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 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 March 31, 2021
OR
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 classTrading Symbol(s)Name of each exchange on which registered
Common Units representing limited partnership interestsMMLPThe 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.
YesNo
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). 
YesNo
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). 
YesNo
 The number of the registrant’s Common Units outstanding at April 26, 2021, was 38,802,750.



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, 2020, filed with the Securities and Exchange Commission (the "SEC") on March 3, 2021, 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
 
 
  
 
  
  
  
  
  
3


PART I – FINANCIAL INFORMATION
Item 1.Financial Statements
MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED BALANCE SHEETS
(Dollars in thousands)
 March 31, 2021December 31, 2020
(Unaudited)(Audited)
Assets  
Cash$1,112 $4,958 
Accounts and other receivables, less allowance for doubtful accounts of $248 and $261, respectively
65,232 52,748 
Inventories 38,716 54,122 
Due from affiliates22,213 14,807 
Fair value of derivatives 12  
Other current assets8,294 8,991 
Total current assets135,579 135,626 
Property, plant and equipment, at cost889,210 889,108 
Accumulated depreciation(518,143)(509,237)
Property, plant and equipment, net371,067 379,871 
Goodwill16,823 16,823 
Right-of-use assets 21,250 22,260 
Deferred income taxes, net 22,178 22,253 
Other assets, net 3,314 2,805 
Total assets$570,211 $579,638 
Liabilities and Partners’ Capital (Deficit)  
Current installments of long-term debt and finance lease obligations $335 $31,497 
Trade and other accounts payable56,271 51,900 
Product exchange payables237 373 
Due to affiliates1,214 435 
Income taxes payable696 556 
Fair value of derivatives  207 
Other accrued liabilities19,485 34,407 
Total current liabilities78,238 119,375 
Long-term debt, net 513,272 484,597 
Finance lease obligations230 289 
Operating lease liabilities 14,264 15,181 
Other long-term obligations8,541 7,067 
Total liabilities614,545 626,509 
Commitments and contingencies
Partners’ capital (deficit) (44,334)(46,871)
Total partners’ capital (deficit)(44,334)(46,871)
Total liabilities and partners' capital (deficit)$570,211 $579,638 

See accompanying notes to consolidated and condensed financial statements.
4

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars and units in thousands, except per unit amounts)

Three Months Ended
March 31,
20212020
Revenues:  
Terminalling and storage  *$18,378 $20,474 
Transportation  *29,815 38,941 
Sulfur services2,950 2,915 
Product sales: *
Natural gas liquids98,085 82,211 
Sulfur services31,885 25,408 
Terminalling and storage19,861 28,934 
 149,831 136,553 
Total revenues200,974 198,883 
Costs and expenses:  
Cost of products sold: (excluding depreciation and amortization)
  
Natural gas liquids *79,135 69,835 
Sulfur services *21,214 15,295 
Terminalling and storage *14,502 23,680 
 114,851 108,810 
Expenses:  
Operating expenses  *44,634 51,282 
Selling, general and administrative  *10,609 10,462 
Depreciation and amortization14,434 15,239 
Total costs and expenses184,528 185,793 
Other operating income (loss), net(760)2,510 
Operating income15,686 15,600 
Other income (expense):  
Interest expense, net(12,953)(9,925)
Gain on retirement of senior unsecured notes 3,484 
Other, net 3 
Total other expense(12,953)(6,438)
Net income before taxes2,733 9,162 
Income tax expense(222)(347)
Net income2,511 8,815 
Less general partner's interest in net (income)(50)(176)
Less (income) allocable to unvested restricted units(10)(55)
Limited partners' interest in net income (loss)$2,451 $8,584 
Net income per unit attributable to limited partners - basic$0.06 $0.22 
Net income per unit attributable to limited partners - diluted$0.06 $0.22 
Weighted average limited partner units - basic38,692,60938,640,862
Weighted average limited partner units - diluted38,705,64138,644,467
See accompanying notes to consolidated and condensed financial statements.

