.

Products revenues decreased $18.7 million as a result of a 14% drop in sales volumes, primarily related to a 15% decrease in sulfur volumes.

Products revenues increased an offsetting $6.3 million due to a 5% rise in average sales prices.

Cost of products sold.

A 14% decrease in sales volumes resulted in a decrease in cost of products sold of $12.9 million.

A 1% decrease in product cost impacted cost of products sold by $0.9 million, resulting from reduced commodity prices.

A 10% increase in sales volumes resulted in an offsetting increase in cost of products sold of $8.8 million.

Margin per ton decreased $13.97, or 23%.

Margin per ton increased $9.83, or 21%.

Operating expenses.

Operating expenses decreased due to a decrease in outside towing of $1.1 million, marine fuel expense of $0.7 million, insurance premiums and claims of $0.3 million, contract labor of $0.3 million, and repairs and maintenance of marine assets of $0.3 million.

Offsetting these decreases, employment expenses increased $0.4 million combined with a $0.1 million increase in utilities expense.

Operating expenses decreased due to reductions of $0.7 million in marine pass-through expense, $0.4 million in utilities expenses, $0.2 million in outside services, $0.1 million in contract labor, and $0.1 million in marine operating expense.

These reductions were offset by an increase of $0.4 million in repairs and maintenance and $0.2 million in employment expenses.

Selling, general and administrative expenses.

Selling, general and administrative expenses remained relatively consistent.

Selling, general and administrative expenses increased $1.1 million due to higher employee-related costs.

Depreciation and amortization.

Depreciation and amortization decreased as a result of the sale of Stockton assets in the third quarter of 2022, offset by recent capital expenditures.

Other operating income, net.

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

Depreciation and amortization increased $1.1 million largely due to the amortization of higher turnaround costs offset by lower depreciation associated with certain assets becoming fully depreciated.

Other operating income (loss), net.

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

Specialty Products Segment

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Product revenues decreased $70.5 million due to the exit of the butane optimization business in the second quarter 2023.

For the remaining products, sales volumes decreased 19%, lowering revenues by $62.9 million, primarily related to a 20% decrease in NGL sales volume.

For the remaining products, sales volumes decreased 3%, lowering revenues by $7.6 million, primarily related to a 6% decrease in other specialty products sales volume.

Our average sales price per barrel decreased $1.37, or 1%, decreasing revenues by $3.7 million.

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Our average cost per barrel decreased $0.98, or 1%, decreasing cost of products sold by $2.7 million.

Our margins increased $1.07 per barrel, or 11%, during the period.

Our margins decreased $0.39 per barrel, or 4%, during the period.

Operating expenses .

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Selling, general and administrative expenses .

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

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

Depreciation and amortization.

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

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

Other operating income (loss), net.

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Indirect selling, general and administrative expenses $ 19,556 $ 16,030 $ 3,526 22%

Indirect selling, general and administrative expenses decreased primarily due to decreases in employee-related expenses of $1.4 million, offset by a $0.9 million increase in the indirect expenses allocated from Martin Resource Management Corporation.

Indirect selling, general and administrative expenses increased primarily due to transaction expenses associated with the terminated Merger with Martin Resource Management Corporation of $3.7 million and increased insurance claims expense of $0.8 million, offset by a $0.5 million decrease in the indirect expenses allocated from Martin Resource Management Corporation.

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

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

The board of directors of our general partner approved the following reimbursement amounts:

The Board of Directors approved the following reimbursement amounts:

Year Ended December 31, Variance Percent Change

(In thousands)

Board approved reimbursement amount $ 13,982 $ 13,491 $ 491 4%

Board of Directors approved reimbursement amount $ 13,508 $ 13,982 $ (474) (3)%

The amounts reflected above represent our allocable share of such expenses.

The board of directors of our general partner will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

The Board of Directors will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

Liquidity and Capital Resources

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Net cash provided by operating activities.

Net cash provided by operating activities for the year ended December 31, 2023 increased $121.3 million, primarily as a result of a favorable variance in changes in working capital of $114.0 million combined with an increase in operating results and non-cash items of $11.1 million.

Net cash provided by operating activities for the year ended December 31, 2024 decreased $89.1 million, primarily as a result of an unfavorable variance in changes in working capital of $80.0 million, primarily resulting from the exit of the butane optimization business in May of 2023, combined with a decrease in operating results and non-cash items of $9.1 million.

Net cash used in investing activities.

Net cash used in investing activities for the year ended December 31, 2024 increased $24.9 million.

An increase in cash used of $6.7 million resulted from higher payments for capital expenditures and plant turnaround costs in 2023 combined with a decrease of $2.3 million in net proceeds received from the sale of property, plant and equipment.

An increase in cash used of $13.8 million resulted from higher payments for capital expenditures and plant turnaround costs, cash used to make the initial contribution in DSM of $6.9 million, and a decrease of $4.2 million in net proceeds received from the sale of property, plant and equipment.

