MARTIN MIDSTREAM PARTNERS L.P. [MMLP] Filings

10-Q 1 mmlp-20240630.htm 10-Q mmlp-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐						TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number

000-50056

MARTIN MIDSTREAM PARTNERS L.P.

(Exact name of registrant as specified in its charter)


Delaware						05-0527861
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

4200 Stone Road

Kilgore, Texas 75662

(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code: (903) 983-6200

Securities registered pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units representing limited partnership interests	MMLP	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			☒			No			☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			☒			No			☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			☒

The number of the registrant’s Common Units outstanding at July 23, 2024, was 39,001,086.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements included in this quarterly report that are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), including, without limitation, the information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements. These statements can be identified by the use of forward-looking terminology including "forecast," "may," "believe," "will," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other "forward-looking" information. We and our representatives may from time to time make other oral or written statements that are also forward-looking statements.

These forward-looking statements are made based upon management’s current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.

Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those expressed or implied by these forward-looking statements for a number of important reasons, including those discussed under "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC") on February 21, 2024, and as may be updated and supplemented from time to time in our future Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.


			Page

PART I – FINANCIAL INFORMATION			4

Item 1. Financial Statements			4
Consolidated and Condensed Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 (audited)			4
Consolidated and Condensed Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)			5
Consolidated and Condensed Statements of Capital (Deficit) for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)			7
Consolidated and Condensed Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)			8
Notes to Consolidated and Condensed Financial Statements (unaudited)			9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			30

Item 3. Quantitative and Qualitative Disclosures About Market Risk			51

Item 4. Controls and Procedures			52

PART II. OTHER INFORMATION			53

Item 1. Legal Proceedings			53

Item 1A. Risk Factors			53

Item 5. Other Information			59

Item 6. Exhibits			53

PART I – FINANCIAL INFORMATION


Item 1.			Financial Statements

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(Dollars in thousands)


	June 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
Assets
Cash	$	55	$	54
Accounts and other receivables, less allowance for doubtful accounts of $506 and $530, respectively	50,910		53,293

Inventories	41,597		43,822
Due from affiliates	22,151		7,924

Other current assets	10,284		9,220

Total current assets	124,997		114,313

Property, plant and equipment, at cost	939,570		918,786
Accumulated depreciation	(631,219)		(612,993)
Property, plant and equipment, net	308,351		305,793

Goodwill	16,671		16,671
Right-of-use assets	63,768		60,359
Investment in DSM Semichem LLC	7,938		—
Deferred income taxes, net	10,174		10,200
Other assets, net	3,179		2,039
Total assets	$	535,078	$	509,375

Liabilities and Partners’ Capital (Deficit)
Current installments of long-term debt and finance lease obligations	$	14	$	—
Trade and other accounts payable	51,874		51,653
Product exchange payables	—		426
Due to affiliates	3,269		6,334
Income taxes payable	1,374		652

Other accrued liabilities	42,178		41,499
Total current liabilities	98,709		100,564

Long-term debt, net	439,397		421,173
Finance lease obligations	62		—
Operating lease liabilities	47,187		45,684
Other long-term obligations	7,589		6,578
Total liabilities	592,944		573,999

Commitments and contingencies
Partners’ capital (deficit)	(57,866)		(64,624)

Total liabilities and partners' capital (deficit)	$	535,078	$	509,375

See accompanying notes to consolidated and condensed financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:
Terminalling and storage *	$	22,375	$	21,684	$	44,892	$	42,542
Transportation *	57,676		54,750		115,983		110,473
Sulfur services	3,477		3,357		6,954		6,715
Product sales: *
Specialty products	67,288		78,872		133,613		211,141
Sulfur services	33,715		36,973		63,919		69,294

	101,003		115,845		197,532		280,435
Total revenues	184,531		195,636		365,361		440,165

Costs and expenses:
Cost of products sold: (excluding depreciation and amortization)
Specialty products *	57,553		71,570		114,783		189,565
Sulfur services *	19,234		25,654		39,633		47,471
Terminalling and storage *	24		25		42		31
	76,811		97,249		154,458		237,067
Expenses:
Operating expenses *	65,358		60,737		129,292		123,482
Selling, general and administrative *	10,701		8,447		19,614		19,619


Depreciation and amortization	12,687		12,547		25,336		25,448
Total costs and expenses	165,557		178,980		328,700		405,616

Other operating income (loss), net	953		673		1,161		285

Operating income	19,927		17,329		37,822		34,834

Other income (expense):
Interest expense, net	(14,377)		(15,263)		(28,219)		(30,920)

Loss on extinguishment of debt	—		—		—		(5,121)

Other, net	2		11		18		33
Total other expense	(14,375)		(15,252)		(28,201)		(36,008)

Net income (loss) before taxes	5,552		2,077		9,621		(1,174)
Income tax expense	(1,772)		(996)		(2,568)		(2,831)


Net income (loss)	3,780		1,081		7,053		(4,005)
Less general partner's interest in net income (loss)	(76)		(22)		(141)		80

Less income (loss) allocable to unvested restricted units	(16)		(4)		(28)		12
Limited partners' interest in net income (loss)	$	3,688	$	1,055	$	6,884	$	(3,913)

Net income (loss) per unit attributable to limited partners - basic and diluted	$	0.09	$	0.03	$	0.18	$	(0.10)

Weighted average limited partner units - basic	38,832,222		38,772,266		38,833,039		38,771,037
Weighted average limited partner units - diluted	38,891,375		38,777,600		38,872,192		38,771,037

See accompanying notes to consolidated and condensed financial statements.

