Martin Midstream Partners
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KMark OneAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year endedDecember 31, 2019ORTransition 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 05-0527861State or other jurisdiction of incorporation or organization (I.R.S. Employer Identification No.) 4200 Stone Road Kilgore, Texas 75662(Address of principal executive offices) (Zip Code)903-983-6200(Registrant’s telephone number, including area code)_______________________ Securities Registered Pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Units representing limited partnership interestsMMLPThe NASDAQ Global Select MarketSecurities Registered Pursuant to Section 12(g) of the Act:NONEIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes ☐ No ☒ 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 thepreceding 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 the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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 filerNon-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 revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒ As of June 30, 2019, 38,863,389 common units were outstanding. The aggregate market value of the common units held by non-affiliates of the registrant as of suchdate approximated $233,826,839 based on the closing sale price on that date. There were 38,944,389 of the registrant’s common units outstanding as of February 14, 2020. DOCUMENTS INCORPORATED BY REFERENCE: None. TABLE OF CONTENTS PagePART I 1Item 1.Business1Item 1A.Risk Factors21Item 1B.Unresolved Staff Comments42Item 2.Properties42Item 3.Legal Proceedings42Item 4.Mine Safety Disclosures42 PART II43Item 5.Market for Our Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities43Item 6.Selected Financial Data43Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations45Item 7A.Quantitative and Qualitative Disclosures about Market Risk65Item 8.Financial Statements and Supplementary Data66Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure110Item 9A.Controls and Procedures110Item 9B.Other Information111 PART III112Item 10.Directors, Executive Officers and Corporate Governance112Item 11.Executive Compensation117Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters124Item 13.Certain Relationships and Related Transactions, and Director Independence127Item 14.Principal Accounting Fees and Services132 PART IV 133Item 15.Exhibits, Financial Statement Schedules133 iPART IItem 1.BusinessReferences in this annual report to "we," "ours," "us" or like terms when used in a historical context refer to the assets and operations of Martin ResourceManagement Corporation's business contributed to us in connection with our initial public offering on November 6, 2002. References in this annual report to"Martin Resource Management Corporation" refer to Martin Resource Management Corporation and its subsidiaries, unless the context otherwise requires.References in this annual report to the "Partnership" refer to Martin Midstream Partners L.P. and its subsidiaries, unless the content otherwise requires. You shouldread the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and the notes theretoincluded elsewhere in this annual report. For more detailed information regarding the basis for presentation for the following information, you should read thenotes to the consolidated financial statements included elsewhere in this annual report.Forward-Looking StatementsThis annual report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended(the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("the Exchange Act"). Statements included in this annual report thatare not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptionsor forecasts related thereto), 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 ofresults of operations or of financial condition or state other "forward-looking" information. We and our representatives may from time to time make other oral orwritten 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 futureevents impacting us and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actualresults 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 theseforward-looking statements for a number of important reasons, including those discussed below in "Item 1A. Risk Factors - Risks Related to our Business."Overview We are a publicly traded limited partnership with a diverse set of operations focused primarily in the United States ("U.S.") Gulf Coast region. Our fourprimary business lines include:•Terminalling, processing, storage and packaging services for petroleum products and by-products, including the refining of naphthenic crudeoil;•Land and marine transportation services for petroleum products and by-products, chemicals, and specialtyproducts;•Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and•Natural gas liquids ("NGL") marketing, distribution, and transportationservices.Our vertically integrated services have created longstanding relationships with a diversified customer base with a revenue-weighted average customerrelationship of approximately 16.0 years. These customers include major and independent oil and gas companies, independent refiners, chemical companies, andother wholesale purchasers of certain petroleum products and by-products, with significant business concentrated around the U.S. Gulf Coast refinery complex,which is a major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry. The petroleumproducts and by-products we gather, transport, store and market are produced primarily by major and independent oil and gas companies who often rely on thirdparties, such as us, for the transportation and disposition of these products.1We believe that we have become an integral part of the value chain for our customers by providing them with high value, niche services. We generate asignificant amount of our revenues from fee-based businesses with a significant amount of the working capital demands and margin risk associated with thecollective services that we and our sponsor, Martin Resource Management Corporation, provide to customers mainly assumed under contracts between suchcustomers and Martin Resource Management Corporation. Our fixed fee and margin business provides a combination of long-term, spot and evergreen contracts.We were formed in 2002 by Martin Resource Management Corporation, a privately-held company whose initial predecessor was incorporated in 1951 asa supplier of products and services to drilling rig contractors. Since then, Martin Resource Management Corporation has expanded its operations throughacquisitions and internal expansion initiatives as its management identified and capitalized on the needs of producers and purchasers of petroleum products and by-products and other bulk liquids. Martin Resource Management Corporation is an important supplier and customer of ours. As of December 31, 2019, MartinResource Management Corporation owned 15.7% of our total outstanding common limited partner units. Furthermore, Martin Resource Management Corporationcontrols Martin Midstream GP LLC ("MMGP"), our general partner, by virtue of its 51% voting interest in MMGP Holdings, LLC ("Holdings"), the sole memberof MMGP. MMGP owns a 2.0% general partner interest in us and all of our incentive distribution rights. Martin Resource Management Corporation directs ourbusiness operations through its ownership interests in and control of our general partner.We entered into an omnibus agreement dated November 1, 2002, with Martin Resource Management Corporation (the "Omnibus Agreement") thatgoverns, among other things, potential competition and indemnification obligations among the parties to the agreement, related party transactions, the provision tous of general administration and support services by Martin Resource Management Corporation and our use of certain of Martin Resource ManagementCorporation’s trade names and trademarks. Under the terms of the Omnibus Agreement, the employees of Martin Resource Management Corporation areresponsible for conducting our business and operating our assets.Martin Resource Management Corporation has operated our business since 2002. Martin Resource Management Corporation began operating our NGLbusiness in the 1950s and our sulfur business in the 1960s. It began our land transportation business in the early 1980s and our marine transportation business in thelate 1980s. It entered into our fertilizer and terminalling and storage businesses in the early 1990s.Primary Business Segments Our primary business segments can be generally described as follows: •Terminalling and Storage. We own or operate 19 marine shore-based terminal facilities and 12 specialty terminal facilities located primarily in theU.S. Gulf Coast region with aggregate storage capacity of 2.8 million barrels. We provide storage, refining, blending, packaging, and handlingservices for producers and suppliers of petroleum products and by-products, including the refining of naphthenic crude oil and the blending andpackaging of various grades and quantities of industrial, commercial, and automotive lubricants and greases. Our facilities and resources provide uswith the ability to handle various products that require specialized treatment, such as molten sulfur and asphalt. We also provide land rental to oil andgas companies along with storage and handling services for lubricants and fuels through our shore-based terminals. We provide these terminallingand storage services on a fixed-fee basis and a significant portion of the contracts in this segment provide for minimum fee arrangements that are notbased on the volumes handled. We believe that our terminalling, processing, storage and packaging services for petroleum products and by-productswould be difficult for our customers or competitors to replicate. We have a revenue weighted average relationship length of 10.0 years among ourtop five customers in the segment.•Transportation. We operate a fleet of both land transportation and marine transportation assets that transport petroleum products and by-products,petrochemicals, and chemicals. Our land transportation assets include approximately 540 tank trucks and 1,275 trailers and are based across 23terminals strategically located throughout the U.S. Gulf Coast and southeastern United States. Our marine transportation assets include 33 inlandmarine tank barges, 19 inland push boats and one articulated offshore tug and barge unit that operate coastwise along the Gulf of Mexico and eastcoast and on the U.S. inland waterway system, primarily between domestic ports along the Gulf of Mexico, the Intracoastal Waterway, theMississippi River system and the Tennessee-Tombigbee Waterway system. Our "refinery and petrochemical services" model is focused ontransportation of heavy tank bottoms (by-products) and other petroleum products, hauling liquefied petroleum gas ("LPG"), molten sulfur, sulfuricacid, paper mill liquids, chemicals, dry bulk and numerous other bulk liquid commodities from refineries and petrochemical production locations toend markets. We provide these2transportation services on a fee basis, and many of our customers have long standing contractual relationships with us. We believe our modernizedasset base is attractive both to our existing customers as well as potential new customers. In addition, our fleet contains several vessels that reflectour focus on specialty products. We have a revenue weighted average relationship length of 9.4 years among our top five customers in this segment.•Sulfur Services. We own 23 railcars and lease 41 railcars equipped to transport molten sulfur and we lease 132 railcars to transport our fertilizerproducts. We have developed an integrated system of transportation assets and facilities relating to sulfur services. We process and distribute sulfurproduced by oil refineries primarily located in the U.S. Gulf Coast region. We seek to buy and sell molten sulfur on contracts that are tied to sulfurindices to minimize margin fluctuations. We process molten sulfur into prilled or pelletized sulfur at our facilities in Beaumont, Texas and Port ofStockton, California on contracts that traditionally provide guaranteed minimum fees. The sulfur we process and handle is primarily used in theproduction of fertilizers and industrial chemicals. We own and operate five sulfur-based fertilizer production plants and one emulsified sulfurblending plant located in Texas and Illinois and manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users.Demand for our sulfur products exists across the globe, and our asset base provides additional opportunities to handle increases in U.S. supply andaccess to foreign demand. We have a revenue weighted average relationship length of 19.0 years among our top five customers in this segment.•Natural Gas Liquids. We distribute NGLs that we primarily purchase from refineries and natural gas processors. We store and transport NGLs forwholesale deliveries to refineries, industrial NGL users in Texas and the southeastern U.S. and propane retailers. We own approximately 2.1 millionbarrels of underground storage capacity for NGLs. This segment is primarily driven by the purchase of butane in the summer months, when demandis typically low, and sale in the winter months, when demand is typically higher. We have a revenue weighted average relationship length of 21.6years among our top five customers in this segment.Significant Developments in 2019Beginning in 2018, we committed to strengthening our balance sheet through strategic initiatives aimed at reducing leverage by divesting non-core assetsand businesses, creating the ability to focus on a streamlined corporate strategy and position the Partnership for growth.The first set of initiatives was executed in 2018 with the divestiture of our 20% interest in West Texas LPG Pipeline Limited Partnership for $195.0million and the sale of a non-strategic terminal asset located in Nevada for $8.0 million. On January 1, 2019, we completed the next initiative with the acquisitionof Martin Transport, Inc. from Martin Resource Management Corporation for $135.0 million, positioning us for cash flow growth. On July 1, 2019, we completedthe sale of our natural gas storage assets for $215.0 million, which was an important piece of the Partnership’s strategy to strengthen the balance sheet and re-focusour operational expertise on the refinery services industry. On August 12, 2019 we completed the sale of our East Texas Pipeline for $17.5 million.As a result of dispositions, offset by acquisitions, we were able to pay down $300.5 million of outstanding debt while incurring only a slight reduction toprojected EBITDA. Consistent with our strategy of reducing leverage and improving liquidity, on January 28, 2020, we announced a $0.75 per unit reduction ofour cash distribution on an annual basis, allowing us to retain $29.2 million to continue to strengthen our balance sheet.Divestiture of East Texas Pipeline. On August 12, 2019, we completed the sale of our East Texas Pipeline for $17.5 million. The net proceeds were usedto reduce outstanding borrowings under our revolving credit facility.Credit Facility Amendment and Extension. On July 18, 2019, the Partnership amended its revolving credit facility to, among other things, extend thematurity date from March 2020 to August 2023 (provided we have refinanced our 7.25% senior unsecured notes due 2021 (the "2021 Notes") on or before August19, 2020) and reduce commitments from $500.0 million to $400.0 million.Divestiture of Natural Gas Storage Assets. On June 28, 2019, we completed the sale of our membership interests in Arcadia Gas Storage, LLC, CadevilleGas Storage LLC, Monroe Gas Storage Company, LLC and Perryville Gas Storage LLC (the "Natural Gas Storage Assets") to Hartree Cardinal Gas, LLC("Hartree"), a subsidiary of Hartree Bulk Storage, LLC. The Natural Gas Storage Assets consist of approximately 50 billion cubic feet of working capacity locatedin northern Louisiana and Mississippi. In consideration of the sale of the Natural Gas Storage Assets, we received cash proceeds of $210.1 million after transactionfees and expenses. The proceeds were used to reduce outstanding borrowings under our revolving credit facility. 3Neches Shiploader Incident. On Friday May 10, 2019, an incident occurred at our Neches Terminal in Beaumont, Texas, causing structural damage to theterminal's mobile ship-loader and crane as a result of severe weather passing through the area. While the damage was repaired, the terminal was unable to loadprilled sulfur onto oceangoing vessels. The shiploader was placed back in service on January 28, 2020. As a result of the downtime associated with the repairs, thenet impact on EBITDA during 2019 was $2.3 million after receipt of $1.3 million in business interruption insurance proceeds.Martin Transport Inc. Stock Purchase Agreement. On October 22, 2018, we entered into a stock purchase agreement (the "Stock Purchase Agreement")with Martin Resource Management Corporation to acquire all of the issued and outstanding equity of Martin Transport, Inc. ("MTI"), a wholly-owned subsidiaryof Martin Resource Management Corporation which operates a fleet of tank trucks providing transportation of petroleum products, liquid petroleum gas,chemicals, sulfur and other products, as well as owns 23 terminals located throughout the U.S. Gulf Coast and southeastern United States for total consideration of$135.0 million with a $10.0 million earn-out based on certain performance thresholds. Additionally, a post-closing working capital adjustment was finalized onJanuary 28, 2019 which included additional consideration paid to Martin Resource Management Corporation of $2.2 million. The Stock Purchase Agreementcontained customary representations and warranties. Martin Resource Management Corporation has owned and operated MTI or its predecessor for over 40 yearsand MTI is integral to our routine movements of sulfur and NGLs. Based on operational estimates and current transportation market conditions, this drop-downfrom our general partner will provide strategic long-term growth for the Partnership. This transaction closed January 2, 2019 and was effective as of January 1,2019. As of January 1, 2019, Martin Resource Management Corporation discontinued providing land transportation services.Subsequent EventsQuarterly Distribution. On January 28, 2020, we declared a quarterly cash distribution of $0.0625 per common unit for the fourth quarter of 2019, or$0.25 per common unit on an annualized basis, which was paid on February 14, 2020 to unitholders of record as of February 7, 2020.Our Growth StrategyThe key components of our growth strategy are:•Pursue Organic Growth Projects. We continually evaluate organic expansion opportunities in existing areas of operation that will allow us toleverage our existing market position and increase the revenues from our existing assets through improved utilization and efficiency. For example,our specialty products division is opening an additional grease processing and packaging location to serve new and existing customers in the westernUnited States.•Spur Internal Organic Growth by Attracting New Customers and Expanding Services Provided to Existing Customers. Opportunities exist to expandour customer base and provide additional services and products to existing customers. We generally begin a relationship with a customer bytransporting, storing or marketing a limited range of products and services. Expanding our customer base and our service and product offerings toexisting customers is an efficient and cost effective method of achieving organic growth in revenues and cash flow. We plan to focus on growth inour business segments with a stronger economic outlook. •Establish Strategic Commercial Alliances. Many of our larger customers, which include major integrated energy companies, have establishedstrategic alliances with midstream service providers such as us to address logistical and transportation challenges or to achieve operational synergies.We intend to utilize our industry knowledge, network of customers and suppliers, and strategic asset base to expand commercial alliances to driverevenue and cash flow growth in the future. We have access to approximately 96.5 additional acres of land at the Beaumont Terminal, which is anattractive deepwater alternative to the Houston Ship Channel where we believe opportunities may exist to jointly develop a potential project usingour terminalling expertise. We also own approximately 18.4 acres of land with a dock located at the mouth of the Port of Corpus Christi ShipChannel, which we believe is a favorable location for a crude oil export project.•Maintain a Disciplined Financial Policy. We intend to continue pursuing a disciplined financial policy that includes continuing to evaluate the saleof non-core assets and conservative capital spending to pay down debt, and prudent control of distributions.4Competitive StrengthsWe believe we are well positioned to execute our business strategy because of the following competitive strengths:Fee-Based Contracts. We generate a significant amount of our cash flow from fee-based contracts with our customers, many of which are major andindependent oil and gas companies with whom we have longstanding customer relationships. A majority of our fee-based contracts consist of reservation chargesor minimum fee arrangements, which reduce the volatility of our cash flows due to volume fluctuations.Vertically Integrated Services Provided for U.S. Gulf Coast-Centric Asset and Operational Footprint. We own and operate a diversified asset base thatenables us to offer our customers an integrated distribution network consisting of terminalling, storage, packaging and other midstream logistical services forpetroleum products and by-products in one of the world’s most active refining and petrochemical regions.Strategically Located Assets. A significant portion of our cash flow comes from providing various services to the oil refining industry. Accordingly, asignificant portion of our assets are located in proximity to refining operations along the U.S. Gulf Coast. For example, our land transportation assets are based outof terminals strategically located to serve refineries and chemical companies across the U.S. Gulf Coast. Many of our sulfur services assets are strategically locatedto source sulfur from the largest refinery sources in the United States. Finally, our terminalling and storage assets are located in strategic areas across the U.S. GulfCoast to support our refinery based customers.Specialized Transportation Equipment and Storage Facilities. We have the assets and expertise to handle and transport an array of petroleum productsand by-products with unique requirements for transportation and storage. For example, we own facilities and resources to transport a variety of specialty products,including ammonia, molten sulfur and asphalt. Some of these specialty products require treatment across a wide range of temperatures ranging betweenapproximately -30 to +400 degrees Fahrenheit to remain in liquid form, which our facilities are designed to accommodate. These capabilities help us enhancerelationships with our customers by offering them services to handle their unique product requirements.Strong Industry Reputation and Established Relationships with Suppliers and Customers. We have established a reputation in our industry as a reliableand cost-effective supplier of services to our customers and have a track record of safe, efficient operation of our facilities. Our management has also establishedlong-term relationships with many of our suppliers and customers with a revenue-weighted average customer tenure of approximately 16 years. We benefit fromour management’s reputation and track record and from these long-term relationships. We provide specialized value added services to our customers and believewe have become an integral part of their value chain.Experienced Management Team and Operational Expertise. Members of our executive management team and the heads of our principal business lineshave a significant amount of experience in the industries in which we operate. Our management team's experience and familiarity with our industry and businessesare important assets that assist us in implementing our business strategies. In addition, members of our senior management hold significant limited and generalpartner interests in us, which we believe aligns incentives with our investors.Strong Parent Support. Martin Resource Management Corporation, a supportive general partner, which is privately owned, assumes a significant amountof the working capital demands and margin risk, providing stable fee-based cash flows to our limited partners.Terminalling and Storage Segment Industry Overview. The U.S. petroleum distribution system moves petroleum products and by-products from oil refineries and natural gas processingfacilities to end users. This distribution system is comprised of a network of terminals, storage facilities, pipelines, tankers, barges, railcars and trucks. Terminalsplay a key role in moving these products throughout the distribution system by providing storage, blending and other ancillary services. Although many large energy and chemical companies own terminalling and storage facilities, these companies also use third-party terminalling andstorage services. Major energy and chemical companies typically have a strong demand for terminals owned by independent operators when such terminals arestrategically located at or near key transportation links, such as deep-water ports. Major energy and chemical companies also need independent terminal storagewhen their owned storage facilities are inadequate, either because of lack of capacity, the nature of the stored material or specialized handling requirements.5The U.S. Gulf Coast region is a major hub for petroleum refining. Approximately 50% of U.S. refining capacity exists in this region. Growth in therefining and natural gas processing industries has increased the volume of petroleum products and by-products that are transported within the U.S. Gulf Coastregion, which consequently has increased the need for terminalling and storage services. The marine and offshore oil and gas exploration and production industries use terminal facilities in the U.S. Gulf Coast region as shore bases that providethem logistical support services as well as provide a broad range of products, including fuel oil, lubricants, chemicals and supplies. The demand for these types ofterminals, services and products is driven primarily by offshore exploration, development and production in the Gulf of Mexico. Offshore activity is greatlyinfluenced by current and projected prices of oil and natural gas. Specialty Petroleum Terminals. We own or operate 12 terminalling facilities providing storage, handling and transportation of various petroleumproducts and by-products. The locations and capabilities of our terminals are structured to complement our other businesses and reflect our strategy to provide abroad range of integrated services in the storage, handling and transportation of products. We developed our terminalling and storage assets by acquisition andupgrades of existing facilities as well as developing our own properties strategically located near rail, waterways and pipelines. We anticipate further expansion ofour terminalling facilities through both acquisition and organic growth.At the Neches and Stanolind terminals, our customers are primarily energy or petrochemical companies. We charge either a fixed monthly fee or athroughput fee for the use of services we perform at our facilities based on the capacity of the applicable tank. We conduct a substantial portion of our terminallingand storage operations under long-term contracts, which enhances the stability and predictability of our operations and cash flow. We attempt to balance our short-term and long-term terminalling contracts in order to allow us to maintain a consistent level of cash flow while maintaining flexibility to earn higher storagerevenues when demand for storage space increases. In addition, a significant portion of the contracts for our specialty terminals provide for minimum feearrangements that are not based on the volume handled.In Smackover, Arkansas, we own a refinery and terminal where we process crude oil into finished products that include naphthenic lubricants, distillates,asphalt and other intermediates. This process is dedicated to an affiliate of Martin Resource Management Corporation through a long-term tolling agreementbased on throughput rates and a monthly reservation fee.In Smackover, Arkansas, we own and operate a terminal used for lubricant blending, processing, packaging, marketing and distribution. This terminal isused as our central hub for branded and private label packaged lubricants where we receive, package and ship heavy-duty, passenger car, and industrial lubricantsto a network of retailers and distributors.In Kansas City, Missouri, we lease and operate a plant that specializes in the processing and packaging of automotive, commercial and industrial greases.In Houston, Texas, we own and operate a plant that specializes in the processing and packaging of post tension greases.We own asphalt terminals in each of Hondo, South Houston, and Port Neches, Texas and Omaha, Nebraska, each of which is dedicated to an affiliate ofMartin Resource Management Corporation through a terminalling service agreement based on throughput rates.In Beaumont, Texas we own a terminal where we receive natural gasoline via pipeline and then ship the product to our customers via other pipelines towhich the facility is connected, referred to as the "Spindletop Terminal." Our fees for the use of this facility are based on the volume of barrels shipped from theterminal.6The following is a summary description of our shore-based specialty terminals:Terminal Location Aggregate Capacity (inbarrels) Products DescriptionTampa (1) Tampa, Florida 718,000 Asphalt and fuel oil Marine terminal, loading/unloading forvessels, barges, railcars and trucksStanolind Beaumont, Texas 593,000 Asphalt, crude oil, sulfur, sulfuricacid and fuel oil Marine terminal, marine dock forloading/unloading of vessels, barges,railcars and trucksNeches (2) Beaumont, Texas 551,000 Molten sulfur, formed sulfur,ammonia, asphalt, fuel oil, crudeoil and sulfur-based fertilizer Marine terminal, loading/unloading forvessels, barges, railcars and trucks (1)This terminal is located on land owned by the Tampa Port Authority that was leased to us under a 10-year lease that expires in December 2021. This leasemay be extended at the option of the tenant for one option period of five years.(2)The Neches terminal is a deep water marine terminal located near Beaumont, Texas, on approximately 50 acres of land owned by us, and an additional 96acres leased to us under terms of a 20-year lease commencing May 1, 2014 with three five-year options.The following is a summary description of our non shore-based specialty terminals:Terminal Location Aggregate Capacity Products DescriptionSmackover Refinery Smackover,Arkansas 7,700 barrels per day;275,000 barrels of crude bulkstorage; 647,000 barrels oflubricant storage Naphthenic lubricants, distillates,asphalt, crude oil Crude refining facilityMartin Lubricants Smackover,Arkansas 3.9 million gallons bulkstorage Agricultural, automotive, andindustrial lubricants and grease Lubricants packaging facilityMartin Lubricants (1) Kansas City,Missouri 0.2 million gallons of bulkstorage Automotive, commercial andindustrial greases Grease manufacturing and packagingfacilityMartin Lubricants Houston, Texas 0.2 million gallons of bulkstorage Post tension greases Grease manufacturing and packagingfacilityHondo Asphalt Hondo, Texas 182,000 barrels Asphalt Asphalt processing and storageSouth Houston Asphalt Houston, Texas 95,000 barrels Asphalt Asphalt processing and storagePort Neches Asphalt Port Neches, Texas 24,000 barrels Asphalt Asphalt processing and storageOmaha Asphalt Omaha, Nebraska 112,000 barrels Asphalt Asphalt processing and storageSpindletop Beaumont, Texas 90,000 barrels Natural gasoline Pipeline receipts and shipments(1)This terminal contains a warehouse owned by third parties and leased under a lease that expires in December 2020 and can be extended by us for twosuccessive five-year periods.Marine Shore-Based Terminals. We own or operate 19 marine shore-based terminals along the U.S. Gulf Coast from Theodore, Alabama to CorpusChristi, Texas. Our terminalling assets are located at strategic distribution points for the products we handle and are in close proximity to our customers. We areone of the largest operators of marine shore-based terminals in the U.S. Gulf Coast region. These terminals are used to distribute and market fuel and lubricants.Additionally, full service terminals also provide shore bases for companies that are operating in the offshore exploration and production industry. Customers areprimarily oil and gas exploration and production companies and oilfield service companies, such as7drilling fluid companies, marine transportation companies and offshore construction companies. Shore bases typically provide logistical support, including thestoring and handling of tubular goods, loading and unloading bulk materials, providing facilities from which major and independent oil companies cancommunicate with and control offshore operations and leasing dockside facilities to companies which provide complementary products and services such asdrilling fluids and cementing services. We generate revenues from our terminals that have shore bases by fees that we charge our customers under land rentalcontracts for the use of our terminal facility for these shore bases. These contracts generally provide us a fixed land rental fee and additional rental fees that aredetermined based on a percentage of the sales value of the products and services delivered from the shore base. In addition, Martin Resource ManagementCorporation, through terminalling service agreements, pays us for terminalling and storage of fuels and lubricants at these terminal facilities and includes aprovision for minimum volume throughput requirements. Our marine shore-based terminals are divided into two classes of terminals: (i) full service terminals and (ii) fuel and lubricant terminals.Full Service Terminals. We own or operate six full service terminals. These facilities provide logistical support services and storage and handlingservices for fuel and lubricants. The significant difference between our full service terminals and our fuel and lubricant terminals is that our full service terminalsgenerate additional revenues by providing shore bases to support our customer’s operating activities related to the offshore exploration and production industry.One typical use for our shore bases is for drilling fluids manufacturers to manufacture and sell drilling fluids to the offshore drilling industry. Offshore drillingcompanies may also set up service facilities at these terminals to support their offshore operations. Customers of our full service terminals are primarily oil andgas exploration and production companies, oilfield service companies such as drilling fluids companies, marine transportation companies and offshore constructioncompanies. The following is a summary description of our full service terminals:Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options)Amelia Amelia, Louisiana 13,000 August 2023Fourchon 15 Fourchon, Louisiana 7,600 February 2047Harbor Island (1) Port Aransas, Texas 6,800 December 2039Intracoastal City 2 (2) Intracoastal City, Louisiana 17,700 December 2025Pelican Island Galveston, Texas 87,600 OwnTheodore Theodore, Alabama 19,900 Own(1)A portion of this terminal isowned.(2)This terminal is currently in caretakerstatus.Fuel and Lubricant Terminals. We own or operate 13 lubricant and fuel terminals located in the U.S. Gulf Coast region that provide storage andhandling services for lubricants and fuel oil. 8The following is a summary description of our fuel and lubricant terminals at:Terminal Location Aggregate Capacity (barrels) End of Lease (Including Options)Dulac (1) Dulac, Louisiana — December 2041Dock 193 (3) Gueydan, Louisiana 11,000 May 2022Fourchon Fourchon, Louisiana 80,900 May 2027Fourchon 16 Fourchon, Louisiana 16,400 July 2048Galveston T (2) Galveston, Texas 1,400 OwnIntracoastal City (2) Intracoastal City, Louisiana — OwnJennings Bulk Plant Jennings, Louisiana 9,100 OwnChannelview Houston, Texas 39,800 OwnLake Charles T Lake Charles, Louisiana 1,000 April 2023Pascagoula (2) Pascagoula, Mississippi 10,100 OwnPort Arthur Port Arthur, Texas 16,300 November 2025Port O'Connor (1) Port O'Connor, Texas 6,700 March 2028Sabine Pass (2)(3) Sabine Pass, Texas 16,700 September 2036(1)This terminal is currently in caretaker status and the lease will not be renewed at the end of the currentoption.(2)These terminals are currently in caretakerstatus.(3)A portion of this terminal isowned.Competition. We compete with independent terminal operators and major energy and chemical companies that own their own terminalling and storagefacilities. Many customers prefer to contract with independent terminal operators rather than terminal operators owned by integrated energy and chemicalcompanies that may have refining or marketing interests that compete with the customers.Independent terminal owners generally compete on the basis of the location and versatility of terminals, service and price. A favorably located terminalhas access to various cost effective transportation modes, both to and from the terminal, such as waterways, railroads, roadways and pipelines. Terminal versatilitydepends upon the operator’s ability to handle diverse products, some of which have complex or specialized handling and storage requirements. The servicefunction of a terminal includes, among other things, the safe storage of product at specified temperature, moisture and other conditions and receiving anddelivering product to and from the terminal. All of these services must be in compliance with applicable environmental and other regulations.We successfully compete for terminal customers because of the strategic location of our terminals along the U.S. Gulf Coast, our integrated transportationservices, our reputation, the prices we charge for our services and the quality and versatility of our services. Additionally, while some companies have significantlymore terminalling and storage capacity than us, not all terminalling and storage facilities located in the markets we serve are equipped to properly handle specialtyproducts such as asphalt, sulfur and anhydrous ammonia.The principal competitive factors affecting our terminals, which provide fuel and lubricants distribution and marketing, as well as shore bases at certainterminals, are the locations of the facilities, availability of competing logistical support services and the experience of personnel and dependability of service. Thedistribution and marketing of our lubricant products is brand sensitive and we encounter brand loyalty competition. Shore base rental contracts are generally long-term contracts and provide more protection from competition. Our primary competitors for both lubricants and shore bases include several independent operatorsas well as major companies that maintain their own similarly equipped marine terminals, shore bases and fuel and lubricant supply sources.Transportation SegmentLand TransportationIndustry Overview. The U.S. tank trucking industry is segmented into fleet type, capacity, and product category. The energy and chemical sector reliesheavily on the transportation industry to assist in moving mass quantities of petroleum products and by-products, petrochemicals, and chemicals.9Our Truck and Trailer Fleet. We operate a fleet of land transportation assets comprising approximately 540 tank trucks and 1,275 trailers that transportpetroleum products and by-products, petrochemicals, and chemicals. Our land transportation assets operate out of 23 strategically located terminals throughout theU.S. Gulf Coast and Southeastern United States. The following is a listing of our terminals utilized in our land transportation business:Terminal LocationsTexasLouisianaArkansasOtherBaytownArcadiaMarionTheodore, AlabamaBeaumontBaton RougeSmackoverTampa, Florida Beaumont LubeBossier CityStephensHattiesburg, MississippiChannelviewJennings Kenova, West VirginiaCorpus ChristiLake CharlesTennessee KilgoreReserveChattanooga Longview Kingsport Plainview Our largest land transportation customers include petroleum, petrochemical, and chemical companies and Martin Resource Management Corporation. Weconduct our land transportation services on a fee basis primarily under spot contracts.We are a party to a master transportation services agreement under which we provide land transportation services to Martin Resource ManagementCorporation on a demand basis at applicable market rates. 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.Competition. The U.S. tank trucking market is highly competitive and fragmented, due to the presence of many small and medium-sized marketparticipants. Driver availability plays a major role in each market participant's ability to generate revenue. We compete primarily with other tank trucktransportation companies. Competition in our service regions is based primarily on freight rates, service, efficiency, and available capacity.Marine Transportation Industry Overview. The U.S. inland waterway system is composed of a network of interconnected rivers and canals that serve as water highways and isused to transport vast quantities of products annually. This waterway system extends approximately 26,000 miles, of which 12,000 miles are generally consideredsignificant for domestic commerce. The U.S. Gulf Coast region is a major hub for petroleum refining. The petroleum refining process generates products and by-products that requiretransportation in large quantities from the refinery or processor. Convenient access to and use of this waterway system by the petroleum and petrochemical industryis a major reason for the current location of U.S. refineries and petrochemical facilities. The marine transportation industry uses push boats and tugboats as powersources and tank barges for freight capacity. The combination of the power source and tank barge freight capacity is called a tow. Marine Fleet. We utilize a fleet of inland and offshore tows that provide marine transportation of petroleum products and by-products produced in oilrefining. Our marine transportation business operates coastwise along the Gulf of Mexico and east coast of the United States, as well as on the U.S. inlandwaterway system, primarily between domestic ports along the Gulf of Mexico, Intracoastal Waterway, the Mississippi River system and the Tennessee-TombigbeeWaterway system. Our inland tows generally consist of one push boat and one to three tank barges, depending upon the horsepower of the push boat, the river orcanal capacity and conditions, and customer requirements. Our offshore tow consists of one tugboat, with much greater horsepower than an inland push boat, andone large tank barge. We transport asphalt, fuel oil, gasoline, sulfur and other bulk liquids. 10The following is a summary description of the marine vessels we use in our marine transportation business (excluding equipment classified as "AssetsHeld for Sale"):Class of Equipment Number in Class Capacity/Horsepower Description of Products Carried Inland tank barges 7 Under 20,000 barrels Asphalt, crude oil, fuel oil, gasolineand sulfurInland tank barges 26 20,000 - 31,000 barrels Asphalt, crude oil, fuel oil andgasolineInland push boats 19 800 - 2,650 horsepower N/AOffshore tank barge 1 59,000 barrels Diesel fuelOffshore tugboat 1 5,100 horsepower N/AOur largest marine transportation customers include major and independent oil and gas refining companies, petroleum marketing companies and MartinResource Management Corporation. We conduct our marine transportation services on a fee basis primarily under spot contracts. We are a party to a marine transportation agreement under which we provide marine transportation services to Martin Resource Management Corporationon a spot contract basis at applicable market rates. Effective each January 1, this agreement automatically renews for consecutive one-year periods unless eitherparty terminates the agreement by giving written notice to the other party at least 60 days prior to the expiration of the then-applicable term.Competition. We compete primarily with other marine transportation companies. Competition in this industry has historically been based primarily onprice. However, customers are placing an increased emphasis on the age of equipment, safety, environmental compliance, quality of service and the availability ofa single source of supply of services. In addition to competitors that provide marine transportation services, we also compete with providers of other modes of transportation, such as rail,trucks and, to a lesser extent, pipelines. For example, a typical two-barge tow carries a volume of product equal to approximately 80 railcars or 250 tanker trucks.Pipelines generally provide a less expensive form of transportation than marine transportation. However, pipelines are not able to transport some of the productswe transport and are generally a less flexible form of transportation because they are limited to the fixed point-to-point distribution of commodities in high volumesover extended periods of time.Sulfur Services Segment Industry Overview. Sulfur is a natural element and is required to produce a variety of industrial products. In the U.S., approximately 8.5 million tons ofsulfur are consumed annually with the Tampa, Florida area being the largest single market. Currently, all sulfur produced in the U.S. is "recovered sulfur," orsulfur that is a by-product from oil refineries and natural gas processing plants. Sulfur production in the U.S. is principally located along the U.S. Gulf Coast,along major inland waterways and in some areas of the western United States. Sulfur has long been recognized as essential for plant and animal growth and various other industrial purposes. The primary application of sulfur infertilizers occurs in the form of sulfuric acid. Burning sulfur creates sulfur dioxide, which is subsequently oxidized and dissolved in water to create sulfuric acid.The sulfuric acid is then combined with ammonia and phosphate rock to manufacture phosphate as well as ammonium sulfate and ammonium thiosulfatefertilizers. Sulfur-based fertilizers are manufactured chemicals containing nutrients known to improve the fertility of soils. Nitrogen, phosphorus, potassium andsulfur are the four most important nutrients for crop growth. These nutrients are found naturally in soils. However, soils used for agriculture become depleted ofnutrients and require fertilizers rich in nutrients to restore fertility. Industrial sulfur products (including sulfuric acid) are used in a wide variety of industries. For example, these products are used in power plants, papermills, auto and tire manufacturing plants, food processing plants, road construction, cosmetics and pharmaceuticals. Our Operations and Products. We maintain an integrated system of transportation assets and facilities relating to our sulfur services. We gather moltensulfur from refiners, primarily located on the U.S. Gulf Coast. We transport sulfur by inland and offshore barges, railcars and trucks. In the U.S., recovered sulfuris mainly kept in liquid form from production to usage at11a temperature of approximately 275 degrees Fahrenheit. Because of the temperature requirement, the sulfur industry uses specialized equipment to store andtransport molten sulfur. We have the necessary assets and expertise to handle the unique requirements for transportation and storage of molten sulfur. Terms for our standard purchase and sales contracts typically range from one to two years in length with prices that are usually tied to a published marketindicator and fluctuate according to the price movement of the indicator. We also provide barge transportation and tank storage services to large producers andconsumers of sulfur under contracts with remaining terms from one to five years in duration. We operate sulfur forming assets in the Port of Stockton, California and Beaumont, Texas, which are used to convert molten sulfur into solid form(prills/granules). The Stockton facility is equipped with one wet prill unit capable of processing 1,000 metric tons of molten sulfur per day. The Beaumont facilityis equipped with two wet prill units and one granulation unit capable of processing a combined 5,500 metric tons of molten sulfur per day. Formed sulfur at bothfacilities is stored in bulk until sold into local or international agricultural markets. Our forming services contracts are fee based and typically include minimum feeguarantees.Our sulfuric acid production facility at our Plainview, Texas location processes molten sulfur to produce a dedicated supply of raw material sulfuric acidto our ammonium sulfate production plant. The ammonium sulfate plant produces approximately 400 tons per day of quality ammonium sulfate and is marketed toour customers throughout the U.S. The sulfuric acid produced and not consumed by the captive ammonium sulfate production is sold to third parties.Fertilizer and related sulfur products are a natural extension of our molten sulfur business because of our access to sulfur and our distributioncapabilities. In the U.S., fertilizer is generally sold to farmers through local dealers. These dealers are typically owned and supplied by much larger wholesaledistributors. We sell to these wholesale distributors. Our industrial sulfur products are marketed primarily in the southern U.S., where many paper manufacturersand power plants are located. Our products are sold in accordance with price lists that vary from state to state. These price lists are updated periodically to reflectchanges in seasonal or competitive prices. We transport our fertilizer and industrial sulfur products to our customers using third-party common carriers. Weutilize barge and rail shipments for large volume and long distance shipments where available. We manufacture and market the following sulfur-based fertilizer and related sulfur products: •Plant nutrient sulfur products. We produce plant nutrient and agricultural ground sulfur products at our facilities in Odessa, Texas, Seneca, Illinoisand Cactus, Texas. Our plant nutrient sulfur product is a 90% degradable sulfur product marketed under the Disper-Sul® trade name and soldthroughout the U.S. to direct application agricultural markets.•Ammonium sulfate products. We produce various grades of ammonium sulfate including granular, coarse, standard, and 40% ammonium sulfatesolution. These products primarily serve direct application agricultural markets. We package these custom grade products under both proprietaryand private labels and sell them to major retail distributors and other retail customers.•Industrial sulfur products. We produce industrial sulfur products such as elemental pastille sulfur, industrial ground sulfur products, and emulsifiedsulfur. We produce elemental pastille sulfur at our Odessa, Texas and Seneca, Illinois facilities. Elemental pastille sulfur is used to increase theefficiency of the coal-fired precipitators in the power industry. These industrial ground sulfur products are also used in a variety of dusting andwettable sulfur applications such as rubber manufacturing, fungicides, sugar and animal feeds. We produce emulsified sulfur at our Nash, Texasfacility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes.•Liquid sulfur products. We produce ammonium thiosulfate at our Neches terminal facility in Beaumont, Texas. This agricultural sulfur product is aclear liquid containing 12% nitrogen and 26% sulfur. This product serves as a liquid plant nutrient used directly through spray rigs or irrigationsystems. It is also blended with other nitrogen phosphorus potassium liquids or suspensions as well. Our market is predominantly the Mid-South U.S.and Coastal Bend area of Texas.12Our Sulfur Services Facilities. We own 23 railcars and lease 41 railcars equipped to transport molten sulfur. We own the following marine assets and usethem to transport molten sulfur between U.S. Gulf Coast storage terminals (including our terminal in Beaumont, Texas) under third-party marine transportationagreements:Asset Class of Equipment Capacity/Horsepower Products TransportedMargaret Sue Offshore tank barge 10,500 long tons Molten sulfurM/V Martin Explorer Offshore tugboat 7,130 horsepower N/AM/V Martin Express Inland push boat 1,200 horsepower N/AMGM 101 Inland tank barge 2,500 long tons Molten sulfurMGM 102 Inland tank barge 2,500 long tons Molten sulfurWe operate the following sulfur forming facilities as part of our sulfur services business: Terminal Location Daily Production Capacity Products StoredNeches Beaumont, Texas 5,500 metric tons per day Molten, prilled and granulated sulfurStockton Stockton, California 1,000 metric tons per day Molten and prilled sulfurWe lease 132 railcars to transport our fertilizer products. We own the following manufacturing plants as part of our sulfur services business:Facility Location Annual Capacity Description Fertilizer plant Plainview, Texas 150,000 tons Fertilizer productionFertilizer plant Beaumont, Texas 110,000 tons Liquid sulfur fertilizer productionFertilizer plants Odessa, Texas 35,000 tons Dry sulfur fertilizer productionFertilizer plant Seneca, Illinois 36,000 tons Dry sulfur fertilizer productionFertilizer plant Cactus, Texas 20,000 tons Dry sulfur fertilizer productionIndustrial sulfur plant Nash, Texas 18,000 tons Emulsified sulfur productionSulfuric acid plant Plainview, Texas 150,000 tons Sulfuric acid production Competition. The Martin Explorer/Margaret Sue articulated barge unit is one of four vessels currently used to transport molten sulfur between U.S. portson the Gulf of Mexico and Tampa, Florida. Phosphate fertilizer manufacturers consume a majority of the sulfur produced in the U.S., which they purchase directlyfrom both producers and resellers. As a reseller, we compete against producers and other resellers capable of accessing the required transportation and storageassets. Our sulfur-based fertilizer products compete with several large fertilizer and sulfur product manufacturers. However, the close proximity of ourmanufacturing plants to our customer base is a competitive advantage for us in the markets we serve and allows us to minimize freight costs and respond quickly tocustomer requests. Our sulfuric acid products compete with regional producers and importers in the South and Southwest portion of the U.S. from Louisiana toCalifornia. Seasonality. Sales of our agricultural fertilizer products are partly seasonal as a result of increased demand during the growing season.Natural Gas Liquids Segment Industry Overview. NGLs are produced through natural gas processing and as a by-product of crude oil refining. NGLs include ethane, propane, normalbutane, iso butane and natural gasoline.Ethane is almost entirely used as a petrochemical feedstock in the production of ethylene and propylene. Propane is used as a petrochemical feedstock inthe production of ethylene and propylene, as a fuel for heating, for industrial applications, as motor fuel and as a refrigerant. Normal butane is used as apetrochemical feedstock, as a blend stock for motor gasoline and as a component in aerosol propellants. Normal butane can also be made into iso butane throughisomerization. Iso butane is used in the production of motor gasoline, alkylation and as a component in aerosol propellants. Natural gasoline is used as acomponent of motor gasoline, as a petrochemical feedstock and as a diluent.13Facilities. We purchase NGLs primarily from major domestic oil refiners and natural gas processors. We transport NGLs using MTI’s landtransportation fleet or by contracting with common carriers, owner-operators and railroad tank cars. We typically enter into annual contracts with independent retailpropane distributors to deliver their estimated annual volume requirements based on prevailing market prices. Dependable delivery is very important to thesecustomers and in some cases may be more important than price. We ensure adequate supply of NGLs through:•term purchase contracts;•storage ofNGLs;•efficient use of railroad tankcars;•the transportation fleet of vehicles owned by MTI;and•product management expertise to obtain supplies whenneeded.The following is a summary description of our owned NGL facilities:NGL Facility Location Capacity Description Wholesale terminals Arcadia, Louisiana 2,100,000 barrels Underground storageRail terminal Arcadia, Louisiana 24 railcars per day NGL railcar loading and unloadingcapabilitiesIn addition to the owned NGL facilities above, we lease underground storage capacity at four locations under short-term lease agreements.Our NGL customers consist of refiners, industrial processors and retail propane distributors. The majority of our NGL volumes are sold to refiners andindustrial processors.Seasonality. The level of NGL supply and demand is subject to changes in domestic production, weather, inventory levels and other factors. Whileproduction is not seasonal, residential, refinery, and wholesale demand is highly seasonal. This imbalance causes increases in inventories during summer monthswhen consumption is low and decreases in inventories during winter months when consumption is high. In September, demand for normal butane typicallyincreases with refineries entering the winter gasoline-blending season, resulting in upward pressure on prices. Abnormally cold weather can put extra upwardpressure on propane prices during the winter.Competition. We compete with large integrated NGL producers and marketers, as well as small local independent marketers, primarily with respect tolocation, rates, terms and flexibility of service and supply. Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation is engaged in the following principal business activities:•distributing fuel oil, asphalt, marine fuel and other liquids;•providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, andFlorida;•operating a crude oil gathering business in Stephens, Arkansas;•providing crude oil gathering, refining, 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 endmarket;•operating an environmental consultingcompany;14•supplying employees and services for the operation of our business;and•operating, solely for our account, the asphalt facilities in each of Hondo, South Houston and Port Neches, Texas and Omaha,Nebraska.We are and will continue to be closely affiliated with Martin Resource Management Corporation as a result of the following relationships.OwnershipMartin Resource Management Corporation owns approximately 15.7% of the outstanding limited partner units. In addition, Martin ResourceManagement Corporation controls MMGP, our general partner, by virtue of its 51% voting interest in Holdings, the sole member of MMGP. MMGP owns a 2%general partner interest in us and all of our incentive distribution rights.ManagementMartin Resource Management Corporation directs our business operations through its ownership interests in and control of our general partner. Webenefit from our relationship with Martin Resource Management Corporation through access to a significant pool of management expertise and establishedrelationships throughout the energy industry. We do not have employees. Martin Resource Management Corporation employees are responsible for conducting ourbusiness and operating our assets on our behalf.Related Party AgreementsThe Omnibus Agreement with Martin Resource Management Corporation requires us to reimburse Martin Resource Management Corporation for alldirect expenses it incurs or payments it makes on our behalf or in connection with the operation of our business. We reimbursed Martin Resource ManagementCorporation for $138.7 million, $136.1 million and $135.9 million of direct costs and expenses for the years ended December 31, 2019, 2018 and 2017,respectively. There is no monetary limitation on the amount we are required to reimburse Martin Resource Management Corporation for direct expenses.In addition to the direct expenses, under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirectgeneral and administrative and corporate overhead expenses. For the years ended December 31, 2019, 2018, and 2017, the conflicts committee of our generalpartner ("Conflicts Committee") approved reimbursement amounts of $16.7 million, $16.4 million and $16.4 million, respectively, reflecting our allocable shareof such expenses. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually. Theseindirect expenses covered the centralized corporate functions Martin Resource Management Corporation provides for us, such as accounting, treasury, clerical,engineering, legal, billing, information technology, administration of insurance, environmental and safety compliance, general office expenses and employeebenefit plans and other general corporate overhead functions we share with Martin Resource Management Corporation’s retained businesses. The OmnibusAgreement also contains significant non-compete provisions and indemnity obligations. Martin Resource Management Corporation also licenses certain of itstrademarks and trade names to us under the Omnibus Agreement. Other agreements include, but are not limited to, a master transportation services agreement, marine transportation agreements, terminal servicesagreements, a tolling agreement, and a sulfuric acid sales agency agreement. Pursuant to the terms of the Omnibus Agreement, we are prohibited from enteringinto certain material agreements with Martin Resource Management Corporation without the approval of the Conflicts Committee.For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin ResourceManagement Corporation, please see "Item 13. Certain Relationships and Related Transactions, and Director Independence." Commercial We have been and anticipate that we will continue to be both a significant customer and supplier of products and services offered by Martin ResourceManagement Corporation. In the aggregate, our purchases from Martin Resource Management Corporation accounted for approximately 7%, 5%, and 5% of ourtotal cost of products sold during for the years ended December 31, 2019, 2018 and 2017, respectively. 15 Correspondingly, Martin Resource Management Corporation is one of our significant customers. Our sales to Martin Resource Management Corporationaccounted for approximately 11%, 11%, and 12% of our total revenues for each of the years ended December 31, 2019, 2018 and 2017, respectively. For a more comprehensive discussion concerning the Omnibus Agreement and the other agreements that we have entered into with Martin ResourceManagement Corporation, please see "Item 13. Certain Relationships and Related Transactions, and Director Independence." Approval and Review of Related Party TransactionsIf we contemplate entering into a transaction, other than a routine or in the ordinary course of business transaction, in which a related person will have adirect or indirect material interest, the proposed transaction is submitted for consideration to the board of directors of our general partner or to our management, asappropriate. If the board of directors is involved in the approval process, it determines whether to refer the matter to the Conflicts Committee, as provided underour limited partnership agreement. If a matter is referred to the Conflicts Committee, it obtains information regarding the proposed transaction from managementand determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding thetransaction. If the Conflicts Committee retains such counsel or financial advisor, it considers such advice and, in the case of a financial advisor, such advisor’sopinion as to whether the transaction is fair and reasonable to us and to our unitholders.InsuranceOur deductible for onshore physical damage resulting from named windstorms is 5% of the total value located at an individual location subject to anoverall minimum deductible of $1.0 million for damage caused by the named windstorm at all locations excluding Neches Industrial Park. Our onshore programcurrently provides $40.0 million per occurrence for named windstorm events. For non-windstorm events, our deductible applicable to onshore physical damage is$0.5 million per occurrence. Business interruption coverage in connection with a windstorm event is subject to the same $40.0 million per occurrence andaggregate limit as the property damage coverage and has a waiting period of 45 days. For non-windstorm events, our waiting period applicable to businessinterruption is 30 days.We have various pollution liability policies which provide coverages ranging from remediation of our property to third party liability. The limits of thesepolicies vary based on our assessments of exposure at each location.Loss of, or damage to, our vessels and cargo is insured through hull and cargo insurance policies. Vessel operating liabilities such as collision, cargo,environmental and personal injury are insured primarily through our participation in mutual insurance associations and other reinsurance arrangements, pursuant towhich we are potentially exposed to assessments in the event claims by us or other members exceed available funds and reinsurance. Protection and indemnity("P&I") insurance coverage is provided by P&I associations and other insurance underwriters. Our vessels are entered in P&I associations that are parties to apooling agreement, known as the International Group Pooling Agreement ("Pooling Agreement") through which approximately 90% of the world's ocean-goingtonnage is reinsured through a group reinsurance policy. With regard to collision coverage, the first $1.0 million of coverage is insured by our hull policy and anyexcess is insured by a P&I association. We insure our owned cargo through a domestic insurance company. We insure cargo owned by third parties through ourP&I coverage. As a member of P&I associations that are parties to the Pooling Agreement, we are subject to supplemental calls payable to the associations ofwhich we are a member, based on our claims record and the other members of the other P&I associations that are parties to the Pooling Agreement. Except for ourmarine operations, we self-insure against liability exposure up to a predetermined amount, beyond which we are covered by catastrophe insurance coverage.For marine claims, our insurance covers up to $1.0 billion of liability per accident or occurrence. We believe our current insurance coverage is adequate toprotect us against most accident related risks involved in the conduct of our business. However, there can be no assurance that all risks are adequately insuredagainst, that any particular claim will be paid by the insurer, or that we will be able to procure adequate insurance coverage at commercially reasonable rates in thefuture.Environmental and Regulatory Matters Our activities are subject to various federal, state and local laws and regulations, as well as orders of regulatory bodies, governing a wide variety ofmatters, including marketing, production, pricing, community right-to-know, protection of the environment, safety and other matters.16 Environmental We are subject to complex federal, state, and local environmental laws and regulations governing the discharge of materials into the environment orotherwise relating to protection of human health, natural resources and the environment. These laws and regulations can impair our operations that affect theenvironment in many ways, such as requiring the acquisition of permits to conduct regulated activities; restricting the manner in which we can release materialsinto the environment; requiring remedial activities or capital expenditures to mitigate pollution from former or current operations; and imposing substantialliabilities on us for pollution resulting from our operations. Many environmental laws and regulations can impose joint and several, strict liability, and any failureto comply with environmental laws and regulations may result in the assessment of administrative, civil, and criminal penalties, the imposition of investigatory andremedial obligations, and, in some circumstances, the issuance of injunctions that can limit or prohibit our operations.The clear trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment, and, thus, anychanges in environmental laws and regulations that result in more stringent and costly pollutant control or waste handling, storage, transport, disposal, orremediation requirements could have a material adverse effect on our operations and financial position. Moreover, there is inherent risk of incurring significantenvironmental costs and liabilities in the performance of our operations due to our handling of petroleum products and by-products, chemical substances, andwastes as well as the accidental release or spill of such materials into the environment. Consequently, we cannot provide assurance that we will not incursignificant costs and liabilities as result of such handling practices, releases or spills, including those relating to claims for damage to property and persons. In theevent of future increases in costs, we may be unable to pass on those increases to our customers. While we believe that we are in substantial compliance withcurrent environmental laws and regulations and that continued compliance with existing requirements would not have a material adverse impact on us, we cannotprovide any assurance that our environmental compliance expenditures will not have a material adverse effect on us in the future. Superfund The Federal Comprehensive Environmental Response, Compensation and Liability Act, as amended, ("CERCLA"), also known as the "Superfund" law,and similar state laws, impose liability without regard to fault or the legality of the original conduct, on certain classes of "responsible persons," including theowner or operator of a site where regulated hazardous substances have been released into the environment and companies that disposed or arranged for thedisposal of the hazardous substances found at such site. Under CERCLA, these responsible persons may be subject to joint and several strict liability for the costsof cleaning up the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies,and it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release ofhazardous substances into the environment. Although certain hydrocarbons are not subject to CERCLA’s reach because "petroleum" is excluded from CERCLA’sdefinition of a "hazardous substance," in the course of our ordinary operations we will generate wastes that may fall within the definition of a "hazardoussubstance." In addition, some state counterparts to CERCLA tie liability to a broader set of substances than does CERCLA. Solid Waste We generate both hazardous and nonhazardous solid wastes, which are subject to requirements of the federal Resource Conservation and Recovery Act,as amended ("RCRA") and comparable state statutes. From time to time, the U.S. Environmental Protection Agency ("EPA") has considered making changes innonhazardous waste standards that would result in stricter disposal requirements for these wastes. Furthermore, it is possible some wastes generated by us that arecurrently classified as nonhazardous may in the future be designated as "hazardous wastes," resulting in the wastes being subject to more rigorous and costlydisposal requirements. Changes in applicable regulations may result in an increase in our capital expenditures or operating expenses. We currently own or lease, and have in the past owned or leased, properties that have been used for the manufacturing, processing, transportation andstorage of petroleum products and by-products. Solid waste disposal practices within oil and gas related industries have improved over the years with the passageand implementation of various environmental laws and regulations. Nevertheless, a possibility exists that petroleum and other solid wastes may have beendisposed of on or under various properties owned or leased by us during the operating history of those facilities. In addition, a number of these properties havebeen operated by third parties over whom we had no control as to such entities’ handling of petroleum, petroleum by-products or other wastes and the manner inwhich such substances may have been disposed of or released. State and federal laws and regulations applicable to oil and natural gas wastes and properties havegradually become more strict and,17under such laws and regulations, we could be required to remove or remediate previously disposed wastes or property contamination, including groundwatercontamination, even under circumstances where such contamination resulted from past operations of third parties.Clean Air Act Our operations are subject to the federal Clean Air Act ("CAA"), as amended, and comparable state statutes. Amendments to the CAA adopted in 1990contain provisions that may result in the imposition of increasingly stringent pollution control requirements with respect to air emissions from the operations of ourterminal facilities, processing and storage facilities and fertilizer and related products manufacturing and processing facilities. Such air pollution controlrequirements may include specific equipment or technologies to control emissions, permits with emissions and operational limitations, pre-approval of new ormodified projects or facilities producing air emissions, and similar measures. Failure to comply with applicable air statutes or regulations may lead to theassessment of administrative, civil or criminal penalties, and/or result in the limitation or cessation of construction or operation of certain air emission sources. Webelieve our operations, including our manufacturing, processing and storage facilities and terminals, are in substantial compliance with applicable requirements ofthe CAA and analogous state laws.Global Warming and Climate Change. Recent scientific studies have suggested that emissions of certain gases, commonly referred to as "greenhousegases" and including carbon dioxide and methane, may be contributing to warming of the Earth’s atmosphere. In response to such studies, the U.S. Congress hasfrom time to time considered climate change-related legislation to restrict greenhouse gas emissions. Many states have already taken legal measures to reduceemissions of greenhouse gases, primarily through the planned development of greenhouse gas emission inventories and/or regional greenhouse gas cap and tradeprograms. Also, as a result of the U.S. Supreme Court’s decision on April 2, 2007, in Massachusetts, et al. v. EPA, the EPA eventually concluded that it isrequired to regulate greenhouse gas emissions from mobile sources (e.g., cars and trucks) even if Congress does not adopt new legislation specifically addressingemissions of greenhouse gases. The Court's holding in Massachusetts that greenhouse gases fall under the federal CAA's definition of air pollutant has also led theEPA to determine that regulation of greenhouse gas emissions from stationary sources under various Clean Air Act programs is required. To that end, EPApromulgated regulations, referred to as the Tailoring Rule, 75 Fed. Red. 31514, to begin gradually subjecting stationary greenhouse gas emission sources to variousClean Air Act programs, including permitting programs applicable to new and existing major sources of greenhouse gas emissions. In reviewing the regulations atissue, the Supreme Court struck down EPA’s permitting requirements as applicable only to greenhouse gas emissions, although it upheld the EPA’s authority tocontrol greenhouse gas emissions when a permit is required due to emissions of other pollutants.On an international level, almost 200 nations agreed in December 2015 to an international climate change agreement in Paris, France that calls for countries to settheir own greenhouse gas emissions targets and be transparent about the measures each country will use to achieve its emissions targets. In August 2017, the U.S.State Department officially informed the United Nations of the intent of the United States to withdraw from the Paris Agreement. Notice of such withdrawaloccurred on November 4, 2019, and will be effective one year from the date of delivery of such notice. Whether the United States may reenter the Paris Agreementor a separately negotiated agreement is unclear at this time. It is not possible at this time to predict how or when the United States might impose restrictions onGHGs as a result of this or another international climate change agreement. Further, several states and local governments have stated their commitment to itsprinciples in their effectuation of policy and regulations. To date, applicable requirements have not had a substantial effect upon our operations. Still, newlegislation or regulatory programs that restrict emissions of greenhouse gases in areas in which we conduct business could adversely affect our operations anddemand for our services.Moreover, in interpretative guidance on climate change disclosures, the U.S. Securities and Exchange Commission ("SEC") indicates that climate changecould have an effect on the severity of weather (including hurricanes and floods), sea levels, the arability of farmland, and water availability and quality. If sucheffects were to occur, our operations have the potential to be adversely affected. Potential adverse effects could include disruption of our business activities,including, for example, damages to our facilities from powerful winds or floods, or increases in our costs of operation or reductions in the efficiency of ouroperations, as well as potentially increased costs for insurance coverages in the aftermath of such effects. Significant physical effects of climate change could alsohave an indirect effect on our financing and operations by disrupting the transportation or process related services provided by companies or suppliers with whomwe have a business relationship. In addition, the demand for and consumption of our products and services (due to change in both costs and weather patterns), andthe economic health of the regions in which we operate, could have a material adverse effect on our business, financial condition, results of operations and cashflows. We may not be able to recover through insurance some or any of the damages, losses or costs that may result from potential physical effects of climatechange.18Clean Water Act The Federal Water Pollution Control Act of 1972, as amended, also known as Clean Water Act and comparable state laws impose restrictions and strictcontrols regarding the discharge of pollutants, including hydrocarbon-bearing wastes, into state waters and waters of the U.S. Pursuant to the Clean Water Act andsimilar state laws, a National Pollutant Discharge Elimination System permit, or a state permit, or both, must be obtained to discharge pollutants into federal andstate waters. In addition, the Clean Water Act and comparable state laws require that individual permits or coverage under general permits be obtained by subjectfacilities for discharges of storm water runoff. Furthermore, the Clean Water Act potentially requires individual permits or qualification for nationwide permits foractivities that involve the discharge of dredged or fill material into waters of the United States, the definition of which was expanded by the EPA and Army Corpsof Engineers in a 2015 rulemaking. However, in October 2019, the subject rule was repealed and the pre-2015 regulatory text was re-codified, with changeseffective December 23, 2019. The newly finalized rule has already been challenged in court. The scope of the CWA’s jurisdiction will likely remain fluid until afinal regulatory determination is made and subsequent litigation, if any, is finalized. To the extent a rule ultimately promulgated expands the scope of the CWA’sjurisdiction, we could face increased costs and delays with respect to permitting. We believe that we are in substantial compliance with Clean Water Act permittingrequirements as well as the conditions imposed thereunder, and that our continued compliance with such existing permit conditions will not have a materialadverse effect on our business, financial condition or results of operations.Oil Pollution Act The Oil Pollution Act of 1990, as amended ("OPA") imposes a variety of regulations on "responsible parties" related to the prevention of oil spills andliability for damages resulting from such spills in U.S. waters. A "responsible party" includes the owner or operator of a facility or vessel or the lessee or permitteeof the area in which an offshore facility is located. The OPA assigns liability to each responsible party for oil removal costs and a variety of public and privatedamages including natural resource damages. Under the OPA, vessels and shore facilities handling, storing, or transporting oil are required to develop andimplement oil spill response plans, and vessels greater than 300 tons in weight must provide to the U.S. Coast Guard evidence of financial responsibility to coverthe costs of cleaning up oil spills from such vessels. The OPA also requires that all newly constructed tank barges engaged in oil transportation in the U.S. bedouble hulled effective January 1, 2016. We believe we are in substantial compliance with all of the oil spill-related and financial responsibility requirements.Nonetheless, in the aftermath of the Deepwater Horizon incident in 2010, Congress has from time to time considered oil spill related legislation that could have theeffect of substantially increasing financial responsibility requirements and potential fines and damages for violations and discharges subject to the OPA, andsimilar legislation. Any such changes in law affecting areas where we conduct business could materially affect our operations.Safety Regulation The Partnership’s marine transportation operations are subject to regulation by the U.S. Coast Guard, federal laws, state laws and certain internationaltreaties. Tank ships, push boats, tugboats and barges are required to meet construction and repair standards established by the American Bureau of Shipping, aprivate organization, and the U.S. Coast Guard and to meet operational and safety standards presently established by the U.S. Coast Guard. We believe our marineoperations and our terminals are in substantial compliance with current applicable safety requirements. Occupational Health Regulations The workplaces associated with our manufacturing, processing, terminal and storage facilities are subject to the requirements of the federal OccupationalSafety and Health Act ("OSHA") and comparable state statutes. We believe we have conducted our operations in substantial compliance with OSHA requirements,including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated substances. Our marine vessel operationsare also subject to safety and operational standards established and monitored by the U.S. Coast Guard. In general, we expect to increase our expenditures relating to compliance with likely higher industry and regulatory safety standards such as thosedescribed above. These expenditures cannot be accurately estimated at this time, but we do not expect them to have a material adverse effect on our business. 19Jones Act The Jones Act is a federal law that restricts maritime transportation between locations in the U.S. to vessels built and registered in the U.S. and owned andmanned by U.S. citizens. Since we engage in maritime transportation between locations in the U.S., we are subject to the provisions of the law. As a result, we areresponsible for monitoring the ownership of our subsidiaries that engage in maritime transportation and for taking any remedial action necessary to ensure that noviolation of the Jones Act ownership restrictions occurs. The Jones Act also requires that all U.S.-flagged vessels be manned by U.S. citizens. Foreign-flaggedseamen generally receive lower wages and benefits than those received by U.S. citizen seamen. This requirement significantly increases operating costs of U.S.-flagged vessel operations compared to foreign-flagged vessel operations. Certain foreign governments subsidize their nations’ shipyards. This results in lowershipyard costs both for new vessels and repairs than those paid by U.S.-flagged vessel owners. The U.S. Coast Guard and American Bureau of Shipping maintainthe most stringent regimen of vessel inspection in the world, which tends to result in higher regulatory compliance costs for U.S.-flagged operators than for ownersof vessels registered under foreign flags of convenience. Merchant Marine Act of 1936 The Merchant Marine Act of 1936 is a federal law that provides that, upon proclamation by the President of the U.S. of a national emergency or a threat tothe national security, the U.S. Secretary of Transportation may requisition or purchase any vessel or other watercraft owned by U.S. citizens (including us,provided that we are considered a U.S. citizen for this purpose). If one of our push boats, tugboats or tank barges were purchased or requisitioned by the U.S.government under this law, we would be entitled to be paid the fair market value of the vessel in the case of a purchase or, in the case of a requisition, the fairmarket value of charter hire. However, if one of our push boats or tugboats is requisitioned or purchased and its associated tank barge is left idle, we would not beentitled to receive any compensation for the lost revenues resulting from the idled barge. We also would not be entitled to be compensated for any consequentialdamages we suffer as a result of the requisition or purchase of any of our push boats, tugboats or tank barges.Transportation Regulations Our trucking operations are subject to regulation by the U.S. Department of Transportation and by various state agencies under the Federal Motor CarrierSafety Act and the Hazardous Materials Transportation Act and analogous state laws. These regulatory authorities exercise broad powers, governing activities suchas the authorization to engage in motor carrier operations, regulatory safety, driver licensing and insurance requirements, and the shipment and packaging ofhazardous materials. Additional regulations apply specifically to the trucking industry, including testing and specification of equipment and product handlingrequirements. The trucking industry is subject to possible regulatory and legislative changes that may affect the economics of the industry by requiring changes inoperating practices or by changing the demand for common or contract carrier services or the cost of providing truckload services. Some of these possible changesinclude increasingly stringent environmental regulations, changes in the hours of service regulations which govern the amount of time a driver may drive or workin any specific period, onboard black box recorder device requirements, or limits on vehicle weight and size. Moreover, various legislative proposals areoccasionally introduced, including proposals to increase federal, state, or local taxes on motor fuels, among other things, which may increase our costs or adverselyimpact the recruitment of drivers. We cannot predict whether, or in what form, any increase in such taxes applicable to us will be enacted.Employees We do not have any employees. Under our Omnibus Agreement with Martin Resource Management Corporation, Martin Resource ManagementCorporation provides us with corporate staff and support services. These services include centralized corporate functions, such as accounting, treasury,engineering, information technology, insurance, administration of employee benefit plans and other corporate services. Martin Resource Management Corporationemploys approximately 1,292 individuals, including 53 employees represented by labor unions, who provide direct support to our operations as of December 31,2019.Financial Information about Segments Information regarding our operating revenues and identifiable assets attributable to each of our segments is presented in Note 20 to our consolidatedfinancial statements included in this annual report on Form 10-K. 20Access to Public Filings We provide public access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to thesereports filed with the SEC under the Exchange Act. These documents may be accessed free of charge on our website at the following address:www.MMLP.com. These documents are provided as soon as is reasonably practicable after their filing with the SEC. This website address is intended to be aninactive, textual reference only, and none of the material on this website is part of this report. These documents may also be found at the SEC’s website atwww.sec.gov.Item 1A.Risk Factors Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject aresimilar to those that would be faced by a corporation engaged in a business similar to ours. If any of the following risks were actually to occur, our business,financial condition or results of operations could be materially adversely affected. In this case, we might not be able to pay distributions on our common units, thetrading price of our common units could decline and unitholders could lose all or part of their investment. These risk factors should be read in conjunction with theother detailed information concerning us set forth herein.Risks Relating to Our BusinessImportant factors that could cause actual results to differ materially from our expectations include, but are not limited to, the risks set forth below. Therisks described below should not be considered to be comprehensive and all-inclusive. Many of such factors are beyond our ability to control or predict.Unitholders are cautioned not to put undue reliance on forward-looking statements. Additional risks that we do not yet know of or that we currently think areimmaterial may also impair our business operations, financial condition and results of operations.We may not have sufficient cash after the establishment of cash reserves and payment of our general partner's expenses to enable us to pay a distributioneach quarter.We may not have sufficient available cash each quarter in the future to pay distributions on our units. Under the terms of our partnership agreement, wemust pay our general partner's expenses and set aside any cash reserve amounts before making a distribution to our unitholders. The amount of cash we candistribute on our common units principally depends upon the amount of net cash generated from our operations, which will fluctuate from quarter to quarter basedon, among other things:•the costs of acquisitions, if any;•the prices of petroleum products and by-products;•fluctuations in our workingcapital;•the level of capital expenditures wemake;•restrictions contained in our debt instruments and our debt servicerequirements;•our ability to make working capital borrowings under our credit facility;and•the amount, if any, of cash reserves established by our general partner in itsdiscretion.Unitholders should also be aware that the amount of cash we have available for distribution depends primarily on our cash flow, including cash flow fromworking capital borrowings, and not solely on profitability, which will be affected by non-cash items. Other than the requirement in our partnership agreement todistribute all of our available cash each quarter, we have no legal obligation to declare quarterly cash distributions, and our general partner has considerablediscretion to determine the amount of our available cash each quarter. Consistent with our strategy of reducing leverage and improving liquidity, on January 28,2020, we announced a $0.75 per unit reduction on our cash distribution on an annual basis. As we continue to pursue the strategy discussed above, we may not beable to maintain or increase the distributions on our common units. In addition, our general partner determines the amount and timing of asset purchases and sales,capital expenditures, borrowings, issuances of additional partnership securities and the establishment of reserves, each of which can affect the amount of cash21available for distribution to our unitholders. As a result, we may make cash distributions during periods when we record losses and may not make cash distributionsduring periods when we record net income.Restrictions in our credit facility could prevent us from making distributions to our unitholders.The payment of principal and interest on our indebtedness reduces the cash available for distribution to our unitholders. In addition, we are prohibited byour credit facility from making cash distributions during a default or an event of default under our credit facility or if the payment of a distribution would cause adefault or an event of default thereunder. Our leverage and various limitations in our credit facility may reduce our ability to incur additional debt, engage incertain transactions, and capitalize on acquisition or other business opportunities that could increase cash flows and distributions to our unitholders.Demand for a portion of our terminalling and storage services is substantially dependent on the level of offshore oil and gas exploration, development andproduction activity.The level of offshore oil and gas exploration, development and production activity historically has been volatile and is likely to continue to be so in thefuture. The level of activity is subject to large fluctuations in response to relatively minor changes in a variety of factors that are beyond our control, including:•prevailing oil and natural gas prices and expectations about future prices and pricevolatility;•the ability of exploration and production companies to drill in other basins that have more attractive rates ofreturn;•the cost of offshore exploration for and production and transportation of oil and naturalgas;•worldwide demand for oil and natural gas (e.g., the reduced demand following the recent coronavirusoutbreaks);•consolidation of oil and gas and oil service companies operatingoffshore;•availability and rate of discovery of new oil and natural gas reserves in offshoreareas;•local and international political and economic conditions and policies;•technological advances affecting energy production andconsumption;•weather conditions;•environmental regulation;and•the ability of oil and gas companies to generate or otherwise obtain funds for exploration andproductionAs a result of the decline in commodity prices that began in the second half of 2014, offshore development activity in the Gulf of Mexico declinedsubstantially, diminishing demand for our terminalling and storage services. We can offer no assurance whether or when those activity levels will improve. Even ifsuch activity levels improve, we expect such activity to continue to be volatile and affect demand for our terminalling and storage services.We have a significant amount of indebtedness. Our leverage and debt service obligations may adversely affect our financial condition, results of operationsand business prospects.As of December 31, 2019, we had approximately $589.9 in principal amount of debt outstanding (including $201.0 million of secured debt outstandingunder our revolving credit facility and $12.6 million of outstanding irrevocable letters of credit). Our revolving credit facility matures on August 31, 2023 unlessthe 2021 Notes have not been refinanced on or before August 19, 2020. See Note 16 of the notes to our consolidated financial statements included in this annualreport on Form 10-K for further discussion of our long-term debt obligations.The level of and terms and conditions governing our debt:22•require us to dedicate a substantial portion of our cash flow from operations to service our existing debt obligations and could limit ourflexibility in planning for or reacting to changes in our business and the industry in which we operate;•increase our vulnerability to the cyclical nature of our business, economic downturns or other adverse developments in ourbusiness;•could limit our ability to access capital markets, refinance our existing indebtedness, raise capital on favorable terms, or obtain additionalfinancing for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy, or for otherpurposes;•expose us to the risk of increased interest rates as certain of our borrowings, including borrowings under our revolving credit facility, bearinterest at floating rates;•place restrictions on our ability to obtain additional financing, make investments, lease equipment, sell assets and engage in businesscombinations;•place us at a competitive disadvantage relative to competitors with lower levels of indebtedness in relation to their overall size, or those thathave less restrictive terms governing their indebtedness, thereby enabling competitors to take advantage of opportunities that ourindebtedness may prevent us from pursuing;•limit management’s discretion in operating our business;and•increase our cost ofborrowing.Any of the above listed factors could have a material adverse effect on our business, financial condition, cash flows and results of operations.Our ability to pay our expenses and fund our working capital needs and debt obligations will depend on our future performance, which will be affected byfinancial, business, economic, regulatory and other factors. We will not be able to control many of these factors, such as commodity prices, other economicconditions and governmental regulation. In addition, we cannot be certain that our cash flow will be sufficient to allow us to pay the principal and interest on ourdebt and meet our other obligations. If we are unable to service our indebtedness and other obligations, we may be required to restructure or refinance all or part ofour existing debt, sell assets, reduce capital expenditures, borrow more money or raise equity, some or all of which may not be available to us on terms acceptableto us, if at all, or such alternative strategies may yield insufficient funds to make required payments on our indebtedness. In addition, our ability to comply with thefinancial and other restrictive covenants in our indebtedness could be affected by our future performance and events or circumstances beyond our control. Failureto comply with these covenants would result in an event of default under such indebtedness, the potential acceleration of our obligation to repay outstanding debtand the potential foreclosure on the collateral securing such debt, and could cause a cross-default under our other outstanding indebtedness.We are currently seeking to refinance the 2021 Notes, although no assurance can be given that we will be able to refinance the 2021 Notes. If we areunable to refinance the 2021 Notes and are unable to repay the outstanding borrowings under our revolving credit facility on August 19, 2020, we would be indefault under our revolving credit facility. An event of default under our revolving credit facility would allow the lenders to declare the balance outstandingthereunder due and payable in full, which could trigger cross-defaults under other agreements, which could also result in the acceleration of those obligations bythe counterparties to those agreements. Any of the above risks could materially adversely affect our business, financial condition, cash flows and results ofoperations.We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by our debt level andindustry conditions.As of December 31, 2019, we had $201.0 million of borrowings outstanding under our revolving credit facility. Our revolving credit facility matures onAugust 31, 2023 unless the 2021 Notes have not been refinanced on or before August 19, 2020. Accessing capital in the capital markets in recent months has beendifficult for companies in the energy industry. Disruptions in the capital and credit markets, in particular with respect to the energy sector, could limit our ability toaccess these markets or may significantly increase our cost to borrow. If we are unable to access the capital and credit markets, we may not be able to refinance the2021 Notes prior to August 19, 2020, at which time our revolving credit facility would mature and we would be required to repay all amounts borrowedthereunder. Low commodity prices have caused and may continue to23cause lenders to increase interest rates, enact tighter lending standards, refuse to refinance existing debt around maturity on favorable terms or at all and mayreduce or cease to provide funding to borrowers. Our inability to access the capital or credit markets on favorable terms could have a material adverse effect on ourbusiness, financial condition, results of operations, cash flows and liquidity and our ability to repay or refinance our debt.If we are unable to generate enough cash flow from operations to service our indebtedness or are unable to use future borrowings to refinance ourindebtedness or fund other capital needs, we may have to undertake alternative financing plans, which may have onerous terms or may be unavailable.Our primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditureshave historically been provided by cash flows generated by our operations, borrowings under our revolving credit facility and access to the debt and equity capitalmarkets. Our ability to generate cash from operations will depend upon our future operating performance, which is subject to certain risks.Our earnings and cash flow could vary significantly from year to year due to the volatility of our business. As a result, the amount of debt that we canmanage in some periods may not be appropriate for us in other periods. Additionally, our future cash flow may be insufficient to meet our debt obligations andcommitments. A range of economic, competitive, business and industry factors will affect our future financial performance and, as a result, our ability to generatecash flow from operations and service our debt. Factors that may cause us to generate cash flow that is insufficient to meet our debt obligations include the eventsand risks related to our business, many of which are beyond our control. Any cash flow insufficiency would have a material adverse impact on our business,financial condition, results of operations, cash flows and liquidity and our ability to repay or refinance our debt.In addition, while our revolving credit facility has $400.0 million in lender commitments, the amount we are able to borrow is limited by the financialcovenants contained therein, including covenants that limit the amount we may borrow based on our trailing four quarter consolidated EBITDA ("ComplianceEBITDA"). As of December 31, 2019, we had the ability to borrow approximately $51.5 million under our revolving credit facility due to such financialcovenants. As our Compliance EBITDA has declined over the last five years, the amount we are permitted to borrow has likewise declined, and further decreasesin our Compliance EBITDA will further limit our borrowing capacity. As a result, we may have limited ability to obtain the capital necessary to sustain ouroperations.If we do not generate sufficient cash flow from operations to service our outstanding indebtedness, or if future borrowings are not available to us in anamount sufficient to enable us to pay or refinance our indebtedness, we may be required to undertake various alternative financing plans, which may include:•refinancing or restructuring all or a portion of ourdebt;•seeking alternative financing or additional capital investment;•selling strategic assets;•reducing or delaying capital investments; or•revising or delaying our strategicplans.We cannot assure you that we would be able to implement any of the above alternative financing plans, if necessary, on commercially reasonable terms orat all. If we are unable to generate sufficient cash flow to satisfy our debt obligations or to obtain alternative financing, our business, financial condition, results ofoperations, cash flows, ability to pay distributions to our unitholders, and liquidity could be materially and adversely affected. Any failure to make scheduledpayments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could significantly harm our abilityto incur additional indebtedness on acceptable terms. Further, if for any reason we are unable to meet our debt service and repayment obligations, we would be indefault under the terms of the agreements governing our debt, which would allow our creditors under those agreements to declare all outstanding indebtednessthereunder to be due and payable (which would in turn trigger cross-acceleration or cross-default rights between the relevant agreements), the lenders under ourrevolving credit facility could terminate their commitments to extend credit, and the lenders could foreclose against our assets securing their borrowings and wecould be forced into bankruptcy or liquidation. In addition, the lenders under our revolving credit facility could compel us to apply our available cash to repay ourborrowings. If the amounts outstanding under our revolving credit facility or any of our other significant indebtedness were to be accelerated, we cannot assure youthat our assets would be sufficient to repay in full the amounts owed to the lenders or to our other debt holders.24Debt we owe or incur in the future could limit our flexibility to obtain financing, pursue other business opportunities, and to pay distributions to ourunitholders. Our indebtedness could have important consequences, including the following:•our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impairedor such financing may not be available on favorable terms;•our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flowsrequired to make interest payments on the debt;•we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally;and•our flexibility in responding to changing business and economic conditions may belimited.Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailingeconomic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient toservice any current or future indebtedness, we will be forced to take actions such as further reducing distributions, reducing or delaying our business activities,acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital. We may not be able to effect any of these actions onsatisfactory terms or at all. Further, agreements we may enter into in the future governing our indebtedness could further restrict our ability to make quarterlydistributions to our unitholders.Fluctuations in interest rates could materially affect our financial results.Because a significant portion of our debt bears interest at variable rates, increases in interest rates could materially increase our interest expense. Based onour debt outstanding as of December 31, 2019, if interest rates were to increase by 100 basis points, the corresponding increase in interest expense on our variablerate debt would decrease future earnings and cash flows by approximately $2.0 million per year.Further, LIBOR and certain other interest rate "benchmarks" are the subject of recent national, international, and other regulatory guidance and proposalsfor reform. These reforms may cause such benchmarks to perform differently than in the past or have other consequences which cannot be predicted. On July 27,2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks tosubmit LIBOR rates after 2021. It is expected that a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the nextseveral years. As a result of this transition, LIBOR may disappear entirely or perform differently than in the past. At this time, it is not possible to predict the effectany discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates will have on us.However, if LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, our borrowing costs on our variable rate indebtednessmay be adversely affected.We are exposed to counterparty risk in our credit facility and related interest rate protection agreements.We rely on our credit facility to assist in financing a significant portion of our working capital, acquisitions and capital expenditures. Our ability to borrowunder our credit facility may be impaired because:•one or more of our lenders may be unable or otherwise fail to meet its fundingobligations;•the lenders do not have to provide funding if there is a default under the credit facility or if any of the representations or warranties included inthe credit facility are false in any material respect; and•if any lender refuses to fund its commitment for any reason, whether or not valid, the other lenders are not required to provide additional fundingto make up for the unfunded portion.If we are unable to access funds under our credit facility, we will need to meet our capital requirements, including some of our short-term capitalrequirements, using other sources. Alternative sources of liquidity may not be available on acceptable terms, if at all. If the cash generated from our operations orthe funds we are able to obtain under our credit facility25or other sources of liquidity are not sufficient to meet our capital requirements, then we may need to delay or abandon capital projects or other businessopportunities, which could have a material adverse effect on our business, financial condition and results of operations.In addition, we have from time to time entered into interest rate protection agreements to manage our interest rate risk exposure by fixing a portion of theinterest expense we pay on our long-term debt under our credit facility. If the counterparties fail to honor their commitments, we could experience higher interestrates, which could have a material adverse effect on our business, financial condition and results of operations. In addition, if the counterparties fail to honor theircommitments, we also may be required to replace such interest rate protection agreements with new interest rate protection agreements, and such replacementinterest rate protection agreements may be at higher rates than our current interest rate protection agreements, which could have a material adverse effect on ourbusiness, financial condition and results of operations.We are exposed to counterparty credit risk. Nonpayment and nonperformance by our customers, suppliers or vendors could reduce our revenues, increase ourexpenses and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows and ability to make distributions to ourunitholders.Weak economic conditions and widespread financial distress could reduce the liquidity of our customers, suppliers or vendors, making it more difficultfor them to meet their obligations to us. We are therefore subject to risks of loss resulting from nonpayment or nonperformance by our customers. Severe financialproblems encountered by our customers could limit our ability to collect amounts owed to us, or to enforce the performance of obligations owed to us undercontractual arrangements. In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by suchcustomer, and we may be forced to cancel all or a portion of our contracts with such customer at significant expense to us.In addition, nonperformance by suppliers or vendors who have committed to provide us with critical products or services could raise our costs or interferewith our ability to successfully conduct our business.Our recent and future acquisitions may not be successful, may substantially increase our indebtedness and contingent liabilities and may create integrationdifficulties.We may not be able to successfully integrate recent or any future acquisitions into our existing operations or achieve the desired profitability from suchacquisitions. These acquisitions may require substantial capital expenditures and the incurrence of additional indebtedness. If we make acquisitions, ourcapitalization and results of operations may change significantly. Further, any acquisition could result in:•post-closing discovery of material undisclosed liabilities of the acquired business orassets;•the unexpected loss of key employees or customers from the acquiredbusinesses;•difficulties resulting from our integration of the operations, systems and management of the acquired business;and•an unexpected diversion of our management's attention from otheroperations.If recent or any future acquisitions are unsuccessful or result in unanticipated events or if we are unable to successfully integrate acquisitions into ourexisting operations, such acquisitions could adversely affect our results of operations, cash flow and ability to make distributions to our unitholders.Our and our customers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs andreduced demand for our services.The threat of climate change continues to attract considerable attention in the United States and in foreign countries. Numerous proposals have been madeand could continue to be made at the international, national, regional, and state levels to monitor and limit existing emissions of greenhouse gases ("GHGs") aswell as to restrict or eliminate such future emissions. As a result, our operations, as well as the operations of our customers, are subject to a series of regulatory,political, financial, and litigation risks associated with the processing, terminalling, storage, and transportation of fossil fuels, petroleum products, and emission ofGHGs.26In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, the EPA has adopted rules that,among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring andannual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and implement New Source PerformanceStandards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, including midstream sources.However, while many states continue to implement regulations to control emissions of methane, the future of federal regulation of methane emissions is in doubt asa result of recent actions by the EPA. Despite potential changes with respect to the federal regulation of GHGs, various states and groups of states have adopted orare considering adopting legislation, regulations, or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes,reporting and tracking programs, and various other measures that would restrict emissions of GHGs from different industrial sectors. At the international level,pursuant to the non-binding United Nations-sponsored Paris Agreement, over 180 nations have committed to limit their GHG emissions through individually-determined reduction goals every five years after 2020, although the United States has announced its withdrawal from such agreement, effective November 4,2020. Such state, federal, and international regulatory measures have the potential to increase our operating costs through direct regulation of GHG emissionsresulting from our operations, and could also indirectly adversely affect our operations by decreasing demand for our services and products.Additionally, there are increasing potential financial risks for fossil fuel energy companies as environmental activists concerned about the potentialeffects of climate change are focusing intensive lobbying efforts on institutional lenders, including financial institutions and institutional investors, not to providefunding to such companies. Institutional lenders may, of their own accord, elect not to provide funding to fossil fuel energy companies based on climate changeconcerns. Limitation of investments in fossil fuel energy companies could result in the restriction, delay, or cancellation of drilling programs or development orproduction activities of our customers, and, consequently, reduce their demand for our services. Separately, increased attention to climate change risks has increased the possibility of claims brought by public and private entities against energycompanies in connection with their GHG emissions and alleged damages resulting from the alleged physical impacts of climate change, such as flooding, coastalerosion, and severe weather events. While courts have generally declined to assign direct liability for climate change to large sources of GHG emissions, newclaims for damages and increased government scrutiny, especially from state and local governments, will likely continue. While we are not currently party to anysuch private litigation, we could be named in future actions making similar claims of liability. Moreover, societal pressures or political or other factors may shapethe success of such claims, without regard to the company’s causation of or contribution to the asserted damage, or to other mitigating factors.The adoption and implementation of new or more stringent international, federal, or state legislation, regulations, or other regulatory initiatives thatimpose more stringent standards for GHG emissions from oil and natural gas producers or their midstream services providers such as ourselves could result inincreased costs of compliance or costs of consuming, and thereby reduce demand for or erode value for, the petroleum products and by-products that we process,store and transport. Additionally, political, financial, and litigation risks may result in our customers restricting or cancelling oil and natural gas productionactivities, which could result in reduced demand for our services. We may also suffer claims for infrastructure damages allegedly caused by climactic changes orbe unable to continue to operate in an economic manner. One or more of these developments could have a material adverse effect on our business, financialcondition, results of operations and cash flows.Subsidence and coastal erosion could damage our facilities along the U.S. Gulf Coast and offshore and the facilities of our customers, which could adverselyaffect our operations and financial