*Related Party Transactions Shown Below
5

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
March 31,
20212020
Revenues:*  
Terminalling and storage$15,306 $15,874 
Transportation4,010 5,894 
Product Sales114 92 
Costs and expenses:*
Cost of products sold: (excluding depreciation and amortization)
Sulfur services2,535 2,767 
Terminalling and storage4,568 5,777 
Expenses:
Operating expenses18,368 21,771 
Selling, general and administrative8,680 8,312 

See accompanying notes to consolidated and condensed financial statements.




6

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CAPITAL (DEFICIT)
(Unaudited)
(Dollars in thousands)

 Partners’ Capital (Deficit)
 Common LimitedGeneral Partner Amount 
 UnitsAmountTotal
Balances - January 1, 202038,863,389 $(38,342)$2,146 $(36,196)
Net income— 8,639 176 8,815 
Issuance of restricted units81,000 — — — 
Forfeiture of restricted units(84,134)— — — 
Cash distributions— (2,408)(49)(2,457)
Unit-based compensation— 346 — 346 
Purchase of treasury units(7,748)(9)— (9)
Balances - March 31, 202038,852,507 $(31,774)$2,273 $(29,501)
Balances - January 1, 202138,851,174 $(48,776)$1,905 $(46,871)
Net income— 2,461 50 2,511 
Issuance of restricted units42,168 — — — 
Forfeiture of restricted units(83,436)— — — 
Cash distributions— (193)(4)(197)
Unit-based compensation— 240 — 240 
Purchase of treasury units(7,156)(17)— (17)
Balances - March 31, 202138,802,750 $(46,285)$1,951 $(44,334)
 
See accompanying notes to consolidated and condensed financial statements.


7

MARTIN MIDSTREAM PARTNERS L.P.
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

 Three Months Ended
March 31,
 20212020
Cash flows from operating activities:  
Net Income$2,511 $8,815 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization14,434 15,239 
Amortization of deferred debt issuance costs755 492 
Amortization of premium on notes payable (77)
Deferred income tax expense75 286 
Loss on sale of property, plant and equipment, net760 190 
Gain on retirement of senior unsecured notes (3,484)
Derivative (income) loss1,436 (33)
Net cash paid for commodity derivatives(1,655)(636)
Unit-based compensation240 346 
Change in current assets and liabilities, excluding effects of acquisitions and dispositions:  
Accounts and other receivables(12,484)26,413 
Inventories15,070 15,710 
Due from affiliates(7,406)2,729 
Other current assets633 (1,413)
Trade and other accounts payable1,984 (10,440)
Product exchange payables(136)450 
Due to affiliates779 (166)
Income taxes payable140 133 
Other accrued liabilities(13,370)(9,118)
Change in other non-current assets and liabilities88 (547)
Net cash provided by operating activities3,854 44,889 
Cash flows from investing activities:  
Payments for property, plant and equipment(2,514)(12,260)
Payments for plant turnaround costs(1,674)(150)
Proceeds from involuntary conversion of property, plant and equipment 1,768 
Proceeds from sale of property, plant and equipment3 4,347 
Net cash used in investing activities(4,185)(6,295)
Cash flows from financing activities:  
Payments of long-term debt(87,790)(112,860)
Payments under finance lease obligations(2,431)(1,864)
Proceeds from long-term debt87,000 76,000 
Purchase of treasury units(17)(9)
Payment of debt issuance costs(80)(192)
Cash distributions paid(197)(2,457)
Net cash used in financing activities(3,515)(41,382)
Net decrease in cash(3,846)(2,788)
Cash at beginning of period4,958 2,856 
Cash at end of period$1,112 $68 
Non-cash additions to property, plant and equipment$2,855 $2,142 

See accompanying notes to consolidated and condensed financial statements.
8

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(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 United States ("U.S.") Gulf Coast region. Its four primary business lines include:   terminalling, processing, storage and packaging 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 natural gas liquids marketing, distribution, and transportation services.
 
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, 2020, filed with the SEC on March 3, 2021.

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

On January 1, 2021, the Partnership adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2019-12, Income Taxes (Accounting Standards Codification ("ASC") Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to general principles in ASC 740 and clarifies and amends existing guidance within U.S. GAAP. Adoption of the new standard did not have a material impact on the Partnership’s consolidated financial statements.