*Related Party Transactions Shown Below

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

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

*Related Party Transactions Included Above


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:*
Terminalling and storage	$	18,078	$	18,077	$	36,627	$	35,579
Transportation	8,318		7,277		16,919		12,788

Product Sales	123		7,497		252		8,422
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Specialty products	8,368		7,918		14,941		17,428
Sulfur services	2,919		2,644		5,912		5,352
Terminalling and storage	24		25		42		31
Expenses:
Operating expenses	26,501		25,058		52,924		48,885
Selling, general and administrative	8,638		6,556		15,501		15,072

See accompanying notes to consolidated and condensed financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)

(Unaudited)

(Dollars in thousands)


	Partners’ Capital (Deficit)
	Common Limited			General Partner Amount
	Units	Amount				Total
Balances - March 31, 2024	39,001,086	$	(63,115)	$	1,619		$	(61,496)
Net income	—	3,704		76			3,780




Cash distributions	—	(195)		(4)			(199)
Unit-based compensation	—	49		—			49




Balances - June 30, 2024	39,001,086	(59,557)		1,691			(57,866)

Balances - December 31, 2023	38,914,806	$	(66,182)	$	1,558		$	(64,624)
Net income	—	6,912		141			7,053

Issuance of restricted units	86,280	—		—			—


Cash distributions	—	(390)		(8)			(398)
Unit-based compensation	—	103		—			103




Balances - June 30, 2024	39,001,086	$	(59,557)	$	1,691		$	(57,866)


	Partners’ Capital (Deficit)
	Common Limited			General Partner Amount
	Units	Amount				Total
Balances - March 31, 2023	38,914,806	$	(66,236)	$	1,559		$	(64,677)
Net income	—	1,059		22			1,081




Cash distributions	—	(195)		(4)			(199)
Unit-based compensation	—	38		—			38




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

Balances - December 31, 2022	38,850,750	$	(61,110)	$	1,665		$	(59,445)
Net loss	—	(3,925)		(80)			(4,005)

Issuance of restricted units	64,056	—		—			—


Cash distributions	—	(389)		(8)			(397)
Unit-based compensation	—	90		—			90




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

See accompanying notes to consolidated and condensed financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended
	June 30,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	7,053	$	(4,005)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	25,336		25,448
Amortization of deferred debt issuance costs	1,539		2,435
Amortization of debt discount	1,200		1,000

Deferred income tax expense	26		1,867
Gain on disposition or sale of property, plant and equipment, net	(1,161)		(285)



Loss on extinguishment of debt	—		5,121



Non cash unit-based compensation	103		90
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:
Accounts and other receivables	2,383		22,619

Inventories	2,031		58,933
Due from affiliates	(14,227)		5,654
Other current assets	174		5,296
Trade and other accounts payable	523		(19,459)
Product exchange payables	(426)		278
Due to affiliates	(3,065)		(6,641)
Income taxes payable	722		(215)
Other accrued liabilities	(1,196)		1,907
Change in other non-current assets and liabilities	922		(1,269)


Net cash provided by operating activities	21,937		98,774

Cash flows from investing activities:
Payments for property, plant and equipment	(24,194)		(17,024)

Payments for plant turnaround costs	(6,705)		(661)

Investment in DSM Semichem LLC	(6,938)		—
Proceeds from sale of property, plant and equipment	738		4,275


Net cash used in investing activities	(37,099)		(13,410)

Cash flows from financing activities:
Payments of long-term debt	(113,000)		(519,197)
Payments under finance lease obligations	(1)		(9)
Proceeds from long-term debt	128,577		448,489




Payment of debt issuance costs	(15)		(14,238)

Cash distributions paid	(398)		(397)
Net cash provided by (used in) financing activities	15,163		(85,352)

Net increase in cash	1		12
Cash at beginning of period	54		45
Cash at end of period	$	55	$	57

Non-cash additions to property, plant and equipment	$	2,641	$	1,679
Non-cash contribution of land to DSM Semichem LLC	$	1,000	$	—

See accompanying notes to consolidated and condensed financial statements.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Martin Midstream Partners L.P. (the "Partnership") is a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the United States ("U.S."). Its four primary business lines include: terminalling, processing, and storage services for petroleum products and by-products including the refining of naphthenic crude oil; land and marine transportation services for petroleum products and by-products, chemicals, and specialty products; sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and marketing, distribution, and transportation services for natural gas liquids and blending and packaging services for specialty lubricants and grease.

The Partnership’s unaudited consolidated and condensed financial statements have been prepared in accordance with the requirements of Form 10-Q and U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial reporting. Accordingly, these financial statements have been condensed and do not include all of the information and footnotes required by U.S. GAAP for annual audited financial statements of the type contained in the Partnership’s annual reports on Form 10-K. In the opinion of the management of the Partnership’s general partner, all adjustments and elimination of significant intercompany balances necessary for a fair presentation of the Partnership’s financial position, results of operations, and cash flows for the periods shown have been made. All such adjustments are of a normal recurring nature. Results for such interim periods are not necessarily indicative of the results of operations for the full year. These financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.

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

NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS

There were no new accounting pronouncements applicable to the Partnership during the six months ended June 30, 2024.