condition.Our assets and operations along the U.S. Gulf Coast and offshore could be impacted by subsidence and coastal erosion. Such processes potentially couldcause serious damage to our terminal facilities, which could affect our ability to provide our processing, terminalling, storage and transportation services in themanner presently provided or in a manner consistent with our present plans. Additionally, such processes could impact our customers who operate along the U.S.Gulf Coast, and they may be unable to utilize our services. Subsidence and coastal erosion could also expose our operations to increased risk associated withsevere weather conditions, such as hurricanes, flooding, and rising sea levels. As a result, we may incur significant costs to repair and preserve our facilities. Suchcosts could adversely affect our business, financial condition, results of operations, and cash flows.Adverse weather conditions, including droughts, hurricanes, tropical storms and other severe weather, could reduce our results of operations and ability tomake distributions to our unitholders.Our distribution network and operations are primarily concentrated in the U.S. Gulf Coast region and along the Mississippi River inland waterway.Weather in these regions is sometimes severe (including tropical storms and hurricanes) and can be a major factor in our day-to-day operations. Our marinetransportation operations can be significantly delayed,27impaired or postponed by adverse weather conditions, such as fog in the winter and spring months and certain river conditions. Additionally, our marinetransportation operations and our assets in the Gulf of Mexico, including our barges, push boats, tugboats and terminals, can be adversely impacted or damaged byhurricanes, tropical storms, tidal waves or other related events. Demand for our lubricants and the diesel fuel we throughput in our Terminalling and Storagesegment can be affected if offshore drilling operations are disrupted by weather in the Gulf of Mexico.National weather conditions have a substantial impact on the demand for our products. Unusually warm weather during the winter months can cause asignificant decrease in the demand for NGL products. Likewise, extreme weather conditions (either wet or dry) has in recent years decreased the demand forfertilizer. For example, an unusually wet spring can delay planting of seeds, which can leave insufficient time to apply fertilizer at the planting stage. Conversely,drought conditions can kill or severely stunt the growth of crops, thus eliminating the need to nurture plants with fertilizer. Any of these or similar conditions couldresult in a decline in our net income and cash flow, which would reduce our ability to make distributions to our unitholders.If we incur material liabilities that are not fully covered by insurance, such as liabilities resulting from accidents on rivers or at sea, spills, fires or explosions,our results of operations and ability to make distributions to our unitholders could be adversely affected.Our operations are subject to the operating hazards and risks incidental to terminalling and storage, marine transportation and the distribution of petroleumproducts and by-products and other industrial products. These hazards and risks, many of which are beyond our control, include:•accidents on rivers or at sea and other hazards that could result in releases, spills and other environmental damages, personal injuries, loss of lifeand suspension of operations;•leakage of NGLs and other petroleum products and by-products;•fires and explosions;•damage to transportation, terminalling and storage facilities and surrounding properties caused by natural disasters;and•terrorist attacks or sabotage.Our insurance coverage may not be adequate to protect us from all material expenses related to potential future claims for personal-injury and propertydamage, including various legal proceedings and litigation resulting from these hazards and risks. If we incur material liabilities that are not covered by insurance,our operating results, cash flow and ability to make distributions to our unitholders could be adversely affected.Changes in the insurance markets attributable to the effects of hurricanes and their aftermath may make some types of insurance more difficult orexpensive for us to obtain. As a result, we may be unable to secure the levels and types of insurance we would otherwise have secured prior to such events.Moreover, the insurance that may be available to us may be significantly more expensive than our existing insurance coverage.The price volatility of petroleum products and by-products could reduce our liquidity and results of operations and ability to make distributions to ourunitholders.We purchase petroleum products and by-products, such as molten sulfur, fuel oils, NGLs (including normal butane), lubricants, and other bulk liquids andsell these products to wholesale and bulk customers and to other end users. We also generate revenues through the terminalling and storage of certain products forthird parties. The price and market value of petroleum products and by-products could be, and has recently been, volatile. Our liquidity and revenues have beenadversely affected by this volatility during periods of decreasing prices because of the reduction in the value and resale price of our inventory. In addition, ourliquidity and costs have been adversely affected during periods of increasing prices because of the increased costs associated with our purchase of petroleumproducts and by-products. Future price volatility could have an adverse impact on our liquidity and results of operations, cash flow and ability to makedistributions to our unitholders.28Increasing energy prices could adversely affect our results of operations.Increasing energy prices could adversely affect our results of operations. Diesel fuel, natural gas, chemicals and other supplies are recorded in operatingexpenses. An increase in price of these products would increase our operating expenses, which could adversely affect our results of operations including netincome and cash flows. We cannot assure unitholders that we will be able to pass along increased operating expenses to our customers.Decreasing energy prices could adversely affect our results of operations.Decreasing energy prices could adversely affect our results of operations. If commodity prices remain weak for a sustained period, our terminallingthroughput and NGL volumes may be negatively impacted, particularly as producers are curtailing or redirecting drilling, adversely affecting our results ofoperations. A sustained decline in commodity prices could result in a decrease in activity in the areas served by certain of our terminalling and storage and marinetransportation assets resulting in reduced utilization of these assets.Our NGL and sulfur-based fertilizer products are subject to seasonal demand and could cause our revenues to vary.The demand for NGLs is highest in the winter. Therefore, revenue from our NGL business is higher in the winter than in other seasons. Our sulfur-basedfertilizer products experience an increase in demand during the spring, which increases the revenue generated by this business line in this period compared to otherperiods. The seasonality of the revenue from these products may cause our results of operations to vary on a quarter-to-quarter basis and thus could cause our cashavailable for quarterly distributions to fluctuate from period to period.The highly competitive nature of our industry could adversely affect our results of operations and ability to make distributions to our unitholders.We operate in a highly competitive marketplace in each of our primary business segments. Most of our competitors in each segment are larger companieswith greater financial and other resources than we possess. We may lose customers and future business opportunities to our competitors and any such losses couldadversely affect our results of operations and ability to make distributions to our unitholders.Our business is subject to compliance with environmental laws and regulations that could expose us to significant costs and liabilities and adversely affect ourresults of operations and ability to make distributions to our unitholders.Our business is subject to federal, state and local environmental laws and regulations governing the discharge of materials into the environment orotherwise relating to protection of human health, natural resources and the environment. These laws and regulations may impose numerous obligations that areapplicable to our operations, such as: requiring the acquisition of permits to conduct regulated activities; restricting the manner in which we can release materialsinto the environment; requiring remedial activities or capital expenditures to mitigate pollution from former or current operations; and imposing substantialliabilities on us for pollution resulting from our operations. Numerous governmental authorities, such as the U.S. EPA and analogous state agencies, have thepower to enforce compliance with these laws and regulations and the permits issued under them, oftentimes requiring difficult and costly actions. Manyenvironmental laws and regulations can impose joint and several strict liability, and any failure to comply with environmental laws, regulations and permits mayresult in the assessment of administrative, civil and criminal penalties, the imposition of investigatory and remedial obligations and, in some circumstances, theissuance of injunctions that can limit or prohibit our operations. The clear trend in environmental regulation is to place more restrictions and limitations onactivities that may affect the environment, and, thus, any changes in environmental laws and regulations that result in more stringent and costly waste handling,storage, transport, disposal or remediation requirements could have a material adverse effect on our operations and financial position.The loss or insufficient attention of key personnel could negatively impact our results of operations and ability to make distributions to our unitholders.Our success is largely dependent upon the continued services of members of the senior management team of Martin Resource Management Corporation.Those senior officers have significant experience in our businesses and have developed strong relationships with a broad range of industry participants. The loss ofany of these executives could have a material adverse effect on our relationships with these industry participants, our results of operations and our ability to makedistributions to our unitholders.29We do not have employees. We rely solely on officers and employees of Martin Resource Management Corporation to operate and manage our business.Martin Resource Management Corporation operates businesses and conducts activities of its own in which we have no economic interest. There could becompetition for the time and effort of the officers and employees who provide services to our general partner. If these officers and employees do not or cannotdevote sufficient attention to the management and operation of our business, our results of operations and ability to make distributions to our unitholders may bereduced.Our loss of significant commercial relationships with Martin Resource Management Corporation could adversely impact our results of operations and abilityto make distributions to our unitholders.Martin Resource Management Corporation provides us with various services and products pursuant to various commercial contracts. The loss of any ofthese services and products provided by Martin Resource Management Corporation could have a material adverse impact on our results of operations, cash flowand ability to make distributions to our unitholders. Additionally, we provide terminalling and storage, processing and marine transportation services to MartinResource Management Corporation to support its businesses under various commercial contracts. The loss of Martin Resource Management Corporation as acustomer could have a material adverse impact on our results of operations, cash flow and ability to make distributions to our unitholders.Our business could be adversely affected if operations at our transportation, terminalling and storage and distribution facilities experienced significantinterruptions. Our business could also be adversely affected if the operations of our customers and suppliers experienced significant interruptions.Our operations are dependent upon our terminalling and storage facilities and various means of transportation. We are also dependent upon theuninterrupted operations of certain facilities owned or operated by our suppliers and customers. Any significant interruption at these facilities or inability totransport products to or from these facilities or to or from our customers for any reason would adversely affect our results of operations, cash flow and ability tomake distributions to our unitholders. Operations at our facilities and at the facilities owned or operated by our suppliers and customers could be partially orcompletely shut down, temporarily or permanently, as the result of any number of circumstances that are not within our control, such as:•catastrophic events, includinghurricanes;•environmental remediation;•labor difficulties; and•disruptions in the supply of our products to our facilities or means oftransportation.Additionally, terrorist attacks and acts of sabotage could target oil and gas production facilities, refineries, processing plants, terminals and otherinfrastructure facilities. Any significant interruptions at our facilities, facilities owned or operated by our suppliers or customers, or in the oil and gas industry as awhole caused by such attacks or acts could have a material adverse effect on our results of operations, cash flow and ability to make distributions to ourunitholders.NASDAQ does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements, and therefore, unitholders donot have the same protections afforded to shareholders of corporations subject to all NASDAQ requirements. Because we are a publicly traded partnership, the Nasdaq Global Select Market ("NASDAQ") does not require our general partner to have a majority ofindependent directors on its board of directors or to establish a compensation committee or nominating and corporate governance committee. Accordingly,unitholders do not have the same protections afforded to certain corporations that are subject to all of NASDAQ corporate governance requirements.Our marine transportation business could be adversely affected if we do not satisfy the requirements of the Jones Act or if the Jones Act were modified oreliminated.The Jones Act is a federal law that restricts domestic marine transportation in the U.S. to vessels built and registered in the U.S. Furthermore, the JonesAct requires that the vessels be manned and owned by U.S. citizens. If we fail to comply with these requirements, our vessels lose their eligibility to engage incoastwise trade within U.S. domestic waters.30The requirements that our vessels be U.S. built and manned by U.S. citizens, the crewing requirements and material requirements of the Coast Guard andthe application of U.S. labor and tax laws significantly increase the costs of U.S. flagged vessels when compared with foreign-flagged vessels. During the pastseveral years, certain interest groups have lobbied Congress to repeal the Jones Act to facilitate foreign flag competition for trades and cargoes reserved for U.S.flagged vessels under the Jones Act and cargo preference laws. If the Jones Act were to be modified to permit foreign competition that would not be subject to thesame U.S. government imposed costs, we may need to lower the prices we charge for our services in order to compete with foreign competitors, which wouldadversely affect our cash flow and ability to make distributions to our unitholders.Our marine transportation business could be adversely affected if the U.S. Government purchases or requisitions any of our vessels under the MerchantMarine Act.We are subject to the Merchant Marine Act of 1936, which provides that, upon proclamation by the U.S. President of a national emergency or a threat tothe national security, the U.S. Secretary of Transportation may requisition or purchase any vessel or other watercraft owned by U.S. citizens (including us,provided that we are considered a U.S. citizen for this purpose). If one of our push boats, tugboats or tank barges were purchased or requisitioned by the U.S.government under this law, we would be entitled to be paid the fair market value of the vessel in the case of a purchase or, in the case of a requisition, the fairmarket value of charter hire. However, if one of our push boats or tugboats is requisitioned or purchased and its associated tank barge is left idle, we would not beentitled to receive any compensation for the lost revenues resulting from the idled barge. We also would not be entitled to be compensated for any consequentialdamages we suffer as a result of the requisition or purchase of any of our push boats, tugboats or tank barges. If any of our vessels are purchased or requisitionedfor an extended period of time by the U.S. government, such transactions could have a material adverse effect on our results of operations, cash flow and ability tomake distributions to our unitholders.Changes in transportation regulations may increase our costs and negatively impact our results of operations. We are subject to various transportation regulations by the U.S. Department of Transportation and analogous state agencies, whose regulations includecertain permit requirements of highway and safety authorities. These regulatory authorities exercise broad powers over our trucking operations, generallygoverning such matters as the authorization to engage in motor carrier operations, safety, equipment testing, driver requirements and specifications, and insurancerequirements. The trucking industry is subject to possible regulatory and legislative changes that may impact our operations, such as changes in fuel emissionslimits, hours of service regulations that govern the amount of time a driver may drive or work in any specific period, and limits on vehicle weight and size. As thefederal government continues to develop and propose regulations relating to fuel quality, engine efficiency and greenhouse gas emissions, we may experience anincrease in costs related to truck purchases and maintenance, impairment of equipment productivity, a decrease in the residual value of vehicles, and an increase inoperating expenses. Increased truck traffic may contribute to deteriorating road conditions in some areas where we operate. Our operations could also be affectedby road construction, road repairs, detours and state and local regulations and ordinances restricting access to certain roads. Proposals to increase federal, state, orlocal taxes, including taxes on motor fuels, are also made from time to time, and any such increase could increase our operating costs. Additionally, state and localregulation of permitted routes and times on specific roadways could adversely affect our operations. We cannot predict whether, or in what form, any legislative orregulatory changes or municipal ordinances applicable to our trucking operations will be enacted or to what extent any such legislation or regulations couldincrease our costs or otherwise adversely affect our business or operations.Our interest rate swap activities could have a material adverse effect on our earnings, profitability, liquidity, cash flows and financial condition.We enter into interest rate swap agreements from time to time to manage some of our exposure to interest rate volatility. These swap agreements involverisks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective inreducing our exposure to changes in interest rates. When we use forward-starting interest rate swaps, there is a risk that we will not complete the long-termborrowing against which the swap is intended to hedge. If such events occur, our results of operations may be adversely affected.The industry in which we operate is highly competitive, and increased competitive pressure could adversely affect our business and operating results.We compete with similar enterprises in our respective areas of operation. Some of our competitors are large oil, natural gas and petrochemical companiesthat have greater financial resources and access to supplies of NGLs than we do. Our31customers who produce NGLs may develop their own systems to transport NGLs in lieu of using ours. Our ability to renew or replace existing contracts with ourcustomers at rates sufficient to maintain current revenues and cash flows could be adversely affected by the activities of our competitors and our customers. All ofthese competitive pressures could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions toour unitholders.Information technology systems present potential targets for cyber security attacks, which could adversely affect our business. We are reliant on technology to improve efficiency in our business. Information technology systems are critical to our operations. These systems could bea potential target for a cyber security attack as they are used to store and process sensitive information regarding our operations, financial position, and informationpertaining to our customers and vendors. While we take the utmost precautions, we cannot guarantee safety from all threats and attacks. Any successful breach ofsecurity could result in the spread of inaccurate or confidential information, disruption of operations, environmental harm, endangerment of employees, damage toour assets, and increased costs to respond. Any of these instances could have a negative impact on cash flows, litigation status and/or our reputation, which couldhave a material adverse affect on our business, financial conditions and operations. While we make significant investments in technology security and we carefullyevaluate the security of selected cloud system providers and cloud storage providers, there can be no guarantee that information security efforts will be totallyeffective.Risks Relating to an Investment in the Common UnitsUnits available for future sales by us or our affiliates could have an adverse impact on the price of our common units or on any trading market that maydevelop.Common units will generally be freely transferable without restriction or further registration under the Securities Act, except that any common units heldby an "affiliate" of ours may not be resold publicly except in compliance with the registration requirements of the Securities Act or under an exemption under Rule144 or otherwise.Our partnership agreement provides that we may issue an unlimited number of limited partner interests of any type without a vote of the unitholders. Ourgeneral partner may also cause us to issue an unlimited number of additional common units or other equity securities of equal rank with the common units, withoutunitholder approval, in a number of circumstances such as:•the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, perunit basis;•the conversion of subordinated units into commonunits;•the conversion of units of equal rank with the common units into common units under some circumstances;or•the conversion of our general partner's general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal ofour general partner.Our partnership agreement does not restrict our ability to issue equity securities ranking junior to the common units at any time. Any issuance ofadditional common units or other equity securities would result in a corresponding decrease in the proportionate ownership interest in us represented by, and couldadversely affect the cash distributions to and market price of, common units then outstanding.Under our partnership agreement, our general partner and its affiliates have the right to cause us to register under the Securities Act and applicable statesecurities laws the offer and sale of any units that they hold. Subject to the terms and conditions of our partnership agreement, these registration rights allow thegeneral partner and its affiliates or their assignees holding any units to require registration of any of these units and to include any of these units in a registration byus of other units, including units offered by us or by any unitholder. Our general partner will continue to have these registration rights for two years following itswithdrawal or removal as a general partner. In connection with any registration of this kind, we will indemnify each unitholder participating in the registration andits officers, directors, and controlling persons from and against any liabilities under the Securities Act or any applicable state securities laws arising from theregistration statement or prospectus. Except as described below, the general partner and its affiliates may sell their units in private transactions at any32time, subject to compliance with applicable laws. Our general partner and its affiliates, with our concurrence, have granted comparable registration rights to theirbank group to which their partnership units have been pledged.The sale of any common or subordinated units could have an adverse impact on the price of the common units or on any trading market that may develop.Unitholders have less power to elect or remove management of our general partner than holders of common stock in a corporation. It is unlikely that ourcommon unitholders will have sufficient voting power to elect or remove our general partner without the consent of Martin Resource ManagementCorporation and its affiliates.Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and therefore limitedability to influence management's decisions regarding our business. Unitholders did not elect our general partner or its directors and will have no right to elect ourgeneral partner or its directors on an annual or other continuing basis. Holdings, the sole member of MMGP, elects the board of directors of our general partner.If unitholders are dissatisfied with the performance of our general partner, they will have a limited ability to remove our general partner. Our generalpartner generally may not be removed except upon the vote of the holders of at least 66 2/3% of the outstanding units voting together as a single class. As ofDecember 31, 2019, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units.Unitholders' voting rights are further restricted by our partnership agreement provision prohibiting any units held by a person owning 20% or more of anyclass of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of ourgeneral partner's directors, from voting on any matter. In addition, our partnership agreement contains provisions limiting the ability of unitholders to call meetingsor to acquire information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management.As a result of these provisions, it will be more difficult for a third party to acquire our partnership without first negotiating the acquisition with our generalpartner. Consequently, it is unlikely the trading price of our common units will ever reflect a takeover premium.Our general partner's discretion in determining the level of our cash reserves may adversely affect our ability to make cash distributions to our unitholders.Our partnership agreement requires our general partner to deduct from operating surplus cash reserves that it determines in its reasonable discretion to benecessary to fund our future operating expenditures. In addition, our partnership agreement permits our general partner to reduce available cash by establishingcash reserves for the proper conduct of our business, to comply with applicable law or agreements to which we are a party, or to provide funds for futuredistributions to partners. These cash reserves will affect the amount of cash available for distribution to our unitholders.Unitholders may not have limited liability if a court finds that we have not complied with applicable statutes or that unitholder action constitutes control ofour business.The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in somestates. The holder of one of our common units could be held liable in some circumstances for our obligations to the same extent as a general partner if a court wereto determine that:•we had been conducting business in any state without compliance with the applicable limited partnership statute;or•the right or the exercise of the right by our unitholders as a group to remove or replace our general partner, to approve some amendments to ourpartnership agreement, or to take other action under our partnership agreement constituted participation in the "control" of our business.Our general partner generally has unlimited liability for our obligations, such as our debts and environmental liabilities, except for our contractualobligations that are expressly made without recourse to our general partner. In addition, under some circumstances, a unitholder may be liable to us for the amountof a distribution for a period of nine years from the date of the distribution.33Our partnership agreement contains provisions that reduce the remedies available to unitholders for actions that might otherwise constitute a breach offiduciary duty by our general partner.Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner to the unitholders. Our partnership agreement alsorestricts the remedies available to unitholders for actions that would otherwise constitute breaches of our general partner's fiduciary duties. For example, ourpartnership agreement:•permits our general partner to make a number of decisions in its "sole discretion." This entitles our general partner to consider only the interestsand factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates orany limited partner;•provides that our general partner is entitled to make other decisions in its "reasonable discretion," which may reduce the obligations to which ourgeneral partner would otherwise be held;•generally provides that affiliated transactions and resolutions of conflicts of interest not involving a required vote of unitholders must be "fairand reasonable" to us and that, in determining whether a transaction or resolution is "fair and reasonable," our general partner may consider theinterests of all parties involved, including its own; and•provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees forerrors of judgment or for any acts or omissions if our general partner and those other persons acted in good faith.Unitholders are treated as having consented to the various actions contemplated in our partnership agreement and conflicts of interest that mightotherwise be considered a breach of fiduciary duties under applicable state law.We may issue additional common units without unitholder approval, which would dilute unitholder ownership interests.Our general partner may also cause us to issue an unlimited number of additional common units or other equity securities of equal rank with the commonunits, without unitholder approval, in a number of circumstances such as:•the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a proforma, per unit basis;•the conversion of subordinated units into commonunits;•the conversion of units of equal rank with the common units into common units under some circumstances;or•the conversion of our general partner's general partner interest in us and its incentive distribution rights into common units as a result of thewithdrawal of our general partner.We may issue an unlimited number of limited partner interests of any type without the approval of our unitholders. Our partnership agreement does notgive our unitholders the right to approve our issuance of equity securities ranking junior to the common units at any time.The issuance of additional common units or other equity securities of equal or senior rank will have the following effects:•our unitholders' proportionate ownership interest in us willdecrease;•the amount of cash available for distribution on a per unit basis maydecrease;•because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimumquarterly distribution will be borne by our common unitholders will increase;•the relative voting strength of each previously outstanding unit will diminish;•the market price of the common units may decline;and34•the ratio of taxable income to distributions mayincrease.The control of our general partner may be transferred to a third party and that party could replace our current management team, without unitholder consent.Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assets without theconsent of the unitholders. Furthermore, there is no restriction in our partnership agreement on the ability of the owner of our general partner to transfer itsownership interest in our general partner to a third party. A new owner of our general partner could replace the directors and officers of our general partner with itsown designees and control the decisions taken by our general partner.Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right, but not theobligation, which it may assign to any of its affiliates or to us, to acquire all, but not less than all, of the remaining common units held by unaffiliated persons at aprice not less than the then-current market price. As a result, unitholders may be required to sell their common units at an undesirable time or price and may notreceive any return on their investment. Unitholders may also incur a tax liability upon a sale of their units. No provision in our partnership agreement, or in anyother agreement we have with our general partner or Martin Resource Management Corporation, prohibits our general partner or its affiliates from acquiring morethan 80% of our common units. For additional information about this call right and unitholders' potential tax liability, please see "Risk Factors-Tax Risks-Tax gainor loss on the disposition of our common units could be different than expected."Our common units have a limited trading volume compared to other publicly traded securities.Our common units are quoted on the NASDAQ under the symbol "MMLP." However, daily trading volumes for our common units are, and may continueto be, relatively small compared to many other securities quoted on the NASDAQ. The price of our common units may, therefore, be volatile.Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect onour unit price.In order to comply with Section 404 of the Sarbanes-Oxley Act, we periodically document and test our internal control procedures. Section 404 of theSarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal controls over financial reporting addressing these assessments.During the course of our testing we may identify deficiencies, which we may not be able to address in time to meet the deadline imposed by the Sarbanes-OxleyAct for compliance with the requirements of Section 404. In addition, if we fail to maintain the adequacy of our internal controls, as such standards are modified,supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls overfinancial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Failure to achieve and maintain an effective internal control environment could havea material adverse effect on the price of our common units.Risks Relating to Our Relationship with Martin Resource Management CorporationCash reimbursements due to Martin Resource Management Corporation may be substantial and will reduce our cash available for distribution to ourunitholders.Under our Omnibus Agreement with Martin Resource Management Corporation, Martin Resource Management Corporation provides us with corporatestaff and support services on behalf of our general partner that are substantially identical in nature and quality to the services it conducted for our business prior toour formation. The Omnibus Agreement requires us to reimburse Martin Resource Management Corporation for the costs and expenses it incurs in rendering theseservices, including an overhead allocation to us of Martin Resource Management Corporation's indirect general and administrative expenses from its corporateallocation pool. These payments may be substantial. Payments to Martin Resource Management Corporation will reduce the amount of available cash fordistribution to our unitholders.Martin Resource Management Corporation has conflicts of interest and limited fiduciary responsibilities, which may permit it to favor its own interests to thedetriment of our unitholders.35As of December 31, 2019, Martin Resource Management Corporation owned 15.7% of our total outstanding common limited partner units and a 51%voting interest in Holdings, the sole member of MMGP. MMGP owns a 2% general partnership interest in us and all of our incentive distribution rights. Conflictsof interest may arise between Martin Resource Management Corporation and our general partner, on the one hand, and our unitholders, on the other hand. As aresult of these conflicts, our general partner may favor its own interests and the interests of Martin Resource Management Corporation over the interests of ourunitholders. Potential conflicts of interest between us, Martin Resource Management Corporation and our general partner could occur in many of our day-to-dayoperations including, among others, the following situations:•Officers of Martin Resource Management Corporation who provide services to us also devote significant time to the businesses of MartinResource Management Corporation and are compensated by Martin Resource Management Corporation for that time;•Neither our partnership agreement nor any other agreement requires Martin Resource Management Corporation to pursue a business strategythat favors us or utilizes our assets or services. Martin Resource Management Corporation's directors and officers have a fiduciary duty to makethese decisions in the best interests of the shareholders of Martin Resource Management Corporation without regard to the best interests of theunitholders;•Martin Resource Management Corporation may engage in limited competition withus;•Our general partner is allowed to take into account the interests of parties other than us, such as Martin Resource Management Corporation, inresolving conflicts of interest, which has the effect of reducing its fiduciary duty to our unitholders;•Under our partnership agreement, our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remediesavailable to our unitholders for actions that, without the limitations and reductions, might constitute breaches of fiduciary duty. As a result ofpurchasing units, our unitholders will be treated as having consented to some actions and conflicts of interest that, without such consent, mightotherwise constitute a breach of fiduciary or other duties under applicable state law;•Our general partner determines which costs incurred by Martin Resource Management Corporation are reimbursable byus;•Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms thatare fair and reasonable to us or from entering into additional contractual arrangements with any of these entities on our behalf;•Our general partner controls the enforcement of obligations owed to us by Martin Resource ManagementCorporation;•Our general partner decides whether to retain separate counsel, accountants or others to perform services forus;•The audit committee of our general partner retains our independentauditors;•In some instances, our general partner may cause us to borrow funds to permit us to pay cash distributions, even if the purpose or effect of theborrowing is to make incentive distributions; and•Our general partner has broad discretion to establish financial reserves for the proper conduct of our business. These reserves also will affect theamount of cash available for distribution.Martin Resource Management Corporation and its affiliates may engage in limited competition with us.Martin Resource Management Corporation and its affiliates may engage in limited competition with us. For a discussion of the non-competitionprovisions of the Omnibus Agreement, please see "Item 13. Certain Relationships and Related Transactions, and Director Independence." If Martin ResourceManagement Corporation does engage in competition with us, we may lose customers or business opportunities, which could have an adverse impact on our resultsof operations, cash flow and ability to make distributions to our unitholder allocations.36If Martin Resource Management Corporation were ever to file for bankruptcy or otherwise default on its obligations under its credit facility, amounts we oweunder our credit facility may become immediately due and payable and our results of operations could be adversely affected.If Martin Resource Management Corporation were ever to commence or consent to the commencement of a bankruptcy proceeding or otherwise defaulton its obligations under its credit facility, its lenders could foreclose on its pledge of the interests in our general partner and take control of our general partner. IfMartin Resources Management no longer controls our general partner, the lenders under our credit facility may declare all amounts outstanding thereunderimmediately due and payable. In addition, either a judgment against Martin Resource Management Corporation or a bankruptcy filing by or against MartinResource Management Corporation could independently result in an event of default under our credit facility if it could reasonably be expected to have a materialadverse effect on us. If our lenders do declare us in default and accelerate repayment, we may be required to refinance our debt on unfavorable terms, which couldnegatively impact our results of operations and our ability to make distributions to our unitholders. A bankruptcy filing by or against Martin Resource ManagementCorporation could also result in the termination or material breach of some or all of the various commercial contracts between us and Martin ResourceManagement Corporation, which could have a material adverse impact on our results of operations, cash flow and ability to make distributions to our unitholders.Tax RisksThe U.S. Internal Revenue Service ("IRS") could treat us as a corporation for tax purposes, which would substantially reduce the cash available fordistribution to unitholders.The anticipated after-tax economic benefit of an investment in us depends largely on our classification as a partnership for federal income tax purposes.We have not requested a ruling from the IRS on this matter.Despite the fact that we are organized as a limited partnership under Delaware law, it is possible in certain circumstances for a partnership such as ours tobe treated as a corporation for federal income tax purposes. In order for us to be classified as a partnership for U.S. federal income tax purposes, more than 90% ofour gross income each year must be "qualifying income" under Section 7704 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"). "Qualifyingincome" includes income and gains derived from the exploration, development, mining or production, processing, refining, transportation, or marketing ofminerals or natural resources, including crude oil, natural gas and products thereof. Other types of qualifying income include interest (other than from a financialbusiness), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income thatotherwise constitutes qualifying income.Although we intend to meet this gross income requirement, we may not find it possible, regardless of our efforts, to meet this gross income requirementor may inadvertently fail to meet this gross income requirement. If we do not meet this gross income requirement for any taxable year and the IRS does notdetermine that such failure was inadvertent, we would be treated as a corporation for such taxable year and each taxable year thereafter.If we were treated as a corporation for federal income tax purposes, we would owe federal income tax on our income at the corporate tax rate, which iscurrently a maximum of 21%, and would likely owe state income tax at varying rates. Distributions would generally be taxed again to unitholders as corporatedistributions and no income, gains, losses, or deductions would flow through to unitholders. Because a tax would be imposed upon us as an entity, cash availablefor distribution to unitholders would be reduced. Treatment of us as a corporation would result in a reduction in the anticipated cash flow and after-tax return tounitholders and therefore would likely result in a reduction in the value of the common units.Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as acorporation or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes, then the minimum quarterly distribution amount and thetarget distribution amount will be adjusted to reflect the impact of that law on us.The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes anddiffering interpretations, possibly on a retroactive basis.The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units, may be modified byadministrative, legislative or judicial interpretation at any time.37At the federal level, members of Congress and the President of the United States have periodically considered substantive changes to the existing U.S. taxlaws that would have affected certain publicly traded partnerships, including the elimination of partnership tax treatment for publicly traded partnerships. At thestate level, because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation throughthe imposition of state income, franchise and other forms of taxation. For example, we are required to pay a Texas margin tax at a maximum effective rate of0.525% of our gross income apportioned to Texas in the prior year. Imposition of any such tax on us by any other state will reduce the cash available fordistribution to our unitholders.Any modification to the tax laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible tomeet the exception pursuant to which we are treated as a partnership for U.S. federal income tax purposes that is not taxable as a corporation, affect or cause us tochange our business activities, affect the tax considerations of an investment in us, change the character or treatment of portions of our income and adversely affectan investment in our common units. We are unable to predict whether any of these changes or other proposals will ultimately be enacted. Any such changes couldnegatively impact the value of an investment in our common units.On January 24, 2017, the U.S. Department of the Treasury issued final regulations (the "Final Regulations") regarding qualifying income under Section7704(d)(1)(E) of the Code which relates to the qualifying income exception upon which we rely for partnership tax treatment. The Final Regulations apply toincome earned in a taxable year beginning on or after January 19, 2017. The Final Regulations include "reserved" paragraphs for fertilizer and hedging, which theU.S. Department of the Treasury plans to address in future proposed and final Treasury regulations ("Treasury regulations"). We are unable to predict how suchfuture regulations may treat fertilizer or hedging activities, but such regulations could impact our ability to treat certain activities as generating qualifying income.The Final Regulations provide for a ten year transition period during which certain taxpayers that either obtained a favorable private letter ruling or treated incomeunder a reasonable interpretation of the statute or prior proposed regulations as qualifying income may continue to treat such income as qualifying income. Wehave obtained favorable private letter rulings from the IRS in the past as to what constitutes "qualifying income" within the meaning of Section 7704(d)(1)(E) ofthe Code and we expect to rely upon these private letter rulings for purposes of the ten year transition rule contained in the Final Regulations. With respect to someof these private letter rulings, the income that we derived from certain affected activities will be treated as qualifying income only until the end of the ten yeartransition period. Thus, at this time and through the transition period, we believe that the Final Regulations will not significantly impact the amount of our grossincome that we are able to treat as qualifying income.A successful IRS contest of the federal income tax positions we take could adversely affect the market for our common units and the costs of any contest willbe borne by our unitholders, debt security holders and our general partner.We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes or any other matter affectingus. The IRS may adopt positions that differ from the positions we take and our counsel's conclusions. It may be necessary to resort to administrative or courtproceedings to sustain some or all of our counsel's conclusions or the positions we take. A court may not agree with some or all our counsel's conclusions or thepositions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the prices at which they trade. In addition,the costs of any contest with the IRS will be borne directly or indirectly by all of our unitholders, debt security holders and our general partner.If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it may assess and collect any taxes (includingany applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to ourunitholders might be substantially reduced.Pursuant to the Bipartisan Budget Act of 2015, for taxable years beginning after December 31, 2017, if the IRS makes audit adjustments to our incometax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. Similarly,for such taxable years, if the IRS makes audit adjustments to income tax returns filed by an entity in which we are a member or partner, the IRS may assess andcollect any taxes (including penalties and interest) resulting from such audit adjustment directly from such entity. Generally, we expect to elect to have ourunitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, but there can be no assurance that suchelection will be effective in all circumstances. If we are unable to have our unitholders take such audit adjustment into account in accordance with their interests inus during the tax year under audit, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholdersdid not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties andinterest as a result of audit adjustments cash available for distribution to our unitholders may be substantially reduced. These rules are not applicable to us for taxyears beginning on or prior to December 31, 2017.38Additionally, pursuant to the Bipartisan Budget Act of 2015, we are no longer required to designate a "tax matters partner." Instead, for taxable yearsbeginning after December 31, 2017, we are required to designate a partner, or other person, with a substantial presence in the United States as the partnershiprepresentative ("Partnership Representative"). The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things,U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. We have designated our general partner as our PartnershipRepresentative. Further, any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, federal income tax auditsand judicial review of administrative adjustments by the IRS, will be binding on us and all of our unitholders.Unitholders may be required to pay taxes on income from us, including their share of income from the cancellation of debt, even if they do not receive anycash distributions from us.Unitholders may be required to pay federal income taxes and, in some cases, state, local and foreign income taxes on their share of our taxable incomeeven if they receive no cash distributions from us. Unitholders may not receive cash distributions from us equal to their share of our taxable income or even the taxliability that results from the taxation of their share of our taxable income.We may engage in transactions to delever the partnership and manage our liquidity that may result in income to our unitholders without a correspondingcash distribution. For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income andgain resulting from the sale without receiving a cash distribution. Further, taking advantage of opportunities to reduce our existing debt, such as debt exchanges,debt repurchases, or modifications of our existing debt could result in "cancellation of indebtedness income" (also referred to as "COD income") being allocated toour unitholders as taxable income. Unitholders may be allocated COD income, and income tax liabilities arising therefrom may exceed cash distributions or thevalue of the units. The ultimate effect of any such allocations will depend on the unitholder's individual tax position with respect to its units. Unitholders areencouraged to consult their tax advisor with respect to the consequences to them of COD income.Tax gain or loss on the disposition of our common units could be different than expected.If our unitholders sell their common units, they will recognize gain or loss equal to the difference between the amount realized and their tax basis in thosecommon units. Prior distributions in excess of the total net taxable income unitholders were allocated for a common unit, which decreased unitholder tax basis inthat common unit, will, in effect, become taxable income to our unitholders if the common unit is sold at a price greater than their tax basis in that common unit,even if the price they receive is less than their original cost. A substantial portion of the amount realized, whether or not representing gain, may be ordinaryincome to our unitholders. Should the IRS successfully contest some positions we take, our unitholders could recognize more gain on the sale of units than wouldbe the case under those positions without the benefit of decreased income in prior years. In addition, if our unitholders sell their units, they may incur a tax liabilityin excess of the amount of cash they receive from the sale.Unitholders may be subject to limitations on their ability to deduct interest expenses incurred by us.In general, the Partnership is entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or business during itstaxable year. However, under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017, the deduction for "business interest" is limited tothe sum of the Partnership’s business interest income and 30% of its "adjusted taxable income." For the purposes of this limitation, the Partnership’s adjustedtaxable income is computed without regard to any business interest expense or business interest income, and in the case of taxable years beginning before January1, 2022, any deduction allowable for depreciation, amortization, or depletion to the extent such depreciation, amortization, or depletion is not capitalized into costof goods sold with respect to inventory. If the Partnership’s "business interest" is subject to limitation under these rules, unitholders will be limited in their abilityto deduct their share of any interest expense that has been allocated to them. As a result, unitholders may be subject to limitation on their ability to deduct interestexpenses incurred by the Partnership.39Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.Investment in common units by tax-exempt entities, such as employee benefit plans, individual retirement accounts (known as IRAs), Keogh plans andother retirement plans, regulated investment companies, real estate investment trusts, mutual funds and non-U.S. persons raises issues unique to them. Forexample, virtually all of our income allocated to organizations exempt from federal income tax, including IRAs and other retirement plans, will be unrelatedbusiness income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest applicable effective tax rate,and non-U.S persons will be required to file U.S. federal income tax returns and pay tax on their share of our taxable income. In addition, a withholding tax mayapply on the amount realized on the disposition of a partnership interest by a foreign person if any gain on the transfer of such interest would be treated as givingrise to effectively connected income. Such withholding tax obligation is currently suspended in the case of a disposition of certain publicly traded partnershipinterests, but such suspension would end if proposed Treasury regulations become final. Tax-exempt entities, non-U.S. persons and other unique investors shouldconsult their tax advisor regarding their investment in our common units.We treat a purchaser of our common units as having the same tax benefits without regard to the seller's identity. The IRS may challenge this treatment, whichcould adversely affect the value of the common units.Because we cannot match transferors and transferees of common units and because of other reasons, we have adopted depreciation positions that may notconform to all aspects of the Treasury regulations. Any position we take that is inconsistent with applicable Treasury regulations may have to be disclosed on ourfederal income tax return. This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of ourunitholders. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders. It also could affect thetiming of these tax benefits or the amount of gain from the sale of common units and could have a negative impact on the value of our common units or result inaudit adjustments to our unitholders' tax returns.Unitholders may be subject to state, local and foreign taxes and return filing requirements as a result of investing in our common units.In addition to federal income taxes, unitholders may be subject to other taxes, such as state, local and foreign income taxes, unincorporated business taxesand estate, inheritance, or intangible taxes that are imposed by the various jurisdictions in which we do business or own property. Unitholders may be required tofile state, local and foreign income tax returns and pay state and local income taxes in some or all of the various jurisdictions in which we do business or ownproperty and may be subject to penalties for failure to comply with those requirements. We own property and/or conduct business in Alabama, Arizona, Arkansas,California, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, Nevada, Oklahoma, Pennsylvania, Tennessee,Texas, Utah, and West Virginia. We may do business or own property in other states or foreign countries in the future. It is the unitholder's responsibility to file allfederal, state, local and foreign tax returns. Our counsel has not rendered an opinion on the state, local or foreign tax consequences of an investment in ourcommon units.There are limits on the deductibility of our losses that may adversely affect our unitholders.There are a number of limitations that may prevent unitholders from using their allocable share of our losses as a deduction against unrelated income. Incases when our unitholders are subject to the passive loss rules (generally, individuals and closely-held corporations), any losses generated by us will only beavailable to offset our future income and cannot be used to offset income from other activities, including other passive activities or investments. Unused lossesmay be deducted when the unitholder disposes of its entire investment in us in a fully taxable transaction with an unrelated party. A unitholder's share of our netpassive income may be offset by unused losses from us carried over from prior years but not by losses from other passive activities, including losses from otherpublicly traded partnerships. Other limitations that may further restrict the deductibility of our losses by a unitholder include the at-risk rules, the excess losslimitation rules for non-corporate unitholders that applies until January 1, 2026, and the prohibition against loss allocations in excess of the unitholder's tax basis inits units.We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our unitson the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could changethe allocation of items of income, gain, loss and deduction among our unitholders.We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of ourunits on the first day of each month, instead of on the basis of the date a particular unit is40transferred. Treasury regulations permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but they do not specificallyauthorize all aspects of the proration method we have adopted. Therefore, the use of our proration method may not be permitted under existing Treasuryregulations, and, accordingly, our counsel is unable to opine as to the validity of such method. If the IRS were to challenge our proration method, we may berequired to change the allocation of items of income, gain, loss and deduction among our unitholders.A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of those units. If so, he would nolonger be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.Because a unitholder whose units are loaned to a "short seller" to cover a short sale of units may be considered as having disposed of the loaned units, hemay no longer be treated for tax purposes as a partner with respect to those units during the period of the loan to the short seller and the unitholder may recognizegain or loss from such disposition. Moreover, during the period of the loan to the short seller any of our income, gain, loss or deduction with respect to those unitsmay not be reportable by the unitholder and any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Ourcounsel has not rendered an opinion regarding the treatment of a unitholder where common units are loaned to a short seller to cover a short sale of common units;therefore, unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify anyapplicable brokerage account agreements to prohibit their brokers from borrowing their units.41Item 1B.Unresolved Staff CommentsNone. Item 2.Properties A description of our properties is contained in "Item 1. Business" and is incorporated herein by reference. We believe we have satisfactory title to our assets. Some of the easements, rights-of-way, permits, licenses or similar documents relating to the use of theproperties that have been transferred to us in connection with our initial public offering and the assets we acquired in our acquisitions, required the consent of thirdparties, which in some cases is a governmental entity. We believe we have obtained sufficient third-party consents, permits and authorizations for the transfer ofassets necessary for us to operate our business in all material respects. With respect to any third-party consents, permits or authorizations that have not beenobtained, we believe the failure to obtain these consents, permits or authorizations will not have a material adverse effect on the operation of our business. Title toour property may be subject to encumbrances, including liens in favor of our secured lender. We believe none of these encumbrances materially detract from thevalue of our properties or our interest in these properties or materially interfere with their use in the operation of our business.Item 3.Legal ProceedingsFrom time to time, we are subject to certain legal proceedings, claims and disputes that arise in the ordinary course of our business. Although we cannotpredict the outcomes of these legal proceedings, we do not believe these actions, in the aggregate, will have a material adverse impact on our financial position,results of operations or liquidity. A description of our legal proceedings is included in "Item 8. Financial Statements and Supplementary Data, Note 22.Commitments and Contingencies", and is incorporated herein by reference.Item 4.Mine Safety DisclosuresNot applicable.42PART IIItem 5.Market for Our Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information and HoldersOur common units are traded on the NASDAQ under the symbol "MMLP." As of February 14, 2020, there were approximately 254 holders of record andapproximately 16,664 beneficial owners of our common units. Cash Distribution Policy Within 45 days after the end of each quarter, we distribute all of our available cash, as defined in our partnership agreement, to unitholders of record onthe applicable record date. Our general partner has broad discretion to establish cash reserves that it determines are necessary or appropriate to properly conductour business. These can include cash reserves for future capital and maintenance expenditures, reserves to stabilize distributions of cash to the unitholders and ourgeneral partner, reserves to reduce debt, or, as necessary, reserves to comply with the terms of any of our agreements or obligations. Our distributions areeffectively made 98% to unitholders and 2% to our general partner, subject to the payment of incentive distributions to our general partner if certain target cashdistribution levels to common unitholders are achieved. Distributions to our general partner increase to 15%, 25% and 50% based on incremental distributionthresholds as set forth in our partnership agreement. Our ability to distribute available cash is contractually restricted by the terms of our credit facility. Our credit facility contains covenants requiring us tomaintain certain financial ratios. We are prohibited from making any distributions to unitholders if the distribution would cause a default or an event of default, ora default or an event of default exists, under our credit facility. Please read "Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations — Liquidity and Capital Resources — Description of Our Credit Facility."Quarterly Distribution. On January 28, 2020, we declared a quarterly cash distribution of $0.0625 per common unit for the fourth quarter of 2019, or$0.25 per common unit on an annualized basis, which was paid on February 14, 2020 to unitholders of record as of February 7, 2020.Item 6.Selected Financial DataThe following table sets forth selected financial data and other operating data of the Partnership for the years ended December 31, 2019, 2018, 2017, 2016and 2015 and is derived from the audited consolidated financial statements of the Partnership. The following selected financial data are qualified by reference to and should be read in conjunction with the Partnership's Consolidated FinancialStatements and Notes thereto and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in thisdocument.43 2019 2018 2017 2016 2015 (Dollars in thousands, except per unit amounts) Revenues$847,118 $1,020,104 $973,386 $857,522 $1,084,958 Income (loss) from continuing operations4,520 (7,831) (1,183) 10,157 22,495Income (loss) from discontinued operations, net of tax(179,466) 63,486 21,099 20,806 22,068Net income (loss)$(174,946) $55,655 $19,916 $30,963 $44,563Net income (loss) attributable to limited partners$(171,488) $43,195 $16,750 $23,143 $21,902 Net income (loss) per limited partner unit – continuingoperations0.11 (0.49) (0.10) 0.22 0.26Net income (loss) per limited partner unit – discontinuedoperations(4.55) 1.6 0.54 0.43 0.36Net income (loss) per limited partner unit$(4.44) $1.11 $0.44 $0.65 $0.62 Total assets$667,156 $1,073,628 $1,285,621 $1,269,354 $1,406,936Long-term debt570,505 662,731 814,874 808,150 865,003 Cash dividends per common unit (in dollars)1.25 2.00 2.00 2.94 3.2544Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverview We are a publicly traded limited partnership with a diverse set of operations focused primarily in the U.S. Gulf Coast region. Our four primary businesslines include:•Terminalling, processing, storage and packaging services for petroleum products and by-products including the refining of naphthenic crudeoil;•Land and marine transportation services for petroleum products and by-products, chemicals, and specialtyproducts;•Sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and•NGL marketing, distribution, and transportation services.The petroleum products and by-products we collect, transport, store and market are produced primarily by major and independent oil and gas companieswho 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 gascompanies, our primary customers include independent refiners, large chemical companies, and other wholesale purchasers of these products. We operateprimarily in the U.S. Gulf Coast region. This region is a major hub for petroleum refining, natural gas gathering and processing, and support services for theexploration and production industry.We were formed in 2002 by Martin Resource Management Corporation, a privately-held company whose initial predecessor was incorporated in 1951 asa supplier of products and services to drilling rig contractors. Since then, Martin Resource Management Corporation has expanded its operations throughacquisitions and internal expansion initiatives as its management identified and capitalized on the needs of producers and purchasers of petroleum products and by-products and other bulk liquids. Martin Resource Management Corporation is an important supplier and customer of ours. As of December 31, 2019, MartinResource Management Corporation owned 15.7% of our total outstanding common limited partner units. Furthermore, Martin Resource Management Corporationcontrols MMGP, our general partner, by virtue of its 51% voting interest in Holdings, the sole member of MMGP. MMGP owns a 2.0% general partner interest inus and all of our incentive distribution rights. Martin Resource Management Corporation directs our business operations through its ownership interests in andcontrol of our general partner.Our Omnibus Agreement with Martin Resource Management Corporation governs, among other things, potential competition and indemnificationobligations among the parties to the agreement, related party transactions, the provision of general administration and support services by Martin ResourceManagement Corporation and our use of certain of Martin Resource Management Corporation’s trade names and trademarks. Under the terms of the OmnibusAgreement, the employees of Martin Resource Management Corporation are responsible for conducting our business and operating our assets.Martin Resource Management Corporation has operated our business since 2002. Martin Resource Management Corporation began operating our NGLbusiness in the 1950s and our sulfur business in the 1960s. It began our land transportation business in the early 1980s and our marine transportation business in thelate 1980s. It entered into our fertilizer and terminalling and storage businesses in the early 1990s.45Beginning in 2018, we committed to strengthening our balance sheet through strategic initiatives aimed at reducing leverage by divesting non-core assetsand businesses, creating the ability to focus on a streamlined corporate strategy and position the Partnership for growth.The first set of initiatives was executed in 2018 with the divestiture of our 20% interest in West Texas LPG Pipeline Limited Partnership for $195.0million and the sale of a non-strategic terminal asset located in Nevada for $8.0 million. On January 1, 2019, we completed the next initiative with the acquisitionof Martin Transport, Inc. from Martin Resource Management Corporation for $135.0 million, positioning us for cash flow growth. On July 1, 2019, we completedthe sale of our natural gas storage assets for $215.0 million, which was an important piece of the Partnership’s strategy to strengthen the balance sheet and re-focusour operational expertise on the refinery services industry. On August 12, 2019 we completed the sale of our East Texas Pipeline for $17.5 million.As a result of dispositions, offset by acquisitions, we were able to pay down $300.5 million of outstanding debt while incurring only a slight reduction toprojected EBITDA. Consistent with our strategy of reducing leverage and improving liquidity, on January 28, 2020, we announced a $0.75 per unit reduction ofour cash distribution on an annual basis, allowing us to retain $29.2 million to continue to strengthen our balance sheet.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 includedelsewhere herein. We prepared these financial statements in conformity with United States 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 ofthe financial statements and the reported amounts of revenues and expenses during the reporting periods. We based our estimates on historical experience and onvarious other assumptions we believe to be reasonable under the circumstances. We routinely evaluate these estimates, utilizing historical experience, consultationwith experts and other methods we consider reasonable in the particular circumstances. Our results may differ from these estimates, and any effects on ourbusiness, 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 therevision 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 duringthe periods ended December 31, 2019 and 2018:Description Judgments and Uncertainties Effect if Actual Results Differ from Estimates andAssumptionsImpairment of Long-Lived AssetsWe periodically evaluate whether the carryingvalue of long-lived assets has been impaired whencircumstances indicate the carrying value of theassets may not be recoverable. These evaluationsare based on undiscounted cash flow projectionsover the remaining useful life of the asset. Thecarrying value is not recoverable if it exceeds thesum of the undiscounted cash flows. Anyimpairment loss is measured as the excess of theasset's carrying value over its fair value. Our impairment analyses require management to usejudgment in estimating future cash flows and usefullives, as well as assessing the probability of differentoutcomes. Applying this impairment review methodology, noimpairment of long-lived assets was recorded duringthe years ended December 31, 2019 or 2018. In2017, we recorded an impairment charge of $1.6million in our Transportation segment and $0.6million in our Terminalling and Storage segment.Asset Retirement ObligationsAsset retirement obligations ("AROs") associatedwith a contractual or regulatory remediationrequirement are recorded at fair value in the periodin which the obligation can be reasonablyestimated and the related asset is depreciated overits useful life or contractual term. The liability isdetermined using a credit-adjusted risk-free interestrate and is accreted over time until the obligation issettled. Determining the fair value of AROs requiresmanagement judgment to evaluate requiredremediation activities, estimate the cost of thoseactivities and determine the appropriate interest rate. If actual results differ from judgments andassumptions used in valuing an ARO, we mayexperience significant changes in ARO balances.The establishment of an ARO has no initial impacton earnings.46Our Relationship with Martin Resource Management Corporation Martin Resource Management Corporation directs our business operations through its ownership and control of our general partner and under theOmnibus Agreement. In addition to the direct expenses payable to Martin Resource Management Corporation under the Omnibus Agreement, we are required toreimburse Martin Resource Management Corporation for indirect general and administrative and corporate overhead expenses. For the years ended December 31,2019, 2018 and 2017, the Conflicts Committee approved reimbursement amounts of $16.7 million, $16.4 million and $16.4 million, respectively, reflecting ourallocable share of such expenses. The Conflicts Committee 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 inconnection with the operation of our business. Martin Resource Management Corporation also licenses certain of its trademarks and trade names to us under theOmnibus Agreement.We are both an important supplier to and customer of Martin Resource Management Corporation. All of these services and goods are purchased and soldpursuant to the terms of a number of agreements between us and Martin Resource Management Corporation. For a more comprehensive discussion concerning theOmnibus Agreement and the other agreements that we have entered into with Martin Resource Management Corporation, please see "Item 13. CertainRelationships and Related Transactions, and Director Independence."How We Evaluate Our OperationsOur management uses a variety of financial and operational measurements other than our financial statements prepared in accordance with U.S. GAAP toanalyze our performance. These include: (1) net income before interest expense, income tax expense, and depreciation and amortization ("EBITDA"), (2) adjustedEBITDA and (3) distributable cash flow. Our management views these measures as important performance measures of core profitability for our operations andthe ability to generate and distribute cash flow, and as key components of our internal financial reporting. We believe investors benefit from having access to thesame financial measures that our management uses.EBITDA and Adjusted EBITDA. Certain items excluded from EBITDA and adjusted EBITDA are significant components in understanding andassessing an entity's financial performance, such as cost of capital and historic costs of depreciable assets. We have included information concerning EBITDA andadjusted EBITDA because they provide investors and management with additional information to better understand the following: financial performance of ourassets without regard to financing methods, capital structure or historical cost basis; our operating performance and return on capital as compared to those of othersimilarly situated entities; and the viability of acquisitions and capital expenditure projects. Our method of computing adjusted EBITDA may not be the samemethod used to compute similar measures reported by other entities. The economic substance behind our use of adjusted EBITDA is to measure the ability of ourassets to generate cash sufficient to pay interest costs, support our indebtedness and make distributions to our unit holders.Distributable Cash Flow. Distributable cash flow is a significant performance measure used by our management and by external users of our financialstatements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay ourunitholders. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cashreturn 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 anincrease in our quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect topublicly-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 cashdistributions the entity pays to a unitholder.EBITDA, adjusted EBITDA and distributable cash flow should not be considered alternatives to, or more meaningful than, net income, cash flows fromoperating activities, or any other measure presented in accordance with U.S. GAAP. Our method of computing these measures may not be the same method used tocompute similar measures reported by other entities.Non-GAAP Financial MeasuresThe following table reconciles the non-GAAP financial measurements used by management to our most directly comparable GAAP measures for theyears ended December 31, 2019, 2018, and 2017, which represents EBITDA, Adjusted EBITDA and Distributable Cash Flow from continuing operations.47Reconciliation of EBITDA, Adjusted EBITDA, and Distributable Cash Flow Year Ended December 31, 2019 2018 2017 (in thousands)Net income (loss)$(174,946) $55,655 $19,916Less: (Income) loss from discontinued operations, net of income taxes179,466 (63,486) (21,099)Income (loss) from continuing operations4,520 (7,831) (1,183)Adjustments: Interest expense51,690 52,349 47,770Income tax expense1,900 577 158Depreciation and amortization60,060 61,484 65,108EBITDA from Continuing Operations118,170 106,579 111,853Adjustments: Gain on sale of property, plant and equipment(13,332) (1,041) (2,090)Impairment of long-lived assets— — 2,225Unrealized mark-to-market on commodity derivatives671 (76) (3,832)Non-cash insurance related accruals500 — —Lower of cost or market adjustments633 — —Hurricane damage repair accrual— — 657Asset retirement obligation revision— — 5,547Unit-based compensation1,424 1,224 650Transaction costs associated with acquisitions224 465 —Adjusted EBITDA from Continuing Operations108,290 107,151 115,010Adjustments: Interest expense(51,690) (52,349) (47,770)Income tax expense(1,900) (577) (158)Amortization of deferred debt issuance costs4,041 3,445 2,897Amortization of debt premium(306) (306) (306)Deferred income taxes1,360 208 (156)Payments for plant turnaround costs(5,677) (1,893) (1,583)Maintenance capital expenditures(12,368) (19,553) (16,774)Distributable Cash Flow from Continuing Operations$41,750 $36,126 $51,160 Income (loss) from discontinued operations, net of income taxes$(179,466) $63,486 $21,099Adjustments: Depreciation and amortization$8,161 $18,795 $22,370EBITDA from Discontinued Operations$(171,305) $82,281 $43,469Equity in earnings of unconsolidated entities$— $(3,382) $(4,314)Distributions from unconsolidated entities$— $3,500 $5,400Gain on disposition of Investment in WTLPG$— $(48,564) $—Loss on sale of property, plant and equipment, net$178,781 $824 $82Non-cash insurance related accruals$3,213 $— $—Adjusted EBITDA from Discontinued Operations$10,689 $34,659 $44,637Maintenance capital expenditures$(912) $(1,952) $(1,306)Distributable Cash Flow from Discontinued Operations$9,777 $32,707 $43,331Results of Operations48The results of operations for the years ended December 31, 2019, 2018, and 2017 have been derived from our consolidated financial statements.We evaluate segment performance on the basis of operating income, which is derived by subtracting cost of products sold, operating expenses, selling,general and administrative expenses, and depreciation and amortization expense from revenues. Our consolidated results of operations are presented on a comparative basis below. There are certain items of income and expense which we do notallocate on a segment basis. These items, including interest expense, and indirect selling, general and administrative expenses, are discussed after the comparativediscussion of our results within each segment.The Natural Gas Liquids segment information below excludes the discontinued operations of the Natural Gas Storage Assets and WTLPG partnershipinterests disposed of on June 28, 2019 and July 31, 2018, respectively, for the years ended December 31, 2019, 2018 and 2017. See Item 8, Note 5.The following table sets forth our operating revenues and operating income by segment for the years ended December 31, 2019, 2018, and 2017. OperatingRevenues RevenuesIntersegmentEliminations OperatingRevenues afterEliminations OperatingIncome (loss) Operating IncomeIntersegmentEliminations OperatingIncome (loss) afterEliminations (In thousands)Year Ended December 31, 2019: Terminalling and storage$216,313 $(6,659) $209,654 $17,670 $(938) $16,732Natural gas liquids366,502 — 366,502 27,596 16,424 44,020Sulfur services111,340 — 111,340 13,989 8,732 22,721Transportation183,740 (24,118) 159,622 16,830 (24,218) (7,388)Indirect selling, general andadministrative— — — (17,981) — (17,981)Total$877,895 $(30,777) $847,118 $58,104 $— $58,104 Year Ended December 31, 2018: Terminalling and storage$247,840 $(6,400) $241,440 $17,820 $(280) $17,540Natural gas liquids496,026 (19) 496,007 13,152 18,429 31,581Sulfur services132,536 — 132,536 17,216 10,181 27,397Transportation178,163 (28,042) 150,121 14,770 (28,330) (13,560)Indirect selling, general andadministrative— — — (17,901) — (17,901)Total$1,054,565 $(34,461) $1,020,104 $45,057 $— $45,057 Year Ended December 31, 2017: Terminalling and storage$236,169 $(6,134) $230,035 $3,305 $(2,676) $629Natural gas liquids473,548 (231) 473,317 32,408 2,472 34,880Sulfur services134,684 — 134,684 25,862 (2,657) 23,205Transportation164,043 (28,693) 135,350 1,373 2,861 4,234Indirect selling, general andadministrative— — — (17,332) — (17,332)Total$1,008,444 $(35,058) $973,386 $45,616 $— $45,61649Terminalling and Storage SegmentComparative Results of Operations for the Years Ended December 31, 2019 and 2018 Year Ended December 31, Variance PercentChange 2019 2018 (In thousands) Revenues: Services$93,980 $102,514 $(8,534) (8)%Products122,333 145,326 (22,993) (16)%Total revenues216,313 247,840 (31,527) (13)% Cost of products sold107,081 132,384 (25,303) (19)%Operating expenses53,279 54,129 (850) (2)%Selling, general and administrative expenses5,997 5,327 670 13%Depreciation and amortization30,952 39,508 (8,556) (22)% 19,004 16,492 2,512 15%Other operating income (loss), net(1,334) 1,328 (2,662) (200)%Operating income$17,670 $17,820 $(150) (1)% Shore-based throughput volumes (guaranteed minimum) (gallons)80,000 80,000 — —%Smackover refinery throughput volumes (guaranteed minimum BBL per day)6,500 6,500 — —%Services revenues. Services revenue decreased $8.5 million, of which $5.2 million was primarily a result of decreased throughput fees at our shore-basedterminals combined with a $1.7 million decrease at our specialty terminals as a result of the disposition of our sulfuric acid terminal in Elko, Nevada. In addition,$1.6 million was a result of decreased activity at our Tampa specialty terminal.Products revenues. A 31% decrease in sales volumes combined with a 29% decrease in average sales price at our shore-based terminals resulted in a$33.1 million decrease to products revenues. Offsetting this decrease was a 10% increase in sales volumes combined with a 3% increase in average sales price atour blending and packaging facilities resulting in an $11.1 million increase in products revenues.Cost of products sold. A 31% decrease in sales volumes combined with a 32% decrease in average cost per gallon at our shore-based terminals resultedin a $31.7 million decrease in cost of products sold. Offsetting this decrease was a 10% increase in sales volume combined with a 1% increase in average cost pergallon at our blending and packaging facilities resulting in a $7.4 million increase in cost of products sold.Operating expenses. Operating expenses decreased $0.9 million, of which $0.8 million is a result of the disposition of our sulfuric acid terminal in Elko,Nevada combined with decreases in lease expense of $0.9 million and utilities of $0.8 million across our terminals. Offsetting these decreases were increases inrepairs and maintenance of $1.2 million across our terminals and $0.5 million in wharfage and dockage fees at our Tampa specialty terminal.Selling, general and administrative expenses. Selling, general and administrative expenses increased primarily as a result of increases in legal expensesof $0.4 million and compensation expense of $0.3 million.Depreciation and amortization. The decrease in depreciation and amortization is due to the disposition of assets at several closed shore-based facilities,offset by recent capital expenditures.50Other operating income (loss), net. Other operating income (loss), net represents gains and losses from the disposition of property, plant and equipment. Comparative Results of Operations for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Variance PercentChange 2018 2017 (In thousands) Revenues: Services$102,514 $105,703 $(3,189) (3)%Products145,326 130,466 14,860 11%Total revenues247,840 236,169 11,671 5% Cost of products sold132,384 118,832 13,552 11%Operating expenses54,129 63,191 (9,062) (14)%Selling, general and administrative expenses5,327 5,832 (505) (9)%Impairment of long-lived assets— 600 (600) (100)%Depreciation and amortization39,508 45,160 (5,652) (13)% 16,492 2,554 13,938 546%Other operating income, net1,328 751 577 77%Operating income$17,820 $3,305 $14,515 439% Shore-based throughput volumes (guaranteed minimum) (gallons)80,000 144,998 (64,998) (45)%Smackover refinery throughput volumes (guaranteed minimum BBL per day)6,500 6,500 — —%Services revenues. Services revenue decreased $3.2 million, of which $7.6 million was primarily a result of decreased throughput fees at our shore-basedterminals, offset by a $4.1 million increase at our specialty terminals primarily as a result of the Hondo asphalt plant being put into service on July 1, 2017.Products revenues. A 28% increase in sales volumes combined with a 4% increase in average sales price at our blending and packaging facilities resultedin a $20.3 million increase to products revenues. Offsetting this increase was a 9% decrease in sales volumes offset by a 1% increase in average sales price at ourshore-based terminals resulting in a $5.4 million decrease in products revenues.Cost of products sold. A 28% increase in sales volumes combined with a 10% increase in average cost per gallon at our blending and packaging facilitiesresulted in a $19.0 million increase in cost of products sold. Offsetting this increase was a 9% decrease in sales volume offset by a 2% increase in average cost pergallon at our shore-based terminals resulting in a $5.5 million decrease in cost of products sold.Operating expenses. Operating expenses at our shore-based terminals decreased by $8.0 million primarily due to the 2017 period including an increase inthe accrual related to asset retirement obligations of $6.3 million. Additionally, lease expense decreased $0.7 million as a result of closing several facilities.Operating expenses at our specialty terminals decreased $1.8 million, primarily due to the 2017 period including $2.5 million in hurricane expenses offset by anincrease of $1.0 million in expenses at our Hondo facility which was placed in service in July of 2017. Offsetting this decrease was a $0.8 million increase at ourSmackover refinery due to an increase in utilities of $0.4 million, $0.2 million in repairs and maintenance, and $0.2 million in professional fees.Selling, general and administrative expenses. Selling, general and administrative expenses decreased primarily as a result of decreased legal expenses.Impairment of long-lived assets. This represents the loss on impairment of non-core operating assets in 2017.51Depreciation and amortization. The decrease in depreciation and amortization is due to the disposition of assets at several closed shore-based facilities,offset by recent capital expenditures.Other operating income, net. Other operating income, net represents gains from the disposition of property, plant and equipment.Transportation SegmentComparative Results of Operations for the Years Ended December 31, 2019 and 2018 Year Ended December 31, Variance PercentChange 2019 2018 (In thousands) Revenues$183,740 $178,163 $5,577 3%Operating expenses141,713 146,300 (4,587) (3)%Selling, general and administrative expenses8,199 6,305 1,894 30%Depreciation and amortization15,307 11,003 4,304 39% 18,521 14,555 3,966 27%Other operating income (loss), net(1,691) 215 (1,906) (887)%Operating income$16,830 $14,770 $2,060 14%Land Transportation Revenues. A 5% decrease in miles resulted in a decrease to freight revenue of $5.0 million. Transportation rates increased 2%resulting in an offsetting increase of $1.7 million. Additionally, fuel surcharge revenue decreased $1.5 million.Marine Transportation Revenues. An increase of $10.7 million in inland revenue was primarily related to increased rates, utilization and new equipmentbeing placed in service. Revenue was also impacted by an increase in pass-through revenue (primarily fuel) of $0.2 million. An offsetting decrease of $0.4 millionis attributable to revenue related to equipment sold or being classified as idle or held for sale.Operating expenses. The decrease in operating expenses is primarily a result of decreased leases expense of $4.2 million, pass through expenses(primarily fuel) of $1.7 million, compensation expense of $1.0 million, and property and liability insurance premiums and claims of $0.7 million. These decreaseswere offset by an increase in outside services of $2.8 million and repairs and maintenance of $0.5 million.Selling, general and administrative expenses. The increase in selling, general and administrative expenses is primarily due to increased compensationexpense of $1.4 million, lease expense of $0.2 million, and claims expenses of $0.2 million.Depreciation and amortization. Depreciation and amortization increased as a result of recent capital expenditures offset by asset disposals.Other operating income (loss), net. Other operating loss represents losses from the disposition of property, plant and equipment.52Comparative Results of Operations for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Variance PercentChange 2018 2017 (In thousands) Revenues$178,163 $164,043 $14,120 9%Operating expenses146,300 148,331 (2,031) (1)%Selling, general and administrative expenses6,305 4,807 1,498 31%Impairment of long lived assets— 1,625 (1,625) (100)%Depreciation and amortization11,003 9,285 1,718 19% 14,555 (5) 14,560 291,200%Other operating income, net215 1,378 (1,163) (84)%Operating income$14,770 $1,373 $13,397 976% Land Transportation Revenues. Freight revenue increased $7.0 million. Transportation rates increased 8% resulting in an increase to freight revenue of$7.7 million. Miles decreased 1% resulting in an offsetting decrease of $0.7 million. Additionally, fuel increased $6.2 million.Marine Transportation Revenues. An increase of $1.8 million in inland revenue was primarily related to new equipment being placed in service.Revenue was also impacted by an increase in pass-through revenue (primarily fuel) of $2.1 million. An offsetting decrease of $3.1 million is attributable to revenuerelated to equipment sold or being classified as idle or held for sale. A $0.2 million increase in offshore revenues is primarily the result of increased utilization.Operating expenses. The decrease in operating expenses is primarily a result of decreased lease expense of $5.8 million, claims expense of $1.5 million,barge rental expense of $1.0 million, property and liability insurance premiums of $1.0 million, outside towing of $0.3 million, and a reclassification of labor andburden from operating expense to selling general and administrative expense for the 2018 period of $0.7 million. These decreases were offset by an increased fuelexpense of $5.1 million, labor and burden of $2.6 million, repairs and maintenance of $0.5 million, and contract labor of $0.3 million. Selling, general and administrative expenses. Selling, general and administrative expenses increased primarily due to increased compensation expense of$0.8 million and the reclassification of expenses from operating expense to selling, general, and administrative expense of $0.7 million for the 2018 period.Impairment of long-lived assets. This represents the loss on impairment of non-core operating assets.Depreciation and amortization. Depreciation and amortization increased as a result of recent capital expenditures offset by asset disposals.Other operating income, net. Other operating income, net represents gains from the disposition of property, plant and equipment.53Sulfur Services SegmentComparative Results of Operations for the Years Ended December 31, 2019 and 2018 Year Ended December 31, Variance PercentChange 2019 2018 (In thousands) Revenues: Services$11,434 $11,148 $286 3%Products99,906 121,388 (21,482) (18)%Total revenues111,340 132,536 (21,196) (16)% Cost of products sold71,806 90,780 (18,974) (21)%Operating expenses10,639 11,618 (979) (8)%Selling, general and administrative expenses4,784 4,326 458 11%Depreciation and amortization11,332 8,485 2,847 34% 12,779 17,327 (4,548) (26)%Other operating income (loss), net1,210 (111) 1,321 1,190%Operating income$13,989 $17,216 $(3,227) (19)% Sulfur (long tons)665.0 688.0 (23.0) (3)%Fertilizer (long tons)260.0 277.0 (17.0) (6)%Sulfur services volumes (long tons)925.0 965.0 (40.0) (4)% Services Revenues. Services revenues increased slightly as a result of a contractually prescribed, index-based fee adjustment.Products Revenues. Products revenues decreased $17.2 million as a result of a 14% decline in average sulfur services sales prices. Products revenuesdecreased an additional $4.3 million due to a 4% decrease in sales volumes, primarily related to a 6% decrease in fertilizer volumes.Cost of products sold. A 17% decline in prices impacted cost of products sold by $15.9 million, resulting from a decrease in commodity prices. A 4%decrease in sales volumes resulted in an additional decrease in cost of products sold of $3.1 million. Margin per ton decreased $1.34, or 4%.Operating expenses. Our operating expenses decreased $0.6 million due to marine fuel and lube, $0.2 million due to repairs and maintenance, $0.2 milliondue to outside towing, $0.1 million due to lease expense and $0.1 million due to insurance claims. Offsetting, assist tugs increased $0.2 million.Selling, general and administrative expenses. Increased primarily as a result of increased compensation expense of $0.4 million and professional fees of$0.1 million.Depreciation and amortization. Depreciation and amortization expense increased $2.8 million as a result of recent capital expenditures.Other operating income (loss), net. Other operating income (loss), net increased as a result of $1.3 million in business interruption recoveries related tothe Neches ship-loader insurance claim received in the fourth quarter of 2019.54Comparative Results of Operations for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Variance PercentChange 2018 2017 (In thousands) Revenues: Services$11,148 $10,952 $196 2%Products121,388 123,732 (2,344) (2)%Total revenues132,536 134,684 (2,148) (2)% Cost of products sold90,780 82,760 8,020 10%Operating expenses11,618 13,783 (2,165) (16)%Selling, general and administrative expenses4,326 4,136 190 5%Depreciation and amortization8,485 8,117 368 5% 17,327 25,888 (8,561) (33)%Other operating loss, net(111) (26) (85) (327)%Operating income$17,216 $25,862 $(8,646) (33)% Sulfur (long tons)688.0 807.0 (119.0) (15)%Fertilizer (long tons)277.0 276.0 1.0 —%Sulfur services volumes (long tons)965.0 1,083.0 (118.0) (11)%Services Revenues. Services revenues increased as a result of a contractually prescribed index based fee adjustment.Products Revenues. Products revenues decreased $14.8 million due to an 11% decrease in sales volumes, primarily related to a 15% decrease in sulfurvolumes. Offsetting, products revenues increased $12.5 million as a result of a 10% rise in average sulfur services sales prices.Cost of products sold. A 23% increase in prices impacted cost of products sold by $19.1 million, resulting from an increase in commodity prices. An11% decrease in sales volumes resulted in an offsetting decrease in cost of products sold of $11.1 million. Margin per ton decreased $6.11, or 16%.Operating expenses. Our operating expenses decreased primarily as a result of a $1.5 million reduction in compensation expense and $0.4 million in lowerproperty taxes. Additionally, outside towing decreased $0.3 million, railcar leases decreased $0.3 million, and repairs and maintenance on marine vessels decreased$0.2 million. An offsetting increase of $0.5 million resulted from an increase in marine fuel and lube.Selling, general and administrative expenses. Increased primarily as a result of increased compensation expense.Depreciation and amortization. Depreciation expense increased $0.4 million due to capital projects being completed and placed in service in the fourthquarter of 2017 and throughout 2018.Other operating loss, net. Other operating loss, net represents losses from the disposition of property, plant and equipment.55Natural Gas Liquids SegmentComparative Results of Operations for the Years Ended December 31, 2019 and 2018 Year Ended December 31, Variance PercentChange 2019 2018 (In thousands) Products Revenues$366,502 $496,026 (129,524) (26)%Cost of products sold341,800 467,550 (125,750) (27)%Operating expenses6,300 7,107 (807) (11)%Selling, general and administrative expenses4,739 5,338 (599) (11)%Depreciation and amortization2,469 2,488 (19) (1)% 11,194 13,543 (2,349) (17)%Other operating income (loss), net16,402 (391) 16,793 4,295%Operating income$27,596 $13,152 $14,444 110% NGLs Volumes (barrels)9,820 10,223 (403) (4)%Products Revenues. Our NGL average sales price per barrel decreased $11.20, or 23%, resulting in a decrease to products revenues of $114.5 million. Thedecrease in average sales price per barrel was a result of a decrease in market prices. Product sales volumes decreased 4%, decreasing revenues $15.0 million.Cost of products sold. Our average cost per barrel decreased $10.93, or 24%, decreasing cost of products sold by $111.7 million. The decrease inaverage cost per barrel was a result of a decrease in market prices. The decrease in sales volume of 4% resulted in a $14.0 million decrease to cost of products sold.Our margins decreased $0.27 per barrel, or 10% during the period.Operating expenses. Operating expenses decreased primarily due to the sale of our East Texas Pipeline on August 12, 2019.Selling, general and administrative expenses. Selling, general and administrative expenses decreased $0.6 million primarily as a result of $0.3 million indecreased compensation expense and $0.2 million in decreased property taxes.Other operating income (loss), net. Other operating income (loss), net represents the gains associated with the disposition of the East Texas Pipeline.Comparative Results of Operations for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Variance PercentChange 2018 2017 (In thousands) Products Revenues$496,026 $473,548 22,478 5%Cost of products sold467,550 424,610 42,940 10%Operating expenses7,107 6,905 202 3%Selling, general and administrative expenses5,338 7,072 (1,734) (25)%Depreciation and amortization2,488 2,546 (58) (2)% 13,543 32,415 (18,872) (58)%Other operating loss, net(391) (7) (384) (5,486)%Operating income$13,152 $32,408 $(19,256) (59)% NGLs Volumes (barrels)10,223 10,487 (264) (3)%56Products Revenues. Our NGL average sales price per barrel increased $3.37, or 7%, resulting in an increase to products revenues of $35.3 million. Theincrease in average sales price per barrel was a result of an increase in market prices. Product sales volumes decreased 3%, decreasing revenues $12.8 million.Cost of products sold. Our average cost per barrel increased $5.25, or 13%, increasing cost of products sold by $55.0 million. The increase in averagecost per barrel was a result of an increase in market prices. The decrease in sales volume of 3% resulted in a $12.1 million decrease to cost of products sold. Ourmargins decreased $1.88 per barrel, or 40% during the period.Operating expenses. Operating expenses increased $0.2 million as a result of increased repairs and maintenance expense at our underground NGLstorage facility.Selling, general and administrative expenses. Selling, general and administrative expenses decreased $1.7 million as a result of $2.3 million in decreasedcompensation expense offset by $0.4 million in increased property taxes and $0.4 million in in increased property damage claims.Other operating loss, net. Other operating loss, net represents losses from the disposition of property, plant and equipment.Interest ExpenseComparative Components of Interest Expense, Net for the Years Ended December 31, 2019 and 2018 Year Ended December 31, Variance PercentChange 2019 2018 (In thousands) Revolving loan facility$18,550 $20,193 $(1,643) (8)%7.250 % senior unsecured notes27,101 27,101 — —%Amortization of deferred debt issuance costs4,041 3,445 596 17%Amortization of debt premium(306) (306) — —%Other1,728 2,239 (511) (23)%Finance leases672 331 341 103%Capitalized interest(5) (624) 619 99%Interest income(91) (30) (61) (203)%Total interest expense, net$51,690 $52,349 $(659) (1)% Comparative Components of Interest Expense, Net for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Variance PercentChange 2018 2017 (In thousands) Revolving loan facility$20,193 $18,192 $2,001 11%7.250 % senior unsecured notes27,101 27,101 — —%Amortization of deferred debt issuance costs3,445 2,897 548 19%Amortization of debt premium(306) (306) — —%Other2,239 1,534 705 46%Finance leases331 25 306 1,224%Capitalized interest(624) (730) 106 15%Interest income(30) (943) $913 97%Total interest expense, net$52,349 $47,770 $4,579 10%57Indirect Selling, General and Administrative Expenses Year Ended December 31, Variance PercentChange Year Ended December 31, Variance PercentChange 2019 2018 2018 2017 (In thousands) (In thousands) Indirect selling, general andadministrative expenses$17,981 $17,901 $80 —% $17,901 $17,332 $569 3%Indirect selling, general and administrative expenses remained consistent from 2018 to 2019. The increase in indirect selling, general and administrativeexpenses from 2017 to 2018 is primarily a result of increased unit based compensation expense.Martin Resource Management Corporation allocates to us a portion of its indirect selling, general and administrative expenses for services such asaccounting, treasury, clerical, engineering, legal, billing, information technology, administration of insurance, general office expenses and employee benefit plansand other general corporate overhead functions we share with Martin Resource Management Corporation retained businesses. This allocation is based on thepercentage of time spent by Martin Resource Management Corporation personnel that provide such centralized services. GAAP also permits other methods forallocation of these expenses, such as basing the allocation on the percentage of revenues contributed by a segment. The allocation of these expenses betweenMartin Resource Management Corporation and us is subject to a number of judgments and estimates, regardless of the method used. We can provide no assurancesthat 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 methodscould 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 andcorporate overhead expenses. The Conflicts Committee approved the following reimbursement amounts: Year Ended December 31, Variance PercentChange Year Ended December 31, Variance PercentChange 2019 2018 2018 2017 (In thousands) (In thousands) Conflicts Committee approvedreimbursement amount$16,657 $16,416 $241 1% $16,416 $16,416 $— —%The amounts reflected above represent our allocable share of such expenses. The Conflicts Committee will review and approve future adjustments in thereimbursement amount for indirect expenses, if any, annually.Liquidity and Capital Resources GeneralOur primary sources of liquidity to meet operating expenses, service our indebtedness, pay distributions to our unitholders and fund capital expenditureshave historically been cash flows generated by our operations, borrowings under our revolving credit facility and access to debt and equity capital markets, bothpublic and private. Set forth below is a description of our cash flows for the periods indicated.Recent Debt Financing Activity Credit Facility Amendment and Extension. On July 18, 2019, the Partnership amended its revolving credit facility to, among other things, extend thematurity date from March 2020 to August 2023 (provided we have refinanced the 2021 Notes on or before August 19, 2020) and reduce commitments from $500.0million to $400.0 million. After giving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our revolvingcredit facility, we had the ability to borrow approximately $51.5 million in additional amounts thereunder as of December 31, 2019.58Cash Flows - Year Ended December 31, 2019 Compared to Year Ended December 31, 2018The following table details the cash flow changes between the years ended December 31, 2019 and 2018: Years Ended December 31, Variance PercentChange 2019 2018 (In thousands) Net cash provided by (used in): Operating activities$75,815 $105,030 $(29,215) (28)%Investing activities174,828 147,622 27,206 18%Financing activities(248,087) (252,441) 4,354 2%Net increase (decrease) in cash and cash equivalents$2,556 $211 $2,345 1,111%Net cash provided by operating activities. The decrease in net cash provided by operating activities for the year ended December 31, 2019 includes a$22.6 million decrease in net cash received from discontinued operating activities, a $6.2 million unfavorable variance in working capital, and a $1.7 millionunfavorable variance in other non-current assets and liabilities. An additional $11.0 million decrease in other non-cash charges was primarily due to a $12.3million gain on the sale of property, plant and equipment. Offsetting was an increase in operating results of $12.4 million. Net cash provided by investing activities. Net cash provided by investing activities for the year ended December 31, 2019 increased primarily as a resultof $35.9 million related to discontinued investing activities. Also contributing was a $9.2 million increase in proceeds received as a result of higher sales ofproperty, plant and equipment in 2019 as well as an increase of $5.0 million due to proceeds received from involuntary conversion of property, plant andequipment. An additional increase of $0.9 million related to lower payments for capital expenditures and plant turnaround costs in 2019. Offsetting was an increasein cash used of $23.7 million as a result of net assets acquired from MTI.Net cash used in financing activities. Net cash used in financing activities for the year ended December 31, 2019 decreased primarily as a result of $68.7million decrease in net payments and a $29.3 million decrease in cash distributions paid. An additional decrease of $12.1 million is due to distributions paid relatedto 2018, which included a pre-acquisition distribution to Martin Resource Management Corporation related to MTI. Offsetting was an increase in cash paid of$102.4 million related to excess purchase price over the carrying value of acquired assets in common control transactions. Further, costs associated with our creditfacility amendment increased $3.1 million. Cash Flows - Year Ended December 31, 2018 Compared to Year Ended December 31, 2017The following table details the cash flow changes between the years ended December 31, 2018 and 2017: Years Ended December 31, Variance PercentChange 2018 2017 (In thousands) Net cash provided by (used in): Operating activities$105,030 $69,084 $35,946 52%Investing activities147,622 (41,635) 189,257 455%Financing activities(252,441) (27,435) (225,006) (820)%Net decrease in cash and cash equivalents$211 $14 $197 1,407%Net cash provided by operating activities. The increase in net cash provided by operating activities for the year ended December 31, 2018 is primarily dueto a $56.4 million favorable variance in working capital and $0.4 million in other non-cash charges. Offsetting was a decrease in operating results of $6.6 millionand an unfavorable variance in other non-current assets and liabilities of $1.6 million. Net cash provided by discontinued operating activities decreased $12.7million.Net cash provided by (used in) investing activities. Net cash provided by investing activities for the year ended December 31, 2018 increased primarily asa result of a $180.6 million increase in net cash provided by discontinued investing activities. Additionally, a decrease in cash used in investing activities as a resultof the acquisition of certain asphalt59terminalling assets from Martin Resource Management Corporation in 2017, compared to no acquisitions in 2018, resulted in an increase of $19.5 million. Further,a decrease in cash used of $6.4 million is due to lower payments for capital expenditures and plant turnaround costs in 2018. Offsetting was a $15.0 million declinein proceeds received resulting from repayment of the Note receivable - affiliate in 2017 as compared to none in 2018 as well as a $2.2 million decrease in proceedsreceived as a result of higher sales of property, plant and equipment in 2017.Net cash used in financing activities. Net cash used in financing activities increased for the year ended December 31, 2018 as a result of an increase in netrepayments of long-term borrowings of $162.0 million as well as a decrease in proceeds received from the issuance of common units (including the related generalpartner contribution) of $52.3 million. An additional increase of $1.5 million related to cash distributions paid and $14.8 million related to a preacquisitiondistribution to Martin Resource Management Corporation. An increase of $1.2 million related to costs associated with our credit facility amendment. Offsettingwas a decrease in cash used of $6.7 million related to excess purchase price over the carrying value of acquired assets in common control transactions.Total Contractual Obligations A summary of our total contractual obligations as of December 31, 2019 is as follows (dollars in thousands): Payments due by periodType of ObligationTotalObligation Less thanOne Year 1-3Years 3-5Years More than 5yearsRevolving credit facility (1)$201,000 $— $— $201,000 $—2021 senior unsecured notes373,800 — 373,800 — —Throughput commitment9,299 6,280 3,019 — —Operating leases28,735 8,755 9,585 3,586 6,809Finance lease obligations7,475 6,758 717 Interest payable on finance lease obligations323 291 32 Interest payable on fixed long-term obligations30,489 27,101 3,388 — —Total contractual cash obligations$651,121 $49,185 $390,541 $204,586 $6,809(1) The revolving credit facility matures on (a) August 31, 2023, or (b) August 19, 2020 if the 2021 Notes have not been voluntarily refinanced on orprior to August 19, 2020. The interest payable under our revolving credit facility is not reflected in the above table because such amounts depend on the outstanding balances andinterest rates, which vary from time to time.Letter of Credit. At December 31, 2019, we had outstanding irrevocable letters of credit in the amount of $12.6 million, which were issued under ourrevolving credit facility.Off Balance Sheet Arrangements. We do not have any off-balance sheet financing arrangements. 2021 Senior NotesWe and Martin Midstream Finance Corp., a subsidiary of us (collectively, the "Issuers"), entered into (i) an Indenture, dated as of February 11, 2013 (the"2021 Indenture") among the Issuers, certain subsidiary guarantors (the "2021 Guarantors") and Wells Fargo Bank, National Association, as trustee (the "2021Trustee") and (ii) a Registration Rights Agreement, dated as of February 11, 2013 (the "2021 Registration Rights Agreement"), among the Issuers, the 2021Guarantors and Wells Fargo Securities, LLC, RBC Capital Markets, LLC, RBS Securities Inc., SunTrust Robinson Humphrey, Inc. and Merrill Lynch, Pierce,Fenner & Smith Incorporated, as representatives of a group of initial purchasers, in connection with a private placement to eligible purchasers of $250.0 million inaggregate principal amount of the Issuers' 7.25% senior unsecured notes due 2021 (the "2021 Notes"). On April 1, 2014, we completed a private placement add-onof $150.0 million of the 2021 Notes. In 2015, we repurchased on the open market and subsequently retired an aggregate $26.2 million of our outstanding 2021Notes.Interest and Maturity. The Issuers issued the 2021 Notes pursuant to the 2021 Indenture in transactions exempt from registration requirements under theSecurities Act. The 2021 Notes were resold to qualified institutional buyers pursuant to60Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act. The 2021 Notes will mature onFebruary 15, 2021. The interest payment dates are February 15 and August 15. Optional Redemption. The Issuers may on any one or more occasions redeem all or a part of the 2021 Notes at a redemption price equal to 100% of theprincipal amount thereof, plus accrued and unpaid interest, if any, to the applicable redemption date on the 2021 Notes.Certain Covenants. The 2021 Indenture restricts our ability and the ability of certain of our subsidiaries to: (i) sell assets including equity interests in oursubsidiaries; (ii) pay distributions on, redeem or repurchase our units or redeem or repurchase our subordinated debt; (iii) make investments; (iv) incur orguarantee additional indebtedness or issue preferred units; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions or other paymentsfrom our restricted subsidiaries to us; (vii) consolidate, merge or transfer all or substantially all of our assets; (viii) engage in transactions with affiliates; (ix) createunrestricted subsidiaries; (x) enter into sale and leaseback transactions; or (xi) engage in certain business activities. These covenants are subject to a number ofimportant exceptions and qualifications. If the 2021 Notes achieve an investment grade rating from each of Moody's Investors Service, Inc. and Standard & Poor'sRatings Services and no Default (as defined in the 2021 Indenture) has occurred and is continuing, many of these covenants will terminate. Events of Default. The 2021 Indenture provides that each of the following is an Event of Default: (i) default for 30 days in the payment when due ofinterest on the 2021 Notes; (ii) default in payment when due of the principal of, or premium, if any, on the 2021 Notes; (iii) failure by us to comply with certaincovenants relating to asset sales, repurchases of the 2021 Notes upon a change of control and mergers or consolidations; (iv) failure by us for 180 days after noticeto comply with our reporting obligations under the Exchange Act; (v) failure by us for 60 days after notice to comply with any of the other agreements in the 2021Indenture; (vi) default under any mortgage, indenture or instrument governing any indebtedness for money borrowed or guaranteed by us or any of our restrictedsubsidiaries, whether such indebtedness or guarantee now exists or is created after the date of the 2021 Indenture, if such default: (a) is caused by a paymentdefault; or (b) results in the acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of the indebtedness, together withthe principal amount of any other such indebtedness under which there has been a payment default or acceleration of maturity, aggregates $20.0 million or more,subject to a cure provision; (vii) failure by us or any of our restricted subsidiaries to pay final judgments aggregating in excess of $20.0 million, which judgmentsare not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the 2021 Indenture, any subsidiary guarantee is held in any judicialproceeding to be unenforceable or invalid or ceases for any reason to be in full force or effect, or any 2021 Guarantor, or any person acting on behalf of anyGuarantor, denies or disaffirms its obligations under its subsidiary guarantee; and (ix) certain events of bankruptcy, insolvency or reorganization described in the2021 Indenture with respect to the Issuers or any of our restricted subsidiaries that is a significant subsidiary or any group of restricted subsidiaries that, takentogether, would constitute a significant subsidiary of us. Upon a continuing Event of Default, the 2021 Trustee, by notice to the Issuers, or the holders of at least25% in principal amount of the then outstanding 2021 Notes, by notice to the Issuers and the 2021 Trustee, may declare the 2021 Notes immediately due andpayable, except that an Event of Default resulting from entry into a bankruptcy, insolvency or reorganization with respect to the Issuers, any restricted subsidiaryof us that is a significant subsidiary or any group of its restricted subsidiaries that, taken together, would constitute a significant subsidiary of us, willautomatically cause the 2021 Notes to become due and payable.Revolving Credit FacilityAt December 31, 2019, we maintained a $400.0 million revolving credit facility. The revolving credit facility matures on (a) August 31, 2023, or (b)August 19, 2020 if the 2021 Notes have not been voluntarily refinanced on or prior to August 19, 2020.As of December 31, 2019, we had $201.0 million outstanding under the revolving credit facility and $12.6 million of outstanding irrevocable letters ofcredit, leaving a maximum available to be borrowed under our credit facility for future revolving credit borrowings and letters of credit of $186.4 million. Aftergiving effect to our then current borrowings, outstanding letters of credit and the financial covenants contained in our revolving credit facility, we had the ability toborrow approximately $51.5 million in additional amounts thereunder as of December 31, 2019. The revolving credit facility is used for ongoing working capital needs and general partnership purposes, and to finance permitted investments,acquisitions and capital expenditures. During the year ended December 31, 2019, the outstanding balance of our revolving credit facility has ranged from a low of$201.0 million to a high of $455.0 million.The credit facility is guaranteed by substantially all of our subsidiaries. Obligations under the credit facility are secured by first priority liens onsubstantially all of our assets and those of the guarantors, including, without limitation,61inventory, accounts receivable, bank accounts, marine vessels, equipment, fixed assets and the interests in our subsidiaries and certain of our equity methodinvestees.We may prepay all amounts outstanding under the credit facility at any time without premium or penalty (other than customary LIBOR breakage costs),subject to certain notice requirements. The credit facility requires mandatory prepayments of amounts outstanding thereunder with the net proceeds of certain assetsales, equity issuances and debt incurrences.Indebtedness under the credit facility bears interest at our option at the Eurodollar Rate (the British Bankers Association LIBOR Rate) plus an applicablemargin or the Base Rate (the highest of the Federal Funds Rate plus 0.50%, the 30-day Eurodollar Rate plus 1.0%, or the administrative agent’s prime rate) plus anapplicable 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 revolvingcredit availability under the credit facility. The letter of credit fee, the commitment fee and the applicable margins for our interest rate vary quarterly based on ourleverage 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 as of December 31, 2019: Leverage RatioBase Rate Loans EurodollarRateLoans Letters of CreditLess than 3.00 to 1.001.25% 2.25% 2.25%Greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.001.50% 2.50% 2.50%Greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.001.75% 2.75% 2.75%Greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.002.00% 3.00% 3.00%Greater than or equal to 4.50 to 1.00 and less than 5.00 to 1.002.25% 3.25% 3.25%Greater than or equal to 5.00 to 1.002.50% 3.50% 3.50% At December 31, 2019, the applicable margin for revolving loans that are LIBOR loans ranges from 2.25% to 3.50% and the applicable margin forrevolving loans that are base prime rate loans ranges from 1.25% to 2.50%. The applicable margin for LIBOR borrowings at December 31, 2019 is 3.50%. The credit facility includes financial covenants that are tested on a quarterly basis, based on the rolling four quarter period that ends on the last day ofeach fiscal quarter.