9

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


NOTE 3. REVENUE

    The following table disaggregates our revenue by major source:
Three Months Ended March 31,
20212020
Terminalling and storage segment
Lubricant product sales$19,861 $28,934 
Throughput and storage18,378 20,474 
$38,239 $49,408 
Natural gas liquids segment
Natural gas liquids product sales$98,085 $82,211 
$98,085 $82,211 
Sulfur services segment
Sulfur product sales$7,068 $6,481 
Fertilizer product sales24,817 18,927 
Sulfur services 2,950 2,915 
$34,835 $28,323 
Transportation segment
Land transportation$22,956 $24,234 
Inland transportation6,724 13,706 
Offshore transportation135 1,001 
$29,815 $38,941 

    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 the Partnership’s tolling agreement, revenue is recognized based on the contracted monthly reservation fee and throughput volumes moved through the facility.  When lubricants and drilling fluids are sold by truck or rail, revenue is recognized when title is transferred, which is either upon delivering product to the customer or when the product leaves the Partnership's facility, depending on the specific terms of the contract. Delivery of product is invoiced as the transaction occurs and is generally paid within a month. 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.

Natural Gas Liquids Segment

    Natural Gas Liquids ("NGL") revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers. Revenue is recognized on title transfer of the product to the customer. Delivery of product is invoiced as the transaction occurs and is generally paid within a month.
10

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)



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.

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.

    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.

    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.
20212022202320242025ThereafterTotal
Terminalling and storage
Throughput and storage$32,183 $40,394 $41,605 $42,854 $44,197 $294,141 $495,374 
Sulfur services
Sulfur product sales12,874 16,279 15,233 975 975  46,336 
Total$45,057 $56,673 $56,838 $43,829 $45,172 $294,141 $541,710 

NOTE 4. INVENTORIES

Components of inventories at March 31, 2021 and December 31, 2020 were as follows: 
 March 31,
2021
December 31,
2020
Natural gas liquids$11,857 $27,878 
Sulfur222 24 
Fertilizer8,572 10,854 
Lubricants13,650 11,002 
Other4,415 4,364 
 $38,716 $54,122 

11

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


NOTE 5. DEBT

At March 31, 2021 and December 31, 2020, long-term debt consisted of the following:
 March 31,
2021
December 31,
2020
$300,000 Revolving credit facility at variable interest rate (5.00%1 weighted average at March 31, 2021), due August 20234 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 $3,541 and $3,826, respectively 2
$172,459 $144,174 
$400,000 Senior notes, 7.25% interest, net of unamortized debt issuance costs of $ and $, respectively, including unamortized premium of $ and $, respectively, issued $250,000 February 2013 and $150,000 April 2014, $26,200 repurchased during 2015, $9,344 repurchased during 2020, $335,666 refinanced as part of the August 2020 Exchange offer, $28,790 repaid at maturity in February 2021, unsecured 2,3,4
 28,790 
$53,750 Senior notes, 10.0% interest, net of unamortized debt issuance costs of $3,291 and $3,577, respectively, due February 2024, secured 2,3
50,459 50,173 
$291,970 Senior notes, 11.5% interest, net of unamortized debt issuance costs of $1,616 and $1,720, respectively, due February 2025, secured 2,3
290,354 290,250 
Total513,272 513,387 
Less: current portion (28,790)
Total long-term debt, net of current portion$513,272 $484,597 
Current installments of finance lease obligations$335 $2,707 
Finance lease obligations230 289 
Total finance lease obligations$565 $2,996 
     
    1 Interest rate fluctuates based on LIBOR or the base prime rate (set on the date of each advance) plus an applicable margin. The margin is set every three months. All amounts outstanding at December 31, 2020 were at LIBOR plus an applicable margin. All amounts outstanding at December 31, 2020 and March 31, 2021 were at LIBOR plus an applicable margin with LIBOR having a floor of 1.0% per annum. The applicable margin for revolving loans that are LIBOR loans currently ranges from 2.75% to 4.00% and the applicable margin for revolving loans that are base prime rate loans currently ranges from 1.75% to 3.00%.  The applicable margin for LIBOR borrowings at March 31, 2021 is 4.00%. 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 is in compliance with all debt covenants as of March 31, 2021 and December 31, 2020, respectively.

    3 The indentures for each of the outstanding series of senior notes restrict the Partnership’s ability to sell assets; pay distributions or repurchase units or redeem or repurchase subordinated debt; make investments; incur or guarantee additional indebtedness or issue preferred units; and consolidate, merge or transfer all or substantially all of its assets.

4 On February 15, 2021, the 2021 Notes matured and the Partnership retired the outstanding balance of
$28,790 using funds borrowed under its revolving credit facility.

    The Partnership paid cash interest, net of capitalized interest, in the amount of $23,347 and $16,736 for the three months ended March 31, 2021 and 2020, respectively.  Capitalized interest was $0 and $4 for the three months ended March 31, 2021 and 2020, respectively.

12

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


NOTE 6. 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 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 16 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 and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.
    
    The components of lease expense for the three months ended March 31, 2021 and 2020 were as follows:
Three Months Ended March 31,
20212020
Operating lease cost$2,302 $2,844 
Finance lease cost:
     Amortization of right-of-use assets$90 589 
     Interest on lease liabilities$10 110 
Short-term lease cost$3,108 3,423 
Variable lease cost$33 $29 
Total lease cost$5,543 $6,995 
    
Supplemental balance sheet information related to leases at March 31, 2021 and December 31, 2020 was as follows:
March 31,
2021
December 31, 2020
Operating Leases
Operating lease right-of-use assets$21,250 $22,260 
Current portion of operating lease liabilities included in "Other accrued liabilities"$7,368 $7,529 
Operating lease liabilities$14,264 15,181 
     Total operating lease liabilities$21,632 $22,710 
Finance Leases
Property, plant and equipment, at cost$3,451 $10,352 
Accumulated depreciation$(1,177)(3,703)
     Property, plant and equipment, net$2,274 $6,649 
Current installments of finance lease obligations$335 $2,707 
Finance lease obligations$230 289 
     Total finance lease obligations$565 $2,996 

13

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


    The Partnership’s future minimum lease obligations as of March 31, 2021 consist of the following:
Operating LeasesFinance Leases
Year 1$8,237 $355 
Year 25,519 232 
Year 32,877 3 
Year 41,740  
Year 51,113  
Thereafter5,671  
     Total$25,157 $590 
     Less amounts representing interest costs(3,525)(25)
Total lease liability$21,632 $565 

    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 March 31, 2021 are as follows: 2021 - $15,715; 2022 - $13,692; 2023 - $13,297; 2024 - $13,297; 2025 - $12,908; subsequent years - $38,539.
14

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


NOTE 7. SUPPLEMENTAL BALANCE SHEET INFORMATION
    
    Components of "Other accrued liabilities" were as follows:
 March 31,
2021
December 31, 2020
Accrued interest$4,956 $16,104 
Asset retirement obligations300 1,692 
Property and other taxes payable2,423 4,869 
Accrued payroll3,654 3,244 
Operating lease liabilities7,368 7,529 
Other784 969 
 $19,485 $34,407 

The schedule below summarizes the changes in our asset retirement obligations:
 March 31, 2021
 
Beginning asset retirement obligations$8,759 
Additions to asset retirement obligations 
Accretion expense104 
Liabilities settled(22)
Ending asset retirement obligations8,841 
Current portion of asset retirement obligations1
(300)
Long-term portion of asset retirement obligations2
$8,541 

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.

15

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


NOTE 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Partnership’s results of operations could be materially impacted by changes in commodity prices and interest rates. In an effort to manage its exposure to these risks, the Partnership periodically enters into various derivative instruments, including commodity and interest rate hedges. All derivatives and hedging instruments are non-hedge derivatives and are included on the balance sheet as an asset or a liability measured at fair value, and changes in fair value are recognized as gains and losses in the earnings of the periods in which they occur.

(a)    Commodity Derivative Instruments

    The Partnership from time to time has used derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on the value of a liability or future purchase that results from a change in commodity price.  The Partnership has established a hedging policy and monitors and manages the commodity market risk associated with potential commodity risk exposure.  In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction. The Partnership has entered into hedging transactions as of March 31, 2021, to protect a portion of its commodity price risk exposure. These hedging arrangements are in the form of swaps for NGLs. At March 31, 2021, the Partnership had instruments totaling a gross notional quantity of 225,000 barrels settling during the period from April 30, 2021 through June 30, 2021. At December 31, 2020, the Partnership had instruments totaling a gross notional quantity of 137,000 barrels settling during the period from January 31, 2021 through February 28, 2021. These instruments settle against the applicable pricing source for each grade and location.

    For information regarding gains and losses on interest rate derivative instruments, see "Tabular Presentation of Gains and Losses on Derivative Instruments" below.

(b)    Tabular Presentation of Gains and Losses on Derivative Instruments

    The following table summarizes the fair value and classification of the Partnership’s derivative instruments in its Consolidated and Condensed Balance Sheets:
 Fair Values of Derivative Instruments in the Consolidated and Condensed Balance Sheets
Derivative AssetsDerivative Liabilities
  Fair Values Fair Values
 
 Balance Sheet Location
March 31, 2021December 31, 2020
 Balance Sheet Location
March 31, 2021December 31, 2020
Derivatives not designated as hedging instruments:
Current:
Commodity contractsFair value of derivatives$12 $ Fair value of derivatives$ $207 
Total derivatives not designated as hedging instruments
 $12 $  $ $207 



16

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


Effect of Derivative Instruments on the Consolidated and Condensed Statements of Operations
For the Three Months Ended March 31, 2021 and 2020
 Location of Gain (Loss)
Recognized in Income on
 Derivatives
Amount of Gain (Loss) Recognized in
Income on Derivatives
  20212020
Derivatives not designated as hedging instruments:
  
Commodity contractsCost of products sold$(1,436)$33 
Total effect of derivatives not designated as hedging instruments$(1,436)$33 



NOTE 9. PARTNERS' CAPITAL

As of March 31, 2021, Partners’ capital consisted of 38,802,750 common limited partner units, representing a 98% partnership interest, and a 2% general partner interest. Martin Resource Management Corporation, through subsidiaries, owns 6,114,532 of the Partnership's common limited partner units representing approximately 15.8% 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. Martin Resource Management Corporation controls the Partnership's general partner, by virtue of its 51% voting interest in MMGP Holdings, LLC ("Holdings"), the sole member of the Partnership's general partner.

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 $550,773 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 $287,734 reflected as reductions to Partners' capital.

Incentive Distribution Rights

MMGP holds a 2% general partner interest and certain incentive distribution rights ("IDRs") in the Partnership. IDRs are a separate class of non-voting limited partner interest that may be transferred or sold by the general partner under the terms of the Partnership Agreement, and represent the right to receive an increasing percentage of cash distributions after the minimum quarterly distribution and any cumulative arrearages on common units once certain target distribution levels have been achieved. The Partnership is required to distribute all of its available cash from operating surplus, as defined in the Partnership Agreement. The general partner was allocated no incentive distributions during the three months ended March 31, 2021 and 2020.
 
The target distribution levels entitle the general partner to receive 2% of quarterly cash distributions from the minimum of $0.50 per unit up to $0.55 per unit, 15% of quarterly cash distributions in excess of $0.55 per unit until all unitholders have received $0.625 per unit, 25% of quarterly cash distributions in excess of $0.625 per unit until all unitholders have received $0.75 per unit and 50% of quarterly cash distributions in excess of $0.75 per unit.
 
17

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


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. Distributions to the general partner pursuant to the IDRs are limited to available cash that will be distributed as defined in the Partnership Agreement. Accordingly, the Partnership does not allocate undistributed earnings to the general partner for the IDRs because the general partner's share of available cash is the maximum amount that the general partner would be contractually entitled to receive if all earnings for the period were distributed. 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:
 Three Months Ended March 31,
20212020
Net income$2,511 $8,815 
Less general partner’s interest in net income (loss):
Distributions payable on behalf of general partner interest4 49 
General partner interest in undistributed income (loss)
46 127 
Less income allocable to unvested restricted units10 55 
Limited partners’ interest in net income $2,451 $8,584 

    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 March 31,
 20212020
Basic weighted average limited partner units outstanding
38,692,609 38,640,862 
Dilutive effect of restricted units issued
13,032 3,605 
Total weighted average limited partner diluted units outstanding
38,705,641 38,644,467 
18

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)



    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.

NOTE 10. UNIT BASED AWARDS

    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 selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:
Three Months Ended March 31,
20212020
Employees$194 $301 
Non-employee directors46 45 
   Total unit-based compensation expense$240 $346 

All of the Partnership's outstanding awards at March 31, 2021 met the criteria to be treated under equity classification.

    Long-Term Incentive Plans
    
      The Partnership's general partner has a long-term incentive plan for employees and directors of the general partner and its affiliates who perform services for the Partnership.
    On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P. 2017 Restricted Unit Plan (the "2017 LTIP"). The plan 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 plan is administered by the compensation committee of the general partner’s board of directors (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 plan containing such terms as the Compensation Committee shall determine under the plan. With respect to time-based restricted units ("TBRU's"), 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 "PBRU's"). 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. PBRU's are earned only upon our achievement of an objective performance measure for the performance period. PBRU's 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 performance conditions related to the PBRU's awarded on March 1, 2018 were not achieved and the Partnership, as such, did not recognize compensation expense for the vesting of the units.

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.

In February 2021, the Partnership issued 14,056 TBRU's to each of the Partnership's three independent directors under the 2017 LTIP.  These restricted common units vest in equal installments of 3,514 units on January 24, 2022, 2023, 2024, and 2025.
19

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(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 three months ended March 31, 2021 is provided below:
Number of UnitsWeighted Average Grant-Date Fair Value Per Unit
Non-vested, beginning of period273,424 $10.52 
Granted (TBRU)42,168 $2.49 
Vested(117,280)$11.96 
Forfeited(83,436)$13.90 
Non-Vested, end of period114,876 $3.65 
Aggregate intrinsic value, end of period$284 
    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 months ended March 31, 2021 and 2020 is provided below:
Three Months Ended March 31,
20212020
Aggregate intrinsic value of units vested$257 $151 
Fair value of units vested1,418 1,427 

    As of March 31, 2021, there was $395 of unrecognized compensation cost related to non-vested restricted units. That cost is expected to be recognized over a weighted-average period of 2.59 years.

NOTE 11. RELATED PARTY TRANSACTIONS

As of March 31, 2021, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.8% of the Partnership’s outstanding limited partner units.  Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 51% voting interest in 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 and the Partnership’s IDRs.  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 March 31, 2021, 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.

20

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(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;

distributing NGL's; 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;

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

operating, solely for the Partnership's account, the asphalt facilities in Omaha, Nebraska, Port Neches, Texas, and South Houston, Texas.

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
21

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(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, 2021, through December 31, 2021, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $14,386. The Partnership reimbursed Martin Resource Management Corporation for $3,542 and $4,103 of indirect expenses for the three months ended March 31, 2021 and 2020, 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 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.  These rates 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 subcontractors. In the event a claim is the result of the joint negligence or misconduct of MTI and Martin Resource
22

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)


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 January 1, 2016, the Partnership entered into a second amended and restated terminalling services agreement under which the Partnership provides terminal services to Martin Resource Management Corporation for marine fuel distribution.  At such time, the per-gallon throughput fee the Partnership charged under this agreement was increased when compared to the previous agreement and may be adjusted annually based on a price index.  This agreement was further amended on January 1, 2017, October 1, 2017, April 1, 2019, and January 1, 2020 to modify its minimum throughput requirements and throughput fees. The term of this agreement is currently evergreen and it will continue on a month to month basis until terminated by either party by giving 60 days’ written notice.  

    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.  As of December 31, 2019, the annual capital recovery fee reimbursement of $2,088 expired. An additional $2,586 of capital recovery fee reimbursement expired on December 31, 2020.  All of these fees (other than the fuel surcharge and capital recovery fee) are subject to escalation annually based upon the greater of 3% or the increase in the Consumer Price Index for a specified annual period. Also, the Partnership renegotiated a crude transportation contract set to expire in the first half of 2022 resulting in a reduction in revenue of $2,145 annually beginning January 1, 2020.

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 March 31, 2021 and 2020 were $236 and $105, respectively.
23

MARTIN MIDSTREAM PARTNERS L.P.
NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except where otherwise indicated)
March 31, 2021
(Unaudited)



    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 March 31,
20212020
Revenues:  
Terminalling and storage$15,306 $15,874 
Transportation4,010 5,894