NOTE 3. EXIT OF BUTANE OPTIMIZATION BUSINESS

During the second quarter of 2023, the Partnership completed its previously announced exit from its butane optimization business at the conclusion of the butane selling season. This exit did not qualify as discontinued operations in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 205. Going forward, with respect to butane, the Partnership will operate as a fee-based butane logistics business, primarily continuing to utilize its north Louisiana underground storage assets, which have both truck and rail capability. This logistics business will also utilize the Partnership's truck transportation assets for fee-based product movements. As a result of this new business model, the Partnership will no longer carry butane inventory, enabling the Partnership to reduce commodity risk exposure, cash flow and earnings volatility, and working capital requirements. The following revenues and costs, which are included in the financial results for all periods presented, are not expected to be incurred under the new fee-based butane logistics business model. The butane optimization business has historically been included in the Partnership's Specialty Products operating segment.


	Three Months Ended June 30,		Six Months Ended June 30,
	2023		2023
Products revenue	$	13,650	$	70,539
Cost of products sold	16,074		72,282
Selling, general and administrative expenses	140		512
	$	(2,564)	$	(2,255)

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

NOTE 4. REVENUE

The following table disaggregates our revenue by major source:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Terminalling and storage segment
Throughput and storage	$	22,375	$	21,684	$	44,892	$	42,542
	$	22,375	$	21,684	$	44,892	$	42,542

Transportation segment
Land transportation	$	42,860	$	40,869	$	85,603	$	83,099
Inland marine transportation	12,977		12,357		27,300		24,435
Offshore marine transportation	1,839		1,524		3,080		2,939
	$	57,676	$	54,750	$	115,983	$	110,473
Sulfur services segment
Sulfur product sales	$	7,521	$	7,462	$	13,204	$	13,738
Fertilizer product sales	26,194		29,511		50,715		55,556
Sulfur services	3,477		3,357		6,954		6,715
	$	37,192	$	40,330	$	70,873	$	76,009
Specialty products segment
Natural gas liquids product sales	$	35,435	$	45,678	$	73,566	$	143,900
Lubricant product sales	31,853		33,194		60,047		67,241
	$	67,288	$	78,872	$	133,613	$	211,141

Revenue is measured based on a consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties where the Partnership is acting as an agent. The Partnership recognizes revenue when the Partnership satisfies a performance obligation, which typically occurs when the Partnership transfers control over a product to a customer or as the Partnership delivers a service.

The following is a description of the principal activities - separated by reportable segments - from which the Partnership generates revenue.

Terminalling and Storage Segment

Revenue is recognized for storage contracts based on the contracted monthly tank fixed fee. For throughput contracts, revenue is recognized based on the volume moved through the Partnership’s terminals at the contracted rate. For storage and throughput contracts at the Partnership's underground NGL storage facility, revenue is recognized based on the volume stored and moved through the facility at the contracted rate. For the Partnership’s tolling agreement, revenue is recognized based on the contracted monthly reservation fee and throughput volumes moved through the facility. Throughput and storage revenue in the table above includes non-cancelable revenue arrangements that are under the scope of ASC 842, whereby the Partnership has committed certain Terminalling and Storage assets in exchange for a minimum fee.

Transportation Segment

Revenue related to land transportation is recognized for line hauls based on a mileage rate. For contracted trips, revenue is recognized upon completion of the particular trip. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

Revenue related to marine transportation is recognized for time charters based on a per day rate. For contracted trips, revenue is recognized upon completion of the particular trip. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Sulfur Services Segment

Revenue from sulfur and fertilizer product sales is recognized when the customer takes title to the product. Delivery of product is invoiced as the transaction occurs and is generally paid within a month. Revenue from sulfur services is recognized as services are performed during each monthly period. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.

Specialty Products Segment

Natural Gas Liquids ("NGL") revenue is recognized when title is transferred, which is generally when the product is delivered by truck, rail, or pipeline to the Partnership's NGL customers or when the customer picks up the product from our facilities. When lubricants are sold by truck or rail, revenue is recognized when title is transferred, which is generally when the product leaves the Partnership's facility, but can vary based on the specific terms of the contract. Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

The table below includes estimated minimum revenue expected to be recognized in the future related to performance obligations that are unsatisfied at the end of the reporting period. The Partnership applies the practical expedient in ASC 606-10-50-14(a) and does not disclose information about remaining performance obligations that have original expected durations of one year or less.


	2024		2025		2026		2027		2028		Thereafter		Total
Terminalling and storage
Throughput and storage	$	22,120	$	45,448	$	46,749	$	48,152	$	49,662	$	157,964	$	370,095
Sulfur services
Product sales	2,833		5,666		4,691		295		—		—		13,485
Service revenues	6,954		13,908		13,908		—		—		—		34,770
Specialty Products
NGL product sales	3,242		6,431		3,736		—		—		—		13,409
Total	$	35,149	$	71,453	$	69,084	$	48,447	$	49,662	$	157,964	$	431,759

NOTE 5. INVENTORIES

Components of inventories at June 30, 2024 and December 31, 2023, were as follows:


	June 30, 2024		December 31, 2023
Natural gas liquids	$	867	$	3,679
Lubricants	23,001		20,057
Sulfur	761		817
Fertilizer	11,312		13,411
Other	5,656		5,858
	$	41,597	$	43,822

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

NOTE 6. DEBT

At June 30, 2024 and December 31, 2023, long-term debt consisted of the following:


	June 30, 2024		December 31, 2023
$150,000 Credit facility at variable interest rate (8.72%1 weighted average at June 30, 2024), due February 2027 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $2,771 and $3,292, respectively 2	$	55,229	$	39,208
$400,000 Senior notes, 11.5% interest, net of unamortized debt issuance costs of $7,232 and $8,235, respectively, including unamortized premium of $8,600 and $9,800, respectively, due February 2028, secured 2	384,168		381,965
Total	439,397		421,173
Less: current portion	—		—
Total long-term debt, net of current portion	$	439,397	$	421,173

1 The interest rate fluctuates based on Adjusted Term SOFR (set on the date of each advance) or the alternate base rate plus an applicable margin. The margin is set every three months. All amounts outstanding at June 30, 2024 were at Adjusted Term SOFR plus an applicable margin. The applicable margin for revolving loans that are SOFR loans currently ranges from 2.75% to 3.75%, and the applicable margin for revolving loans that are alternate base rate loans currently ranges from 1.75% to 2.75%. The applicable margin for SOFR borrowings at June 30, 2024 is 3.25%. The applicable margin for SOFR borrowings effective July 17, 2024, is 3.25%. The credit facility contains various covenants that limit the Partnership’s ability to make distributions; make certain investments and acquisitions; enter into certain agreements; incur indebtedness; sell assets; and make certain amendments to the Partnership's omnibus agreement with Martin Resource Management Corporation (the "Omnibus Agreement").

2 The Partnership was in compliance with all debt covenants as of June 30, 2024 and December 31, 2023.

The Partnership paid cash interest in the amount of $1,585 and $2,632 for the three months ended June 30, 2024 and 2023, respectively. The Partnership paid cash interest in the amount of $26,238 and $24,808 for the six months ended June 30, 2024 and 2023, respectively. Capitalized interest was $291 and $7 for the three months ended June 30, 2024 and 2023, respectively. Capitalized interest was $443 and $11 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 7. LEASES

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment. The leases generally provide that all expenses related to the facilities and equipment are to be paid by the lessee.

Operating lease Right-of-Use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based on the information available at commencement date in determining the present value of lease payments. The estimated rate is based on a risk-free rate plus a risk-adjusted margin.

Our leases have remaining lease terms of 1 year to 12 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The Partnership includes extension periods in its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the extension options.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

The components of lease expense for the three and six months ended June 30, 2024 and 2023, were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	5,181	$	3,604	$	10,120	$	6,791
Finance lease cost:
Amortization of right-of-use assets	$	3	$	2	3		6
Interest on lease liabilities	1		—		1		—
Short-term lease cost	1,333		1,368		2,499		3,075
Variable lease cost	41		39		87		94
Total lease cost	$	6,559	$	5,013	$	12,710	$	9,966

Supplemental balance sheet information related to leases at June 30, 2024 and December 31, 2023, was as follows:


	June 30, 2024		December 31, 2023
Operating Leases
Operating lease right-of-use assets	$	63,768	$	60,359

Current portion of operating lease liabilities included in "Other accrued liabilities"	$	16,801	$	14,901
Operating lease liabilities	47,187		45,684
Total operating lease liabilities	$	63,988	$	60,585

Finance Leases
Property, plant and equipment, at cost	$	77	$	—
Accumulated depreciation	(3)		—
Property, plant and equipment, net	$	74	$	—

Current installments of finance lease obligations	$	14	$	—
Finance lease obligations	62		—
Total finance lease obligations	$	76	$	—

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

For the six months ended June 30, 2024, the Partnership incurred new operating leases, primarily related to land and marine transportation assets and renewed existing operating leases set to expire, primarily related to marine transportation assets.

The Partnership’s future minimum lease obligations as of June 30, 2024, consist of the following:


	Operating Leases
Year 1	$	20,795
Year 2	19,074
Year 3	15,533
Year 4	10,342
Year 5	3,542
Thereafter	4,745
Total	74,031
Less amounts representing interest costs	(10,043)
Total lease liability	$	63,988

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee. Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of June 30, 2024, are as follows: 2024 - $13,269; 2025 - $17,433; 2026 - $11,755; 2027 - $11,559; 2028 - $11,364; subsequent years - $18,256.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

NOTE 8. SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:


	June 30, 2024		December 31, 2023
Accrued interest	$	17,641	$	17,956
Asset retirement obligations	—		25
Property and other taxes payable	3,315		4,348
Accrued payroll	4,375		4,136
Operating lease liabilities	16,801		14,901
Other	46		133
	$	42,178	$	41,499

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


	June 30, 2024

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

Additions to asset retirement obligations	—
Accretion expense	66
Liabilities settled	—
Ending asset retirement obligations	5,248
Current portion of asset retirement obligations1	—
Long-term portion of asset retirement obligations2	$	5,248

1The current portion of asset retirement obligations is included in "Other accrued liabilities" on the Partnership's Consolidated and Condensed Balance Sheets.

2The non-current portion of asset retirement obligations is included in "Other long-term obligations" on the Partnership's Consolidated and Condensed Balance Sheets.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

NOTE 9. PARTNERS' CAPITAL (DEFICIT)

As of June 30, 2024, Partners’ capital (deficit) consisted of 39,001,086 common limited partner units, representing a 98% partnership interest, and a 2% general partner interest. Martin Resource Management Corporation, through subsidiaries, owned 6,114,532 of the Partnership's common limited partner units representing approximately 15.7% of the Partnership's outstanding common limited partner units. Martin Midstream GP LLC ("MMGP"), the Partnership's general partner, owns the 2% general partnership interest.

The partnership agreement of the Partnership (the "Partnership Agreement") contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital accounts.

Impact on Partners' Capital (Deficit) Related to Transactions Between Entities Under Common Control

Under ASC 805, assets and liabilities transferred between entities under common control are accounted for at the historical cost of those entities' ultimate parent, in a manner similar to a pooling of interests. Any difference in the amount paid by the transferee versus the historical cost of the assets transferred is recorded as an adjustment to equity (contribution or distribution) by the transferee. This is in contrast with a business combination between unrelated parties, where assets and liabilities are recorded at their fair values at the acquisition date, with any excess of amounts paid over the fair value representing goodwill. From time to time, the most recent being in 2019, the Partnership has entered into common control acquisitions from Martin Resource Management Corporation. The consideration transferred totaling $552,058 exceeds the historical cost of the net assets received. This excess of the purchase price over the historical cost of the net assets received has resulted in cumulative distributions of $289,019 reflected as reductions to Partners' capital.

Distributions of Available Cash

The Partnership distributes all of its available cash (as defined in the Partnership Agreement) within 45 days after the end of each quarter to unitholders of record and to the general partner. Available cash is generally defined as all cash and cash equivalents of the Partnership on hand at the end of each quarter less the amount of cash reserves its general partner determines in its reasonable discretion is necessary or appropriate to: (i) provide for the proper conduct of the Partnership’s business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds for distributions to unitholders and the general partner for any one or more of the next four quarters, plus all cash on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter.

Net Income per Unit

The Partnership follows the provisions of the FASB ASC 260-10 related to earnings per share, which addresses the application of the two-class method in determining income per unit for master limited partnerships having multiple classes of securities that may participate in partnership distributions accounted for as equity distributions. Undistributed earnings are allocated to the general partner and limited partners utilizing the contractual terms of the Partnership Agreement. When current period distributions are in excess of earnings, the excess distributions for the period are to be allocated to the general partner and limited partners based on their respective sharing of income and losses specified in the Partnership Agreement. Additionally, as required under FASB ASC 260-10-45-61A, unvested share-based payments that entitle employees to receive non-forfeitable distributions are considered participating securities, as defined in FASB ASC 260-10-20, for earnings per unit calculations.

For purposes of computing diluted net income per unit, the Partnership uses the more dilutive of the two-class and if-converted methods. Under the if-converted method, the weighted-average number of subordinated units outstanding for the period is added to the weighted-average number of common units outstanding for purposes of computing basic net income per unit and the resulting amount is compared to the diluted net income per unit computed using the two-class method. The following is a reconciliation of net income allocated to the general partner and limited partners for purposes of calculating net income attributable to limited partners per unit:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

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

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

Distributions payable on behalf of general partner interest	4		4		8		8
General partner interest in undistributed income (loss)	72		18		133		(88)
Less income (loss) allocable to unvested restricted units	16		4		28		(12)
Limited partners’ interest in net income (loss)	$	3,688	$	1,055	$	6,884	$	(3,913)

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Basic weighted average limited partner units outstanding	38,832,222	38,772,266	38,833,039	38,771,037
Dilutive effect of restricted units issued	59,153	5,334	39,153	—
Total weighted average limited partner diluted units outstanding	38,891,375	38,777,600	38,872,192	38,771,037

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the periods presented. All common unit equivalents were antidilutive for the three months ended June 30, 2023, because the limited partners were allocated a net loss in this period.

NOTE 10. UNIT BASED AWARDS - LONG-TERM INCENTIVE PLANS

The Partnership recognizes compensation cost related to unit-based awards to both employees and non-employees in its consolidated and condensed financial statements in accordance with certain provisions of ASC 718. Amounts recognized in operating expense and selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Restricted unit Awards
Employees	$	—	$	—	$	—	$	—
Non-employee directors	49		38		103		90
Phantom unit Awards
Employees	1,395		(1,574)		1,221		(1,175)
Non-employee directors	—		—		—		—
Total unit-based compensation expense	$	1,444	$	(1,536)	$	1,324	$	(1,085)

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

Long-Term Incentive Plans

The Partnership's general partner has long-term incentive plans for employees and directors of the general partner and its affiliates who perform services for the Partnership.

Phantom Unit Plan

On July 21, 2021, the board of directors of the general partner of the Partnership and the compensation committee of the general partner's board of directors (the "Compensation Committee") approved the Martin Midstream Partners L.P. 2021 Phantom Unit Plan (the “Plan”), effective as of the same date. The Plan permits the awards of phantom units and phantom unit appreciation rights (collectively, "phantom unit awards") 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.

The award of a phantom unit entitles the participant to a cash payment equal to the value of the phantom unit on the vesting date or dates, which value is the fair market value of a common unit of the Partnership (a “Unit”) on such vesting date or dates. The award of a phantom unit appreciation right entitles the recipient to a cash payment equal to the difference between the value of a phantom unit on the vesting date or dates in excess of the value assigned by the Compensation Committee to the phantom unit as of the grant date. Phantom units and phantom unit appreciation rights granted to participants do not confer upon participants any right to a Unit.

On July 21, 2021, the Compensation Committee approved forms of time-based award agreements for phantom units and phantom unit appreciation rights, both of which awards vest in full on the third anniversary of the grant date. The grant date value of a phantom unit under a phantom unit appreciation right award is equal to the average of the closing price for a Unit during the 20 trading days immediately preceding the grant date of the award.

Generally, vesting of an award is subject to a participant remaining continuously employed with the Partnership through the vesting date. However, if prior to the vesting date (i) a participant is terminated without cause (as defined in the award agreement) or terminates employment after the participant has attained both the age of 65 and ten years of employment (“retirement-eligible”), a prorated portion of the award will vest and be paid in cash no later than the 30th day following such termination date (subject to a six-month delay in payment for certain retirement-eligible participants) or (ii) there is a change in control of the Partnership (as defined in the Plan), the award will vest in full and be paid in cash no later than the 30th day following the date of the change of control; provided, that the participant has been in continuous employment through the termination or change in control date, as applicable.

On July 21, 2021, 620,000 phantom units and 1,245,000 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership. On April 20, 2022, the board of directors of the general partner of the Partnership and the Compensation Committee approved the First Amendment to the Plan, effective as of the same date, which amendment increased the total number of phantom units available for grant under the Plan from 2,000,000 units to 5,000,000 units. On April 20, 2022, 365,000 phantom units and 1,097,500 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership. On July 19, 2023, 1,179,500 phantom units and 505,500 phantom unit appreciation rights were granted to employees of the general partner and its affiliates who perform services for the Partnership.

Phantom unit awards are recorded in operating expense and selling, general and administrative expense based on the fair value of the vested portion of the awards on the balance sheet date. The fair value of these awards is updated at each balance sheet date and changes in the fair value of the vested portions of the awards are recorded as increases or decreases to compensation expense within operating expense and selling, general and administrative expense in the Consolidated and Condensed Statements of Operations. All of the Partnership's outstanding phantom unit awards at June 30, 2024, met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.

Compensation expense for the phantom awards is based on the fair value of the units as of the balance sheet date as further discussed below, and such costs are recognized ratably over the service period of the awards. As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

periods for these awards will vary. The estimated future cash payments of these awards are presented as liabilities within "Other current liabilities" and "Other long-term obligations" in the Consolidated and Condensed Balance Sheets. As of June 30, 2024, there was a total of $3,543 of unrecognized compensation costs related to non-vested phantom unit awards. These costs are expected to be recognized over a remaining life of 1.90 years.

The fair value of the phantom unit awards was estimated using a Monte Carlo valuation model as of the balance sheet date. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility was calculated based on the historical volatility of the Partnership’s common units as well as set of peer companies.

Restricted Unit Plan

On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P. 2017 Restricted Unit Plan (the "2017 LTIP"). The 2017 LTIP currently permits the grant of awards covering an aggregate of 3,000,000 common units, all of which can be awarded in the form of restricted units. The 2017 LTIP is administered by the Compensation Committee.

A restricted unit is a unit that is granted to grantees with certain vesting restrictions, which may be time-based and/or performance-based. Once these restrictions lapse, the grantee is entitled to full ownership of the unit without restrictions. The Compensation Committee may determine to make grants under the 2017 LTIP containing such terms as the Compensation Committee shall determine under the 2017 LTIP. With respect to time-based restricted units ("TBRUs"), the Compensation Committee will determine the time period over which restricted units granted to employees and directors will vest. The Compensation Committee may also award a percentage of restricted units with vesting requirements based upon the achievement of specified pre-established performance targets ("Performance Based Restricted Units" or "PBRUs"). The performance targets may include, but are not limited to, the following: revenue and income measures, cash flow measures, net income before interest expense and income tax expense ("EBIT"), net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), distribution coverage metrics, expense measures, liquidity measures, market measures, corporate sustainability metrics, and other measures related to acquisitions, dispositions, operational objectives and succession planning objectives. PBRUs are earned only upon our achievement of an objective performance measure for the performance period. PBRUs which vest are payable in common units. Unvested units granted under the 2017 LTIP may or may not participate in cash distributions depending on the terms of each individual award agreement.

The restricted units issued to directors generally vest in equal annual installments over a four-year period. Restricted units issued to employees generally vest in equal annual installments over three years of service. All of the Partnership's outstanding restricted unit awards at June 30, 2024, met the criteria to be treated under equity classification.

In February 2024, the Partnership issued 28,760 TBRUs to each of the Partnership's three independent directors under the 2017 LTIP. These restricted common units vest in equal installments of 7,190 units on January 24, 2025, 2026, 2027, and 2028.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

The restricted units are valued at their fair value at the date of grant, which is equal to the market value of common units on such date. A summary of the restricted unit activity for the six months ended June 30, 2024, is provided below:


	Number of Units		Weighted Average Grant-Date Fair Value Per Unit
Non-vested, beginning of period	141,390		$	2.99
Granted (TBRU)	86,280		$	2.26

Vested	(58,806)		$	2.86
Forfeited	—		$	—
Non-Vested, end of period	168,864		$	2.65

Aggregate intrinsic value, end of period	$	545

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and six months ended June 30, 2024 and 2023, is provided below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Aggregate intrinsic value of units vested	$	—	$	—	$	46	$	89
Fair value of units vested	—		—		168		178

As of June 30, 2024, there was $377 of unrecognized compensation cost related to non-vested restricted units. That cost is expected to be recognized over a weighted-average period of 2.76 years.

NOTE 11. RELATED PARTY TRANSACTIONS

As of June 30, 2024, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7% of the Partnership’s outstanding limited partner units. Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 100% voting interest in MMGP Holdings, LLC ("Holdings"), the sole member of the Partnership's general partner. The Partnership’s general partner, MMGP, owns a 2% general partner interest in the Partnership. The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of June 30, 2024, of approximately 15.7% of the Partnership’s outstanding limited partnership units, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

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

Omnibus Agreement

Omnibus Agreement. The Partnership and its general partner are parties to the Omnibus Agreement dated November 1, 2002, with Martin Resource Management Corporation that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin Resource Management Corporation and the Partnership’s use of certain Martin Resource Management Corporation trade names and trademarks. The Omnibus Agreement was amended on November 25, 2009, to include processing crude oil into finished products including naphthenic lubricants, distillates, asphalt and other intermediate cuts. The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

Non-Competition Provisions. Martin Resource Management Corporation has agreed for so long as it controls the general partner of the Partnership, not to engage in the business of:

•providing terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finished lubricants;

•providing land and marine transportation of petroleum products, by-products, and chemicals; and

•manufacturing and selling sulfur-based fertilizer products and other sulfur-related products.

This restriction does not apply to:

•the ownership and/or operation on the Partnership’s behalf of any asset or group of assets owned by it or its affiliates;

•any business operated by Martin Resource Management Corporation, including the following:

◦distributing asphalt, marine fuel and other liquids;

◦providing shore-based marine services in Texas, Louisiana, Mississippi, and Alabama;

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

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

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

◦operating an environmental consulting company;

◦operating a butane optimization business;

◦supplying employees and services for the operation of the Partnership's business; and

◦operating, solely for our account, the asphalt facilities in each of Hondo, South Houston and Port Neches, Texas and Omaha, Nebraska.

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

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

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

Services. Under the Omnibus Agreement, Martin Resource Management Corporation provides the Partnership with corporate staff, support services, and administrative services necessary to operate the Partnership’s business. The Omnibus Agreement requires the Partnership to reimburse Martin Resource Management Corporation for all direct expenses it incurs or payments it makes on the Partnership’s behalf or in connection with the operation of the Partnership’s business. There is no

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

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

Effective January 1, 2024, through December 31, 2024, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $13,508. The Partnership reimbursed Martin Resource Management Corporation for $3,377 and $3,496 of indirect expenses for the three months ended June 30, 2024 and 2023, respectively. The Partnership reimbursed Martin Resource Management Corporation for $6,754 and $6,991 of indirect expenses for the six months ended June 30, 2024 and 2023, respectively. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

These indirect expenses are intended to cover the centralized corporate functions Martin Resource Management Corporation provides to the Partnership, 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 the Partnership shares with Martin Resource Management Corporation retained businesses. The provisions of the Omnibus Agreement regarding Martin Resource Management Corporation’s services will terminate if Martin Resource Management Corporation ceases to control the general partner of the Partnership.

Related-Party Transactions. The Omnibus Agreement prohibits the Partnership from entering into any material agreement with Martin Resource Management Corporation without the prior approval of the Conflicts Committee. For purposes of the Omnibus Agreement, the term "material agreements" means any agreement between the Partnership and Martin Resource Management Corporation that requires aggregate annual payments in excess of the then-applicable agreed upon reimbursable amount of indirect general and administrative expenses. Please read "Services" above.

License Provisions. Under the Omnibus Agreement, Martin Resource Management Corporation has granted the Partnership a nontransferable, nonexclusive, royalty-free right and license to use certain of its trade names and marks, as well as the trade names and marks used by some of its affiliates.

Amendment and Termination. The Omnibus Agreement may be amended by written agreement of the parties; provided, however, that it may not be amended without the approval of the Conflicts Committee if such amendment would adversely affect the unitholders. The Omnibus Agreement was first amended on November 25, 2009, to permit the Partnership to provide refining services to Martin Resource Management Corporation. The Omnibus Agreement was amended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management Corporation. Such amendments were approved by the Conflicts Committee. The Omnibus Agreement, other than the indemnification provisions and the provisions limiting the amount for which the Partnership will reimburse Martin Resource Management Corporation for general and administrative services performed on its behalf, will terminate if the Partnership is no longer an affiliate of Martin Resource Management Corporation.

Master Transportation Services Agreement

Master Transportation Services Agreement. Martin Transport, Inc. ("MTI"), a wholly owned subsidiary of the Partnership, is a party to a master transportation services agreement effective January 1, 2019, with certain wholly owned subsidiaries of Martin Resource Management Corporation. Under the agreement, MTI agreed to transport Martin Resource Management Corporation's petroleum products and by-products.

Term and Pricing. The agreement will continue unless either party terminates the agreement by giving at least 30 days' written notice to the other party. The rates under the agreement are subject to any adjustments which are mutually agreed upon or in accordance with a price index. Additionally, shipping charges are also subject to fuel surcharges determined on a weekly basis in accordance with the U.S. Department of Energy’s national diesel price list.

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

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

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

Marine Agreements

Marine Transportation Agreement. The Partnership is a party to a marine transportation agreement effective January 1, 2006, as amended, under which the Partnership provides marine transportation services to Martin Resource Management Corporation on a spot-contract basis at applicable market rates. Effective each January 1, this agreement automatically renews for consecutive one year periods unless either party terminates the agreement by giving written notice to the other party at least 60 days prior to the expiration of the then applicable term. The fees the Partnership charges Martin Resource Management Corporation are based on applicable market rates.

Marine Fuel. The Partnership is a party to an agreement with Martin Resource Management Corporation dated November 1, 2002, under which Martin Resource Management Corporation provides the Partnership with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of the Platt’s U.S. Gulf Coast Index for #2 Fuel Oil. Under this agreement, the Partnership agreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin Resource Management Corporation.

Terminal Services Agreements

Diesel Fuel Terminal Services Agreement. Effective October 1, 2022, the Partnership entered into a third amended and restated terminalling services agreement under which it provides terminal services to Martin Energy Services LLC (“MES”), a wholly owned subsidiary of Martin Resource Management Corporation, for fuel distribution utilizing marine shore based terminals owned by the Partnership. This agreement amended the existing arrangement between the Partnership and MES by eliminating any minimum throughput volume requirements and increasing the per gallon throughput fee. The primary term of this agreement expired on December 31, 2023, but will continue on a year to year basis until terminated by either party by giving at least 90 days’ written notice prior to the end of any term. Effective January 1, 2024, this agreement was amended to increase the throughput rate and to establish a minimum throughput volume.

Miscellaneous Terminal Services Agreements. The Partnership is currently party to several terminal services agreements and from time to time the Partnership may enter into other terminal service agreements for the purpose of providing terminal services to related parties. Individually, each of these agreements is immaterial but when considered in the aggregate they could be deemed material. These agreements are throughput based with a minimum volume commitment. Generally, the fees due under these agreements are adjusted annually based on a price index.

Other Agreements

Cross Tolling Agreement. The Partnership is a party to an amended and restated tolling agreement with Cross Oil Refining and Marketing, Inc. ("Cross") dated October 28, 2014, under which the Partnership processes crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts for Cross. The tolling agreement expires November 25, 2031. Under this tolling agreement, Cross agreed to process a minimum of 6,500 barrels per day of crude oil at the facility at a fixed price per barrel. Any additional barrels are processed at a modified price per barrel. In addition, Cross agreed to pay a monthly reservation fee and a periodic fuel surcharge fee based on certain parameters specified in the tolling agreement. Further, certain capital improvements, to the extent requested by Cross, are reimbursed through a capital recovery fee. All of these fees (other than the fuel surcharge) are subject to escalation annually based upon the greater of 3% or the increase in the Consumer Price Index for a specified annual period.

East Texas Mack Leases. MTI leases equipment, including tractors and trailers, from East Texas Mack Sales ("East Texas Mack"). Certain of our directors or officers are owners of East Texas Mack, including entities affiliated with Ruben Martin, who owns approximately 46% of the issued and outstanding stock of East Texas Mack. Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the three months ended June 30, 2024 and 2023, were $1,118 and $785, respectively. Amounts paid to East Texas Mack for tractor and trailer lease payments and lease residuals for the six months ended June 30, 2024 and 2023, were $2,055 and $1,409, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

Storage and Services Agreement. The Partnership is a party to a storage and services agreement with Martin Butane, a division of Martin Product Sales LLC (a subsidiary of Martin Resource Management Corporation), dated May 1, 2023, under which the Partnership provides storage and other services for NGLs at the Partnership's Arcadia, Louisiana, underground storage facility. The primary term of the agreement expired on April 30, 2024, but will continue on a year to year basis until terminated by either party by giving at least 90 days’ written notice prior to the end of any term.

Other Miscellaneous Agreements. From time to time the Partnership enters into other miscellaneous agreements with Martin Resource Management Corporation for the provision of other services or the purchase of other goods.

The tables below summarize the related party transactions that are included in the related financial statement captions on the face of the Partnership’s Consolidated and Condensed Statements of Operations. The revenues, costs and expenses reflected in these tables are tabulations of the related party transactions that are recorded in the corresponding captions of the consolidated and condensed financial statements and do not reflect a statement of profits and losses for related party transactions.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Terminalling and storage	$	18,078	$	18,077	$	36,627	$	35,579
Transportation	8,318		7,277		16,919		12,788

Product sales:
Specialty products	89		7,417		190		8,289
Sulfur services	34		80		62		133

	123		7,497		252		8,422
	$	26,519	$	32,851	$	53,798	$	56,789

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of products sold:
Specialty products	$	8,368	$	7,918	$	14,941	$	17,428
Sulfur services	2,919		2,644		5,912		5,352
Terminalling and storage	24		25		42		31
	$	11,311	$	10,587	$	20,895	$	22,811

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2024

(Unaudited)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating expenses:
Transportation	$	19,814	$	17,951	$	39,587	$	36,015

Sulfur services	1,050		1,590		2,372		2,590
Terminalling and storage	5,637		5,517		10,965		10,280
	$	26,501	$	25,058	$	52,924	$	48,885

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Selling, general and administrative:
Transportation	$	2,203	$	1,939	$	4,030	$	4,202
Specialty products	1,256		570		1,992		1,881
Sulfur services	1,157		439		1,933		1,520
Terminalling and storage	482		(8)		424		228
Indirect, including overhead allocation	3,540		3,616		7,122		7,241
	$	8,638	$	6,556	$	15,501	$	15,072

NOTE 12. BUSINESS SEGMENTS

The Partnership has four reportable segments: (1) terminalling and storage, (2) transportation, (3) sulfur services and (4) specialty products. The Partnership’s reportable segments are strategic business units that offer different products and services. The operating income of these segments is reviewed by the chief operating decision maker to assess performance and make business decisions. The Partnership evaluates the performance of its reportable segments based on operating income. There is no allocation of interest expense.


Three Months Ended June 30, 2024	Operating Revenues		Intersegment Revenues Eliminations		Operating Revenues after Eliminations		Depreciation and Amortization		Operating Income (Loss) after Eliminations		Capital Expenditures and Plant Turnaround Costs
Terminalling and storage	$	24,402	$	(2,027)	$	22,375	$	5,729	$	1,316	$	2,075
Transportation	61,467		(3,791)		57,676		3,381