Net cash provided by (used in) financing activities.

Net cash (used in) provided by financing activities for the year ended December 31, 2023 decreased $112.3 million primarily as a result of a $99.3 million decrease in net borrowings from long-term debt combined with increased debt issuance costs of $14.2 million.

Net cash provided by financing activities for the year ended December 31, 2024 increased $114.1 million primarily as a result of the 2023 period, including net pay downs of long-term debt of $88.7 million, primarily resulting from the exit of the butane optimization business, combined with decreased debt issuance costs of $14.3 million.

Total Contractual Obligations

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Operating leases 78,479 24,137 36,698 13,289 4,355

Finance leases 69 14 31 24 —

Interest payable on finance lease obligations 9 4 5 — —

Interest payable on fixed long-term debt obligations 142,926 46,000 92,000 4,926 —

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After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our credit facility, we had the ability to borrow approximately $80.7 million in additional amounts thereunder as of December 31, 2024.

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

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

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

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

From February 8, 2023 through December 31, 2023, the level of outstanding draws on our amended credit facility ranged from a low of $42.5 million to a high of $138.0 million.

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

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

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

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

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

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

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

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

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

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

The level of outstanding draws on our credit facility from January 1, 2024 through December 31, 2024, ranged from a low of $40.5 million to a high of $102.5 million.

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

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

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

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

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

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

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

Leverage Ratio

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The applicable margin for Adjusted Term SOFR borrowings at February 24, 2025 is 3.25%.

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

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

• a maximum Total Leverage Ratio of not more than 4.75:1.00, stepping down to 4.50:1.00 on March 31, 2025;

• a maximum First Lien Leverage Ratio (as defined in the amended credit facility) of not more than 1.50:1.00.

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

Effective February 13, 2025, we entered into the credit facility amendment to modify the financial covenants in our credit facility.

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

• a minimum Interest Coverage Ratio (as defined in the credit facility) of at least 2.00:1.00 for the fiscal quarter ended December 31, 2024, stepping down to 1.75:1.00 for the fiscal quarters ending March 31, 2025, June 30, 2025 and September 30, 2025, and stepping back up to 2.00:1.00 for the fiscal quarter ending December 31, 2025 and each fiscal quarter thereafter;

• a maximum First Lien Leverage Ratio (as defined in the credit facility) of not more than 1.50:1.00 for the fiscal quarter ended December 31, 2024, stepping down to 1.25:1.00 for the fiscal quarters ending March 31, 2025, June 30, 2025 and September 30, 2025, and stepping back up to 1.50:1.00 for the fiscal quarter ending December 31, 2025 and each fiscal quarter thereafter.

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

(i) grant or assume liens;

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

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our Total Leverage Ratio is below 3.75:1:00, pro forma first lien leverage is less than 1.00 to 1.00, and our pro forma liquidity is greater than or equal to 35% of the commitments under our amended credit facility) and certain other restricted payments;

(vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our Total Leverage Ratio is below 3.75:1:00, pro forma first lien leverage is less than 1.00 to 1.00, and our pro forma liquidity is greater than or equal to 35% of the commitments under our credit facility) and certain other restricted payments;

(vii) change the nature of our business;

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

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

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

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

(ii) failure to meet the quarterly financial covenants;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2028 Senior Secured Notes and Indenture

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We are subject to interest rate risk on our credit facility due to the variable interest rate and may enter into interest rate swaps to reduce this variable rate risk.

A substantial portion of our revenues is dependent on sales prices of products, particularly fertilizers and NGLs, which fluctuate in part based on spring and winter weather conditions.

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

A substantial portion of our revenues is dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winter and spring weather conditions.

The demand for NGLs is strongest during the winter heating season.

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.

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We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during 2024, 2023 or 2022.

On June 15, 2024, the Partnership experienced a spill of less than 2,500 barrels of crude oil from its transfer pipeline connecting the Sandyland Terminal to the refinery in Smackover, Union County, Arkansas.

The Partnership promptly coordinated with the U.S Environmental Protection Agency (the “EPA”), Arkansas Department of Energy and Environment (the “ADEE”), and Arkansas Game and Fish Commission, dedicating the necessary resources, equipment, and personnel to expedite oil recovery and cleanup activities.

In October 2024, the EPA transitioned the Partnership’s response from emergency response status to remediation status under ADEE oversight.

On October 11, 2024, the ADEE notified the Partnership that documentation, observations, and data indicated the Partnership completed all remedial actions to the maximum practical extent, apart from providing additional water samples.

No further remediation is required at this time.

The Partnership submitted a claim related to the spill, which was accepted by its insurance carriers, subject to a reservation of rights.

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 Statements of Operations for the year ended December 31, 2024.

As of February 24, 2025, no fines or penalties have been assessed in relation to the spill.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis