Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a publicly traded limited partnership with a diverse set of operations focused primarily in the Gulf Coast region of the U.S. Our four primary business lines include:
• Terminalling, processing, and storage services for petroleum products and by-products;
• Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products;
• Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and
• Marketing, distribution, and transportation services for NGLs and blending and packaging services for specialty lubricants and grease.
The petroleum products and by-products we collect, transport, store and market are produced primarily by major and independent oil and gas companies who often turn to third parties, such as us, for the transportation and disposition of these products. In addition to these major and independent oil and gas companies, our primary customers include independent refiners, large chemical companies, and other wholesale purchasers of these products. We operate primarily in the Gulf Coast region of the U.S. This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry.
Significant Recent Developments
Tariffs and Trading Relationships. In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government announced and rescinded multiple tariffs on several foreign jurisdictions, which increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. In August 2025, however, the U.S. Court of Appeals for the Federal Circuit ruled that the tariffs imposed under the Trump Administration exceed presidential authority and therefore are invalid, and in February 2026, the U.S. Supreme Court affirmed such decision. The Trump Administration has since indicated its intention to impose a new 15% “global tariff.” Any future tariffs and current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.
For more information about the potential physical effects of climate change and environmental regulation on our business, see our environmental and climate change related risk factors in Section 1A “Risk Factors.”
Subsequent Events
Quarterly Distribution. On January 22, 2026, we declared a quarterly cash distribution of $0.005 per common unit for the fourth quarter of 2025, or $0.02 per common unit on an annualized basis, which was paid on February 13, 2026 to unitholders of record as of February 6, 2026.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated financial statements included elsewhere herein. We prepared these financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP" or "GAAP"). The preparation of these financial statements required us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We based our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Our results may differ from these estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Changes in these estimates could materially affect our financial position, results of operations or cash flows. You should also read Note 2, "Significant Accounting Policies" in Notes to Consolidated Financial Statements. The following table evaluates the potential impact of estimates utilized during the periods ended December 31, 2025 and 2024:
Description
Judgments and Uncertainties
Effect if Actual Results Differ from Estimates and Assumptions
Impairment of Long-Lived Assets
We periodically evaluate whether the carrying value of long-lived assets has been impaired when circumstances indicate the carrying value of the assets may not be recoverable. These evaluations are based on undiscounted cash flow projections over the remaining useful life of the asset. The carrying value is not recoverable if it exceeds the sum of the undiscounted cash flows. Any impairment loss is measured as the excess of the asset's carrying value over its fair value.
Our impairment analyses require management to use judgment in estimating future cash flows and useful lives, as well as assessing the probability of different outcomes.
Applying this impairment review methodology, no impairment was recorded during the years ended December 31, 2025 or 2024.
Impairment of Goodwill
Goodwill is subject to a fair-value based
impairment test on an annual basis, or more frequently if events or changes in circumstances indicate that the fair value of any of our reporting units is less than its carrying amount. When assessing the recoverability of goodwill, we may first assess qualitative factors in determining
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing qualitative factors, if we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a quantitative assessment is not required. If an initial qualitative assessment indicates that it is more likely than not the carrying amount exceeds the fair value of a reporting unit, a quantitative analysis will be performed. We may also elect to bypass the qualitative assessment and proceed directly to a quantitative analysis depending on the facts and circumstances.
As part of the quantitative evaluation, we determine fair value using accepted valuation techniques, including discounted cash flow, the guideline public company method and the guideline transaction method. These analyses require management to make assumptions and estimates regarding industry and economic factors, future operating results and discount rates. We conduct impairment testing using present economic conditions, as well as future expectations.
Based upon the most recent annual review as of August 31, 2025, no goodwill impairment exists within our reporting units for the year ended December 31, 2025. No goodwill impairment was recorded during the year ended December 31, 2024.
Our Relationship with Martin Resource Management Corporation
Martin Resource Management Corporation directs our business operations through its ownership of our general partner and under the Omnibus Agreement. 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 each of the years ended December 31, 2025 and 2024, the Board of Directors approved a reimbursement amount of $13.5 million, 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. Martin Resource Management Corporation also licenses certain of its trademarks and trade names to us under the Omnibus Agreement.
We are both an important supplier to and customer of Martin Resource Management Corporation. All of these services and goods are purchased and sold pursuant to the terms of a number of agreements between us and Martin Resource Management Corporation. For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please see "Item 13. Certain Relationships and Related Transactions, and Director Independence."
Non-GAAP Financial Measures
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), 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. GAAP to analyze our performance.
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.
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, transaction costs associated with business combination, merger, and divestiture activities, equity in earnings (loss) from unconsolidated entities, and non-cash contractual revenue deferral adjustments. 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:
• the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis;
• the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness, and make cash distributions to our unitholders; and
• 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.
We define Credit Adjusted EBITDA as Adjusted EBITDA plus pro forma adjustments associated with business combinations or material projects and capitalized interest. 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. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to
generate cash available for distribution. Because we have capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. 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. We define Distributable Cash Flow as net cash provided by (used in) operating activities, plus changes in operating assets and liabilities which (provided) used cash, transaction costs associated with business combination, merger, and divestiture activities, and non-cash contractual revenue deferral adjustments, less maintenance capital expenditures and plant turnaround costs. Distributable Cash Flow is a significant performance measure used by our management and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay unitholders. Distributable Cash Flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our quarterly distribution rates. 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. Adjusted Free Cash Flow is a significant performance measure used by our management and by external users of our financial statements and represents how much cash flow a business generates during a specified time period after accounting for all capital expenditures, including expenditures for growth and maintenance capital projects. We believe that Adjusted Free Cash Flow is important to investors, lenders, commercial banks and research analysts since it reflects the amount of cash available for reducing debt, investing in additional capital projects, paying distributions, and similar matters. Our calculation of Adjusted Free Cash Flow may or may not be comparable to similarly titled measures used by other entities.
The GAAP measure most directly comparable to Distributable Cash Flow and Adjusted Free Cash Flow is net cash provided by (used in) operating activities. Distributable Cash Flow and Adjusted Free Cash Flow should not be considered alternatives to, or more meaningful than, net income (loss), operating Income (loss), net cash provided by (used in) operating activities, or any other measure of liquidity presented in accordance with GAAP. Distributable Cash Flow and Adjusted Free Cash Flow have important limitations because they exclude some items that affect net income (loss), operating income (loss), and net cash provided by (used in) operating activities. Distributable Cash Flow and Adjusted Free Cash Flow may not be comparable to similarly titled measures of other companies because other companies may not calculate these non-GAAP metrics in the same manner. To compensate for these limitations, we believe that it is important to consider net cash provided by (used in) operating activities determined under GAAP, as well as Distributable Cash Flow and Adjusted Free Cash Flow, to evaluate our overall liquidity.
The following tables reconcile the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for the years ended December 31, 2025 and 2024, 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,
(in thousands)
Net loss
Adjustments:
Interest expense
Income tax expense
Depreciation and amortization
EBITDA
Adjustments:
Gain on disposition of property, plant and equipment
Transaction expenses related to the terminated merger with Martin Resource Management Corporation
Equity in loss of DSM Semichem LLC
Non-cash contractual revenue deferral adjustment
Unit-based compensation
Adjusted EBITDA
Adjustments:
Pro-forma adjustment related to ELSA project
Capitalized interest
Credit Adjusted EBITDA
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,
(in thousands)
Net cash provided by operating activities
Interest expense 1
Current income tax expense
Transaction expenses related to the terminated merger with Martin Resource Management Corporation
Non-cash contractual revenue deferral adjustment
Changes in operating assets and liabilities which (provided) used cash:
Accounts and other receivables, inventories, and other current assets
Trade, accounts and other payables, and other current liabilities
Other
Adjusted EBITDA
Pro-forma adjustment related to ELSA project
Capitalized interest
Credit Adjusted EBITDA
Adjustments:
Interest expense
Income tax expense
Deferred income taxes
Amortization of deferred debt issuance costs
Amortization of discount on notes payable
Payments for plant turnaround costs
Maintenance capital expenditures
Distributable Cash Flow
Principal payments under finance lease obligations
Investment in DSM Semichem LLC
Expansion capital expenditures
Adjusted Free Cash Flow
1 Net of amortization of debt issuance costs and discount, which are included in interest expense but not included in net cash provided by (used in) operating activities.
Results of Operations
The results of operations for the years ended December 31, 2025 and 2024 have been derived from our consolidated financial statements. Discussions of the year ended December 31, 2023 that are not included in this Annual Report and year-to-year comparisons of the year ended December 31, 2024 and the year ended December 31, 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and the Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling, general and administrative expenses, and depreciation and amortization expense from revenues.
Our consolidated results of operations are presented on a comparative basis below. There are certain items of income and expense which we do not allocate on a segment basis. These items, including interest expense, and indirect selling, general and administrative expenses, are discussed after the comparative discussion of our results within each segment.
The following table sets forth our operating revenues and operating income by segment for the years ended December 31, 2025 and 2024.
Operating Revenues
Revenues
Intersegment Eliminations
Operating Revenues
after Eliminations
Operating Income (loss)
Operating Income Intersegment Eliminations
Operating
Income (loss)
after
Eliminations
(In thousands)
Year Ended December 31, 2025:
Terminalling and storage
Specialty products
Sulfur services
Transportation
Indirect selling, general and administrative
Total
Year Ended December 31, 2024:
Terminalling and storage
Specialty products
Sulfur services
Transportation
Indirect selling, general and administrative
Total
Terminalling and Storage Segment
Comparative Results of Operations for the Years Ended December 31, 2025 and 2024
Year Ended December 31,
Variance
Percent Change
(In thousands)
Revenues
Cost of products sold
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Other operating income (loss), net
Operating income
Shore-based throughput volumes (gallons)
Smackover refinery throughput volumes (guaranteed minimum BBL per day)
Revenues. Revenues increased $1.7 million compared to the prior year. Revenues at our underground storage terminals increased $1.3 million, driven by higher storage revenue of $2.4 million, partially offset by decreases in throughput revenue of $1.0 million and reservation fees of $0.1 million. Revenues at our Smackover refinery increased $1.0 million, reflecting higher throughput revenue of $0.9 million, increased reservation fees of $0.5 million, and higher other revenue of $0.2 million, partially offset by a $0.6 million decrease in natural gas surcharge revenue. Revenues at our shore-based terminals decreased $0.4 million, primarily due to lower space rental revenue of $0.6 million, partially offset by a $0.3 million increase in throughput revenue. Revenues at our specialty terminals decreased $0.2 million, driven by lower service revenue of $0.5 million, partially offset by increases in throughput revenue of $0.2 million and storage revenue of $0.1 million.
Operating expenses. Operating expenses decreased $1.2 million compared to the prior year. Expenses at our Smackover refinery decreased $1.3 million, primarily due to lower insurance claim expense of $1.5 million related to the 2024 crude pipeline spill. This was offset by higher employee-related expenses of $0.8 million, increased natural gas utility costs of $0.7 million, and higher lease expense of $0.2 million related to operating equipment. Expenses at our shore-based terminals and underground storage terminals decreased $0.5 million and $0.2 million, respectively, primarily due to lower repairs and maintenance costs. Expenses at our specialty terminals increased $0.4 million, reflecting higher insurance premiums of $0.3 million, increased employee-related expenses of $0.3 million, higher natural gas utility costs of $0.2 million, and increased waste disposal expense of $0.2 million, partially offset by lower repairs and maintenance expense of $0.6 million.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased primarily due to lower employee-related expenses.
Depreciation and amortization. Depreciation and amortization decreased primarily due to recent asset disposals, partially offset by depreciation associated with capital expenditures.
Other operating income (loss), net. Other operating income (loss), net consists primarily of gains and losses from the disposition of property, plant and equipment.
Transportation Segment
Comparative Results of Operations for the Years Ended December 31, 2025 and 2024
Year Ended December 31,
Variance
Percent Change
(In thousands)
Revenues
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Other operating income, net
Operating income
Revenues . Revenues decreased $10.8 million compared to the prior year. In our marine transportation division, inland revenues decreased $5.0 million, primarily due to lower transportation rates and reduced utilization associated with reduced demand and downtime related to equipment repairs and scheduled regulatory inspections. In the third quarter of 2025, the marine transportation business experienced a significant decline in demand for inland barge fuel transportation which was unexpected entering the quarter. Barge utilization also declined significantly as refineries favored lighter crude slates, shifting transportation demand away from barges and into pipelines. Offshore revenues increased $1.9 million, reflecting higher transportation rates, partially offset by lower utilization related to a scheduled regulatory inspection. Pass-through revenue (primarily fuel) increased $0.9 million. In our land transportation division, freight revenue decreased $7.0 million, primarily due to a 5% decrease in total miles. Ancillary revenue decreased $2.6 million.
Operating expenses . Operating expenses increased $2.6 million compared to the prior year. The increase was primarily due to higher lease expense of $4.3 million related to new equipment placed into service, increased insurance premiums and claims of $2.1 million, and higher shop expenses of $0.6 million. These increases were partially offset by lower employee-related expenses of $2.6 million, decreased repairs and maintenance of $1.2 million, and reduced pass-through expenses (primarily fuel) of $0.6 million.
Selling, general and administrative expenses . Selling, general and administrative expenses decreased $1.7 million compared to the prior year, primarily due to a $0.9 million reduction in the allowance for uncollectible accounts receivable related to a reserve release and lower employee-related expenses of $0.7 million.
Depreciation and amortization . Depreciation and amortization decreased $1.3 million compared to the prior year, primarily due to recent asset disposals, partially offset by depreciation associated with capital expenditures placed into service.
Other operating income, net. Other operating income, net consists primarily of gains from the disposition of property, plant and equipment.
Sulfur Services Segment
Comparative Results of Operations for the Years Ended December 31, 2025 and 2024
Year Ended December 31,
Variance
Percent Change
(In thousands)
Revenues:
Services
Products
Total revenues
Cost of products sold
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Other operating income (loss), net
Operating income
Sulfur (long tons)
Fertilizer (long tons)
Sulfur services volumes (long tons)
Services revenues. Services revenues increased $1.9 million compared to the prior year. An increase of $1.5 million primarily reflects reservation fees received from our ELSA joint venture beginning in the fourth quarter of 2024, as well as contractually prescribed, index-based fee adjustments.
Products revenues. Products revenues increased $32.4 million compared to the prior year. The increase was driven by a 32% rise in sales volumes, including a 37% increase in sulfur volumes, which contributed $36.0 million. This volume growth was partially offset by a 3% decline in average sales prices, which reduced revenues by $3.5 million.
Cost of products sold. Cost of products sold increased $33.8 million compared to the prior year. A 32% increase in sales volumes increased cost of products sold by $27.7 million. In addition, an 8% increase in product costs, reflecting higher underlying commodity prices, increased costs by $6.1 million. As a result, margin per ton decreased $15.24, or 27%, as higher commodity costs outpaced pricing.
Operating expenses. Operating expenses increased $1.7 million compared to the prior year, primarily due to higher outside services expense of $0.8 million, marine operating expenses of $0.4 million, marine pass-through expenses of $0.3 million, and utilities expense of $0.2 million.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased $0.6 million compared to the prior year, primarily due to lower employee-related costs.
Depreciation and amortization. Depreciation and amortization increased $2.4 million compared to the prior year, primarily due to the amortization of higher turnaround costs and capital expenditures placed into service.
Other operating income (loss), net. Other operating income (loss), net consists primarily of gains and losses from the disposition of property, plant and equipment.
Specialty Products Segment
Comparative Results of Operations for the Years Ended December 31, 2025 and 2024
Year Ended December 31,
Variance
Percent Change
(In thousands)
Products revenues
Cost of products sold
Operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Other operating income, net
Operating income
NGL sales volumes (Bbls)
Other specialty products volumes (Bbls)
Total specialty products volumes (Bbls)
Product Revenues. Product revenues decreased $16.1 million compared to the prior year. The decline was primarily driven by an 11% decrease in average sales prices, which reduced revenues by $28.8 million. This was partially offset by a 5% increase in sales volumes, contributing $12.6 million.
Cost of Products Sold. Cost of products sold decreased $11.7 million compared to the prior year. Lower average cost per barrel, down 10%, reduced costs by $23.1 million. However, the increase in sales volumes partially offset this benefit, increasing costs by $11.5 million. As a result, margin per barrel decreased $2.13, or 21%, as price compression outpaced the benefit of lower input costs.
Operating expenses . Operating expenses remained relatively consistent with the prior year.
Selling, general and administrative expenses . Selling, general and administrative expenses decreased $0.6 million compared to the prior year, primarily due to lower professional fees.
Depreciation and amortization. Depreciation and amortization decreased $0.2 million compared to the prior year as certain assets became fully depreciated during the period.
Other operating income, net. Other operating income, net consists primarily of gains and losses from the disposition of property, plant and equipment.
Interest Expense
Comparative Components of Interest Expense, Net for the Years Ended December 31, 2025 and 2024
Year Ended December 31,
Variance
Percent Change
(In thousands)
Credit facility
Senior notes
Amortization of deferred debt issuance costs
Amortization of debt discount
Other
Finance leases
Capitalized interest
Total interest expense, net
Indirect Selling, General and Administrative Expenses
Year Ended December 31,
Variance
Percent Change
(In thousands)
Indirect selling, general and administrative expenses
Indirect selling, general and administrative expenses decreased primarily due to transaction expenses associated with the terminated merger with Martin Resource Management Corporation of $2.7 million and decreased insurance claims expense of $0.7 million.
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. This allocation is based on the percentage of time spent by Martin Resource Management Corporation personnel that provide such centralized services. GAAP also permits other methods for allocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment. The allocation of these expenses between Martin Resource Management Corporation and us is subject to a number of judgments and estimates, regardless of the method used. We can provide no assurances that our method of allocation, in the past or in the future, is or will be the most accurate or appropriate method of allocation for these expenses. Other methods could result in a higher allocation of selling, general and administrative expense to us, which would reduce our net income.
Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses. The Board of Directors approved the following reimbursement amounts:
Year Ended December 31,
Variance
Percent Change
(In thousands)
Board of Directors approved reimbursement amount
The amounts reflected above represent 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.
Liquidity and Capital Resources
General
Our primary sources of liquidity to meet operating expenses, service our indebtedness, fund capital expenditures and pay distributions to our unitholders have historically been cash flows generated by our operations, borrowings under our credit facility and access to debt and equity capital markets, both public and private. Set forth below is a description of our cash flows for the periods indicated.
Cash Flows - Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table details the cash flow changes between the years ended December 31, 2025 and 2024:
Year Ended December 31,
Variance
Percent Change
(In thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash and cash equivalents
Net cash provided by operating activities. Net cash provided by operating activities for the year ended December 31, 2025 decreased $2.2 million, primarily as a result of a decrease in operating results and non-cash items of $9.2 million, offset by a favorable variance in changes in working capital of $7.0 million.
Net cash used in investing activities. Net cash used in investing activities for the year ended December 31, 2025 decreased $28.6 million. A decrease in cash used of $20.8 million resulted from lower payments for capital expenditures and plant turnaround costs. A reduction in cash used of $6.9 million was attributable to the initial contribution in DSM in 2024. Additionally, we saw an increase of $0.9 million in net proceeds received from the sale of property, plant and equipment.
Net cash provided by (used in) financing activities. Net cash provided by financing activities for the year ended December 31, 2025 decreased primarily as a result of a decrease in borrowings of long-term debt of $34.6 million, offset by a decrease in repayments of long-term debt of $9.0 million. Additionally, payments of debt issuance costs increased $0.8 million.
Total Contractual Obligations
A summary of our total contractual cash obligations as of December 31, 2025 is as follows (dollars in thousands):
Payments due by period
Type of Obligation
Total
Obligation
Less than
One Year
Years
Years
Due
Thereafter
Credit facility
11.5% senior secured notes, due 2028
Operating leases
Finance leases
Interest payable on finance lease obligations
Interest payable on fixed long-term debt obligations
Total contractual cash obligations
The interest payable under our credit facility is not reflected in the above table because such amounts depend on the outstanding balances and interest rates, which vary from time to time.
Letters of Credit . At December 31, 2025, we had outstanding irrevocable letters of credit in the amount of $0.6 million, which were issued under our credit facility.
Off Balance Sheet Arrangements. We do not have any off-balance sheet financing arrangements.
Description of Our Indebtedness
Credit Facility
At December 31, 2025, we maintained a $130.0 million credit facility that matures November 16, 2027. As of December 31, 2025, we had $39.0 million outstanding under the credit facility and $0.6 million of outstanding irrevocable letters of credit, leaving a maximum amount available to be borrowed under our credit facility for future borrowings and letters of credit of $90.4 million. 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 $31.4 million in additional amounts thereunder as of December 31, 2025.
Effective September 24, 2025, we entered into a Second Amendment to Fourth Amended and Restated Credit Agreement (the “Second Amendment”) with Royal Bank of Canada, as administrative agent and collateral agent, and the lenders party thereto, which amends the Fourth Amended and Restated Credit Agreement, dated effective as of February 8, 2023 (as previously amended, the “Credit Agreement,” and as further amended from time to time, the "credit facility”) to, among other things:
• extend the maturity date of amounts outstanding and the lenders’ commitments under the Credit Agreement from February 8, 2027 to November 16, 2027;
• decrease the amount available for the Partnership to borrow under the Credit Agreement on a revolving credit basis from $150,000 to $130,000; and
• adjust the financial covenants as described in more detail below:
◦ require the Partnership to maintain a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of at least 1.75 to 1.00 for the fiscal quarter ended March 31, 2025 and each fiscal quarter thereafter;
◦ require the Partnership to maintain a maximum Total Leverage Ratio (as defined in the Credit Agreement) of not more than 4.50 to 1.00 for the fiscal quarters ended March 31, 2025 and June 30, 2025, and stepping up to 4.75 to 1.00 for the fiscal quarter ended September 30, 2025 and each fiscal quarter thereafter; and
◦ require the Partnership to maintain a maximum First Lien Leverage Ratio (as defined in the Credit Agreement) of not more than 1.25 to 1.00 for the fiscal quarter ended March 31, 2025 and each fiscal quarter thereafter.
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, 2025 through December 31, 2025, ranged from a low of $39.0 million to a high of $87.0 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:
Total Leverage Ratio
ABR Loans
Term SOFR Rate Loans and Letters of Credit
Less than 3.00 to 1.00
Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00
Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00
Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00
Greater than or equal to 4.50 to 1.00
The applicable margin for Adjusted Term SOFR borrowings and alternate base rate borrowings at December 31, 2025 was 3.75% and 2.75%, respectively. The applicable margin for Adjusted Term SOFR borrowings and alternate base rate borrowings at February 23, 2026 is 3.50% and 2.50%. respectively.
In addition, the credit facility contains various covenants, which, among other things, limit our and our subsidiaries’ ability to: (i) grant or assume liens; (ii) make investments (including investments in our joint ventures) and acquisitions; (iii) enter into certain types of hedging agreements; (iv) incur or assume indebtedness; (v) sell, transfer, assign or convey assets; (vi) repurchase our equity, make distributions (including a limit on our ability to make quarterly distributions to unitholders in excess of $0.005 per unit unless our Total Leverage Ratio is below 4.50:1:00, 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; (viii) engage in transactions with affiliates; (ix) enter into certain burdensome agreements; (x) make certain amendments to the Omnibus Agreement and our material agreements; and (xi) permit our joint ventures to incur indebtedness or grant certain liens.
The 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 credit facility or any related loan document, subject to cure periods for certain failures; (iv) the failure of any representation or warranty to be materially true and correct when made; (v) our, or any of our subsidiaries’ default under other indebtedness that exceeds a threshold amount; (vi) bankruptcy or other insolvency events involving us or any of our subsidiaries; (vii) judgments against us or any of our subsidiaries, in excess of a threshold amount; (viii) certain ERISA events involving us or any of our subsidiaries, in excess of a threshold amount; (ix) a change in control (as defined in the credit facility); and (x) the of any of the loan documents or the of any of the collateral documents to create a lien on 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
General
On February 8, 2023, the Issuers issued $400.0 million aggregate principal amount of their 11.50% senior secured second lien notes due 2028 (the "2028 Notes"). The 2028 Notes were issued under an indenture, dated as of February 8, 2023 (the "2028 Notes Indenture"), among the Issuers, the guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee and as collateral trustee.
The 2028 Notes are guaranteed on a full, joint and several basis by each of the Partnership’s domestic restricted subsidiaries (other than Martin Midstream Finance Corp.). The 2028 Notes will be guaranteed in the future by each of our domestic restricted subsidiaries, in each case, if and so long as such entity guarantees (or is an obligor with respect to) any other indebtedness for borrowed money of either the Issuers or any guarantor. The 2028 Notes and the guarantees thereof are secured on a second-priority basis by a lien on substantially all assets of the Issuers and the guarantors, subject to the terms of an intercreditor agreement (the “Intercreditor Agreement”) and certain exceptions.
The 2028 Notes and the guarantees thereof are, pursuant to the Intercreditor Agreement, secured by second-priority liens and thus are effectively junior to any obligations under our credit facility, which are secured on a "first-lien" basis, to the extent of the value of the collateral securing such first-lien and second-lien obligations. The 2028 Notes and the guarantees thereof rank effectively senior to all of the Issuers’ existing and future unsecured indebtedness to the extent of the value of the collateral securing the 2028 Notes and such guarantees.
Maturity and Interest
The 2028 Notes will mature on February 15, 2028. Interest on the 2028 Notes accrues at a rate of 11.50% per annum and is payable semi-annually in cash in arrears on February 15 and August 15 of each year, commencing on August 15, 2023.
Redemption
At any time prior to August 15, 2025, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 2028 Notes at a redemption price of 111.50% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest to the redemption date, with an amount not greater than the net cash proceeds of one or more equity offerings by the Partnership, so long as the redemption occurs within 180 days of completing such equity offering and 65% of the aggregate principal amount of the 2028 Notes remains outstanding immediately after such redemption. In addition, at any time prior to August 15, 2025, the Issuers may redeem all or a portion of the 2028 Notes at a redemption price equal to 100% of the principal amount of the 2028 Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest to the redemption date.
On and after August 15, 2025, the Issuers may redeem all or a portion of the 2028 Notes at redemption prices set forth in the 2028 Indenture, plus accrued and unpaid interest to the redemption date.
If a Change of Control (as defined in the 2028 Indenture) occurs, the Partnership must offer to repurchase the 2028 Notes at a price equal to 101% of the aggregate principal amount of the 2028 Notes, plus accrued and unpaid interest to the date of repurchase.
Certain Covenants and Events of Default
The terms of the 2028 Notes Indenture, among other things, limit the ability of the Partnership and certain of its subsidiaries to make distributions and other restricted payments, sell assets, make investments, create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries.
The 2028 Notes Indenture provides for customary events of default, which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of other agreements in the Indenture; defaults in failure to pay certain other indebtedness; the failure to pay final judgments of certain amounts of money against the Partnership or certain of its subsidiaries; the failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is not cured within the time periods specified, the trustee under the 2028 Notes Indenture or the holders of at least 25% in principal amount of the 2028 Notes may declare all the 2028 Notes to be due and payable immediately.
Capital Resources and Liquidity
Historically, we have generally satisfied our working capital requirements and funded our debt service obligations and capital expenditures with cash generated from operations and borrowings under our revolving credit facility.
At December 31, 2025, we had cash and cash equivalents of $0.05 million and available borrowing capacity of $90.3 million under our credit facility with $39.0 million of borrowings outstanding. After giving effect to our then current borrowings, letters of credit, and the financial covenants contained in our credit facility, we had the ability to borrow approximately $31.4 million in additional amounts thereunder as of December 31, 2025.
We expect that our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditures will be provided by cash flows generated by our operations, borrowings under our credit facility and access to the debt and equity capital markets. Our ability to generate cash from operations will depend upon our future operating performance, which is subject to certain risks. For a discussion of such risks, please read "Item 1A. Risk Factors" of this Form 10-K. In addition, due to the covenants in our credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility.
The Partnership is in compliance with all debt covenants as of December 31, 2025 and expects to be in compliance for the next twelve months.
Interest Rate Risk
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.
Seasonality
A substantial portion of our revenues is dependent on the quantity and 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 and blending 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. Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact all of our business segments.
Impact of Inflation
Inflation did not have a material impact on our results of operations in 2024, 2023 or 2022. Inflation may increase the cost to acquire or replace property, plant and equipment. It may also increase the costs of labor and supplies. In the future, increasing energy prices for products consumed by our operations, such as diesel fuel, natural gas, chemicals, and other supplies, could adversely affect our results of operations. An increase in price of these products would increase our operating expenses which could adversely affect net income. We cannot provide assurance that we will be able to pass along increased operating expenses to our customers.
Environmental Matters
Our operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which these operations are conducted. We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during 2025, 2024 or 2023.
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 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. 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 deductible under the applicable insurance policies total $0.5 million and such deductible expense has been recorded by the Partnership in the Consolidated Statements of Operations for the year ended December 31, 2025. As of February 23, 2026, no fines or penalties have been assessed in relation to the spill.