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 assumeindebtedness; (v) sell, transfer, assign or convey assets; (vi) repurchase our equity, make distributions and certain other restricted payments, but the credit facilitypermits us to make quarterly distributions to unitholders so long as no default or event of default exists under the credit facility; (vii) change the nature of ourbusiness; (viii) engage in transactions with affiliates; (ix) enter into certain burdensome agreements; (x) make certain amendments to our organizational documentsand other material agreements, including the Omnibus Agreement and our material agreements; (xi) make capital expenditures; and (xii) permit our joint venturesto 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 otheramounts when due; (ii) failure to meet the quarterly financial covenants; (iii) failure to observe any other agreement, obligation, or covenant in the credit facility orany related loan document, subject to cure periods for certain failures; (iv) the failure of any representation or warranty to be materially true and correct whenmade; (v) our, or any of our subsidiaries’ default under other indebtedness that exceeds a threshold amount; (vi) bankruptcy or other insolvency events involvingus 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 anyof our subsidiaries, in excess of a threshold amount; (ix) a change in control (as defined in the credit facility); and (x) the invalidity of any of the loan documents orthe failure 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 ManagementCorporation no longer controls our general partner, the lenders under the credit facility may declare all amounts outstanding thereunder immediately due andpayable. In addition, an event of default by Martin Resource Management Corporation under its credit facility could independently result in an event of defaultunder our credit facility if it is deemed to have a material adverse effect on us.62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 ourcredit facility will immediately become due and payable. If any other event of default exists under our credit facility, the lenders may terminate their commitmentsto lend us money, accelerate the maturity of the indebtedness outstanding under the credit facility and exercise other rights and remedies. In addition, if any eventof default exists under our credit facility, the lenders may commence foreclosure or other actions against the collateral.Capital Resources and LiquidityHistorically, we have generally satisfied our working capital requirements and funded our debt service obligations and capital expenditures with cashgenerated from operations and borrowings under our revolving credit facility.At December 31, 2019, we had cash and cash equivalents of $2.8 million and available borrowing capacity of $51.5 million in additional amounts underour revolving credit facility with $201.0 million of borrowings outstanding. Our revolving credit facility matures on August 31, 2023 unless our 2021 Notes havenot been refinanced on or before August 19, 2020. We are currently seeking to refinance the 2021 Notes, although no assurance can be given that we will be ableto refinance the 2021 Notes. Upon the successful refinancing of the 2021 Notes, 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 revolvingcredit 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. Please read "Item 1A. Risk Factors - Risks related to Our Business" for a discussion of such risks. In addition, due to thecovenants in our revolving credit facility, our financial and operating performance impacts the amount we are permitted to borrow under that facility. To address these challenges, over the last 18 months, we have taken a number of strategic actions to strengthen our balance sheet and reduce leverage,such as asset dispositions and acquisitions, reductions in the distributions payable to our unitholders and efforts to focus our growth on business segments with astronger economic outlook. For example, in an effort to preserve liquidity, we recently reduced the quarterly cash distribution per common unit to $0.0625beginning with the distribution payable for the fourth quarter of 2019. We expect this distribution reduction, along with the reduction announced in 2019, to resultin approximately $68.2 million in cash we can retain annually for debt reduction and investment in higher return opportunities. If we are unable to refinance the 2021 Notes and are unable to repay the outstanding borrowings under our revolving credit facility on August 19, 2020,we would be in default under our revolving credit facility. An event of default under our revolving credit facility would allow the lenders to declare the balanceoutstanding thereunder due and payable in full, which could trigger cross-defaults under other agreements, which could also result in the acceleration of thoseobligations by the counterparties to those agreements.The Partnership is in compliance with all debt covenants as of December 31, 2019 and expects to be in compliance for the next twelve months.Interest Rate RiskWe 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 raterisk.SeasonalityA substantial portion of our revenues is dependent on sales prices of products, particularly NGLs and fertilizers, which fluctuate in part based on winterand spring weather conditions. The demand for NGLs is strongest during the winter heating season and the refinery blending season. The demand for fertilizers isstrongest during the early spring planting season. However, our Terminalling and Storage and Transportation business segments and the molten sulfur business aretypically not impacted by seasonal fluctuations and a significant portion of our net income is derived from our Terminalling and Storage, Sulfur Services andTransportation business segments. Further, extraordinary weather events, such as hurricanes, have in the past, and could in the future, impact our Terminalling andStorage and Transportation business segments.63Impact of InflationInflation did not have a material impact on our results of operations in 2019, 2018 or 2017. Although the impact of inflation has been insignificant inrecent years, it is still a factor in the U.S. economy and may increase the cost to acquire or replace property, plant and equipment. It may also increase the costs oflabor and supplies. In the future, increasing energy prices could adversely affect our results of operations. Diesel fuel, natural gas, chemicals and other suppliesare recorded in operating expenses. An increase in price of these products would increase our operating expenses which could adversely affect net income. Wecannot provide assurance that we will be able to pass along increased operating expenses to our customers.Environmental MattersOur operations are subject to environmental laws and regulations adopted by various governmental authorities in the jurisdictions in which theseoperations are conducted. We incurred no material environmental costs, liabilities or expenditures to mitigate or eliminate environmental contamination during2019, 2018 or 2017.64Item 7A.Quantitative and Qualitative Disclosures about Market RiskCommodity Risk. The Partnership from time to time uses derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverseeffect on the value of a liability or future purchase that results from a change in commodity price. We have established a hedging policy and monitor and managethe commodity market risk associated with potential commodity risk exposure. In addition, we focus on utilizing counterparties for these transactions whosefinancial condition is appropriate for the credit risk involved in each specific transaction. We have entered into hedging transactions as of December 31, 2019 to protect a portion of our commodity price risk exposure. These hedgingarrangements are in the form of swaps for NGLs. We have instruments totaling a gross notional quantity of 452,000 barrels settling during the period from January31, 2020 through February 29, 2020. These instruments settle against the applicable pricing source for each grade and location. These instruments are recorded onour Consolidated Balance Sheets at December 31, 2019 in "Fair value of derivatives" as a current liability of $0.7 million. Based on the current net notional volumehedged as of December 31, 2019, a $0.10 change in the expected settlement price of these contracts would result in an impact of $1.9 million to the Partnership'snet income.Interest Rate Risk. We are exposed to changes in interest rates as a result of our credit facility, which had a weighted-average interest rate of 5.26% as ofDecember 31, 2019. Based on the amount of unhedged floating rate debt owed by us on December 31, 2019, the impact of a 100 basis point increase in interestrates on this amount of debt would result in an increase in interest expense and a corresponding decrease in net income of approximately $2.0 million annually.We are not exposed to changes in interest rates with respect to our senior unsecured notes as these obligations are fixed rate. The estimated fair value ofthe 2021 Notes was approximately $343.5 million as of December 31, 2019, based on market prices of similar debt at December 31, 2019. Market risk isestimated as the potential decrease in fair value of our long-term debt resulting from a hypothetical increase of a 100 basis point increase in interest rates. Such anincrease in interest rates would result in approximately a $3.5 million decrease in fair value of our long-term debt at December 31, 2019. 65Item 8.Financial Statements and Supplementary DataThe following financial statements of Martin Midstream Partners L.P. (Partnership) are listed below: PageReports of Independent Registered Public Accounting Firm67Consolidated Balance Sheets as of December 31, 2019 and 201869Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 201770Consolidated Statements of Changes in Capital (Deficit) for the years ended December 31, 2019, 2018 and 201773Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 201774Notes to Consolidated Financial Statements7566Report of Independent Registered Public Accounting Firm To the Unitholders and Board of DirectorsMartin Midstream Partners L.P. and Martin Midstream GP LLC:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Martin Midstream Partners L.P. and subsidiaries (the Partnership) as of December 31, 2019 and2018, the related consolidated statements of operations, changes in capital (deficit), and cash flows for each of the years in the three‑year period endedDecember 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly,in all material respects, the financial position of the Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each ofthe years in the three‑year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internalcontrol over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission, and our report dated February 14, 2020 expressed an unqualified opinion on theeffectiveness of the Partnership’s internal control over financial reporting.Acquisition of Martin Transport, Inc.As discussed in Note 2(a), the acquisition of Martin Transport, Inc. (MTI) on January 2, 2019 has been accounted for as a transfer of net assets between entitiesunder common control in a manner similar to a pooling of interests. The Partnership’s historical consolidated financial statements have been retrospectivelyrevised to reflect the effects on financial position, cash flows, and results of operations attributable to the activities of MTI for all periods presented.Change in Accounting PrincipleAs discussed in note 3 to the consolidated financial statements, the Partnership has changed its method of accounting for leases in 2019 due to the adoption ofAccounting Standards Codification 842, Leases.Basis for OpinionThese consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to thePartnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and thePCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLP We have served as the Partnership’s auditor since 2002.Dallas, TexasFebruary 14, 2020 67Report of Independent Registered Public Accounting FirmTo the Unitholders and Board of DirectorsMartin Midstream Partners L.P. and Martin Midstream GP LLC:Opinion on Internal Control Over Financial ReportingWe have audited Martin Midstream Partners L.P. and subsidiaries’ (the Partnership) internal control over financial reporting as of December 31, 2019, based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In ouropinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balancesheets of the Partnership as of December 31, 2019 and 2018, the related consolidated statements of operations, changes in capital (deficit), and cash flows for eachof the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements), and our report datedFebruary 14, 2020 expressed an unqualified opinion on those consolidated financial statements.Basis for OpinionThe Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility isto express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOBand are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ KPMG LLP Dallas, TexasFebruary 14, 202068MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED BALANCE SHEETS(Dollars in thousands) December 31, 2019 20181Assets Cash$2,856 $300Trade and accrued accounts receivable, less allowance for doubtful accounts of $532 and $576, respectively87,254 83,488Product exchange receivables— 166Inventories (Note 7)62,540 84,265Due from affiliates17,829 18,845Fair value of derivatives (Note 13)— 4Other current assets5,833 5,889Assets held for sale (Note 5)5,052 5,652Current assets - Natural Gas Storage Assets (Note 5)— 9,428Total current assets181,364 208,037 Property, plant and equipment, at cost (Note 8)884,728 886,435Accumulated depreciation(467,531) (438,602)Property, plant and equipment, net417,197 447,833 Goodwill (Note 9)17,705 17,785Right-of-use assets (Note 10)23,901 —Deferred income taxes, net (Note 19)23,422 —Intangibles and other assets, net (Note 15)3,567 4,584Non current assets - Natural Gas Storage Assets (Note 5)— 395,389 $667,156 $1,073,628Liabilities and Partners’ Capital (Deficit) Current portion of finance lease obligations (Note 10)$6,758 $5,409Trade and other accounts payable64,802 64,041Product exchange payables4,322 12,103Due to affiliates1,470 2,133Income taxes payable (Note 19)472 445Fair value of derivatives (Note 13)667 —Other accrued liabilities (Note 15)28,789 24,380Current liabilities - Natural Gas Storage Assets (Note 5)— 3,240Total current liabilities107,280 111,751 Long-term debt, net (Note 16)569,788 656,459Finance lease obligations (Note 10)717 6,272Operating lease liabilities (Note 10)16,656 —Other long-term obligations8,911 10,045Non current liabilities - Natural Gas Storage Assets— 669Total liabilities703,352 785,196Commitments and contingencies (Note 22) Partners’ capital (deficit) (Note 17)(36,196) 288,432Total partners’ capital (deficit)(36,196) 288,432 $667,156 $1,073,628See accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant AccountingPolicies and Practices.69MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per unit amounts) Year Ended December 31, 2019 20181 20171Revenues: Terminalling and storage *$87,397 $96,204 $99,643Transportation *159,622 150,121 135,350Sulfur services11,434 11,148 10,952Product sales: * Natural gas liquids366,502 496,007 473,317Sulfur services99,906 121,388 123,732Terminalling and storage122,257 145,236 130,392 588,665 762,631 727,441Total revenues847,118 1,020,104 973,386 Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Natural gas liquids *325,376 449,103 406,388Sulfur services *65,893 83,641 76,119Terminalling and storage *101,526 126,562 112,168 492,795 659,306 594,675Expenses: Operating expenses *209,313 216,182 228,778Selling, general and administrative *41,433 39,116 39,080Impairment of long-lived assets— — 2,225Depreciation and amortization60,060 61,484 65,108Total costs and expenses803,601 976,088 929,866Other operating income, net14,587 1,041 2,096Operating income58,104 45,057 45,616 Other income (expense): Interest expense, net(51,690) (52,349) (47,770)Other, net6 38 1,129Total other income (expense)(51,684) (52,311) (46,641)Net income (loss) before taxes6,420 (7,254) (1,025)Income tax expense(1,900) (577) (158)Income (loss) from continuing operations4,520 (7,831) (1,183)Income (loss) from discontinued operations, net of income taxes(179,466) 63,486 21,099Net income (loss)(174,946) 55,655 19,916Less general partner's interest in net (income) loss3,499 (882) (343)Less pre-acquisition income allocated to the general partner— (11,550) (2,781)Less income allocable to unvested restricted units(41) (28) (42)Limited partners' interest in net income (loss)$(171,488) $43,195 $16,750*Related Party Transactions Shown BelowSee accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant AccountingPolicies and Practices.70MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per unit amounts)*Related Party Transactions Included Above Year Ended December 31, 2019 20181 20171Revenues: Terminalling and storage$71,733 $79,137 $82,142Transportation24,243 27,588 29,807Natural gas liquids— — 122Product sales931 1,297 3,497Costs and expenses: Cost of products sold: (excluding depreciation and amortization) Natural gas liquids— — 4,354Sulfur services10,765 10,641 9,345 Terminalling and storage23,859 24,613 16,672Expenses: Operating expenses88,194 90,878 95,546Selling, general and administrative32,622 26,441 26,393See accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant AccountingPolicies and Practices.71MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per unit amounts) Year Ended December 31, 2019 20181 20171Allocation of net income (loss) attributable to: Limited partner interest: Continuing operations$4,430 $(18,982) $(3,875) Discontinued operations(175,918) 62,177 20,625 $(171,488) $43,195 $16,750General partner interest: Continuing operations$91 $(387) $(79) Discontinued operations(3,590) 1,269 422 $(3,499) $882 $343 Net income (loss) per unit attributable to limited partners: Basic: Continuing operations$0.11 $(0.49) $(0.10)Discontinued operations(4.55) 1.60 0.54 $(4.44) $1.11 $0.44 Weighted average limited partner units - basic38,659 38,907 38,102 Diluted: Continuing operations$0.11 $(0.49) $(0.10)Discontinued operations(4.55) 1.60 0.54 $(4.44) $1.11 $0.44 Weighted average limited partner units - diluted38,659 38,923 38,165See accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant AccountingPolicies and Practices.72MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (DEFICIT)(Dollars in thousands) Partners’ Capital (Deficit) Parent NetInvestment Common General Partner Units Amount Amount TotalBalances – December 31, 20161$19,054 35,452,062 $304,594 $7,412 $331,060 Net income2,781 — 16,792 343 19,916Issuance of common units, net— 2,990,000 51,056 — 51,056Issuance of restricted units— 12,000 — — —Forfeiture of restricted units— (9,250) — — —General partner contribution— — — 1,098 1,098Cash distributions— — (75,399) (1,539) (76,938)Deemed contribution from Martin Resource Management Corporation2,405 — — — 2,405Reimbursement of excess purchase price over carrying value of acquiredassets— — 1,125 — 1,125Excess carrying value of the assets over the purchase price paid by MartinResource Management— — (7,887) — (7,887)Unit-based compensation— — 650 — 650Purchase of treasury units— (200) (4) — (4)Balances – December 31, 2017124,240 38,444,612 290,927 7,314 322,481 Net income11,550 — 43,223 882 55,655Issuance of common units, net— — (118) — (118)Issuance of time-based restricted units— 315,500 — — —Issuance of performance-based restricted units 317,925 —Forfeiture of restricted units— (27,000) — — —Cash distributions— — (76,872) (1,569) (78,441)Deemed distribution from Martin Resource Management Corporation(12,070) — — — (12,070)Excess purchase price over carrying value of acquired assets— — (26) — (26)Unit-based compensation— — 1,224 — 1,224Purchase of treasury units— (18,800) (273) — (273)Balances – December 31, 2018123,720 39,032,237 258,085 6,627 288,432 Net loss— — (171,447) (3,499) (174,946)Issuance of common units, net— — (289) — (289)Issuance of time-based restricted units— 16,944 — — —Forfeiture of restricted units— (154,288) — — —Cash distributions— — (48,111) (982) (49,093)Excess purchase price over carrying value of acquired assets — (102,393) — (102,393)Deferred taxes on acquired assets and liabilities— — 24,781 — 24,781Unit-based compensation— — 1,424 — 1,424Purchase of treasury units— (31,504) (392) — (392)Contribution to parent(23,720) — — — (23,720)Balances – December 31, 2019$— 38,863,389 $(38,342) $2,146 $(36,196)See accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant Accounting Policies andPractices.73MARTIN MIDSTREAM PARTNERS L.P.CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands) Year Ended December 31, 2019 20181 20171Cash flows from operating activities: Net income (loss)$(174,946) $55,655 $19,916Less: (Income) loss from discontinued operations179,466 (63,486) (21,099)Net income (loss) from continuing operations4,520 (7,831) (1,183)Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization60,060 61,484 65,108Amortization and write-off of deferred debt issue costs4,041 3,445 2,897Amortization of premium on notes payable(306) (306) (306)Deferred income tax expense (benefit)1,360 208 (156)Gain on disposition or sale of property, plant, and equipment(13,332) (1,041) (2,090)Impairment of long lived assets— — 2,225Derivative (income) loss5,137 (14,024) 1,304Net cash (paid) received for commodity derivatives(4,466) 13,948 (5,136)Unit-based compensation1,424 1,224 650Change in current assets and liabilities, excluding effects of acquisitions and dispositions: Accounts and other receivables62 29,085 (29,384)Product exchange receivables166 (137) 178Inventories21,493 13,370 (14,927)Due from affiliates1,822 5,961 (12,096)Other current assets(254) 1,485 (1,743)Trade and other accounts payable(898) (27,321) 19,263Product exchange payables(7,781) 555 4,829Due to affiliates(1,469) 99 (5,564)Income taxes payable27 (65) (360)Other accrued liabilities(3,017) (6,636) (223)Change in other non-current assets and liabilities(543) 1,206 2,780Net cash provided by continuing operating activities68,046 74,709 26,066Net cash provided by discontinued operating activities7,769 30,321 43,018Net cash provided by operating activities75,815 105,030 69,084Cash flows from investing activities: Payments for property, plant, and equipment(30,621) (35,255) (41,932)Acquisitions, net of cash acquired(23,720) — (19,533)Payments for plant turnaround costs(5,677) (1,893) (1,583)Proceeds from sale of property, plant, and equipment20,660 11,483 13,676Proceeds from involuntary conversion of property, plant and equipment5,031 — —Proceeds from repayment of Note receivable - affiliate— — 15,000Net cash used in continuing investing activities(34,327) (25,665) (34,372)Net cash provided by (used in) discontinued investing activities209,155 173,287 (7,263)Net cash provided by (used in) investing activities174,828 147,622 (41,635)Cash flows from financing activities: Payments of long-term debt(729,514) (559,201) (339,224)Proceeds from long-term debt638,000 399,000 341,000Net proceeds from issuance of common units(289) (118) 51,056General partner contributions— — 1,098Deemed contribution from (distribution to) Martin Resource Management— (12,070) 2,405Excess purchase price over carrying value of acquired assets(102,393) (26) (7,887)Reimbursement of excess purchase price over carrying value of acquired assets— — 1,125Purchase of treasury units(392) (273) (4)Payments of debt issuance costs(4,406) (1,312) (66)Cash distributions paid(49,093) (78,441) (76,938)Net cash used in financing activities(248,087) (252,441) (27,435) Net increase in cash2,556 211 14Cash at beginning of year300 89 75Cash at end of year$2,856 $300 $89 See accompanying notes to consolidated financial statements.1 Financial information has been revised to include results attributable to MTI acquired from Martin Resource Management Corporation. See Note 2 – Significant Accounting Policies andPractices.74MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESSMartin Midstream Partners L.P. (the "Partnership") is a publicly traded limited partnership with a diverse set of operations focused primarily in theUnited States ("U.S.") Gulf Coast region. Its four primary business lines include: terminalling, processing, storage and packaging services for petroleum productsand by-products including the refining of naphthenic crude oil; land and marine transportation services for petroleum products and by-products, chemicals, andspecialty products; sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and NGL marketing, distribution, and transportationservices.The Partnership provide specialty services to major and independent oil and gas companies, independent refiners, large chemical companies, and otherwholesale purchasers of certain petroleum products and by-products, with significant business concentrated around the U.S. Gulf Coast refinery complex, which isa major hub for petroleum refining, natural gas gathering and processing, and support services for the exploration and production industry. The petroleum productsand by-products the Partnership gathers, transports, stores and markets are produced primarily by major and independent oil and gas companies who often rely onthird parties, such as the Partnership, for the transportation and disposition of these products.On August 30, 2013, Martin Resource Management Corporation completed the sale of a 49% non-controlling voting interest (50% economic interest) inMMGP Holdings, LLC ("Holdings"), a newly-formed sole member of Martin Midstream GP LLC ("MMGP"), the general partner of the Partnership, to certainaffiliated investment funds managed by Alinda Capital Partners ("Alinda"). Upon closing the transaction, Alinda appointed two representatives to serve on theboard of directors of the general partner of the Partnership.NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES(a) Principles of Presentation and ConsolidationThe consolidated financial statements include the financial statements of the Partnership and its wholly-owned subsidiaries and equity methodinvestees. In the opinion of the management of the Partnership’s general partner, all adjustments and elimination of significant intercompany balances necessaryfor a fair presentation of the Partnership’s results of operations, financial position and cash flows for the periods shown have been made. All such adjustments areof a normal recurring nature. In addition, the Partnership evaluates its relationships with other entities to identify whether they are variable interest entities undercertain provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), 810-10 and to assess whether it is theprimary beneficiary of such entities. If the determination is made that the Partnership is the primary beneficiary, then that entity is included in the consolidatedfinancial statements in accordance with ASC 810-10. No such variable interest entities exist as of December 31, 2019 or 2018.Divestiture of Natural Gas Storage Assets. On June 28, 2019, the Partnership completed the sale of its membership interests in Arcadia Gas Storage,LLC, Cadeville Gas Storage LLC, Monroe Gas Storage Company, LLC and Perryville Gas Storage LLC (the "Natural Gas Storage Assets") to Hartree CardinalGas, LLC ("Hartree"), a subsidiary of Hartree Bulk Storage, LLC. The Natural Gas Storage Assets consist of approximately 50 billion cubic feet of workingcapacity located in northern Louisiana and Mississippi. In consideration of the sale of the Natural Gas Storage Assets, the Partnership received cash proceeds of$210,067 after transaction fees and expenses. The net proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility. ThePartnership has concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward. As a result, the Partnershiphas presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the years ended December 31, 2019,2018, and 2017. See Note 5 for more information.Acquisition of Martin Transport, Inc. On January 2, 2019, the Partnership acquired all of the issued and outstanding equity interests of MartinTransport, Inc. ("MTI") from Martin Resource Management Corporation. MTI operates a fleet of tank trucks providing transportation of petroleum products,liquid petroleum gas, chemicals, sulfur and other products, as well as owns 23 terminals located throughout the U.S. Gulf Coast and Southeastern United States.The acquisition of MTI was considered a transfer of net assets between entities under common control. As a result, the acquisition of MTI was recordedat amounts based on the historical carrying value of these assets at January 1, 2019, and the Partnership is required to update its historical financial statements toinclude the activities of MTI as of the date of common75MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)control. See Note 4 for more information. The Partnership’s accompanying historical financial statements have been retrospectively updated to reflect the effectson financial position, cash flows and results of operations attributable to the activities of MTI as if the Partnership owned these assets for the periods presented. SeeNote 4 for separate results of MTI for the years ended December 31, 2018 and 2017. Net income attributable to MTI for periods prior to the Partnership’sacquisition of the assets is not allocated to the limited partners for purposes of calculating net income per limited partner unit. See Note 17.Divestiture of WTLPG Partnership Interest. On July 31, 2018, the Partnership completed the sale of its 20 percent non-operating interest in West TexasLPG Pipeline L.P. ("WTLPG") to ONEOK, Inc. ("ONEOK"). WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transportsNGLs from New Mexico and Texas to Mont Belvieu, Texas for fractionation. A wholly-owned subsidiary of ONEOK, Inc. is the operator of the assets. ThePartnership has concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward. As a result, the Partnershiphas presented the results of operations and cash flows relating to its equity method investment in WTLPG as discontinued operations for the years ended December31, 2018 and 2017. See Note 5 for more information.(b) Product Exchanges The Partnership enters into product exchange agreements with third parties, whereby the Partnership agrees to exchange NGLs and sulfur with thirdparties. The Partnership records the balance of exchange products due to other companies under these agreements at quoted market product prices and the balanceof exchange products due from other companies at the lower of cost or market. Cost is determined using the first-in, first-out ("FIFO") method. Productexchanges with the same counterparty are entered into in contemplation of one another and are combined. The net amount related to location differentials isreported in "Product sales" or "Cost of products sold" in the Consolidated Statements of Operations. (c) Inventories Inventories are stated at the lower of cost or market. Cost is generally determined by using the FIFO method for all inventories except lubricants andlubricants packaging inventories. Lubricants and lubricants packaging inventories cost is determined using standard cost, which approximates actual cost,computed on a FIFO basis. (d) Revenue Recognition Terminalling and Storage – 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 isrecognized based on the contracted monthly reservation fee and throughput volumes moved through the facility. When lubricants and drilling fluids are sold bytruck or rail, revenue is recognized when title is transfered, which is either upon delivering product to the customer or when the product leaves the Partnership'sfacility, depending on the specific terms of the contract. Delivery of product is invoiced as the transaction occurs and is generally paid within a month. Transportation – Revenue related to land transportation is recognized for line hauls based on a mileage rate. For contracted trips, revenue is recognizedupon 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 uponcompletion of the particular trip. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.Sulfur Services – Revenue from sulfur and fertilizer product sales is recognized when the customer takes title to the product. Delivery of product isinvoiced as the transaction occurs and is generally paid within a month. Revenue from sulfur services is recognized as services are performed during each monthlyperiod. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.Natural Gas Liquids – NGL distribution 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 amonth. 76MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)(e) Equity Method Investments The Partnership uses the equity method of accounting for investments in unconsolidated entities where the ability to exercise significant influence oversuch entities exists. Investments in unconsolidated entities consist of capital contributions and advances plus the Partnership’s share of accumulated earnings as ofthe entities’ latest fiscal year-ends, less capital withdrawals and distributions. Equity method investments are subject to impairment under the provisions of ASC323-10, which relates to the equity method of accounting for investments in common stock. No portion of the net income from these entities is included in thePartnership’s operating income.(f) Property, Plant, and EquipmentOwned property, plant, and equipment is stated at cost, less accumulated depreciation. Owned buildings and equipment are depreciated using straight-line method over the estimated lives of the respective assets.Equipment under finance leases is stated at the present value of minimum lease payments less accumulated amortization. Equipment under finance leasesis amortized on a straight line basis over the estimated useful life of the asset.Routine maintenance and repairs are charged to expense while costs of betterments and renewals are capitalized. When an asset is retired or sold, its costand related accumulated depreciation are removed from the accounts, and the difference between net book value of the asset and proceeds from disposition isrecognized as gain or loss. (g) Goodwill and Other Intangible AssetsGoodwill is subject to a fair-value based impairment test on an annual basis, or more often if events or circumstances indicate there may be impairment.The Partnership is required to identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, includingthe existing goodwill and intangible assets. The Partnership is required to determine the fair value of each reporting unit and compare it to the carrying amount ofthe reporting unit. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, the Partnership will record the amount ofgoodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reportingunit.When assessing the recoverability of goodwill and other intangible assets, the Partnership may first assess qualitative factors in determining whether it ismore likely than not that the fair value of a reporting unit or other intangible asset is less than its carrying amount. After assessing qualitative factors, if thePartnership determines that it is not more likely than not that the fair value of a reporting unit or other intangible asset is less than its carrying amount, thenperforming a quantitative assessment is not required. If an initial qualitative assessment indicates that it is more likely than not the carrying amount exceeds thefair value of a reporting unit or other intangible asset, a quantitative analysis will be performed. The Partnership may also elect to bypass the qualitative assessmentand proceed directly to a quantitative analysis depending on the facts and circumstances.Of the Partnership's four reporting units, the terminalling and storage, transportation, and sulfur services reporting units contain goodwill. No goodwillimpairment was recorded for the years ended December 31, 2019, 2018, or 2017.In performing a quantitative analysis, recoverability of goodwill for each reporting unit is measured using a weighting of the discounted cash flow methodand two market approaches (the guideline public company method and the guideline transaction method). The discounted cash flow model incorporates discountrates commensurate with the risks involved. Use of a discounted cash flow model is common practice in assessing impairment in the absence of availabletransactional market evidence to determine the fair value. The key assumptions used in the discounted cash flow valuation model include discount rates, growthrates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as theyrequire significant management judgment. Discount rates are determined by using a weighted average cost of capital ("WACC"). The WACC considers market andindustry data as well as company-specific risk factors for each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized foreach reporting unit is indicative of the return an investor would expect to receive for investing in such a business. Management, considering industry and companyspecific historical and projected data, develops growth rates and cash flow projections for each reporting unit. Terminal value rate determination follows commonmethodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and low long-termgrowth77MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)rates. If the calculated fair value is less than the current carrying amount, the Partnership will record the amount of goodwill impairment as the excess of a reportingunit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.Significant changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit which could give riseto future impairment. Changes to these estimates and assumptions can include, but may not be limited to, varying commodity prices, volume changes andoperating costs due to market conditions and/or alternative providers of services.Other intangible assets that have finite lives are tested for impairment when events or circumstances indicate that the carrying value may not berecoverable. An impairment is indicated if the carrying amount of a long-lived intangible asset exceeds the sum of the undiscounted future cash flows expected toresult from the use and eventual disposition of the asset. If impairment is indicated, the Partnership would record an impairment loss equal to the differencebetween the carrying value and the fair value of the asset. There were no intangible asset impairments in 2019, 2018 or 2017. (h) Debt Issuance CostsDebt issuance costs relating to the Partnership’s revolving credit facility and senior unsecured notes are deferred and amortized over the terms of the debtarrangements and are shown, net of accumulated amortization, as a reduction of the related long-term debt.In connection with the issuance, amendment, expansion and restatement of debt arrangements, the Partnership incurred debt issuance costs of $4,406,$1,312 and $66 in the years ended December 31, 2019, 2018 and 2017, respectively.In connection with the Partnership's July 18, 2019 revolving credit facility amendment, the Partnership expensed $608 of unamortized debt issuance costsdetermined not to have continuing benefit.Remaining unamortized deferred issuance costs are amortized over the term of each respective revised debt arrangement.Amortization and write-off of debt issuance costs, which is included in interest expense, totaled $4,041, $3,445 and $2,897 for the years endedDecember 31, 2019, 2018 and 2017, respectively. Accumulated amortization amounted to $24,644 and $20,607 at December 31, 2019 and 2018, respectively. (i) Impairment of Long-Lived Assets In accordance with ASC 360-10, long-lived assets, such as property, plant and equipment, and intangible assets with definite lives are reviewed forimpairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be heldand used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If thecarrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the assetexceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount orfair value less costs to sell and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presentedseparately in the appropriate asset and liability sections of the balance sheet. In the fourth quarter of 2017, the Partnership identified a triggering event related to the planned disposition of certain assets that were no longer deemedcore assets in the Partnership's Marine Transportation division of the Transportation segment. The triggering event was the assets' inability to generate cash flowsin recent quarters and going forward. As a result, an impairment charge of $1,625 was recorded in the Transportation segment results of operations in the fourthquarter of 2017. Additionally, the Partnership recorded an adjustment to the fair value less cost to sell of a certain asset classified as held for sale in the MartinLubricants division of the Terminalling and Storage segment. As a result, an impairment charge of $600 was recorded in the Terminalling and Storage segmentresults of operations in the fourth quarter of 2017.On August 25, 2017, Hurricane Harvey made landfall as a Category 4 hurricane. The storm lingered over Texas and Louisiana for days producing over 50inches of rain in some areas, resulting in widespread flooding and damage. The78MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Partnership experienced an impact from Hurricane Harvey in our Terminalling and Storage and Sulfur Services segments, where damages were suffered to thePartnership's property, plant, and equipment at its Neches, Stanolind, Galveston, and Harbor Island terminals located along the Texas gulf coast. The damageincurred did not exceed the insurance deductible at these locations and therefore the Partnership did not receive any insurance proceeds resulting from the damagefrom Hurricane Harvey. In the third quarter of 2017, the Partnership recorded a write-off in the amount of $186 related to assets damaged. (j) Asset Retirement Obligations Under ASC 410-20, which relates to accounting requirements for costs associated with legal obligations to retire tangible, long-lived assets, thePartnership records an asset retirement obligation ("ARO") at fair value in the period in which it is incurred by increasing the carrying amount of the related long-lived asset. In each subsequent period, the liability is accreted over time towards the ultimate obligation amount and the capitalized costs are depreciated over theuseful life of the related asset. (k) Derivative Instruments and Hedging Activities In accordance with certain provisions of ASC 815-10 related to accounting for derivative instruments and hedging activities, all derivatives and hedginginstruments are included in the Consolidated Balance Sheets as an asset or liability measured at fair value and changes in fair value are recognized currently inearnings unless specific hedge accounting criteria are met. If a derivative qualifies for hedge accounting, changes in the fair value can be offset against the changein the fair value of the hedged item through earnings or recognized in other comprehensive income until such time as the hedged item is recognized in earnings. Derivative instruments not designated as hedges are marked to market with all market value adjustments being recorded in the Consolidated Statements ofOperations. (l) Use of EstimatesManagement has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets andliabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted in the U.S. Actual results could differfrom those estimates. (m) Indirect Selling, General and Administrative Expenses Indirect selling, general and administrative expenses are incurred by Martin Resource Management Corporation and allocated to the Partnership to covercosts of centralized corporate functions such as accounting, treasury, engineering, information technology, risk management and other corporate services. Suchexpenses are based on the percentage of time spent by Martin Resource Management Corporation’s personnel that provide such centralized services. Under anomnibus agreement with Martin Resource Management Corporation, the Partnership is required to reimburse Martin Resource Management Corporation forindirect general and administrative and corporate overhead expenses. For the years ended December 31, 2019, 2018 and 2017, the conflicts committee of thePartnership's general partner ("Conflicts Committee") approved reimbursement amounts of $16,657, $16,416 and $16,416, respectively, reflecting thePartnership's allocable share of such expenses. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirectexpenses, if any, annually. (n) Environmental Liabilities and Litigation The Partnership’s policy is to accrue for losses associated with environmental remediation obligations when such losses are probable and reasonablyestimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibilitystudy. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediationobligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt isdeemed probable. 79MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)(o) Trade and Accrued Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Partnership’s bestestimate of the amount of probable credit losses in the Partnership’s existing accounts receivable. (p) Deferred Catalyst CostsThe cost of the periodic replacement of catalysts is deferred and amortized over the catalyst’s estimated useful life, which ranges from 12 to 36 months.(q) Deferred Turnaround CostsThe Partnership capitalizes the cost of major turnarounds and amortizes these costs over the estimated period to the next turnaround, which ranges from12 to 36 months.(r) Income Taxes The Partnership is subject to the Texas margin tax, which is considered a state income tax, and is included in income tax expense on the ConsolidatedStatements of Operations. Since the tax base on the Texas margin tax is derived from an income-based measure, the margin tax is construed as an income tax and,therefore, the recognition of deferred taxes applies to the margin tax. The impact on deferred taxes as a result of this provision is immaterial.Prior to the acquisition of MTI on January 2, 2019, MTI was a Qualified Subchapter S subsidiary ("QSub") of Martin Resource Management Corporation,a qualifying S Corporation. A QSub is not treated as a separate corporation for federal income tax purposes as it is deemed liquidated into its S Corporation parent.S Corporations are generally not subject to income taxes because income and losses flow through to shareholders and are reported on their individual returns.Three states in which MTI was subject to taxation prior to the acquisition - Louisiana, New Jersey and Tennessee - do not recognize the federal S Corporationstatus and, therefore, taxed MTI on a C Corporation basis. Subsequent to the acquisition, the QSub election terminated resulting in MTI being taxed as a stand-alone C Corporation.The Partnership's financial statements recognize the current and deferred income tax consequences that result from MTI’s activities during the currentperiod pursuant to the provisions of the FASB ASC 740 related to income taxes. As a result of the common control transaction with the Partnership, the deferredtax consequences of the changes in the tax bases of MTI’s assets and liabilities were included in equity (ASC 740-20-45-11).With respect to the Partnership’s taxable subsidiary (MTI), income taxes are accounted for under the asset and liability method, whereby deferred taxassets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax ratesexpected to apply to taxable income in the years those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilitiesof a change in tax rates is recognized in income in the period that includes the enactment date. In the ordinary course of business, there may be many transactions and calculations where the ultimate tax outcome is uncertain. The calculation of taxliabilities involves dealing with uncertainties in the application of complex tax laws. In accordance with the provisions of ASC 740, we use a two-step approach forrecognizing and measuring tax benefits taken or expected to be taken in a tax return. In the first step, "recognition", the Partnership determines whether it is morelikely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technicalmerits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Partnership presumes that the position willbe examined by the appropriate taxing authority that has full knowledge of all relevant information. In the second step, "measurement", a tax position that meetsthe more-likely-than-not threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at thelargest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement based upon management’s intent regarding negotiationand litigation. In evaluating all income tax positions for all open years, management has determined all positions are more likely than not to be sustained at fullbenefit based upon their technical merit under applicable tax laws.80MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)(s) Comprehensive Income Comprehensive income includes net income and other comprehensive income. There are no items of other comprehensive income or loss in any of theyears presented.NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTSIn June 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-07, Compensation - StockCompensation: Improvements to Non-employee Share-Based Payment Accounting, which will expand the scope of FASB Accounting Standards Codification("ASC") 718 to include share-based payment transactions for acquiring goods and services from non-employees. The standard is effective for the Partnership'sfinancial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Partnership adopted this standardeffective January 1, 2019. The result of this adoption did not have a material impact on the Partnership's consolidated financial statements.In February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leasesclassified as operating leases under previous guidance. Lessor accounting under the new standard is substantially unchanged and substantially all of our leases willcontinue to be classified as operating leases under the new standard. Additional qualitative and quantitative disclosures, including significant judgments made bymanagement are required. The update is effective for annual reporting periods beginning after December 15, 2018, including interim periods within thosereporting periods, with early adoption permitted. The original guidance required application on a modified retrospective basis with the earliest period presented. InAugust 2018, the FASB issued ASU 2018-11, Targeted Improvements to Financial Accounting Standards Board ("FASB") Accounting Standards Codification("ASC") 842, which includes an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initialapplication of transition. The Partnership adopted this ASU on January 1, 2019, electing the transition option provided under ASU 2018-11. Consequently,financial information was not updated and the disclosures required under the new standard are not provided for dates and periods before January 1, 2019.The new standard provides a number of optional practical expedients in transition. The Partnership elected the "package of practical expedients", whichpermits the Partnership not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The newstandard also provides practical expedients for an entity’s ongoing accounting. The Partnership elected the short-term lease recognition exemption for all leasesthat qualify. This means, for those assets that qualify, the Partnership did not recognize Right-of-Use ("ROU") assets or lease liabilities, and this includes notrecognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. See Note 10 for more information.In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenueto which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S.GAAP. The new standard is effective for the Partnership on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transitionmethod. The Partnership adopted the new standard utilizing the cumulative effect method which resulted in no cumulative effect of the adoption being recorded asof January 1, 2018. The Partnership did not identify any significant changes in the timing of revenue recognition when considering the amended accountingguidance. Additional disclosures related to revenue recognition appear in "Note 6. Revenue."NOTE 4. ACQUISITIONSMartin Transport, Inc. Stock Purchase Agreement. On January 2, 2019, the Partnership acquired all of the issued and outstanding equity interests of MTI,a wholly-owned subsidiary of Martin Resource Management Corporation which operates a fleet of tank trucks providing transportation of petroleum products,liquid petroleum gas, chemicals, sulfur and other products, as well as owns 23 terminals located throughout the U.S. Gulf Coast and Southeastern United States fortotal consideration as follows:81MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Purchase price1$135,000Plus: Working Capital Adjustment2,795Less: Finance lease obligations assumed(11,682)Cash consideration paid$126,1131The stock purchase agreement also includes a $10,000 earn-out based on certain performance thresholds. The performance threshold related to financialresults for the year ended December 31, 2019 was not achieved, which resulted in a reduction in the potential earn-out by $3,333.The transaction closed on January 2, 2019 and was effective as of January 1, 2019 and was funded with borrowings under the Partnership's revolvingcredit facility.This acquisition is considered a transfer of net assets between entities under common control. The acquisition of MTI was recorded at the historicalcarrying value of the assets at the acquisition date, which were as follows:Accounts receivable, net$11,724Inventories1,138Due from affiliates1,042Other current assets897Property, plant and equipment, net25,383Goodwill489Other noncurrent assets362Current installments of finance lease obligations(5,409)Accounts payable(2,564)Due to affiliates(482)Other accrued liabilities(2,588)Finance lease obligations, net of current installments(6,272)Historical carrying value of assets acquired$23,720The excess purchase price over the historical carrying value of the assets at the acquisition date was $102,393 and was recorded as an adjustment to"Partners' capital (deficit)".82MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)The separate results of operations related to MTI for the years ended December 31, 2018 and 2017, which were recast as part of the Partnership'sConsolidated Statements of Operations, were as follows: For the Year Ended December 31, 2018 2017 Transportation revenue$125,333 $112,127 Operating expenses105,212 104,304Selling, general and administrative5,246 4,449Depreciation and amortization3,413 2,284Total costs and expenses113,871 111,037 Other operating income, net596 1,491Operating income12,058 2,581 Other income (expense): Interest expense(312) (26)Other, net12 33 Income before income taxes11,758 2,588Income tax expense (benefit)208 (193)Net income$11,550 $2,781Acquisition of Terminalling Assets. On February 22, 2017, the Partnership acquired 100% of the membership interests of MEH South Texas TerminalsLLC ("MEH"), a subsidiary of Martin Resource Management Corporation, for a purchase price of $27,420 (the "Hondo Acquisition"), which was was funded withborrowings under the Partnership's revolving credit facility. At the date of acquisition, MEH was in the process of constructing an asphalt terminal facility inHondo, Texas (the "Hondo Terminal"), which will serve the asphalt market in San Antonio, Texas and surrounding areas. This acquisition is considered a transferof net assets between entities under common control. The acquisition of these assets was recorded at the historical carrying value of the assets at the acquisitiondate. The excess of the purchase price over the carrying value of the assets of $7,887 was recorded as an adjustment to "Partners' capital." During 2018, thePartnership paid an additional $26 related to a purchase price true-up, which was recorded as a further adjustment to "Partners' capital" for the year endedDecember 31, 2018.Purchase price$27,420Purchase price true-up26Historical carrying value of assets allocated to "Property, plant and equipment"19,533Excess purchase price over carrying value of acquired assets$7,913As no individual line item of the historical financial statements of the acquired assets was in excess of 3% of the Partnership's relative consolidatedfinancial statement captions, the Partnership elected not to retrospectively recast the historical financial information to include these assets.83MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)NOTE 5. DISCONTINUED OPERATIONS, DIVESTITURES, AND ASSETS HELD FOR SALEDivestituresDivestiture of East Texas Pipeline. On August 12, 2019, the Partnership completed the sale of its East Texas Pipeline for $17,500. The Partnershiprecorded a gain on the disposition of $16,154, which was included in "Other operating income, net" on the Partnership's Consolidated Statements of Operations.The net proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility. The divestiture of the East Texas Pipeline assets didnot qualify for discontinued operations presentation under the guidance of ASC 205-20. Divestiture of Natural Gas Storage Assets. On June 28, 2019, the Partnership completed the sale of the Natural Gas Storage Assets to Hartree, asubsidiary of Hartree Bulk Storage, LLC. The Natural Gas Storage Assets consist of approximately 50 billion cubic feet of working capacity located in northernLouisiana and Mississippi. In consideration of the sale of these assets, the Partnership received cash proceeds of $210,067 after transaction fees and expenses. Thenet proceeds were used to reduce outstanding borrowings under the Partnership's revolving credit facility. The Partnership has concluded the disposition representsa strategic shift and will have a major effect on its financial results going forward. As a result, the Partnership has presented the results of operations and cash flowsrelating to the Natural Gas Storage Assets as discontinued operations for the years ended December 31, 2019, 2018, and 2017.The operating results, which are included in income (loss) from discontinued operations, were as follows: For the Year Ended December 31, 2019 2018 2017 Total revenues$22,836 $52,108 $59,360Total costs and expenses and other, net, excluding depreciation andamortization(15,360) (20,703) (19,940)Depreciation and amortization(8,161) (18,795) (22,370)Other operating loss, net1(178,781) (824) (82)Other, net— — 3Income (loss) from discontinued operations before income taxes(179,466) 11,786 16,971Income tax expense— — —Income (loss) from discontinued operations, net of income taxes$(179,466) $11,786 $16,9711 The year ended December 31, 2019 includes a loss on the disposition of the Natural Gas Storage Assets of $178,781.84MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)As the disposition of the Natural Gas Storage Assets was completed prior to meeting the criteria in ASC 210-20-14 to be classified as held for sale, thePartnership has adjusted the Balance Sheet as of December 31, 2018 to present separately the assets and liabilities of the Natural Gas Storage Assets. See tablebelow for more information. December 31, 2018 Accounts and other receivables$7,269Inventories1,942Other current assets217Current assets - Natural Gas Storage Assets$9,428 Property, plant and equipment, at cost$425,138Accumulated depreciation(49,238)Intangibles and other assets, net19,489Non-current assets - Natural Gas Storage Assets$395,389 Trade and other accounts payable$1,682Product exchange payable1,134Due to affiliates2Other accrued liabilities422Current liabilities - Natural Gas Storage Assets$3,240 Other long-term obligations$669Non-current liabilities - Natural Gas Storage Assets$669Divestiture of WTLPG Partnership Interest. On July 31, 2018, the Partnership completed the sale of its 20 percent non-operating interest in WTLPG toONEOK. WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to MontBelvieu, Texas for fractionation. A wholly-owned subsidiary of ONEOK is the operator of the assets. In consideration for the sale of these assets, the Partnershipreceived cash proceeds of $193,705, after transaction fees and expenses. The proceeds from the sale were used to reduce outstanding borrowings under thePartnership's revolving credit facility. The Partnership has concluded the disposition represents a strategic shift and will have a major effect on its financial resultsgoing forward. As a result, the Partnership has presented the results of operations and cash flows relating to its equity method investment in WTLPG asdiscontinued operations for the years ended December 31, 2018 and 2017.The operating results, which are included in income from discontinued operations, were as follows: For the Year Ended December 31, 2019 2018 2017 Total costs and expenses and other, net, excluding depreciation and amortization1$— $(247) $(186)Other operating income2— 48,564 —Equity in earnings— 3,383 4,314Income from discontinued operations before income taxes— 51,700 4,128Income tax expense— — —Income from discontinued operations, net of income taxes$— $51,700 $4,1281 These expenses represent direct operating expenses as a result of the Partnership's ownership interest in WTLPG.85MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)2 Other operating income represents the gain on the disposition of the investment in WTLPG.Long-Lived Assets Held for SaleIn the fourth quarter of 2017, the Partnership identified certain assets that were no longer deemed core to the operations of the Partnership in the Marinedivision of the Transportation segment. Additionally, the Partnership recorded an adjustment to the fair value less cost to sell of a certain asset classified as held forsale in the Martin Lubricants division of the Terminalling and Storage segment. As a result, an impairment charge of $600 and $1,625 was recorded in theTerminalling and Storage and Transportation segments, respectively, in the fourth quarter of 2017 and was presented as "Impairment of long-lived assets" in thePartnership's Consolidated Statements of Operations.At December 31, 2019 and 2018, the assets met the criteria to be classified as held for sale in accordance with ASC 360-10 and are presented at the assets'fair value less cost to sell by segment in current assets as follows: December 31, 2019 December 31, 2018 Terminalling and storage$3,552 $3,552Transportation1,500 2,100 Assets held for sale$5,052 $5,652During 2018, the Partnership received $1,002 in proceeds from the sale of assets classified as held for sale resulting in a loss of $1,022, which waspresented as a component of "Other operating income (loss), net" in the Partnership's Consolidated Statements of Operations.During 2017, the Partnership received $8,341 in proceeds from the sale of assets classified as held for sale resulting in a gain of $822, which waspresented as a component of "Other operating income (loss), net" in the Partnership's Consolidated Statements of Operations.The non-core assets discussed above did not qualify for discontinued operations presentation under the guidance of ASC 205-20.86MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)NOTE 6. REVENUEThe following table disaggregates our revenue by major source: 2019 2018 2017 Terminalling and storage segment Lubricant product sales$122,257 $145,236 $130,392Throughput and storage87,397 96,204 99,643 $209,654 $241,440 $230,035Transportation segment Land transportation$98,895 $99,751 $86,771Inland transportation54,834 44,580 42,874Offshore transportation5,893 5,790 5,705 $159,622 $150,121 $135,350Sulfur service segment Sulfur product sales$30,135 $46,347 $49,204Fertilizer product sales69,771 75,041 74,528Sulfur services11,434 11,148 10,952 $111,340 $132,536 $134,684Natural gas liquids segment Natural gas liquids product sales$366,502 $496,007 $473,317 $366,502 $496,007 $473,317Revenue is measured based on a consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties where thePartnership is acting as an agent. The Partnership recognizes revenue when the Partnership satisfies a performance obligation, which typically occurs when thePartnership 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 SegmentRevenue is recognized for storage contracts based on the contracted monthly tank fixed fee. For throughput contracts, revenue is recognized based on thevolume moved through the Partnership’s terminals at the contracted rate. For the Partnership’s tolling agreement, revenue is recognized based on the contractedmonthly reservation fee and throughput volumes moved through the facility. When lubricants and drilling fluids are sold by truck or rail, revenue is recognizedwhen title is transfered, which is either upon delivering product to the customer or when the product leaves the Partnership's facility, depending on the specificterms 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 tableabove includes non-cancelable revenue arrangements that are under the scope of ASC 842, whereby the Partnership has committed certain Terminalling andStorage assets in exchange for a minimum fee.Transportation SegmentRevenue related to land transportation is recognized for line hauls based on a mileage rate. For contracted trips, revenue is recognized upon completion ofthe particular trip. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.87MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Revenue related to marine transportation is recognized for time charters based on a per day rate. For contracted trips, revenue is recognized uponcompletion of the particular trip. The performance of the service is invoiced as the transaction occurs and is generally paid within a month.Sulfur Services SegmentRevenue from sulfur and fertilizer product sales is recognized when the customer takes title to the product. Delivery of product is invoiced as thetransaction occurs and is generally paid within a month. Revenue from sulfur services is recognized as services are performed during each monthly period. Theperformance of the service is invoiced as the transaction occurs and is generally paid within a month.Natural Gas Liquids SegmentNGL distribution revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers. Revenue is recognizedon title transfer of the product to the customer. Delivery of product is invoiced as the transaction occurs and is generally paid within a month.The table below includes estimated minimum revenue expected to be recognized in the future related to performance obligations that are unsatisfied at theend of the reporting period. The Partnership applies the practical expedient in ASC 606-10-50-14(a) and does not disclose information about remainingperformance obligations that have original expected durations of one year or less. 2020 2021 2022 2023 2024 Thereafter TotalTerminalling and storage Throughput and storage$49,405 $46,694 $42,735 $42,854 $44,197 $348,427 $574,312Sulfur services Sulfur product sales4,898 1,181 295 — — — 6,374Total$54,303 $47,875 $43,030 $42,854 $44,197 $348,427 $580,686NOTE 7. INVENTORIESComponents of inventories at December 31, 2019 and 2018 were as follows: 2019 2018Natural gas liquids$19,097 $30,446Sulfur4,586 12,818Fertilizer15,852 14,208Lubricants18,925 22,887Other4,080 3,906 $62,540 $84,26588MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)NOTE 8. PROPERTY, PLANT, AND EQUIPMENTAt December 31, 2019 and 2018, property, plant and equipment consisted of the following: Depreciable Lives 2019 2018Land— $22,083 $22,204Improvements to land and buildings10-25 years 135,666 134,783Storage equipment5-50 years 120,788 120,005Marine vessels4-25 years 182,115 191,070Operating plant and equipment3-50 years 343,236 352,235Furniture, fixtures and other equipment3-20 years 12,896 12,119Transportation equipment3-7 years 47,525 40,582Construction in progress 20,419 13,437 $884,728 $886,435Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $53,856, $58,615 and $61,590, which includes amortization of fixedassets acquired under capital lease obligations of $2,686, $1,174, and $139. Gross assets under capital leases were $15,367 and $14,058 at December 31, 2019 and2018, respectively. Accumulated amortization associated with capital leases was $3,941 and $1,266 at December 31, 2019 and 2018, respectively.Additions to property, plant and equipment included in accounts payable at December 31, 2019 and 2018 were $3,791 and $2,166, respectively.Equipment purchased under capital lease obligations was $1,308, $10,472, and $3,551 for the years ended December 31, 2019, 2018, and 2017, respectively.NOTE 9. GOODWILLThe following table represents the goodwill balance by reporting unit at December 31, 2019 and 2018 as follows: 2019 2018Carrying amount of goodwill: Terminalling and storage$11,867 $11,868Natural gas liquids— 79Sulfur services5,349 5,349Transportation489 489 Total goodwill$17,705 $17,785NOTE 10. LEASESIn February 2016, the FASB issued ASU 2016-02, Leases, which introduces the recognition of lease assets and lease liabilities by lessees for those leasesclassified as operating leases under previous guidance. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which includes anoption to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition. ThePartnership elected the effective date transition method in ASC 842 and adopted the standard beginning January 1, 2019.The new standard provides a number of optional practical expedients in transition. The Partnership elected the "package of practical expedients", whichpermits the Partnership not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. ThePartnership also elected the short-term lease recognition exemption, meaning the Partnership does not recognize ROU assets or lease liabilities for all leases thatqualify. Lease agreements for all classes of assets with lease and non-lease components are combined as a single lease component. Variable lease payments aregenerally expensed as incurred and include certain index-based changes in rent, certain non-lease components, such as maintenance and other services provided bythe lessor, and other charges included in the lease. 89MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)The adoption of this standard resulted in the recording of approximately $25,552 of additional assets and liabilities on the Partnership's ConsolidatedBalance Sheet as of January 1, 2019. The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment. The leases generally provide thatall expenses related to the equipment are to be paid by the lessee.Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term atcommencement date. Because most of the Partnership's leases do not provide an implicit rate of return, the Partnership uses its imputed collateralized rate based onthe 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 17 years, some of which include options to extend the leases for up to 5 years, and some of whichinclude options to terminate the leases within 1 year. The Partnership includes extension periods and excludes termination periods from its lease term if, atcommencement, it is reasonably likely that the Partnership will exercise the option.The components of lease expense for the year ended December 31, 2019 were as follows: 2019Operating lease cost$10,897Finance lease cost: Amortization of right-of-use assets2,686 Interest on lease liabilities671Short-term lease cost13,756Total lease cost$28,010Supplemental cash flow information for the year ended December 31, 2019 related to leases was as follows: 2019Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases$24,526 Operating cash flows from finance leases671 Financing cash flows from finance leases5,517 Right-of-use assets obtained in exchange for lease obligations: Operating leases$9,122 Finance leases1,30990MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Supplemental balance sheet information related to leases was as follows: 2019Operating Leases Operating lease right-of-use assets$23,901 Current portion of operating lease liabilities included in "Other accrued liabilities"$7,722Operating lease liabilities16,656 Total operating lease liabilities$24,378 Finance Leases Property, plant and equipment, at cost$15,367Accumulated depreciation(3,941) Property, plant and equipment, net$11,426 Current installments of finance lease obligations$6,758Finance lease obligations717 Total finance lease obligations$7,475 Weighted Average Remaining Lease Term (years) Operating leases6.26 Finance leases0.97Weighted Average Discount Rate Operating leases5.27% Finance leases6.83%The Partnership’s future minimum lease obligations as of December 31, 2019 consist of the following: Operating Leases Finance LeasesYear 1$8,755 $7,049Year 25,999 489Year 33,586 260Year 42,280 —Year 51,306 —Thereafter6,809 — Total28,735 7,798 Less amounts representing interest costs(4,357) (323)Total lease liability$24,378 $7,475As of December 31, 2019, we have additional operating leases for marine vessels that have not yet commenced of $4,085. These operating leases willcommence during the first quarter of 2020 with lease terms of 3 years.91MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)The Partnership's future minimum lease obligations as of December 31, 2018 consisted of the following: OperatingLeases FinanceLeasesYear 1$13,126 $6,022Year 27,194 6,068Year 34,262 223Year 42,642 260Year 51,749 —Thereafter7,823 —Total$36,796 12,573Less amounts representing interest costs (892)Present value of net minimum capital lease payments 11,681Less current portion (5,409)Present value of net minimum capital lease payments, excluding current portion $6,272Rent expense for continuing operating leases for the years ended December 31, 2018 and 2017 was $26,606 and $30,911, respectively.Lessor accounting under the new standard is substantially unchanged and all of the Partnership's leases will continue to be classified as operating leasesunder the new standard.The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling andstorage assets in exchange for a minimum fee. Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as ofDecember 31, 2019 are as follows: 2020 - $19,358; 2021 - $14,019; 2022 - $13,004; 2023 - $12,609; 2024 - $12,609; subsequent years - $49,414.NOTE 11. INVESTMENT IN WTLPGAs discussed in Note 5, on July 31, 2018, the Partnership completed the sale of its 20% non-operating interest in WTLPG. Prior to the sale, thePartnership owned a 19.8% limited partnership and 0.2% general partnership interest in WTLPG. A wholly-owned subsidiary of ONEOK is the operator of theassets. WTLPG owns an approximate 2,300 mile common-carrier pipeline system that primarily transports NGLs from New Mexico and Texas to Mont Belvieu,Texas for fractionation. The Partnership accounted for its ownership interest in WTLPG under the equity method of accounting.Selected financial information for WTLPG during the period of ownership is as follows: As of July 31, Seven Months Ended July 31, Total Assets Long-Term Debt Members’Equity/Partners'Capital Revenues Net Income2018 WTLPG$928,349 $— $868,894 $55,534 $16,642 As of December 31, Years ended December 31, Total Assets Long-Term Debt Members’Equity/Partners'Capital Revenues Net Income2017 WTLPG$837,163 $— $787,426 $87,048 $21,571 92MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)NOTE 12. FAIR VALUE MEASUREMENTSThe Partnership uses a valuation framework based upon inputs that market participants use in pricing certain assets and liabilities. These inputs areclassified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources.Unobservable inputs represent the Partnership's own market assumptions. Unobservable inputs are used only if observable inputs are unavailable or not reasonablyavailable without undue cost and effort. The two types of inputs are further prioritized into the following hierarchy:Level 1: Quoted market prices in active markets for identical assets or liabilities.Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.Level 3: Unobservable inputs that reflect the entity's own assumptions and are not corroborated by market data.Assets and liabilities measured at fair value on a recurring basis are summarized below: Level 2 December 31, 2019 2018Commodity derivative contracts, net$(667) $4The Partnership is required to disclose estimated fair values for its financial instruments. Fair value estimates are set forth below for these financialinstruments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument:•Accounts and other receivables, trade and other accounts payable, accrued interest payable, other accrued liabilities, income taxes payable and duefrom/to affiliates: The carrying amounts approximate fair value due to the short maturity and highly liquid nature of these instruments, and as such thesehave been excluded from the table below. There is negligible credit risk associated with these instruments.•Long-term debt: The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate and is in Level2. The Partnership has not had any indicators which represent a change in the market spread associated with its variable interest rate debt. The estimatedfair value of the senior unsecured notes is considered Level 1, as the fair value is based on quoted market prices in active markets. December 31, 2019 December 31, 2018 CarryingValue FairValue CarryingValue FairValue2021 Senior unsecured notes$373,374 $343,470 $372,996 $360,138NOTE 13. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIESThe Partnership’s results of operations could be materially impacted by changes in NGL prices and interest rates. In an effort to manage its exposure tothese risks, the Partnership periodically enters into various derivative instruments, including commodity and interest rate hedges. All derivatives and hedginginstruments are included on the balance sheet as an asset or a liability measured at fair value and changes in fair value are recognized currently in earnings. All ofthe Partnership's derivatives are non-hedge derivatives and therefore all changes in fair values are recognized as gains and losses in the earnings of the periods inwhich they occur.93MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)(a) Commodity Derivative InstrumentsThe Partnership from time to time has used derivatives to manage the risk of commodity price fluctuation. Commodity risk is the adverse effect on thevalue of a liability or future purchase that results from a change in commodity price. The Partnership has established a hedging policy and monitors and managesthe commodity market risk associated with potential commodity risk exposure. In addition, the Partnership has focused on utilizing counterparties for thesetransactions whose financial condition is appropriate for the credit risk involved in each specific transaction. The Partnership has entered into hedging transactionsas of December 31, 2019 to protect a portion of its commodity price risk exposure. These hedging arrangements are in the form of swaps for NGLs. ThePartnership has instruments totaling a gross notional quantity of 452 barrels settling during the period from January 31, 2020 through February 29, 2020. AtDecember 31, 2018, the Partnership had instruments totaling a gross notional quantity of 55 barrels settling during the period from January 31, 2019 throughFebruary 28, 2019. These instruments settle against the applicable pricing source for each grade and location.(b) Interest Rate Derivative InstrumentsThe Partnership is exposed to market risks associated with interest rates. Market risk is the adverse effect on the value of a financial instrument thatresults from a change in interest rates. We minimize this market risk by establishing and monitoring parameters that limit the types and degree of market risk thatmay be undertaken. The Partnership periodically enters into interest rate swaps to manage interest rate risk associated with the Partnership’s variable rate creditfacility and its senior unsecured notes. No such swaps were utilized during the period of January 1, 2017 through December 31, 2019. (c) Tabular Presentation of Gains and Losses on Derivative InstrumentsThe following table summarizes the fair values and classification of the Partnership’s derivative instruments in its Consolidated Balance Sheets: Fair Values of Derivative Instruments in the Consolidated Balance Sheet Derivative AssetsDerivative Liabilities Fair Values Fair Values Balance SheetLocationDecember 31, 2019 December 31, 2018 Balance SheetLocationDecember 31, 2019 December 31, 2018Derivatives not designated ashedging instruments:Current: Commodity contractsFair value ofderivatives$— $4Fair value ofderivatives$667 $—Total derivatives notdesignated as hedginginstruments $— $4 $667 $—Effect of Derivative Instruments on the Consolidated Statement of Operations For the Years Ended December 31, 2019, 2018, and 2017 Location of Gain or (Loss) Recognized inIncome on DerivativesAmount of (Gain) or Loss Recognized in Income on Derivatives 2019 2018 2017Derivatives not designated as hedging instruments: Commodity contractsCost of products sold5,137 (14,024) 1,304Total derivatives not designated as hedging instruments$5,137 $(14,024) $1,304NOTE 14. RELATED PARTY TRANSACTIONSAs of December 31, 2019, Martin Resource Management Corporation owned 6,114,532 of the Partnership’s common units representing approximately15.7% of the Partnership’s outstanding limited partnership units. Martin Resource Management Corporation controls the Partnership's general partner by virtue ofits 51% voting interest in Holdings, the sole94MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)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’sincentive distribution rights. The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin ResourceManagement Corporation’s ownership as of December 31, 2019 of approximately 15.7% of the Partnership’s outstanding limited partnership units, effectivelygives 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: Omnibus Agreement Omnibus Agreement. The Partnership and its general partner are parties to the Omnibus Agreement dated November 1, 2002, with Martin ResourceManagement Corporation that governs, among other things, potential competition and indemnification obligations among the parties to the agreement, relatedparty transactions, the provision of general administration and support services by Martin Resource Management Corporation and the Partnership’s use of certainMartin Resource Management Corporation trade names and trademarks. The Omnibus Agreement was amended on November 25, 2009, to include processingcrude oil into finished products including naphthenic lubricants, distillates, asphalt and other intermediate cuts. The Omnibus Agreement was amended further onOctober 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource Management Corporation.Non-Competition Provisions. Martin Resource Management Corporation has agreed for so long as it controls the general partner of the Partnership, not toengage in the business of:•providing terminalling and storage services for petroleum products and by-products including the refining, blending and packaging of finishedlubricants;•providing land and marine transportation of petroleum products, by-products, and chemicals;•distributing NGLs; 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 itsaffiliates;•any business operated by Martin Resource Management Corporation, including thefollowing:◦distributing fuel oil, marine fuel and other liquids;◦providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, andFlorida;◦operating a crude oil gathering business in Stephens, Arkansas;◦providing crude oil gathering, refining, 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 endmarket;◦operating an environmental consultingcompany;◦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.95MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)•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 hasbeen offered the opportunity to purchase the business for fair market value and the Partnership declines to do so with the concurrence of the ConflictsCommittee; and•any business that Martin Resource Management Corporation acquires or constructs where a portion of such business includes a restricted business andthe 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 acquiredor constructed; provided that, following completion of the acquisition or construction, the Partnership will be provided the opportunity to purchase therestricted business. Services. Under the Omnibus Agreement, Martin Resource Management Corporation provides the Partnership with corporate staff, support services, andadministrative services necessary to operate the Partnership’s business. The Omnibus Agreement requires the Partnership to reimburse Martin ResourceManagement 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’sbusiness. There is no monetary limitation on the amount the Partnership is required to reimburse Martin Resource Management Corporation for direct expenses. Inaddition to the direct expenses, under the Omnibus Agreement, the Partnership is required to reimburse Martin Resource Management Corporation for indirectgeneral and administrative and corporate overhead expenses.Effective January 1, 2019, through December 31, 2019, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of$16,657. The Partnership reimbursed Martin Resource Management Corporation for $16,657, $16,416 and $16,416 of indirect expenses for the years endedDecember 31, 2019, 2018 and 2017, respectively. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirectexpenses, if any, annually.These indirect expenses are intended to cover the centralized corporate functions Martin Resource Management Corporation Corporation provides to thePartnership, such as accounting, treasury, clerical, engineering, legal, billing, information technology, administration of insurance, general office expenses andemployee 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 ManagementCorporation 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 ResourceManagement Corporation without the prior approval of the Conflicts Committee. For purposes of the Omnibus Agreement, the term "material agreements" meansany agreement between the Partnership and Martin Resource Management Corporation that requires aggregate annual payments in excess of the then-applicableagreed 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 beamended without the approval of the Conflicts Committee if such amendment would adversely affect the unitholders. The Omnibus Agreement was first amendedon November 25, 2009, to permit the Partnership to provide refining services to Martin Resource Management Corporation. The Omnibus Agreement wasamended further on October 1, 2012, to permit the Partnership to provide certain lubricant packaging products and services to Martin Resource ManagementCorporation. Such amendments were approved by the Conflicts Committee. The Omnibus Agreement, other than the indemnification provisions and theprovisions limiting the amount for which the Partnership will reimburse Martin Resource Management Corporation for general and administrative servicesperformed on its behalf, will terminate if the Partnership is no longer an affiliate of Martin Resource Management Corporation.96MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Master Transportation Services AgreementMaster Transportation Agreement. MTI, a wholly owned subsidiary of the Partnership, is a party to a master transportation services agreement effectiveJanuary 1, 2019, with certain wholly owned subsidiaries of Martin Resource Management Corporation. Under the agreement, MTI agreed to transport MartinResource 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 otherparty. These rates are subject to any adjustments which are mutually agreed upon or in accordance with a price index. Additionally, shipping charges are alsosubject 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 willfulmisconduct of MTI and its officers, employees, agents, representatives and subcontractors. Martin Resource Management Corporation has agreed to indemnifyMTI 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 Management Corporation,indemnification obligations will be shared in proportion to each party’s allocable share of such joint negligence or misconduct.Marine AgreementsMarine Transportation Agreement. The Partnership is a party to a marine transportation agreement effective January 1, 2006, as amended, under whichthe Partnership provides marine transportation services to Martin Resource Management Corporation on a spot-contract basis at applicable market rates. Effectiveeach January 1, this agreement automatically renews for consecutive one year periods unless either party terminates the agreement by giving written notice to theother party at least 60 days prior to the expiration of the then applicable term. The fees the Partnership charges Martin Resource Management Corporation arebased 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 MartinResource Management Corporation provides the Partnership with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of a priceindex. Under this agreement, the Partnership agreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin ResourceManagement Corporation.Terminal Services AgreementsDiesel Fuel Terminal Services Agreement. Effective January 1, 2016, the Partnership entered into a second amended and restated terminalling servicesagreement under which the Partnership provides terminal services to Martin Resource Management Corporation for marine fuel distribution. At such time, the pergallon throughput fee the Partnership charged under this agreement was increased when compared to the previous agreement and may be adjusted annually basedon a price index. This agreement was further amended on January 1, 2017, October 1, 2017, and April 1, 2019 to modify its minimum throughput requirementsand 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 60days’ written notice. Miscellaneous Terminal Services Agreements. The Partnership is currently party to several terminal services agreements and from time to time thePartnership may enter into other terminal service agreements for the purpose of providing terminal services to related parties. Individually, each of theseagreements is immaterial but when considered in the aggregate they could be deemed material. These agreements are throughput based with a minimum volumecommitment. 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 otherintermediate cuts for Cross. The tolling agreement expires November 25, 2031. Under this tolling agreement, Cross agreed to toll a minimum of 6,500 barrels perday of crude oil97MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)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 reservationfee and a periodic fuel surcharge fee based on certain parameters specified in the tolling agreement. Further, certain capital improvements, to the extent requestedby Cross, are reimbursed through a capital recovery fee. As of December 31, 2019, annual capital recovery fee reimbursement of $2,088 expired. An additional$2,586 of capital recovery fee reimbursement will expire on December 31, 2020. All of these fees (other than the fuel surcharge and capital recovery fee) aresubject to escalation annually based upon the greater of 3% or the increase in the Consumer Price Index for a specified annual period. In addition, on the third,sixth and ninth anniversaries of the agreement, the parties can negotiate an upward or downward adjustment in the fees subject to their mutual agreement.Also, thePartnership renegotiated a crude transportation contract set to expire in the first half of 2022 resulting in a reduction in revenue of $2,145 annually beginningJanuary 1, 2020.Sulfuric Acid Sales Agency Agreement. The Partnership was previously a party to a third amended and restated sulfuric acid sales agency agreement datedAugust 2, 2017 but effective October 1, 2017, under which a successor in interest to the agreement from Martin Resource Management Corporation, Saconix LLC("Saconix"), a limited liability company in which Martin Resource Management Corporation held a minority equity interest, purchased and marketed the sulfuricacid produced by the Partnership’s sulfuric acid production plant at Plainview, Texas, that was not consumed by the Partnership’s internal operations. Thisagreement, as amended, was to remain in place until September 30, 2020 and automatically renew year to year thereafter until either party provided 90 days’written notice of termination prior to the expiration of the then existing term. Under this agreement, the Partnership sold all of its excess sulfuric acid to Saconix,who then marketed and sold such acid to third-parties. The Partnership shared in the profit of such sales. Effective May 31, 2018, Martin Resource ManagementCorporation no longer holds an equity interest in Saconix. These transactions are reported below as related party transactions during the period the equity interestwas held. Transactions subsequent to Martin Resource Management Corporation's disposition of the equity interest will be reported as third party transactions.Other Miscellaneous Agreements. From time to time the Partnership enters into other miscellaneous agreements with Martin Resource ManagementCorporation 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’sConsolidated Statements of Operations. The revenues, costs and expenses reflected in these tables are tabulations of the related party transactions that are recordedin the corresponding caption of the Consolidated Statements of Operations 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 Statements of Operations as follows:Revenues:2019 2018 2017Terminalling and storage$71,733 $79,137 $82,142Transportation24,243 27,588 29,807Natural gas liquids— — 122Product sales: Natural gas liquids— — 1,037Sulfur services54 630 1,963Terminalling and storage877 667 497 931 1,297 3,497 $96,907 $108,022 $115,568The impact of related party cost of products sold is reflected in the Consolidated Statements of Operations as follows:Cost of products sold: Natural gas liquids$— $— $4,354Sulfur services10,765 10,641 9,345Terminalling and storage23,859 24,613 16,672 $34,624 $35,254 $30,37198MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)The impact of related party operating expenses is reflected in the Consolidated Statements of Operations as follows:Operating expenses: Transportation$61,376 $62,965 $63,487Natural gas liquids3,446 3,779 4,042Sulfur services4,810 5,381 5,821Terminalling and storage18,562 18,753 22,196 $88,194 $90,878 $95,546The impact of related party selling, general and administrative expenses is reflected in the Consolidated Statements of Operations as follows:Selling, general and administrative: Transportation$7,107 $1,606 $35Natural gas liquids2,804 2,942 5,237Sulfur services2,850 2,684 2,526Terminalling and storage3,083 2,766 2,179Indirect overhead allocation, net of reimbursement16,778 16,443 16,416 $32,622 $26,441 $26,393NOTE 15. SUPPLEMENTAL BALANCE SHEET INFORMATIONComponents of "Intangibles and other assets, net" at December 31, 2019 and 2018 were as follows: 2019 2018Catalyst and turnaround costs$1,655 $926Other intangible assets936 1,310Other976 2,348 $3,567 $4,584Other intangible assets consist of covenants not-to-compete and technology-based assets.Aggregate amortization expense for customer contracts and other intangible assets included in continuing operations was $5,797, $2,353, and $3,114, forthe years ended December 31, 2019, 2018 and 2017, respectively, and accumulated amortization amounted to $6,519 and $5,907 at December 31, 2019 and 2018,respectively.Estimated amortization expense for intangibles and other assets for the years subsequent to December 31, 2019 are as follows: 2020 - $4,893; 2021 -$1,080; 2022 - $892; 2023 - $214; 2024 - $29; subsequent years - $26.99MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)Components of "Other accrued liabilities" at December 31, 2019 and 2018 were as follows: 2019 2018Accrued interest$10,761 $10,735Asset retirement obligations25 2,721Property and other taxes payable5,411 5,751Accrued payroll3,011 3,110Operating lease liabilities7,722 —Other1,859 2,063 $28,789 $24,380The schedule below summarizes the changes in our asset retirement obligations: Year Ended December 31, 2019 2018 (In thousands) Beginning asset retirement obligations$12,429 $13,512Revisions to existing liabilities1— 4,041Accretion expense407 516Liabilities settled(3,900) (5,640)Ending asset retirement obligations8,936 12,429Current portion of asset retirement obligations2(25) (2,721)Long-term portion of asset retirement obligations3$8,911 $9,7081Several factors are considered in the annual review process, including inflation rates, current estimates for removal cost, discount rates, and the estimatedremaining useful life of the assets.2The current portion of asset retirement obligations is included in "Other current liabilities" on the Partnership's Consolidated Balance Sheets.3The non-current portion of asset retirement obligations is included in "Other long-term obligations" on the Partnership's Consolidated Balance Sheets.NOTE 16. LONG-TERM DEBTAt December 31, 2019 and 2018, long-term debt consisted of the following: 2019 2018$400,000 Revolving credit facility at variable interest rate (5.26%1 weighted average at December 31, 2019), dueAugust 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, netof unamortized debt issuance costs of $4,586 and $3,537, respectively2$196,414 $283,463$400,000 Senior notes, 7.25% interest, including unamortized premium of $344 and $650, respectively, also net ofunamortized debt issuance costs of $770 and $1,454 respectively, issued $250,000 February 2013 and $150,000 April2014, $26,200 repurchased during 2015, due February 2021, unsecured2,3373,374 372,996Total long-term debt$569,788 $656,459100MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)1 Interest rate fluctuates based on the LIBOR rate plus an applicable margin set on the date of each advance. The margin above LIBOR is set every threemonths. Indebtedness under the credit facility bears interest at LIBOR plus an applicable margin or the base prime rate plus an applicable margin. All amountsoutstanding at December 31, 2019 and 2018 were at LIBOR plus an applicable margin. The applicable margin for revolving loans that are LIBOR loans rangesfrom 2.25% to 3.50% and the applicable margin for revolving loans that are base prime rate loans ranges from 1.25% to 2.50%. The applicable margin for LIBORborrowings at December 31, 2019 is 3.50%. The credit facility contains various covenants which limit the Partnership’s ability to make certain investments andacquisitions; enter into certain agreements; incur indebtedness; sell assets; and make certain amendments to the Omnibus Agreement. The Partnership is permittedto make quarterly distributions so long as no event of default exists.2 The Partnership is in compliance with all debt covenants as of December 31, 2019.3 The indentures governing the 2021 Notes restrict the Partnership’s ability to sell assets; pay distributions or repurchase units or redeem or repurchasesubordinated debt; make investments; incur or guarantee additional indebtedness or issue preferred units; and consolidate, merge or transfer all or substantially allof its assets.4 On July 18, 2019, the Partnership amended its revolving credit facility to, among other things, extend the maturity date from March 2020 to August2023 and reduce commitments from $500,000 to $400,000. The Partnership's amended revolving credit facility includes a provision which accelerates the maturitydate to August 2020 if the 2021 Notes are not refinanced in a manner not prohibited by the facility, by August 19, 2020.The Partnership paid cash interest, net of capitalized interest, in the amount of $48,025, $50,543, and $45,728 for the years ended December 31, 2019,2018 and 2017, respectively. Capitalized interest was $5, $624, and $730 for the years ended December 31, 2019, 2018 and 2017, respectively.NOTE 17. PARTNERS' CAPITAL (DEFICIT)As of December 31, 2019, partners’ capital consisted of 38,863,389 common limited partner units, representing a 98% partnership interest, anda 2% general partner interest. Martin Resource Management Corporation, through subsidiaries, owned 6,114,532 of the Partnership's common limited partnershipunits representing approximately 15.7% of the Partnership's outstanding common limited partnership units. MMGP, the Partnership's general partner, ownsthe 2% general partnership interest.The partnership agreement of the Partnership (the "Partnership Agreement") contains specific provisions for the allocation of net income and losses to eachof the partners for purposes of maintaining their respective partner capital accounts.Issuance of Common UnitsOn February 22, 2017, the Partnership completed a public offering of 2,990,000 common units at a price of $18.00 per common unit, before the paymentof underwriters' discounts, commissions and offering expenses (per unit value is in dollars, not thousands). Total proceeds from the sale of the 2,990,000 commonunits, net of underwriters' discounts, commissions and offering expenses, were $51,056. Additionally, the Partnership's general partner contributed $1,098 in cashto the Partnership in conjunction with the issuance in order to maintain its 2% general partner interest in the Partnership. All of the net proceeds were used to paydown outstanding amounts under the Partnership's revolving credit facility.Incentive Distribution RightsMMGP holds a 2% general partner interest and certain incentive distribution rights ("IDRs") in the Partnership. IDRs are a separate class of non-votinglimited 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 anincreasing percentage of cash distributions after the minimum quarterly distribution and any cumulative arrearages on common units once certain targetdistribution levels have been achieved. The Partnership is required to distribute all of its available cash from operating surplus, as defined in the PartnershipAgreement. The target distribution levels entitle the general partner to receive 2% of quarterly cash distributions up to $0.55 per unit, 15% of quarterly cashdistributions in excess of $0.55 per unit until all unitholders have received $0.625 per unit, 25% of101MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)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 $0.75per unit. For the years ended December 31, 2019, 2018 and 2017, the general partner was allocated no incentive distributions.Distributions of Available CashThe Partnership distributes all of its available cash (as defined in the Partnership Agreement) within 45 days after the end of each quarter to unitholders ofrecord 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 theamount of cash reserves its general partner determines in its reasonable discretion is necessary or appropriate to: (i) provide for the proper conduct of thePartnership’s business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds for distributions to unitholders and thegeneral 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 workingcapital borrowings made after the end of the quarter.Net Income per UnitThe Partnership follows the provisions of the FASB ASC 260-10 related to earnings per share, which addresses the application of the two-class method indetermining income per unit for master limited partnerships having multiple classes of securities that may participate in partnership distributions accounted for asequity 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 maximumamount that the general partner would be contractually entitled to receive if all earnings for the period were distributed. When current period distributions are inexcess 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 lossesspecified in the Partnership Agreement. Additionally, as required under FASB ASC 260-10-45-61A, unvested share-based payments that entitle employees toreceive 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 unitsoutstanding 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 from continuing operations and net income from discontinued operations allocated to the generalpartner and limited partners for purposes of calculating net income attributable to limited partners per unit: Years Ended December 31, 2019 2018 2017Continuing operations: Income from continuing operations$4,520 $(7,831) $(1,183)Less pre-acquisition income allocated to Parent— (11,550) (2,781)Less general partner’s interest in net income: Distributions payable on behalf of IDRs— — —Distributions payable on behalf of general partner interest(20) (689) (363)General partner interest in undistributed loss111 302 284Less income allocable to unvested restricted units(1) (12) (10)Limited partners’ interest in net income$4,430 $(18,982) $(3,875)102MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated) Years Ended December 31, 2019 2018 2017Discontinued operations: Income from discontinued operations$(179,466) $63,486 $21,099Less general partner’s interest in net income: Distributions payable on behalf of IDRs— — —Distributions payable on behalf of general partner interest806 2,258 1,932General partner interest in undistributed loss(4,396) (989) (1,510)Less income allocable to unvested restricted units42 40 52Limited partners’ interest in net income$(175,918) $62,177 $20,625The Partnership allocates the general partner's share of earnings between continuing and discontinued operations as a proportion of net income fromcontinuing and discontinued operations to total net income.The following are the unit amounts used to compute the basic and diluted earnings per limited partner unit for the periods presented: Years Ended December 31, 2019 2018 2017Basic weighted average limited partner units outstanding 38,658,881 38,907,000 38,101,583Dilutive effect of restricted units issued — 15,678 63,318Total weighted average limited partner diluted units outstanding 38,658,881 38,922,678 38,164,901All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstandingduring the period presented. All common unit equivalents were antidilutive for the year ended December 31, 2019 because the limited partners were allocated a netloss in this period.NOTE 18. UNIT BASED AWARDS The Partnership recognizes compensation cost related to unit-based awards to both employees and non-employees in its consolidated financial statementsin accordance with certain provisions of ASC 718. Amounts recognized in selling, general, and administrative expense in the consolidated financial statementswith respect to these plans are as follows: For the Year Ended December 31, 2019 2018 2017Employees$1,226 $1,098 $534Non-employee directors198 126 116 Total unit-based compensation expense$1,424 $1,224 $650All of the Partnership's outstanding awards at December 31, 2019 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 forthe Partnership. On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P. 2017 Restricted Unit Plan. The plan currently permitsthe 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 thecompensation committee of the general partner’s board of directors (the "Compensation Committee").103MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated) 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 theserestrictions lapse, the grantee is entitled to full ownership of the unit without restrictions. The Compensation Committee may determine to make grants under theplan containing such terms as the Compensation Committee shall determine under the plan. With respect to time-based restricted units ("TBRU's"), theCompensation Committee will determine the time period over which restricted units granted to employees and directors will vest. The Compensation Committeemay 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, anddepreciation and amortization ("EBITDA"), distribution coverage metrics, expense measures, liquidity measures, market measures, corporate sustainabilitymetrics, and other measures related to acquisitions, dispositions, operational objectives and succession planning objectives. PBRU's are earned only upon ourachievement of an objective performance measure for the performance period. PBRU's which vest are payable in common units. Unvested units granted under the2017 LTIP may or may not participate in cash distributions depending on the terms of each individual award agreement.The restricted units issued to directors generally vest in equal annual installments over a four-year period.On February 11, 2019, the Partnership issued 5,648 TBRU's to each of the Partnership's three independent directors under the 2017 LTIP. Theserestricted common units vest in equal installments of 1,412 units on January 24, 2020, 2021, 2022, and 2023.On March 1, 2018, the Partnership issued 301,550 TBRU's and 317,925 PBRU's to certain employees of Martin Resource Management Corporation. TheTBRU's vest in equal installments over a three-year service period. The PBRU's will vest at the conclusion of a three-year performance period based on certainperformance targets. In addition, the PBRU's awarded on March 1, 2018 that are achieved will only vest if the grantee is employed by Martin ResourceManagement Corporation on March 31, 2021. As of December 31, 2019, the Partnership is unable to ascertain if certain performance conditions will be achievedand, as such, has not recognized compensation expense for the vesting of the units. The Partnership will record compensation expense for the vested portion of theunits once the achievement of the performance condition is deemed probable. 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 therestricted unit activity for the year ended December 31, 2019 is provided below: Number of Units Weighted AverageGrant-Date FairValue Per UnitNon-vested, beginning of year624,125 $13.78 Granted (TBRU)16,944 $12.45 Vested(107,762) $13.82 Forfeited(154,288) $13.90Non-Vested, end of year379,019 $13.91 Aggregate intrinsic value, end of year$1,527 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 years ended December 31, 2019, 2018 and 2017 is provided below:104MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated) For the Year EndedDecember 31, 2019 2018 2017Aggregate intrinsic value of units vested$1,351 $1,195 $143Fair value of units vested$1,551 $2,250 $208As of December 31, 2019, there was $1,753 of unrecognized compensation cost related to non-vested time-based restricted units. That cost is expected tobe recognized over a weighted-average period of 1.5 years.NOTE 19. INCOME TAXESThe components of income tax expense (benefit) from operations for the years ended December 31, 2019, 2018 and 2017 are as follows: 2019 2018 2017Current: Federal$174 $— $—State366 369 314 540 369 314Deferred: Federal882 — — State478 208 (156) 1,360 208 (156)Total income tax expense$1,900 $577 $158The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners.The Texas margin tax is considered a state income tax and is included in income tax expense on the Consolidated Statements of Operations. Since the tax base onthe Texas margin tax is derived from an income-based measure, the margin tax is construed as income tax, and therefore, the recognition of deferred taxes appliesto the margin tax. The impact on deferred taxes as a result of this provision is immaterial. State income taxes attributable to the Texas margin tax relating to theoperation of the Partnership of $458, $369 and $352 were recorded in income tax expense for the years ended December 31, 2019, 2018 and 2017, respectively.Prior to the acquisition of MTI on January 2, 2019, MTI was a QSub of Martin Resource Management Corporation, a qualifying S Corporation. A QSubis not treated as a separate corporation for federal income tax purposes as it is deemed liquidated into its S Corporation parent. S Corporations are generally notsubject to income taxes because income and losses flow through to shareholders and are reported on their individual returns. State income taxes attributable to thepre-acquisition QSub of $0 and ($38) were recorded in income tax expense for the years ended December 31, 2018 and 2017, respectively. The principalcomponent of the difference between the expected state tax expense and actual state tax expense relates to taxes incurred in states that do not recognize Scorporation status.Subsequent to the acquisition, the QSub election terminated resulting in MTI being taxed as a stand-alone C Corporation. Total income tax expenserelating to the operation of the subsidiary of $1,442 was recorded in income tax expense for the year ended December 31, 2019.The income tax expense from the subsidiary operations for the year ended December 31, 2019 differs from the "expected" tax expense (computed byapplying the federal corporate rate of 21% to income before income taxes) as follows:105MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated) 2019"Expected" tax expense$1,116Increase in income taxes resulting from: State income taxes, net of federal income tax expense235Other non-deductible items19Other, net72Actual tax expense$1,442Cash paid for income taxes was $515, $431 and $799 for the years ended December 31, 2019, 2018 and 2017, respectively.Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes. Significantcomponents of deferred tax assets and liabilities are as follows: 2019 2018Deferred tax assets: Bad debt reserves$64 $—Goodwill and intangibles15,245 —Employee benefits500 —Interest expense658 —Tax loss carryforwards12,879 —Other147 —Total deferred tax assets29,493 — Deferred tax liabilities: Property and equipment(6,069) —Operating leases(2) —Other— —Total deferred tax liabilities(6,071) — Net deferred tax assets$23,422 $—Deferred tax assets are regularly reviewed for recoverability and a valuation allowance is provided when it is more likely than not that some portion or allof a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in whichthose temporary differences become deductible. In assessing the need for a valuation allowance, management considers all available positive and negativeevidence, including the ability to carryback operating losses to prior periods and the expected future utilization of net operating loss carryforwards, the reversal ofdeferred tax liabilities, projected taxable income, and tax-planning strategies. On the basis of these considerations, as of December 31, 2019, management believesit is more likely than not that the subsidiary will realize the benefit of the existing deferred tax assets."Income taxes payable" includes a state income tax liability related to the operation of the Partnership of $298 and $445 for the years ended December31, 2019 and 2018, respectively. Also included in "Income taxes payable" is a federal income tax liability related to the operation of the subsidiary of $174 and $0for the years ended December 31, 2019 and 2018, respectively. State income taxes refundable related to the operation of the subsidiary of $117 and $127 for theyears ended December 31, 2019 and 2018, respectively, are included in "Other current assets".At December 31, 2019, MTI had net operating loss carryforwards for income tax purposes of approximately $73,801 related to federal and state taxes. Ofthese net operating loss carryforwards, approximately $14,080 will expire between 2027 and 2039 and approximately $59,721 may be carried forward indefinitely. The operations of the Partnership are generally not subject to income taxes, except as discussed above, because its income is taxed directly to its partners.The net tax basis in the Partnership's assets and liabilities is greater (less) than the106MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)reported amounts on the financial statements by approximately $78,649 and $(121,775) as of December 31, 2019 and December 31, 2018, respectively.As of December 31, 2019, the tax years that remain open to assessment are 2016-2018.NOTE 20. BUSINESS SEGMENTSThe Partnership has four reportable segments: terminalling and storage, natural gas liquids, transportation, and sulfur services. The Partnership’sreportable segments are strategic business units that offer different products and services. The operating income of these segments is reviewed by the chiefoperating decision maker to assess performance and make business decisions.The accounting policies of the operating segments are the same as those described in Note 2. The Partnership evaluates the performance of its reportablesegments based on operating income. There is no allocation of administrative expenses or interest expense. Operating Revenues IntersegmentEliminations Operating RevenuesAfter Eliminations Depreciation andAmortization Operating Income(Loss) afterEliminations Capital Expendituresand PlantTurnaround Costs Year Ended December 31, 2019: Terminalling and storage$216,313 $(6,659) $209,654 $30,952 $16,732 $12,987Natural gas liquids366,502 — 366,502 2,469 44,020 1,870Sulfur services111,340 — 111,340 11,332 22,721 14,853Transportation183,740 (24,118) 159,622 15,307 (7,388) 8,213Indirect selling, general, andadministrative— — — — (17,981) —Total$877,895 $(30,777) $847,118 $60,060 $58,104 $37,923 Year Ended December 31, 2018: Terminalling and storage$247,840 $(6,400) $241,440 $39,508 $17,540 $13,704Natural gas liquids496,026 (19) 496,007 2,488 31,581 746Sulfur services132,536 — 132,536 8,485 27,397 4,429Transportation178,163 (28,042) 150,121 11,003 (13,560) 16,335Indirect selling, general, andadministrative— — — — (17,901) —Total$1,054,565 $(34,461) $1,020,104 $61,484 $45,057 $35,214 Year Ended December 31, 2017: Terminalling and storage$236,169 $(6,134) $230,035 $45,160 $629 $29,644Natural gas liquids473,548 (231) 473,317 2,546 34,880 555Sulfur services134,684 — 134,684 8,117 23,205 2,611Transportation164,043 (28,693) 135,350 9,285 4,234 12,987Indirect selling, general, andadministrative— — — — (17,332) —Total$1,008,444 $(35,058) $973,386 $65,108 $45,616 $45,797Revenues from one customer in the Natural Gas Liquids segment was $112,280, $148,103 and $114,874 for the years ended December 31, 2019, 2018and 2017, respectively.107MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)The Partnership's assets by reportable segment as of December 31, 2019 and 2018 are as follows: 2019 2018Total assets: Terminalling and storage$292,136 $298,784Natural gas liquids94,195 512,817Sulfur services110,780 115,498Transportation170,045 146,529Total assets$667,156 $1,073,628NOTE 21. QUARTERLY FINANCIAL INFORMATIONConsolidated Quarterly Income Statement Information (Unaudited) First Quarter Second Quarter Third Quarter FourthQuarter (Dollar in thousands, except per unit amounts)2019 Revenues$240,033 $187,323 $177,900 $241,862Operating income9,606 5,010 25,461 18,027Income (loss) from continuing operations(4,758) (10,614) 13,250 6,642Income (loss) from discontinued operations1,102 (180,568) — —Net income (loss)(3,656) (191,182) 13,250 6,642Income (loss) from continuing operations per unit(0.12) (0.27) 0.34 0.17Limited partners' interest in net income (loss) per limited partner unit(0.09) (4.82) 0.33 0.14 First Quarter Second Quarter Third Quarter FourthQuarter (Dollar in thousands, except per unit amounts)2018 Revenues$291,718 $227,164 $234,047 $267,175Operating income20,828 4,489 5,431 14,309Income (loss) from continuing operations7,949 (9,453) (7,880) 1,553Income from discontinued operations7,087 4,927 50,443 1,029Net income (loss)15,036 (4,526) 42,563 2,582Income (loss) from continuing operations per unit0.21 (0.24) (0.20) 0.04Limited partners' interest in net income (loss) per limited partner unit0.33 (0.18) 1.00 (0.04)NOTE 22. COMMITMENTS AND CONTINGENCIESContingenciesFrom time to time, the Partnership is subject to various claims and legal actions arising in the ordinary course of business. In the opinion of management,the ultimate disposition of these matters will not have a material adverse effect on the Partnership. On December 31, 2015, the Partnership received a demand from a customer in its lubricants packaging business for defense and indemnity in connectionwith lawsuits filed against it in various United States District Courts, which generally allege that the customer engaged in unlawful and deceptive businesspractices in connection with its marketing and advertising of its private label motor oil. The Partnership disputes that it has any obligation to defend or indemnifythe customer for its conduct. Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory Judgment in the Chancery Court of DavidsonCounty, Tennessee requesting a judicial determination that the Partnership does not owe the customer the108MARTIN MIDSTREAM PARTNERS L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands, except where otherwise indicated)demanded defense and indemnity obligations. The lawsuits against the customer have been transferred to the United States District Court for the Western Districtof Missouri for consolidated pretrial proceedings. On March 1, 2017, at the request of the parties, the Chancery Court of Davidson County, Tennesseeadministratively closed the Partnership's lawsuit pending rulings in the United States District Court for the Western District of Missouri. In the event that eitherparty moves the Chancery Court of Davidson County, Tennessee to reopen the case, we expect the Court would grant such motion and reopen the case. Further,the same customer has made a claim under the Partnership’s insurance policy. The insurer has denied the claim. However, in the event that the customer issuccessful in pursuing the claim, such action would negatively impact the Partnership because the Partnership has certain reimbursement obligations it would owethe insurance company. If the case is reopened or the insurance claim by the customer is successful, we are currently unable to determine the exposure we mayhave in this matter, if any.NOTE 23. CONDENSED CONSOLIDATING FINANCIAL INFORMATIONThe Partnership's operations are conducted by its operating subsidiaries as it has no independent assets or operations. Martin Operating Partnership L.P.(the "Operating Partnership"), the Partnership’s wholly-owned subsidiary, and the Partnership's other operating subsidiaries have issued in the past, and may issuein the future, unconditional guarantees of senior or subordinated debt securities of the Partnership. The guarantees that have been issued are full, irrevocable andunconditional and joint and several. In addition, the Operating Partnership may also issue senior or subordinated debt securities which, if issued, will be fully,irrevocably and unconditionally guaranteed by the Partnership. Substantially all of the Partnership's operating subsidiaries are subsidiary guarantors of itsoutstanding senior unsecured notes and any subsidiaries other than the subsidiary guarantors are minor.NOTE 24. SUBSEQUENT EVENTSQuarterly Distribution. On January 28, 2020, the Partnership declared a quarterly cash distribution of $0.0625 per common unit for the fourth quarter of2019, or $0.25 per common unit on an annualized basis, which was paid on February 14, 2020 to unitholders of record as of February 7, 2020. 109Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A.Controls and Procedures(a) Evaluation of Disclosure Controls and Procedures. In accordance with Rules 13a-15 and 15d-15 of the Exchange Act of 1934, we, under thesupervision and with the participation of the Chief Executive Officer and Chief Financial Officer of our general partner, carried out an evaluation of theeffectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) of the Exchange Act) as of December 31, 2019. Based onthat evaluation, the Chief Executive Officer and Chief Financial Officer of our general partner concluded that our disclosure controls and procedures wereeffective as of December 31, 2019 to provide reasonable assurance that information required to be disclosed by the Partnership in reports that it files or submitsunder the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated andcommunicated to the Partnership’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisionsregarding required disclosure. (b) Management’s Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequateinternal control over financial reporting. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.Our management, including the Chief Executive Officer and Chief Financial Officer of our general partner, conducted an evaluation of the effectivenessof our internal control over financial reporting based on criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission. Based on its evaluation under the framework in Internal Control — Integrated Framework (2013), ourmanagement concluded that our internal control over financial reporting was effective as of December 31, 2019. The effectiveness of our internal control overfinancial reporting as of December 31, 2019 has been audited by KPMG LLP, our independent registered public accounting firm, as stated in their report appearingin "Item 8 - Financial Statements and Supplementary Data."(c) Changes in Internal Control Over Financial Reporting. There were no changes in our internal controls over financial reporting (as defined inRules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely tomaterially affect, our internal controls over financial reporting. 110Item 9B.Other InformationNone.111PART IIIItem 10.Directors, Executive Officers and Corporate Governance Management of Martin Midstream Partners L.P. Martin Midstream GP LLC, as our general partner, manages our operations and activities on our behalf. Our general partner was not elected by ourunitholders and will not be subject to re-election in the future. Unitholders do not directly or indirectly participate in our management or operation. Our generalpartner owes a fiduciary duty to our unitholders. Our general partner is liable, as general partner, for all of our debts (to the extent not paid from our assets), exceptfor indebtedness or other obligations that are made specifically non-recourse to it. However, whenever possible, our general partner seeks to provide that ourindebtedness or other obligations are non-recourse to our general partner. Three directors of our general partner serve on the Conflicts Committee to review specific matters that the directors believe may involve conflicts ofinterest. The Conflicts Committee determines if the resolution of the conflict of interest is fair and reasonable to us. The members of the Conflicts Committee maynot be officers or employees of our general partner or directors, officers, or employees of its affiliates and must meet the independence standards established byNASDAQ to serve on an audit committee of a board of directors. Any matters approved by the Conflicts Committee will be conclusively deemed to be fair andreasonable to us, approved by all of our partners, and not a breach by our general partner of any duties it may owe us or our unitholders. The current members ofour Conflicts Committee are outside directors, James M. Collingsworth, C. Scott Massey and Byron R. Kelley, all of whom meet the independence standardsestablished by NASDAQ. The Audit Committee reviews our external financial reporting, recommends engagement of our independent auditors and reviews procedures for internalauditing and the adequacy of our internal accounting controls. The current members of our Audit Committee are outside directors, C. Scott Massey, Byron R.Kelley and James M. Collingsworth, all of whom meet the independence standards established by NASDAQ.The Compensation Committee oversees compensation decisions for the officers of our general partner as well as the compensation plans describedbelow. The current members of our Compensation Committee are our outside directors, James M. Collingsworth, C. Scott Massey, and Byron R. Kelley.The current members of our Nominating Committee are outside directors, James M. Collingsworth, Byron R. Kelley and C. Scott Massey. We are managed and operated by the directors and officers of our general partner. All of our operational personnel are employees of Martin ResourceManagement Corporation. All of the officers of our general partner will spend a substantial amount of time managing the business and affairs of Martin ResourceManagement Corporation and its other affiliates. These officers may face a conflict regarding the allocation of their time between our business and the otherbusiness interests of Martin Resource Management Corporation. Our general partner intends to cause its officers to devote as much time to the management of ourbusiness and affairs as is necessary for the proper conduct of our business and affairs.112Directors and Executive Officers of Martin Midstream GP LLCThe following table shows information for the directors and executive officers of our general partner. Directors and executive officers are elected for one-year terms.Name Age Position with the General PartnerRuben S. Martin 68 President, Chief Executive Officer and DirectorRobert D. Bondurant 61 Executive Vice President, Chief Financial Officer, Treasurer and DirectorRandall L. Tauscher 54 Executive Vice President and Chief Operating OfficerChris H. Booth 50 Executive Vice President, Chief Legal Officer, General Counsel and SecretaryScot A. Shoup 59 Senior Vice President of OperationsC. Scott Massey 67 DirectorJames M. Collingsworth 65 DirectorByron R. Kelley 72 DirectorSean P. Dolan 46 DirectorZachary S. Stanton 44 DirectorRuben S. Martin serves as President, Chief Executive Officer and a member of the board of directors of our general partner. Mr. Martin has served in suchcapacities since June 2002. Mr. Martin has served as President of Martin Resource Management Corporation since 1981 and has served in various capacitieswithin the company since 1974. Mr. Martin holds a Bachelor of Science degree in industrial management from the University of Arkansas. Mr. Martin wasselected to serve as a director on our general partner's board of directors due to his depth of knowledge of the Partnership, including its strategies and operations,his business judgment and his position within the Partnership.Robert D. Bondurant serves as Executive Vice President, Chief Financial Officer, Treasurer and a member of the board of directors of our generalpartner. Mr. Bondurant has served in such capacities since June 2002. Mr. Bondurant joined Martin Resource Management Corporation in 1983 as Controller andsubsequently was appointed Chief Financial Officer and a member of its board of directors in 1990. Mr. Bondurant served in the audit department at PeatMarwick, Mitchell and Co. from 1980 to 1983. Mr. Bondurant holds a Bachelor of Business Administration degree in accounting from Texas A&M University andis a Certified Public Accountant, licensed in the state of Texas. Randall L. Tauscher serves as Executive Vice President and Chief Operating Officer of our general partner. Mr. Tauscher has served as an officer of ourgeneral partner since September 2007. Prior to joining Martin, Mr. Tauscher was employed by Koch Industries for over 18 years, most recently as Senior VicePresident of the Koch Carbon Division. Mr. Tauscher earned a Bachelor of Business Administration degree from Kansas State University. Chris H. Booth serves as Executive Vice President, Chief Legal Officer, General Counsel and Secretary of our general partner. Mr. Booth has served asan officer of our general partner since February 2006. Mr. Booth joined Martin Resource Management Corporation in October 2005. Prior to joining MartinResource Management Corporation, Mr. Booth was an attorney with the law firm of Mehaffy Weber located in Beaumont, Texas. Mr. Booth holds a Doctor ofJurisprudence degree and a Masters of Business Administration degree from the University of Houston. Additionally, Mr. Booth holds a Bachelor of Sciencedegree in business management from LeTourneau University. Mr. Booth is an attorney licensed to practice in the State of Texas.Scot A. Shoup serves as Senior Vice President of Operations for our general partner. Mr. Shoup joined Martin Resource Management Corporation in May2011. Prior to joining Martin, Mr. Shoup was employed by Exline, Inc. as Executive Vice President from 2005 to 2011 and was employed by Koch Industries invarious capacities for 18 years. Mr. Shoup holds a bachelor of science degree in Civil Engineering from the University of Kansas.C. Scott Massey serves as a member of the board of directors of our general partner. Mr. Massey has served as a Director since June 2002. Mr. Masseyhas been self employed as a Certified Public Accountant since 1998. From 1977 to 1998, Mr. Massey worked for KPMG Peat Marwick, LLP in various positions,including, most recently, as a Partner in the firm's Tax Practice - Energy, Real Estate, Timber from 1986 to 1998. Mr. Massey received a Bachelor of BusinessAdministration degree from the University of Texas at Austin and a Doctor of Jurisprudence degree from the University of Houston. Mr. Massey is a CertifiedPublic Accountant, licensed in the States of Louisiana and Texas. Mr. Massey was selected to serve as a director on our general partner's board of directors due tohis extensive background in public accounting and taxation. Mr. Massey qualifies as an "audit committee financial expert" under the SEC guidelines.113 James M. Collingsworth serves as a member of the board of directors of our general partner. Mr. Collingsworth has spent 41 years in all facets of themidstream and petrochemical industry. In 2013, Mr. Collingsworth retired from Enterprise Products Company as a Sr. Vice President of Regulated NGL Pipelines& Natural Gas Storage. Mr. Collingsworth currently serves on the board of directors of NGL Energy Partners LP, and has served on the board of directors ofTexaco Canada, Dixie Pipeline Company, Seminole Pipeline Company and the Petrochemical Feedstock Association of America. Mr. Collingsworth has served asa Director since October 2014. Mr. Collingsworth received a bachelor’s degree in Finance and Marketing from Northeastern State University. Mr. Collingsworthwas selected to serve as a director on our general partner's board of directors due to his extensive corporate business experience. Byron R. Kelley serves as a member of the board of directors of our general partner and also served as an Advisory Director from April 2011 to August2012. On December 31, 2013, Mr. Kelley retired as CEO, President and a member of the board of directors of CVR Partners, LP, a chemical company engaged inthe production of nitrogen based fertilizers and served in this position from June 2011 through December 2013. Prior to joining CVR Partners he served asPresident, Chief Executive Officer and a member of the board of directors of Regency GP, LLC from April 2008 to November 2010. From 2004 through March of2008, Mr. Kelley served as Senior Vice President and Group President of Pipeline and Field Services at CenterPoint Energy. Preceding his work at CenterPoint,Mr. Kelley served as Executive Vice President of Development, Operations and Engineering, and as President of El Paso Energy International. Mr. Kelley is a pastmember and Chairman of the board of directors of the Interstate National Gas Association and previously served as one of the association's representatives on theUnited States Natural Gas Council of America. Mr. Kelley received a Bachelor of Science degree in civil engineering from Auburn University. Mr. Kelley wasselected to serve as a director on our general partner's board of directors due to his extensive corporate business experience.Sean P. Dolan serves as a member of the board of directors of our general partner. Mr. Dolan has served as a Director since 2013. Mr. Dolan is a Partnerof Alinda Capital Partners, which he joined in 2009. Prior to joining Alinda, Mr. Dolan spent over 12 years with Citigroup Global Markets in investment bankingprimarily focused in the energy sector. Mr. Dolan received a bachelor's degree from Georgetown University. Mr. Dolan was selected to serve as a director on ourgeneral partner's board of directors due to his affiliation with Alinda, his knowledge of the energy industry and his financial and business expertise.Zachary S. Stanton serves as a member of the board of directors of our general partner. Mr. Stanton has served as a director since 2016. Mr. Stanton is aManaging Director of Alinda Capital Partners, which he joined in 2011. Prior to joining Alinda, he was a Director at Zolfo Cooper, LLC, a consulting firm basedin New York. Mr. Stanton has over 15 years of experience focused on the corporate development and operations of energy and transportation infrastructurebusinesses as well as diversified industrial companies. Mr. Stanton received a bachelor's degree from Wesleyan University. Mr. Stanton was selected to serve as adirector on our general partner's board of directors due to his affiliation with Alinda, his knowledge of the energy industry, and his financial and business expertise.Independence of DirectorsMessrs. Massey, Collingsworth, and Kelley qualify as "independent" in accordance with the published listing requirements of NASDAQ and applicablesecurities laws. The NASDAQ independence definition includes a series of objective tests, such as that the director is not an employee of us and has not engagedin various types of business dealings with us. In addition, as further required by the NASDAQ rules, the board of directors has made a subjective determination asto each independent director that no relationships exist which, in the opinion of the board, would interfere with the exercise of independent judgment in carryingout the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and us with regardto each director's business and personal activities as they may relate to us and our management. Board Meetings and Committees From January 1, 2019 to December 31, 2019, the board of directors of our general partner held 13 meetings. All directors then in office attended each ofthese meetings, either in person, by teleconference or by videoconference with the exception of: Byron R. Kelley and Zach Stanton, who were not in attendance atthe meeting of the board of directors on the date of May 31, 2019. Additionally, the board of directors undertook action three times during 2019 without a meetingby acting through written unanimous consent. We have standing conflicts, audit, compensation and nominating committees of the board of directors of our generalpartner. The board of directors of our general partner appoints the members of the Audit, Compensation, Nominating and Conflicts Committees. Each member ofthe Audit Committee is an independent director in accordance with NASDAQ and applicable securities laws. Each of the board committees has a written charterapproved by the114board. Copies of each charter are posted on our website at www.MMLP.com under the "Corporate Governance" section. The current members of the committees,the number of meetings held by each committee from January 1, 2019 to December 31, 2019, and a brief description of the functions performed by eachcommittee are set forth below: Conflicts Committee (3 meetings). The members of the Conflicts Committee are: Messrs. Kelley (chairman), Massey and Collingsworth. All of themembers of the Conflicts Committee attended all meetings of the committee for the period noted above. The primary responsibility of the Conflicts Committee isto review matters that the directors believe may involve conflicts of interest. The Conflicts Committee determines if the resolution of the conflict of interest is fairand reasonable to us. The members of the Conflicts Committee may not be officers or employees of our general partner or directors, officers, or employees of itsaffiliates and must meet the independence standards to serve on an audit committee of a board of directors established by NASDAQ. Any matters approved by theConflicts Committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our general partner of anyduties it may owe us or our unitholders. Audit Committee (5 meetings). The members of the Audit Committee are Messrs. Massey (chairman), Kelley and Collingsworth. All of the membersattended all meetings of the Audit Committee for the period noted. The primary responsibilities of the Audit Committee are to assist the board of directors in itsgeneral oversight of our financial reporting, internal controls and audit functions, and it is directly responsible for the appointment, retention, compensation andoversight of the work of our independent auditors. The members of the Audit Committee of the board of directors of our general partner each qualify as"independent" under standards established by the SEC for members of audit committees, and the Audit Committee includes at least one member who is determinedby the board of directors to meet the qualifications of an "audit committee financial expert" in accordance with SEC rules, including that the person meets therelevant definition of an "independent" director. C. Scott Massey is the independent director who has been determined to be an audit committee financial expert. Unitholders should understand that this designation is a disclosure requirement of the SEC related to Mr. Massey's experience and understanding with respect tocertain accounting and auditing matters. The designation does not impose on Mr. Massey any duties, obligations or liability that are greater than are generallyimposed on him as a member of the Audit Committee and board of directors, and his designation as an audit committee financial expert pursuant to this SECrequirement does not affect the duties, obligations or liability of any other member of the Audit Committee or board of directors. Compensation Committee (2 meetings). The members of the Compensation Committee are Messrs. Collingsworth (chairman), Massey and Kelley. Allmembers attended the meeting of the Compensation Committee for the period noted above. The primary responsibility of the Compensation Committee is tooversee compensation decisions for the outside directors of our general partner and executive officers of our general partner (in the event they are to be paid by ourgeneral partner) as well as our long-term incentive plan. Nominating Committee (2 meetings). The members of the Nominating Committee are Messrs. Collingsworth (chairman), Massey, and Kelley. All ofthe members attended the meeting of the Nominating Committee for the period noted above. The primary responsibility of the nominating committee is to selectand recommend nominees for election to the board of directors of our general partner.Code of Ethics and Business Conduct Our general partner has adopted a Code of Ethics and Business Conduct applicable to all of our general partner's employees (including any employees ofMartin Resource Management Corporation who undertake actions with respect to us or on our behalf), including all officers, and including our general partner'sindependent directors, who are not employees of our general partner, with regard to their activities relating to us. The Code of Ethics and Business Conductincorporate guidelines designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. They alsoincorporate our expectations of our general partner's employees (including any employees of Martin Resource Management Corporation who undertake actionswith respect to us or on our behalf) that enable us to provide accurate and timely disclosure in our filings with the Securities and Exchange Commission and otherpublic communications. The Code of Ethics and Business Conduct is publicly available on our website under the "Corporate Governance" section (atwww.MMLP.com). This website address is intended to be an inactive, textual reference only, and none of the material on this website is part of this report. If anysubstantive amendments are made to the Code of Ethics and Business Conduct or if we or our general partner grant any waiver, including any implicit waiver, froma provision of the code to any of our general partner's executive officers and directors, we will disclose the nature of such amendment or waiver on that website orin a report on Form 8-K.Section 16(a) Beneficial Ownership Reporting Compliance115 Our general partner's directors and officers and beneficial owners of more than 10% of a registered class of our equity securities are required to filereports of ownership and reports of changes in ownership with the SEC and NASDAQ. Directors, officers and beneficial owners of more than 10% of our equitysecurities are also required to furnish us with copies of all such reports that are filed. Based solely on our review of copies of such forms and amendmentspreviously provided to us, we believe directors, officers and greater than 10% beneficial owners complied with all filing requirements during the year endedDecember 31, 2019. 116Item 11.Executive Compensation Compensation Discussion and AnalysisBackgroundWe are required to provide information regarding the compensation program in place as of December 31, 2019, for the CEO, CFO and the three othermost highly-compensated executive officers of our general partner as reflected in the summary compensation table set forth below (the "Named ExecutiveOfficers"). This section should be read in conjunction with the detailed tables and narrative descriptions regarding compensation below.We are a master limited partnership and have no employees. We are managed by the executive officers of our general partner. These executive officersare employed by Martin Resource Management Corporation, a private corporation that has significant operations that are separate from ours. The executiveofficers of our general partner are also the executive officers of Martin Resource Management Corporation and devote significant time to the management ofMartin Resource Management Corporation’s operations. We reimburse Martin Resource Management Corporation for a portion of the indirect general andadministrative expenses, including compensation expense relating to the service of these individuals that are allocated to us pursuant to the Omnibus Agreement.Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative and corporateoverhead expenses. For the years ended December 31, 2019, 2018 and 2017 the Conflicts Committee approved reimbursement amounts of $16.7 million, $16.4million and $16.4 million, respectively, reflecting our allocable share of such expenses. Please see "Item 13. Certain Relationships and Related Transactions, andDirector Independence — Agreements — Omnibus Agreement" for a discussion of the Omnibus Agreement.Compensation ObjectivesAs we do not directly compensate the executive officers of our general partner, we do not have any set compensation programs. The elements of MartinResource Management Corporation’s compensation program discussed below, along with Martin Resource Management Corporation’s other rewards, are intendedto provide a total rewards package designed to yield competitive total cash compensation, drive performance and reward contributions in support of the businessesof Martin Resource Management Corporation and other Martin Resource Management Corporation affiliates, including us, for which the Named ExecutiveOfficers perform services. Although we bear an allocated portion of Martin Resource Management Corporation’s costs of providing compensation and benefits tothe Named Executive Officers, we do not have control over such costs and do not establish or direct the compensation policies or practices of Martin ResourceManagement Corporation. During 2019, Martin Resource Management Corporation paid compensation based on the performance of Martin ResourceManagement Corporation but did not set any specific performance-based criteria and did not have any other specific performance-based objectives.Elements of CompensationMartin Resource Management Corporation’s executive officer compensation package includes a combination of annual cash, long-term incentivecompensation and other compensation. Elements of compensation which the Named Executive Officers may be eligible to receive from Martin ResourceManagement Corporation consist of the following: (1) annual base salary; (2) discretionary annual cash awards; (3) awards pursuant to the Martin MidstreamPartners L.P. 2017 Restricted Unit Plan and Martin Resource Management Corporation employee benefit plans and (4) where appropriate, other compensation,including limited perquisites.Annual Base Salary. Base salary is intended to provide fixed compensation to the Named Executive Officers for their performance of core duties withrespect to Martin Resource Management Corporation and its affiliates, including us, and to compensate for experience levels, scope of responsibility and futurepotential. Base salaries are not intended to compensate individuals for extraordinary performance or for above average company performance. The base salaries ofthe Named Executive Officers are generally reviewed on an annual basis, as well as at the time of promotion and other changes in responsibilities or marketconditions.Discretionary Annual Cash Awards. In addition to the annual base salary, the Named Executive Officers may be eligible to receive discretionary annualcash awards that, if awarded, are paid in a lump sum in the quarter following the end of the fiscal year. These cash awards are designed to provide the NamedExecutive Officers with competitive incentives to help drive performance and promote achievement of Martin Resource Management Corporation’s businessobjectives. Named117Executive Officers may also be eligible to receive a cash award based upon their services provided to us in the event that any such Named Executive Officer hasdevoted a significant amount of their time to working for us. Any such award is determined in accordance with the same methodologies as the discretionary annualcash awards for Martin Resource Management Corporation, as described below.Employee Benefit Plan Awards. The Named Executive Officers may be eligible to receive awards pursuant to the Martin Midstream Partners L.P. 2017Restricted Unit Plan and Martin Resource Management Corporation employee benefit plans. These employee benefit plan awards are designed to reward theperformance of the Named Executive Officers by providing annual incentive opportunities tied to the annual performance of Martin Resource ManagementCorporation. In particular, these awards are provided to the Named Executive Officers in order to provide competitive incentives to these executives who cansignificantly impact performance and promote achievement of the business objectives of Martin Resource Management Corporation.Other Compensation. Martin Resource Management Corporation generally does not pay for perquisites for any of the Named Executive Officers, otherthan general recreational activities at certain Martin Resource Management Corporation’s properties and use of Martin Resource Management Corporationvehicles, including aircraft. No perquisites are paid for services rendered to us. Martin Resource Management Corporation provides an executive life insurancepolicy and long term disability policy for the Named Executive Officers with the annual premiums being paid by Martin Resource ManagementCorporation. Martin Resource Management Corporation does not provide any greater allocation toward employee health insurance premiums than is provided forall other employees covered on the health benefits plan.Compensation MethodologyThe compensation policies and philosophy of Martin Resource Management Corporation govern the types and amount of compensation granted to each ofthe Named Executive Officers. The board of directors and Conflicts Committee have responsibility for evaluating and determining the reasonableness of the totalamount we are charged under the Omnibus Agreement for managerial, administrative and operational support, including compensation of the Named ExecutiveOfficers, provided by Martin Resource Management Corporation. Our allocation for the costs incurred by Martin Resource Management Corporation in providing compensation and benefits to its employees who serve asthe Named Executive Officers is governed by the Omnibus Agreement. In general, this allocation is based upon estimates of the relative amounts of time that theseemployees devote to the business and affairs of our general partner and to the business and affairs of Martin Resource Management Corporation. We bearsubstantially less than a majority of Martin Resource Management Corporation’s costs of providing compensation and benefits to the Named Executive Officers.When setting compensation for the Named Executive Officers, the elements of compensation above are considered holistically to provide an appropriatecombination of compensation. Annual base salaries for the Named Executive Officers are determined by Mr. Ruben Martin, Chief Executive Officer, Mr. RobertBondurant, Chief Financial Officer, Mr. Randall Tauscher, Chief Operating Officer, and Mrs. Melanie Mathews, Vice President-Human Resources (collectively,the "Management Compensation Committee of Martin Resource Management Corporation") based on a periodic performance review of each Named ExecutiveOfficer. Except in the case of an exceptional amount of time devoted to us, discretionary annual cash awards are based on the performance of Martin ResourceManagement Corporation. Annual discretionary cash awards, if any, are calculated first by allocating a portion of Martin Resource Management Corporation’searnings as determined by the Management Compensation Committee of Martin Resource Management Corporation for distribution to key employees of MartinResource Management Corporation. Upon such allocation, the Management Compensation Committee of Martin Resource Management Corporation, with inputfrom appropriate business leaders determines the allocation and distribution of the bonus pool among such employees, including the Named Executive Officers. Alldecisions of the Management Compensation Committee of Martin Resource Management Corporation concerning the compensation of the Named ExecutiveOfficers are reviewed and approved by the Compensation Committee of the Board of Directors of Martin Resource Management Corporation, which is made up ofMr. Cullen M. Godfrey, an independent director of Martin Resource Management Corporation and Mr. Ruben Martin. With respect to employee benefit planawards pursuant to plans maintained by the Partnership, the Management Compensation Committee of Martin Resource Management Corporation makes arecommendation as to whether such awards should be awarded to any employees. Any such employee plan awards are then considered and must be approved bythe Compensation Committee and then are distributed to the employees, including Named Executive Officers, accordingly. Further, Martin Resource ManagementCorporation, with the approval of the Compensation Committee of the Board of Directors of Martin Resource Management Corporation or the CompensationCommittee regularly reviews market data and relevant compensation surveys when setting base compensation and, when appropriate, engages compensationconsultants. Because he serves on both the Management Compensation Committee of Martin Resource118Management Corporation and on the Compensation Committee of the Board of Directors of Martin Resource Management Corporation, Mr. Martin, as ChiefExecutive Officer, has significant authority in setting base salaries, discretionary annual cash award allocations and amounts and employee benefit awarddistributions.Any awards granted under our long-term incentive plan, which to date have consisted of the grant of restricted common units to the independent directorsand employees of our general partner, are approved by the Compensation Committee.Determination of 2019 Compensation Amounts During 2019, elements of all compensation paid to the Named Executive Officers by Martin Resource Management Corporation consisted of thefollowing: (1) annual base salary; (2) discretionary annual cash awards; (3) awards pursuant to the Martin Midstream Partners L.P. 2017 Restricted Unit Plan andMartin Resource Management Corporation employee benefit plans; and (4) other compensation, including limited perquisites. With respect to the NamedExecutive Officers, they were paid an allocated portion of their base salaries.Annual Base Salary. The portions of the annual base salaries paid by Martin Resource Management Corporation to the Named Executive Officers, whichare allocable to us under our Omnibus Agreement with Martin Resource Management Corporation, are reflected in the summary compensation table below. Basedupon the agreement of our general partner with Martin Resource Management Corporation, we have reimbursed Martin Resource Management Corporation forapproximately 56.3% of the aggregate annual base salaries paid to the Named Executive Officers by Martin Resource Management Corporation during 2019. Theforegoing agreement has been developed based on an assessment of the estimated percentage of the time spent by the Named Executive Officers managing ouraffairs, relative to the affairs of Martin Resource Management Corporation ranging from approximately 50% to 75%. Our Named Executive Officers are Mr.Ruben Martin, the President and Chief Executive Officer of our general partner, Mr. Robert Bondurant, an Executive Vice President and Chief Financial Officer ofour general partner, Mr. Randall Tauscher, an Executive Vice President and Chief Operating Officer of our general partner, Mr. Chris Booth, the Executive VicePresident, General Counsel and Secretary of our general partner, and Mr. Scot A. Shoup, Senior Vice President of Operations.Discretionary Annual Cash Awards. Discretionary annual cash awards paid to the Named Executive Officers which are allocable to us are reflected in thesummary compensation table below.Martin Midstream Partners L.P. Long-Term Incentive PlanOn May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P. 2017 Restricted Unit Plan (the "2017 LTIP"). The plancurrently 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 isadministered by the Compensation Committee of our general partner’s board of directors. The purpose of the 2017 LTIP is designed to enhance our ability toattract, retain, reward and motivate the services of certain key employees, officers, and directors of the general partner and Martin Resource ManagementCorporation.Our general partner’s board of directors or the Compensation Committee, in their discretion, may terminate or amend the 2017 LTIP at any time withrespect to any units for which a grant has not yet been made. Our general partner’s board of directors or the Compensation Committee also have the right to alter oramend the 2017 LTIP or any part of the plan from time to time, including increasing the number of units that may be reserved for issuance under the plan subjectto any applicable unitholder approval. However, no change in any outstanding grant may be made that would materially impair the rights of the participant withoutthe consent of the participant. In addition, the restricted units will vest upon a change of control of us, our general partner or Martin Resource ManagementCorporation or if our general partner ceases to be an affiliate of Martin Resource Management Corporation.Restricted Units. 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 makegrants 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. TheCompensation Committee may also award a percentage of restricted units with vesting requirements based upon the achievement of specified pre-establishedperformance targets ("Performance Based Restricted Units" or "PBRU's"). The performance targets may include, but are not limited to, the following: revenue andincome measures, cash flow measures, EBIT, EBITDA, distribution coverage metrics, expense measures, liquidity measures, market measures, corporatesustainability119metrics, and other measures related to acquisitions, dispositions, operational objectives and succession planning objectives. PBRU's are earned only upon ourachievement of an objective performance measure for the performance period. PBRU's which vest are payable in common units. The Compensation Committeebelieves this type of incentive award strengthens the tie between each grantee's pay and our financial performance. We intend the issuance of the common unitsupon vesting of the restricted units under the plan to serve as a means of incentive compensation for performance and not primarily as an opportunity to participatein the equity appreciation of the common units. Therefore, plan participants will not pay any consideration for the common units they receive, and we will receiveno remuneration for the units. Unvested units granted under the 2017 LTIP may or may not participate in cash distributions depending on the terms of eachindividual award agreement.If a grantee’s service to the Partnership terminates for any reason, the grantee’s restricted units will be automatically forfeited unless, and to the extent, theCompensation Committee provides otherwise. Common units to be delivered upon the vesting of restricted units may be common units acquired by our generalpartner in the open market, common units already owned by our general partner, common units acquired by our general partner directly from us or any affiliate ofour general partner, newly issued common units under the LTIP, or any combination of the foregoing. Our general partner will be entitled to reimbursement by usfor the cost incurred in acquiring common units. If we issue new common units upon vesting of the restricted units, the total number of common units outstandingwill increase.On February 11, 2019, we issued 5,648 TBRU's to each of our three independent directors under the 2017 LTIP. These restricted common units vest inequal installments of 1,412 units on January 24, 2020, 2021, 2022, and 2023.Martin Resource Management Corporation Employee Benefit PlansMartin Resource Management Corporation has employee benefit plans for its employees who perform services for us. The following summary of theseplans is not complete but outlines the material provisions of these plans.Martin Resource Management Corporation Purchase Plan for Units of Martin Midstream Partners L.P. Martin Resource Management Corporationmaintains a purchase plan for our units to provide employees of Martin Resource Management Corporation and its affiliates who perform services for us theopportunity to acquire an equity interest in us through the purchase of our common units. Each individual employed by Martin Resource Management Corporationor an affiliate of Martin Resource Management Corporation that provides services to us is eligible to participate in the purchase plan. Enrollment in the purchaseplan by an eligible employee will constitute a grant by Martin Resource Management Corporation to the employee of the right to purchase common units under thepurchase plan. The right to purchase common units granted by the Partnership under the purchase plan is for the term of a purchase period.During each purchase period, each participating employee may elect to make contributions to his bookkeeping account each pay period in an amount notless than one percent of his compensation and not more than fifteen percent of his compensation. The rate of contribution shall be designated by the employee atthe time of enrollment. On each purchase date (the last day of such purchase period), units will be purchased for each participating employee at the fair marketvalue of such units. The fair market value of the Units to be purchased during such purchase period shall mean the closing sales price of a unit on the purchase date. Martin Resource Management Corporation Employee Stock Ownership Plans.MRMC Employee Stock Ownership Plan ("ESOP"). Martin Resource Management Corporation maintains an employee stock ownership plan that coversemployees who satisfy certain minimum age and service requirements. Under the terms of the ESOP, Martin Resource Management Corporation has the discretionto make contributions in an amount determined by its board of directors. Those contributions are allocated under the terms of the ESOP and invested primarily inthe common stock of Martin Resource Management Corporation. Participants in the ESOP become 100% vested upon completing six years of vesting service orupon their attainment of Normal Retirement Age (as defined in the plan document), permanent disability or death during employment. Any forfeitures of non-vested accounts may be used to pay administrative expenses and restore previous forfeitures of employees rehired before incurring five consecutive breaks-in-service. Any remaining forfeitures will be allocated to the accounts of employed participants. Participants are not permitted to make contributions includingrollover contributions to the ESOP.Martin Employee Stock Ownership Plan (the "Plan"). Martin Resource Management Corporation maintains an employee stock ownership plan thatcovers employees who satisfied certain minimum age and service requirements but no employee shall become eligible to participate in the Plan on or after January1, 2013. This Plan is referred to as the "Martin Employee Stock Ownership Plan". Under the terms of the Plan, Martin Resource Management Corporation has thediscretion120to make contributions in an amount determined by its board of directors. Those contributions are allocated under the terms of the Plan and invested primarily in thecommon stock of Martin Resource Management Corporation. No contributions will be made to the Plan for any Plan year commencing on or after January 1, 2013.The account balances of any participant who was employed by Martin Resource Management Corporation on December 31, 2012 are fully vested and non-forfeitable. The Plan converted to an employee stock ownership plan on January 1, 2013.Martin Resource Management Corporation 401(k) Profit Sharing Plan. Martin Resource Management Corporation maintains a profit sharing plan thatcovers employees who satisfy certain minimum age and service requirements. This profit sharing plan is referred to as the "401(k) Plan." Eligible employees mayelect to participate in the 401(k) Plan by electing pre-tax contributions up to 30% of their regular compensation. Matching contributions are made to the 401(k)Plan equal to 50% of the first 4% of eligible compensation. Martin Resource Management Corporation may make annual discretionary profit sharing contributionsin an amount at the plan year end as determined by the board of directors of Martin Resource Management Corporation. Participants in the 401(k) Plan prior toJanuary 1, 2017 are 100% vested in matching contributions, while those employed after January 1, 2017 become vested upon completion of the five years ofvesting service schedule or upon their attainment of age 65, permanent disability or death during employment. The five year vesting service schedule is alsoapplicable to discretionary contributions made to the plan.Martin Resource Management Corporation Non-Qualified Option Plan. In September 1999, Martin Resource Management Corporation adopted a stockoption plan designed to retain and attract qualified management personnel, directors and consultants. Under the plan, Martin Resource Management Corporationis authorized to issue to qualifying parties from time to time options to purchase up to 2,000 shares of its common stock with terms not to exceed ten years fromthe date of grant and at exercise prices generally not less than fair market value on the date of grant. In November 2007, Martin Resource ManagementCorporation adopted an additional stock option plan designed to retain and attract qualified management personnel, directors and consultants. In December 2013,all outstanding options were exercised or redeemed in lieu of redemption. There are no outstanding options under this plan as of December 31, 2019.Other CompensationMartin Resource Management Corporation generally does not pay for perquisites for any of our named executive officers other than general recreationalactivities at certain Martin Resource Management Corporation’s properties located in Texas and use of Martin Resource Management Corporation vehicles,including aircraft. SUMMARY COMPENSATION TABLEThe following table sets forth the compensation expense that was allocated to us for the services of the named executive officers for the years endedDecember 31, 2019, 2018 and 2017.Name and Principal Position Year Salary Bonus Stock Awards(1) Total CompensationRuben S. Martin, President and Chief Executive Officer 2019 $262,500 $— $— $262,500 2018 $262,500 $— $1,158,913 $1,421,413 2017 $412,500 $— $— $412,500Robert D. Bondurant, Executive Vice President and ChiefFinancial Officer 2019 $240,000 $— $— $240,000 2018 $240,000 $— $740,870 $980,870 2017 $230,000 $— $— $230,000Randall L. Tauscher, Executive Vice President and ChiefOperating Officer 2019 $288,000 $— $— $288,000 2018 $288,000 $— $740,870 $1,028,870 2017 $276,000 $— $— $276,000Chris H. Booth, Executive Vice President, General Counsel andSecretary 2019 $192,500 $— $— $192,500 2018 $192,500 $— $556,000 $748,500 2017 $183,600 $— $— $183,600Scot A. Shoup, Senior Vice President of Operations 2019 $279,000 $— $— $279,000 2018 $279,000 $— $222,400 $501,400 2017 $270,000 $— $— $270,000121(1) The amounts shown represent the grant date fair value of awards computed in accordance with FASB ASC 718, however, such awards are subject to vesting requirementsfor TBRU's and PBRU's which have not been met as it relates to the 2018 stock award. See Note 18 included in Item 8 herein for the assumptions made in our valuation of suchawards.Director CompensationAs a partnership, we are managed by our general partner. The board of directors of our general partner performs for us the functions of a board ofdirectors of a business corporation. Directors of our general partner are entitled to receive total quarterly retainer fees of $16,250 each, which are paid by thegeneral partner. Martin Resource Management Corporation employees who are a member of the board of directors of our general partner do not receive anyadditional compensation for serving in such capacity. Officers of our general partner who also serve as directors will not receive additional compensation. Alldirectors of our general partner are entitled to reimbursement for their reasonable out-of-pocket expenses in connection with their travel to and from, andattendance at, meetings of the board of directors or committees thereof. Each director will be fully indemnified by us for actions associated with being a directorto the extent permitted under Delaware law.The following table sets forth the compensation of our board members for the period from January 1, 2019 through December 31, 2019. Name Fees EarnedPaid inCash StockAwards (2) TotalRuben S. Martin $— $— $—Robert D. Bondurant $— $— $—C. Scott Massey (1) $65,000 $70,769 $135,769Byron R. Kelley (1) $65,000 $70,769 $135,769James M. Collingsworth (1) $65,000 $70,769 $135,769Sean P. Dolan $— $— $—Zachary S. Stanton $— $— $—(1) On February 11, 2019, the Partnership issued 5,648 restricted common units to each of three independent directors, C. Scott Massey, Byron R. Kelley, andJames M. Collingsworth under our 2017 LTIP. These restricted common units vest in equal installments of 1,412 units on January 24, 2020, 2021, 2022 and2023, respectively. In calculating the fair value of the award, we multiplied the closing price of our common units on the NASDAQ on the date of grant by thenumber of restricted common units granted to each director.(2) The amounts shown represent the grant date fair value of awards computed in accordance with FASB ASC 718, however, such awards are subject to vestingrequirements for TBRU's and PBRU's which have not been met as it relates to the 2018 stock award. See Note 18 included in Item 8 herein for the assumptionsmade in our valuation of such awards.COMPENSATION REPORT OF THE COMPENSATION COMMITTEE The Compensation Committee of the general partner of Martin Midstream Partners L.P. has reviewed and discussed the Compensation Discussion andAnalysis section of this report with management of the general partner of Martin Midstream Partners L.P. and, based on that review and discussions, hasrecommended that the Compensation Discussion and Analysis be included in this report. Members of the Compensation Committee:/s/ James M. CollingsworthJames M. Collingsworth, Committee Chair /s/ Byron R. KelleyByron R. Kelley /s/ C. Scott MasseyC. Scott Massey 122Compensation Committee Interlocks and Insider ParticipationOther than these independent directors, no other officer or employee of our general partner or its subsidiaries is a member of the CompensationCommittee. Employees of Martin Resource Management Corporation, through our general partner, are the individuals who work on our matters. 123Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth the beneficial ownership of our units as of February 14, 2020 held by beneficial owners of 5% or more of the unitsoutstanding, by directors of our general partner, by each executive officer and by all directors and executive officers of our general partner as a group.Name of Beneficial Owner(1) Common UnitsBeneficially Owned Percentage of Common Units BeneficiallyOwned (3)MRMC ESOP Trust (4) 6,114,532 15.7%Martin Resource Management Corporation (5) 6,114,532 15.7%Martin Resource, LLC (5) 4,203,823 10.8%Martin Product Sales LLC (5) 1,021,265 2.6%Cross Oil Refining & Marketing Inc. (6) 889,444 2.3%Invesco Ltd. (2) 8,245,272 21.2%Ruben S. Martin (6) 6,549,293 16.8%Robert D. Bondurant 84,237 —%Randall L. Tauscher 73,673 —%Chris H. Booth 48,203 —%Scot A. Shoup 11,858 —%Sean Dolan — —%Zachary S. Stanton — —%C. Scott Massey (7) 70,298 —%Byron R. Kelley 53,898 —%James M. Collingsworth (8) 51,298 —%All directors and executive officers as a group (10 persons) (9) 6,942,758 17.8% (1)The address for Martin Resource Management Corporation and all of the individuals listed in this table, unless otherwise indicated, is c/o MartinMidstream Partners L.P., 4200 Stone Road, Kilgore, Texas 75662.(2)Based solely upon the Schedule 13G/A filed on February 12, 2020 with the SEC by the beneficial owner as of December 31, 2019. Invesco Ltd. hassole voting power and sole dispositive power over 8,245,272 of common units. The address for Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800,Atlanta, Georgia, 30309(3)The percent of class shown is less than one percent unless otherwisenoted.(4)By virtue of its ownership of 88.39% of the outstanding common stock of Martin Resource Management Corporation, the MRMC ESOP Trust (the"MRMC ESOP") is the controlling shareholder of Martin Resource Management Corporation, and may be deemed to beneficially own the 6,114,532MMLP Common Units held by Martin Resource LLC, Cross Oil Refining & Marketing Inc., and Martin Product Sales LLC. Wilmington TrustRetirement and Institutional Services Company serves as trustee of the MRMC ESOP but all of its voting and investment decisions are directed by theboard of directors of Martin Resource Management Corporation. The MRMC ESOP expressly disclaims beneficial ownership of the MMLP CommonUnits as voting and investment decisions are directed by the board of directors of Martin Resource Management Corporation.(5)Martin Resource Management Corporation is the owner of Martin Resource, LLC, Martin Product Sales LLC, and Cross Oil Refining & MarketingInc., and as such may be deemed to beneficially own the common units held by Martin Resource LLC, Cross Oil Refining & Marketing Inc, andMartin Product Sales LLC. The 4,203,823 common units beneficially owned by Martin Resource Management Corporation through its ownership ofMartin Resource, LLC have been pledged as security to a third party to secure payment for a loan made by such third party. The 1,021,265 commonunits beneficially owned by Martin Resource Management Corporation through its ownership of Martin Product Sales LLC have been pledged assecurity to a third party to secure payment for a loan made by such third party. The 889,444 common units beneficially owned by Martin ResourceManagement Corporation through its ownership of Cross Oil Refining & Marketing Inc. have been pledged as security to a third party to securepayment for a loan made by such third party.124(6)Includes 334,761 common units owned directly by Mr. Martin, 306,447 of which are pledged to third parties to secure payment for loans. By virtue ofserving as the Chairman of the Board and President of Martin Resource Management Corporation, Ruben S. Martin may exercise control over thevoting and disposition of the securities owned by Martin Resource Management Corporation, and therefore, may be deemed the beneficial owner of thecommon units owned by Martin Resource Management Corporation, which include 6,114,532 common units beneficially owned through its ownershipof Martin Resource LLC, Cross Oil Refining & Marketing Inc. and Martin Product Sales LLC.(7)Mr. Massey may be deemed to be the beneficial owner of 1,500 common units held by hiswife.(8)Mr. Collingsworth may be deemed to be the beneficial owner of 775 common units held by hiswife.(9)The total for all directors and executive officers as a group includes the common units directly owned by such directors and executive officers as wellas the common units beneficially owned by Martin Resource Management Corporation as Ruben S. Martin may be deemed to be the beneficial ownerthereof.Martin Resource Management Corporation owns a 51% voting interest in the holding company that is the sole member of our general partner and,together with our general partner, owns approximately 15.7% of our outstanding common limited partner units as of December 31, 2019. The table below setsforth information as of December 31, 2019 concerning (i) each person owning beneficially in excess of 5% of the voting common stock of Martin ResourceManagement Corporation, and (ii) the beneficial common stock ownership of (a) each director of Martin Resource Management Corporation, (b) each executiveofficer of Martin Resource Management Corporation, and (c) all such executive officers and directors of Martin Resource Management Corporation as agroup. Except as indicated, each individual has sole voting and investment power over all shares listed opposite his or her name. Beneficial Ownership ofVoting Common StockName of Beneficial Owner(1) Number ofShares Percent ofOutstanding VotingStockMRMC ESOP Trust (2) 162,772.70 88.39%Martin ESOP Trust (3) 21,382.92 11.61%Robert D. Bondurant (3) 21,382.92 11.61%Randall Tauscher (3) 21,382.92 11.61%(1)The business address of each shareholder, director and executive officer of Martin Resource Management Corporation is c/o Martin ResourceManagement Corporation, 4200 Stone Road, Kilgore, Texas 75662.(2)The MRMC ESOP owns 162,772.70 shares of common stock of Martin Resource Management Corporation. Wilmington Trust Retirement andInstitutional Services Company serves as trustee of the MRMC ESOP but all of its voting and investment decisions related to the unallocated shares ofcommon stock are directed by the board of directors of Martin Resource Management Corporation. Of the common stock held by the MRMC ESOP,98,986.68 shares of common stock are allocated to participant accounts, and 63,786.02 shares of common stock are unallocated.(3)Robert D. Bondurant and Randall Tauscher (the "Co-Trustees") are co-trustees of the Martin Employee Stock Ownership Trust which converted from aprofit sharing plan known as the Martin Employees' Stock Profit Sharing Plan on January 1, 2014. The Co-Trustees exercise shared control over thevoting and disposition of the securities owned by this trust. As a result, the Co-Trustees may be deemed to be the beneficial owner of the securitiesheld by such trust; thus, the number of shares of common stock reported herein as beneficially owned by the Co-Trustees includes the 21,383 sharesowned by such trust. The Co-Trustees disclaim beneficial ownership of these 21,383 shares.125The following table sets forth information regarding securities authorized for issuance under our equity compensation plans as of December 31, 2019: Equity Compensation Plan Information Number of securities to be issued upon exerciseof outstanding options, Warrantsand rights Weighted-average exercise price of outstanding options,warrants and rights Number of securities remaining availablefor future issuance underequity compensationplans (excluding securities reflected in column (a))Plan Category(a) (b) (c)Equity compensation plans approved by security holdersN/A N/A 2,562,423Total— $— 2,562,423 (1) Our general partner has adopted and maintains the Martin Midstream Partners L.P. Long-Term Incentive Plan. For a description of the materialfeatures of this plan, please see "Item 11. Executive Compensation – Employee Benefit Plans – Martin Midstream Partners L.P. Long-Term Incentive Plan".In February 2020, we issued 27,000 restricted common units to independent directors under our long-term incentive plan. These restricted commonunits vest in equal installments of 6,750 units on January 24, 2021, 2022, 2023 and 2024.126Item 13.Certain Relationships and Related Transactions, and Director Independence Martin Resource Management Corporation owns 6,114,532 of our common limited partnership units representing approximately 15.7% of ouroutstanding common limited partnership units as of February 14, 2020. Martin Resource Management Corporation controls Martin Midstream GP LLC, ourgeneral partner, by virtue of its 51% voting interest in MMGP Holdings, LLC, the sole member of our general partner. Our general partner owns a 2% generalpartner interest in us and all of our incentive distribution rights. Our general partner’s ability to manage and operate us and Martin Resource ManagementCorporation’s ownership of approximately 15.7% of our outstanding common limited partnership units effectively gives Martin Resource ManagementCorporation the ability to veto some of our actions and to control our management. Distributions and Payments to the General Partner and its Affiliates The following table summarizes the distributions and payments to be made by us to our general partner and its affiliates in connection with our formation,ongoing operation and liquidation. These distributions and payments were determined by and among affiliated entities and, consequently, are not the result ofarm’s-length negotiations. Formation Stage The consideration received by our generalpartner and Martin Resource ManagementCorporation for the transfer of assets to us4,253,362 subordinated units (All of the original 4,253,362 subordinated units issued to Martin ResourceManagement Corporation have been converted into common units on a one-for-one basis since the formation ofthe Partnership. 850,672 subordinated units were converted on each of November 14, 2005, 2006, 2007 and 2008,respectively, and 850,674 subordinated units were converted on November 14, 2009) Ÿ 2% general partner interest; andŸ the incentive distribution rights.Operational Stage Distributions of available cash to our generalpartnerWe will generally make cash distributions 98% to our unitholders, including Martin Resource ManagementCorporation as holder of all of the subordinated units, and 2% to our general partner. In addition, if distributionsexceed the minimum quarterly distribution and other higher target levels, our general partner will be entitled toincreasing percentages of the distributions, up to 50% of the distributions above the highest target level as a resultof its incentive distribution rights. Assuming we have sufficient available cash to pay the full minimum quarterly distribution on all of ouroutstanding units for four quarters, our general partner would receive an annual aggregate distribution ofapproximately $0.8 million on its 2% general partner interest.Payments to our general partner and itsaffiliatesMartin Resource Management Corporation is entitled to reimbursement for all direct expenses it or our generalpartner incurs on our behalf. The direct expenses include the salaries and benefit costs employees of MartinResource Management Corporation who provide services to us. Our general partner has sole discretion indetermining the amount of these expenses. In addition to the direct expenses, Martin Resource ManagementCorporation is entitled to reimbursement for a portion of indirect general and administrative and corporateoverhead expenses. Under the omnibus agreement, we are required to reimburse Martin Resource ManagementCorporation for indirect general and administrative and corporate overhead expenses. The Conflicts Committeewill review and approve future adjustments in the reimbursement amount for indirect expenses, if any,annually. Please read "Agreements — Omnibus Agreement" below.Withdrawal or removal of our general partner If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights willeither be sold to the new general partner for cash or converted into common units, in each case for an amount equalto the fair market value of those interests.Liquidation Stage Liquidation Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidatingdistributions according to their particular capital account balances.127Agreements Omnibus AgreementWe and our general partner are parties to the Omnibus Agreement 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 andsupport services by Martin Resource Management Corporation and our use of certain of Martin Resource Management Corporation’s 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 lubricantpackaging products and services to Martin Resource Management Corporation.Non-Competition Provisions. Martin Resource Management Corporation has agreed for so long as it controls the general partner of the Partnership, not toengage in the business of:•terminalling, processing, storage and packaging services for petroleum products and by-products including the refining of naphthenic crudeoil;•land and marine transportation services for petroleum products and by-products, chemicals, and specialtyproducts;•sulfur and sulfur-based products processing, manufacturing, marketing, and distribution; and•NGL marketing, distribution, and transportation services.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 itsaffiliates;•any business operated by Martin Resource Management Corporation, including thefollowing:•distributing fuel oil, asphalt, marine fuel and other liquids;•providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, andFlorida;•operating a crude oil gathering business in Stephens, Arkansas;•providing crude oil gathering, refining, 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 endmarket;•operating an environmental consultingcompany;•supplying employees and services for the operation of our business;and•operating, solely for our account, the asphalt facilities in each of Hondo, South Houston and Port Neches, Texas and Omaha,Nebraska.•any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of less than$5,000;•any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of $5,000 or more if the Partnership hasbeen offered the opportunity to purchase the business for fair market value and the Partnership declines to do so with the concurrence of the ConflictsCommittee; and•any business that Martin Resource Management Corporation acquires or constructs where a portion of such business includes a restricted business andthe 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 acquiredor constructed; provided that, following128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 us with corporate staff and support services that aresubstantially identical in nature and quality to the services previously provided by Martin Resource Management Corporation in connection with its managementand operation of our assets during the one-year period prior to the date of the agreement. The Omnibus Agreement requires us to reimburse Martin ResourceManagement Corporation for all direct expenses it incurs or payments it makes on our behalf or in connection with the operation of our business. There is nomonetary limitation on the amount we are required to reimburse Martin Resource Management Corporation for direct expenses. In addition to the direct expenses,Martin Resource Management Corporation is entitled to reimbursement for a portion of indirect general and administrative and corporate overhead expenses. Under the Omnibus Agreement, we are required to reimburse Martin Resource Management Corporation for indirect general and administrative andcorporate overhead expenses. For the years ended December 31, 2019, 2018 and 2017, the Conflicts Committee approved and we reimbursed Martin ResourceManagement Corporation of $16.7 million, $16.4 million and $16.4 million, respectively, reflecting our allocable share of such expenses. The ConflictsCommittee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.These indirect expenses cover all of the centralized corporate functions Martin Resource Management Corporation provides for us, such as accounting,treasury, clerical billing, information technology, administration of insurance, general office expenses and employee benefit plans and other general corporateoverhead functions we share with Martin Resource Management Corporation retained businesses. The provisions of the Omnibus Agreement regarding MartinResource Management Corporation’s services will terminate if Martin Resource Management Corporation ceases to control our general partner. Related Party Transactions. The Omnibus Agreement prohibits us from entering into any material agreement with Martin Resource ManagementCorporation without the prior approval of the Conflicts Committee. For purposes of the Omnibus Agreement, the term material agreements means any agreementbetween us and Martin Resource Management Corporation that requires aggregate annual payments in excess of then-applicable limitation on the reimbursableamount of indirect general and administrative expenses. Please read " Services" above.License Provisions. Under the Omnibus Agreement, Martin Resource Management Corporation has granted us 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 beamended without the approval of the Conflicts Committee if such amendment would adversely affect the unitholders. The Omnibus Agreement was first amendedon November 25, 2009, to permit us to provide refining services to Martin Resource Management Corporation. The Omnibus Agreement was amended further onOctober 1, 2012, to permit us to provide certain lubricant packaging products and services to Martin Resource Management Corporation. Such amendments wereapproved by the Conflicts Committee. The Omnibus Agreement, other than the indemnification provisions and the provisions limiting the amount for which wewill reimburse Martin Resource Management Corporation for general and administrative services performed on our behalf, will terminate if we are no longer anaffiliate of Martin Resource Management Corporation.Master Transportation Services AgreementMaster Transportation Agreement. Martin Transport, Inc. ("MTI"), a wholly owned subsidiary of us, is a party to a master transportation servicesagreement effective January 1, 2019, with certain wholly owned subsidiaries of Martin Resource Management Corporation. Under the agreement, MTI agreed totransport 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 otherparty. These rates are subject to any adjustments which are mutually agreed upon or in accordance with a price index. Additionally, shipping charges are alsosubject 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 willfulmisconduct of MTI and its officers, employees, agents, representatives and subcontractors.129Martin Resource Management Corporation has agreed to indemnify MTI against all claims arising out of the negligence or willful misconduct of Martin ResourceManagement Corporation and its officers, employees, agents, representatives and subcontractors. In the event a claim is the result of the joint negligence ormisconduct of MTI and Martin Resource Management Corporation, indemnification obligations will be shared in proportion to each party’s allocable share of suchjoint negligence or misconduct.Terminal Services AgreementsDiesel Fuel Terminal Services Agreement. Effective January 1, 2016, we entered into a second amended and restated terminalling services agreementunder which we provide terminal services to Martin Resource Management Corporation for marine fuel distribution. At such time, the per gallon throughput feewe charged under this agreement was increased when compared to the previous agreement and may be adjusted annually based on a price index. This agreementwas further amended on January 1, 2017, October 1, 2017, and April 1, 2019 to modify its minimum throughput requirements and throughput fees. The term ofthis 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. We are currently party to several terminal services agreements and from time to time we may enter intoother terminal service agreements for the purpose of providing terminal services to related parties. Individually, each of these agreements is immaterial but whenconsidered in the aggregate they could be deemed material. These agreements are throughput based with a minimum volume commitment. Generally, the fees dueunder these agreements are adjusted annually based on a price index.Marine AgreementsMarine Transportation Agreement. We are a party to a marine transportation agreement effective January 1, 2006, as amended, under which we providemarine transportation services to Martin Resource Management Corporation on a spot-contract basis at applicable market rates. Effective each January 1, thisagreement automatically renews for consecutive one-year periods unless either party terminates the agreement by giving written notice to the other party at least60 days prior to the expiration of the then- applicable term. The fees we charge Martin Resource Management Corporation are based on applicable market rates. Marine Fuel. We are a party to an agreement with Martin Resource Management Corporation dated November 1, 2002 under which Martin ResourceManagement Corporation provides us with marine fuel from its locations in the Gulf of Mexico at a fixed rate in excess of a price index. Under this agreement, weagreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin Resource Management Corporation.Other Agreements Cross Tolling Agreement. We are a party to an amended and restated tolling agreement with Cross dated October 28, 2014 under which we process crudeoil 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, Martin Resource Management Corporation agreed to refine a minimum of 6,500 barrels per day of crude oil at the refinery at afixed price per barrel. Any additional barrels are refined at a modified price per barrel. In addition, Martin Resource Management Corporation agreed to pay amonthly reservation fee and a periodic fuel surcharge fee based on certain parameters specified in the tolling agreement. All of these fees (other than the fuelsurcharge) are subject to escalation annually based upon the greater of 3% or the increase in the Consumer Price Index for a specified annual period. In addition,every three years, the parties can negotiate an upward or downward adjustment in the fees subject to their mutual agreement.Sulfuric Acid Sales Agency Agreement. We were previously a party to a third amended and restated sulfuric acid sales agency agreement dated August 2,2017 but effective October 1, 2017, under which a successor in interest to the agreement from Martin Resource Management Corporation, Saconix LLC("Saconix"), a limited liability company in which Martin Resource Management Corporation held a minority equity interest, purchased and marketed the sulfuricacid produced by our sulfuric acid production plant at Plainview, Texas, that was not consumed by our internal operations. This agreement, as amended, was toremain in place until September 30, 2020 and automatically renew year to year thereafter until either party provided 90 days’ written notice of termination prior tothe expiration of the then existing term. Under this agreement, we sold all of our excess sulfuric acid to Saconix, who then marketed and sold such acid to third-parties. We shared in the profit of such sales. Effective May 31, 2018, Martin Resource Management Corporation no longer holds an equity interest in Saconix.130Transactions subsequent to Martin Resource Management Corporation's disposition of the equity interest will be reported as third party transactions.Other Miscellaneous Agreements. From time to time we enter into other miscellaneous agreements with Martin Resource Management Corporation for theprovision of other services or the purchase of other goods.Other Related Party TransactionsTransfers of Assets Between Entities Under Common Control Acquisition of Martin Transport, Inc. On January 2, 2019, we acquired all of the issued and outstanding equity interests of MTI from Martin ResourceManagement Corporation for a purchase price of $135.0 million. MTI operates a fleet of tank trucks providing transportation of petroleum products, liquidpetroleum gas, chemicals, sulfur and other products, as well as owns 23 terminals located throughout the U.S. Gulf Coast and Southeastern United States. Theexcess of the purchase price over the carrying value of the assets of $102.4 million was recorded as an adjustment to "Partners' capital."Miscellaneous Certain of directors, officers and employees of our general partner and Martin Resource Management Corporation maintain margin accounts with broker-dealers with respect to our common units held by such persons. Margin account transactions for such directors, officers and employees were conducted by suchbroker-dealers in the ordinary course of business.For information regarding amounts of related party transactions that are included in the Partnership's Consolidated Statements of Operations, please seeFootnote 14, "Related Party Transactions", in Part II, Item 8. Approval and Review of Related Party Transactions If we contemplate entering into a transaction, other than a routine or in the ordinary course of business transaction, in which a related person will have adirect or indirect material interest, the proposed transaction is submitted for consideration to the board of directors of our general partner or to our management, asappropriate. If the board of directors is involved in the approval process, it determines whether to refer the matter to the Conflicts Committee, as constituted underour limited partnership agreement. If a matter is referred to the Conflicts Committee, it obtains information regarding the proposed transaction from managementand determines whether to engage independent legal counsel or an independent financial advisor to advise the members of the committee regarding the transaction.If the Conflicts Committee retains such counsel or financial advisor, it considers such advice and, in the case of a financial advisor, such advisor’s opinion as towhether the transaction is fair and reasonable to us and to our unitholders.131Item 14.Principal Accounting Fees and Services KPMG, LLP served as our independent auditors for the fiscal years ended December 31, 2019 and 2018. The following fees were paid to KPMG, LLPfor services rendered during our last two fiscal years: 2019 2018 Audit fees $1,188,000(1)$1,238,500(1)Audit related fees — — Audit and audit related fees 1,188,000 1,238,500 Tax fees 82,000(2)82,106(2)All other fees — — Total fees $1,270,000 $1,320,606 (1)2019 and 2018 audit fees include fees for the annual integrated audit and fees related to services in connection withtransactions.(2)Tax fees are for services related to the review of our partnership K-1's returns, and research and consultations on other tax relatedmatters.Under policies and procedures established by the Board of Directors and the Audit Committee, the Audit Committee is required to pre-approve all auditand non-audit services performed by our independent auditor to ensure that the provisions of such services do not impair the auditor’s independence. All of theservices described above that were provided by KPMG, LLP in years ended December 31, 2019 and December 31, 2018 were approved in advance by the AuditCommittee.132PART IVItem 15.Exhibits, Financial Statement Schedules(a) Financial Statements, Schedules(1)Financial Statements (see Part II, Item 8. of this Annual Report on Form 10-K regarding financialstatements)(2)Financial Statement Schedules: The separate filing of financial statement schedules has been omitted because such schedules are either notapplicable or the information called for therein appears in the footnotes of our Consolidated Financial Statements.133(b) ExhibitsINDEX TO EXHIBITSExhibitNumberExhibit Name 3.1Certificate of Limited Partnership of Martin Midstream Partners L.P. (the "Partnership"), dated June 21, 2002 (filed as Exhibit 3.1 to thePartnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).3.2Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated November 25, 2009 (filed as Exhibit 10.1 to thePartnership's Amendment to Current Report on Form 8-K/A (SEC File No. 000-50056), filed January 19, 2010, and incorporated herein byreference).3.3Amendment No. 2 to the Second Amended and Restated Agreement of Limited Partnership of the Partnership dated January 31, 2011 (filed asExhibit 3.1 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed February 1, 2011, and incorporated herein byreference).3.4Amendment No. 3 to the Second Amended and Restated Agreement of Limited Partnership of the Partnership dated October 2, 2012 (filed asExhibit 10.5 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed October 9, 2012, and incorporated herein byreference).3.5Certificate of Limited Partnership of Martin Operating Partnership L.P. (the "Operating Partnership"), dated June 21, 2002 (filed as Exhibit 3.3 tothe Partnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).3.6Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated November 6, 2002 (filed as Exhibit 3.2 to thePartnership's Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein by reference).3.7Certificate of Formation of Martin Midstream GP LLC (the "General Partner"), dated June 21, 2002 (filed as Exhibit 3.5 to the Partnership'sRegistration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).3.8Amended and Restated Limited Liability Company Agreement of the General Partner, dated August 30, 2013 (filed as Exhibit 3.1 to thePartnership's Current Report on Form 8-K (Reg. No. 000-50056), filed September 3, 2013, and incorporated herein by reference).3.9Certificate of Formation of Martin Operating GP LLC (the "Operating General Partner"), dated June 21, 2002 (filed as Exhibit 3.7 to thePartnership's Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).3.10Limited Liability Company Agreement of the Operating General Partner, dated June 21, 2002 (filed as Exhibit 3.8 to the Partnership's RegistrationStatement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference).3.11Certificate of Formation of Arcadia Gas Storage, LLC, dated June 26, 2006 (filed as Exhibit 3.11 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.12Company Agreement of Arcadia Gas Storage, LLC, dated December 27, 2006 (filed as Exhibit 3.12 to the Partnership’s Quarterly Report on Form10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.13Amendment to the Company Agreement of Arcadia Gas Storage, LLC, dated September 5, 2014 (filed as Exhibit 3.13 to the Partnership’sQuarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.14Certificate of Formation of Cadeville Gas Storage LLC, dated May 23, 2008 (filed as Exhibit 3.14 to the Partnership’s Quarterly Report on Form10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.15Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated May 23, 2008 (filed as Exhibit 3.15 to the Partnership’s QuarterlyReport on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.16First Amendment to the Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated April 16, 2012 (filed as Exhibit 3.16 to thePartnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.17Second Amendment to the Limited Liability Company Agreement of Cadeville Gas Storage LLC, dated September 5, 2014 (filed as Exhibit 3.17 tothe Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.18Certificate of Formation of Monroe Gas Storage Company, LLC, dated June 14, 2006 (filed as Exhibit 3.18 to the Partnership’s Quarterly Reporton Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).1343.19Amended and Restated Limited Liability Company Agreement of Monroe Gas Storage Company, LLC, dated May 31, 2011 (filed as Exhibit 3.19to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.20First Amendment to the Amended and Restated Limited Liability Company Agreement of Monroe Gas Storage Company, LLC, dated September 5,2014 (filed as Exhibit 3.20 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, andincorporated herein by reference).3.21Certificate of Formation of Perryville Gas Storage LLC, dated May 23, 2008.(filed as Exhibit 3.21 to the Partnership’s Quarterly Report on Form10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.22Limited Liability Company Agreement of Perryville Gas Storage LLC, dated June 16, 2008 (filed as Exhibit 3.22 to the Partnership’s QuarterlyReport on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.23First Amendment to the Limited Liability Company Agreement of Perryville Gas Storage LLC, dated April 14, 2010 (filed as Exhibit 3.23 to thePartnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.24Second Amendment to the Limited Liability Company Agreement of Perryville Gas Storage LLC, dated September 5, 2014 (filed as Exhibit 3.24 tothe Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.25Certificate of Formation of Cardinal Gas Storage Partners LLC, dated April 2, 2008 (filed as Exhibit 3.25 to the Partnership’s Quarterly Report onForm 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).3.26Third Amended and Restated Limited Liability Company Agreement of Cardinal Gas Storage Partners LLC (F/K/A Redbird Gas Storage LLC)dated October 27, 2014 (filed as Exhibit 3.26 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29,2014, and incorporated herein by reference).3.27Certificate of Formation of Redbird Gas Storage LLC, dated May 24, 2011 (filed as Exhibit 3.27 to the Partnership's Annual Report on Form 10-K(SEC File No. 000-50056), filed March 2, 2015, and incorporation herein by reference).3.28Second Amended and Restated LLC Agreement of Redbird Gas Storage LLC, dated as of October 2, 2012. (filed as Exhibit 10.6 to thePartnership's Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed November 5, 2012, and incorporated herein by reference).3.29Certificate of Merger of Cardinal Gas Storage Partners LLC with and into Redbird Gas Storage LLC, dated October 27, 2014 (filed as Exhibit 3.27to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, and incorporated herein by reference).4.1Indenture (including form of 7.250% Senior Notes due 2021), dated February 11, 2013, by and among the Partnership, Martin Midstream FinanceCorp., the Guarantors named therein and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Partnership's CurrentReport on Form 8-K (SEC File No. 000-50056), filed February 12, 2013, and incorporated herein by reference).4.2Second Supplemental Indenture, to the Indenture dated February 11, 2013 dated September 30, 2014, by and among the Partnership, MartinMidstream Finance Corp., the Guarantors named therein and Wells Fargo Bank National Association, as trustee (filed as Exhibit 4.4 to thePartnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014 and incorporated herein by reference).4.3Third Supplemental Indenture, to the Indenture dated February 11, 2013 dated October 27, 2014, by and among the Partnership, Martin MidstreamFinance Corp., the Guarantors named therein and Wells Fargo Bank National Association, as trustee (filed as Exhibit 4.5 to the Partnership’sQuarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014 and incorporated herein by reference).4.4Fourth Supplemental Indenture, to the Indenture dated February 11, 2013 dated January 18, 2019, by and among the Partnership, MartinMidstream Finance Corp., the Guarantors named therein and Wells Fargo Bank National Association, as trustee.4.5*Description of Securities10.1Third Amended and Restated Credit Agreement, dated March 28, 2013, among the Partnership, the Operating Partnership, Royal Bank of Canadaand the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed April3, 2013 and incorporated herein by reference).10.2First Amendment to Third Amended and Restated Credit Agreement, dated as of July 12, 2013, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10-Q (SECFile No. 000-50056), filed May 5, 2014 and incorporated herein by reference).13510.3Second Amendment to Third Amended and Restated Credit Agreement, dated as of May 5, 2014, among the Partnership, the OperatingPartnership, Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.2 to the Partnership's Current Report on Form 8-K/A (SEC File No. 000-50056), filed May 6, 2014 and incorporated herein by reference)10.4Third Amendment to Third Amended and Restated Credit Agreement, dated June 27, 2014, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K (SEC FileNo. 000-50056), filed July 1, 2014, and incorporated herein by reference).10.5Fourth Amendment to Third Amended and Restated Credit Agreement, dated June 23, 2015, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K (SEC FileNo. 000-50056), filed June 24, 2015, and incorporated herein by reference).10.6Fifth Amendment to Third Amended and Restated Credit Agreement, dated April 27, 2016, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC FileNo. 000-50056), filed April 27, 2016, and incorporated herein by reference).10.7Sixth Amendment to Third Amended and Restated Credit Agreement, dated February 21, 2018, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC FileNo. 000-50056), filed February 22, 2018, and incorporated herein by reference).10.8Seventh Amendment to Third Amended and Restated Credit Agreement, dated July 24, 2018, among the Partnership, the Operating Partnership,Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K (SEC FileNo. 000-50056), filed July 25, 2018, and incorporated herein by reference).10.9Eighth Amendment to Third Amended and Restated Credit Agreement, dated as of April 16, 2019, among the Partnership, the OperatingPartnership, Royal Bank of Canada and the other Lenders as set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K(SEC File No. 000-50056), filed April 22, 2019, and incorporated herein by reference).10.10Ninth Amendment to Third Amended and Restated Credit Agreement, dated as of July 18, 2019, among the Partnership, the Operating Partnership,Royal Bank of Canada, and the other Lenders as set forth therein (filed as Exhibit 10.2 to the Partnership's Quarterly Report on Form 10-Q (SECFile No. 000-50056), filed July 24, 2019, and incorporated herein by reference).10.11Pledge and Security Agreement, Dated January 2, 201910.12Supplement to Pledge Agreement, Dated January 2, 201910.13Omnibus Agreement, dated November 1, 2002, by and among Martin Resource Management Corporation, the General Partner, the Partnership andthe Operating Partnership (filed as Exhibit 10.3 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19,2002, and incorporated herein by reference).10.14Amendment No. 1 to Omnibus Agreement, dated as of November 25, 2009, by and among Martin Resource Management Corporation, the GeneralPartner, the Partnership and the Operating Partnership (filed as Exhibit 10.3 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed December 1, 2009, and incorporated herein by reference).10.15Amendment No. 2 to Omnibus Agreement, dated October 1, 2012, by Martin Resource Management Corporation, the General Partner, thePartnership and the Operating Partnership (filed as Exhibit 10.4 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filedOctober 9, 2012, and incorporated herein by reference).10.16Motor Carrier Agreement, dated January 1, 2006, by and between the Operating Partnership and Martin Transport, Inc. (filed as Exhibit 10.9 to thePartnership’s Annual Report on Form 10-K (SEC File No. 000-50056), filed March 2, 2011, and incorporated herein by reference).10.17Membership Interests Purchase Agreement, dated August 10, 2014, by and among Energy Capital Partners and its affiliated funds and Redbird GasStorage LLC (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (Sec File No. 000-50056), filed August 12, 2014, andincorporated herein by reference).10.182014 Amended and Restated Tolling Agreement, dated October 28, 2014, by and between the Operating Partnership and Cross Oil Refining &Marketing, Inc. (filed as Exhibit 10.5 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed October 29, 2014, andincorporated herein by reference).10.19Marine Transportation Agreement, dated January 1, 2006, by and between the Operating Partnership and Midstream Fuel Service, L.L.C. (filed asExhibit 10.10 to the Partnership’s Annual Report on Form 10-K (SEC File No. 000-50056), filed March 2, 2011, and incorporated herein byreference).10.20Product Storage Agreement, dated November 1, 2002, by and between Martin Underground Storage, Inc. and the Operating Partnership (filed asExhibit 10.8 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed November 19, 2002, and incorporated herein byreference).13610.21Marine Fuel Agreement, dated November 1, 2002, by and between Martin Fuel Service LLC and the Operating Partnership (filed as Exhibit 10.9 tothe Partnership’s Current Report on Form 8-K (SEC No. 000-50056), filed November 19, 2002, and incorporated herein by reference).10.22†Martin Midstream Partners L.P. Amended and Restated Long-Term Incentive Plan (filed as Exhibit 10.1 to the Partnership’s Current Report onForm 8-K (SEC No. 000-50056), filed January 26, 2006, and incorporated herein by reference).10.23†Form of Restricted Common Unit Grant Notice (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K (SEC No. 000-50056), filedJanuary 26, 2006, and incorporated herein by reference).10.24Purchaser Use Easement, Ingress-Egress Easement, and Utility Facilities Easement dated November 1, 2002, by and between MGSLLC and theOperating Partnership (filed as Exhibit 10.13 to the Partnership’s Current Report on Form 8-K/A (SEC No. 000-50056), filed November 19, 2002,and incorporated herein by reference).10.25Amended and Restated Terminal Services Agreement by and between the Operating Partnership and Martin Fuel Service LLC ("MFSLLC"), datedOctober 27, 2004 (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K (SEC No. 000-50056), filed October 28, 2004, andincorporated herein by reference).10.26Lubricants and Drilling Fluids Terminal Services Agreement by and between the Operating Partnership and MFSLLC, dated December 23, 2003(filed as Exhibit 10.4 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K/A (SEC No. 000-50056), filed January 23, 2004, andincorporated herein by reference).10.27(1)Second Amended and Restated Sales Agency Agreement, dated August 5, 2013, by and between the Operating Partnership and Martin ProductSales LLC (filed as Exhibit 10.2 to the Partnership's Quarterly Report on Form 10-Q (SEC No. 000-50056) filed November 4, 2013).10.28(1)Third Amended and Restated Sales Agency Agreement, dated August 2, 2017, by and between the Operating Partnership and Martin Product SalesLLC (filed as Exhibit 10.20 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056) filed October 25, 2017, andincorporated herein by reference).10.29†Amended and Restated Martin Resource Management Corporation Purchase Plan for Units of the Partnership, effective April 1, 2015 (filed asExhibit 10.1 to the Partnership's registration statement on Form S-8 (SEC File No. 333-203857), filed May 5, 2015, and incorporated herein byreference).10.30Form of Partnership Indemnification Agreement (filed as Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed November 6, 2008, and incorporated herein by reference).10.31Amended and Restated Common Unit Purchase Agreement, dated as of November 24, 2009, by and between the Partnership and Martin ResourceManagement Corporation (filed as Exhibit 10.4 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed December 1,2009, and incorporated herein by reference).10.32Supply Agreement dated, as of October 2, 2012, by and between the Partnership and Cross Oil & Refining Marketing Inc. (filed as Exhibit 10.7 tothe Partnership's Quarterly Report on Form 10-Q (SEC File No. 000-50056), filed November 5, 2012, and incorporated herein by reference).10.33Noncompetition Agreement dated, as of October 2, 2012, by and among the Partnership, Cross Oil Refining & Marketing, Inc., and MartinResource Management Corporation (filed as Exhibit 10.8 to the Partnership's Quarterly Report on Form 10-Q (SEC File No. 000-50056), filedNovember 5, 2012, and incorporated herein by reference).10.34Purchase Price Reimbursement Agreement, dated October 2, 2012, by Martin Resource Management Corporation to and for the benefit of theOperating Partnership (filed as Exhibit 10.2 to the Partnership's Current Report on Form 8-K (SEC File No. 000-50056), filed October 9, 2012, andincorporated herein by reference).10.35Lubricants Terminalling Services Agreement, dated January 1, 2015, by and between the Operating Partnership and Martin Energy Services LLC(filed as Exhibit 10.26 to the Partnership's Annual Report on Form 10-K (SEC File No. 000-50056), filed March 2, 2015, and incorporated hereinby reference).10.36Fuel Terminalling Services Agreement, dated January 1, 2015, by and between the Operating Partnership and Martin Energy Services LLC (filed asExhibit 10.27 to the Partnership's Current Report on Form 10-K (SEC File No. 000-50056), filed March 2, 2015, and incorporated herein byreference).10.37(1)First Amended and Restated Fuel Terminalling Services Agreement, dated January 1, 2016, by and between the Operating Partnership and MartinEnergy Services, LLC (filed as Exhibit 10.29 to the Partnership's Annual Report on Form 10-K (SEC File No. 000-50056), filed February 29,2016, and incorporated herein by reference).10.38(1)First Amendment to the First Amended and Restated Fuel Terminalling Services Agreement, dated January 1, 2017, by and between the OperatingPartnership and Martin Energy Services, LLC (filed as Exhibit 10.30 to the Partnership’s Annual Report on Form 10-K (SEC File No. 000-50056),filed February 15, 2017, and incorporated herein by reference).10.39(1)Second Amendment to the First Amended and Restated Fuel Terminalling Services Agreement, dated October 1, 2017, by and between theOperating Partnership and Martin Energy Services, LLC (filed as Exhibit 10.31 to the Partnership’s Quarterly Report on Form 10-Q (SEC File No.000-50056) filed October 25, 2017).10.40Martin Midstream Partners L.P. 2017 Restricted Unit Plan (filed as Exhibit A to the Partnership’s Definitive Proxy Statement on Schedule 14A(SEC File No. 000-50056), filed April 21, 2017, and incorporated herein by reference).13710.41Restricted Unit Agreement under the Martin Midstream Partners L.P. 2017 Restricted Unit Plan (filed as Exhibit 10.34 to the Partnership's AnnualReport on Form 10-K (SEC File No. 000-50056), filed February 16, 2018).10.42Partnership Interest Purchase Agreement (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filedJuly 25, 2018 and incorporated herein by reference).10.43Stock Purchase Agreement between Martin Resource Management Corporation and the Operating Partnership (filed as Exhibit 10.1 on thePartnership’s Current Report Form 8-K (SEC File No. 000-50056), filed October 24, 2018 and incorporated herein by reference).10.44Master Transportation Services Agreement by and among Martin Resource Management Corporation, Cross Oil Refining & Marketing, Inc.,Martin Energy Services LLC, and Martin Product Sales LLC (filed as Exhibit 10.1 on the Partnership’s Quarterly Report on Form 10-Q (SEC FileNo. 000-50056), filed April 26, 2019 and incorporated herein by reference.10.45Membership Interest Purchase Agreement by and among Hartree Cardinal Gas, LLC, Cardinal Gas Storage Partners LLC, Hartree Bulk Storage,LLC, and the Partnership (filed as Exhibit 10.1 on the Partnership’s Current Report on Form 8-K (SEC File No. 000-50056), filed June 13, 2019and incorporated herein by reference.21.1*List of Subsidiaries.23.1*Consent of KPMG LLP.31.1*Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be "filed."32.2*Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be "filed."101Interactive Data: the following financial information from Martin Midstream Partners L.P.’s Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019, formatted in Extensible Business Reporting Language: (1) the Consolidated Balance Sheets; (2) the Consolidated Statementsof Income; (3) the Consolidated Statements of Cash Flows; (4) the Consolidated Statements of Capital; and (6) the Notes to Consolidated FinancialStatements.*Filed or furnished herewith.†As required by Item 15(a)(3) of Form 10-K, this exhibit is identified as a compensatory plan or arrangement.(1) Material has been redacted from this exhibit and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 ofthe Exchange Act, which has been granted.Item 16.Form 10-K SummaryNot applicable.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, we have duly caused this Report to be signed on our behalf bythe undersigned, thereunto duly authorized representative.138 Martin Midstream Partners L.P (Registrant) By:Martin Midstream GP LLC It's General Partner February 14, 2020By:/s/ Ruben S. Martin Ruben S. Martin President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of theregistrant and in the capacities indicated on February 14, 2020.Signature Title /s/ Ruben S. Martin President, Chief Executive Officer and Director of Martin Midstream GP LLC(Principal Executive Officer)Ruben S. Martin /s/ Robert D. Bondurant Executive Vice President, Director, and Chief Financial Officer of MartinMidstream GP LLC (Principal Financial Officer, Principal Accounting Officer)Robert D. Bondurant /s/ Zachary S. Stanton Director of Martin Midstream GP LLCZachary S. Stanton /s/ James M. Collingsworth Director of Martin Midstream GP LLCJames M. Collingsworth /s/ Sean P. Dolan Director of Martin Midstream GP LLCSean P. Dolan /s/ Byron R. Kelley Director of Martin Midstream GP LLCByron R. Kelley /s/ C. Scott Massey Director of Martin Midstream GP LLCC. Scott Massey 139Exhibit 4.5DESCRIPTION OF THE REGISTRANT’S SECURITIESREGISTERED PURSUANT TO SECTION 12 OF THESECURITIES EXCHANGE ACT OF 1934As of February 14, 2020, Martin Midstream Partners L.P. has one class of securities registered under Section 12 of the SecuritiesExchange Act of 1934, as amended (the "Exchange Act"): (1) our common units.The following description of our common units is a summary and does not purport to be complete. It is subject to and qualified in itsentirety by reference to our Second Amended and Restated Agreement of Limited Partnership, dated as of November 25, 2009, as amendedby that certain Amendment No. 2 to the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as ofJanuary 31, 2011, as further amended by that certain Amendment No. 3 to the Second Amended and Restated Limited PartnershipAgreement of the Partnership, dated as of October 2, 2012 (as amended, our "Partnership Agreement"), which is incorporated by reference asan exhibit to the Annual Report on Form 10-K of which this Exhibit 4.5 is a part. We encourage you to read our Partnership Agreement foradditional informationDescription of Our Common UnitsOur common units represent limited partner interests that entitle the holders to participate in our partnership distributions and toexercise the rights and privileges available to limited partners under our Partnership Agreement. References in this "Description of theCommon Units" to "we," "us" and "our" mean Martin Midstream Partners L.P.Number of UnitsWe currently have 38,944,389 common units outstanding, 32,829,857 of which are held by the public, 4,203,823 are held by MartinResource LLC, 889,444 are held by Cross Oil Refining & Marketing Inc. and 1,021,265 are held by Martin Product Sales LLC, each awholly owned subsidiary of Martin Resource Management. The common units represent an aggregate 98.0% limited partner interest. Ourgeneral partner owns an aggregate 2.0% general partner interest in us.ListingOur outstanding common units are traded on the Nasdaq National Market under the symbol "MMLP."Transfer Agent and RegistrarThe transfer agent and registrar for our common units is Computershare.Transfer of Common UnitsExcept as otherwise provided in the Partnership Agreement, the transfer of a common unit will not be recorded by the transfer agentor recognized by us unless the transferee executes and delivers a transfer application. By executing and delivering a transfer application, thetransferee of common units:•becomes the record holder of the common units and is an assignee until admitted into our partnership as a substituted limited partner;•automatically requests admission as a substituted limited partner in our partnership;•agrees to be bound by the terms and conditions of, and executes, our Partnership Agreement;•represents that the transferee has the capacity, power and authority to enter into our Partnership Agreement;•grants powers of attorney to officers of our general partner and any liquidator of us as specified in our Partnership Agreement; and•makes the consents and waivers contained in our Partnership Agreement.An assignee will become a substituted limited partner of our partnership for the transferred common units upon the consent of ourgeneral partner and the recording of the name of the assignee on our books and records. Our general partner may withhold its consent in itssole discretion.A transferee’s broker, agent or nominee may complete, execute and deliver a transfer application. We are entitled to treat the recordholder of a common unit as the absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against therecord holder as a result of any agreement between the beneficial owner and the record holder.Common units are securities and are transferable according to the laws governing transfer of securities. In addition to other rightsacquired upon transfer, the transferor gives the transferee the right to request admission as a substituted limited partner in our partnership forthe transferred common units. A purchaser or transferee of common units who does not execute and deliver a transfer application obtainsonly:•the right to assign the common unit to a purchaser or other transferee; and•the right to transfer the right to seek admission as a substituted limited partner in our partnership for the transferred common units.Thus, a purchaser or transferee of common units who does not execute and deliver a transfer application:•will not receive cash distributions, unless the common units are held in a nominee or "street name" account and the nominee or brokerhas executed and delivered a transfer application; and•may not receive some U.S. federal income tax information or reports furnished to record holders of common units.Our Partnership Agreement requires that a transferor of common units provide the transferee with all information that may benecessary to transfer the common units. The transferor is not required to insure the execution of the transfer application by the transferee andhas no liability or responsibility if the transferee neglects or chooses not to execute and forward the transfer application to the transfer agent.Until a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as theabsolute owner for all purposes, except as otherwise required by law or applicable stock exchange regulations.Cash DistributionsOur Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash tounitholders of record on the applicable record date. Other than the requirement in our Partnership Agreement to distribute all of our availablecash each quarter, we have no legal obligation to make quarterly cash distributions and the board of directors of our general partner hasconsiderable discretion to determine the amount of our available cash each quarter. Available cash generally means, for each fiscal quarter,all cash and cash equivalents on hand at the end of each quarter less ​the amount of cash reserves our general partner determines in itsreasonable discretion is necessary or appropriate to: (i) provide ​for the proper conduct of our business; (ii) comply with applicable law, anydebt instruments or other agreements; ​or (iii) provide funds for distributions to unitholders and our general partner for any one or more of thenext four quarters, plus ​all cash on the date of determination of available cash for the quarter resulting from working capital borrowings madeafter the ​end of the quarter.​ Working capital borrowings are borrowings that are made under our revolving credit facility or other arrangementrequiring all borrowings thereunder to be reduced to a relatively small amount each year for an economically meaningful period of time andin all cases are used solely for working capital purposes or to pay distributions to partners.LiquidationIf we dissolve in accordance with our Partnership Agreement, we will sell or otherwise dispose of our assets in a process calledliquidation. We will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining proceeds to theholders of common units and our general partner, in accordance with their capital account balances, as adjusted to reflect any gain or lossupon the sale or other disposition of our assets in liquidation, all in accordance with the terms of our Partnership Agreement.Voting RightsExcept as described below regarding a person or group owning 20% or more of any class of units then outstanding, record holders ofunits on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for whichapprovals may be solicited.Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of theclass for which a meeting is proposed. The holders of a majority in voting power of the outstanding units of the class or classes for which ameeting has been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval byholders of a greater percentage of the units, in which case the quorum will be the greater percentage. For all matters presented to the limitedpartners at a meeting at which a quorum is present for which no minimum or other vote of the limited partners is specifically requiredpursuant to our Partnership Agreement, the rules and regulations of any national securities exchange on which the common units are admittedto trading, or applicable law or pursuant to any regulation applicable to us or our partnership interests, a majority of the votes cast by thelimited partners holding outstanding common units will be deemed to constitute the act of all limited partners (with abstentions and brokernon-votes being deemed to not have been cast with respect to such matter). The general partner interest does not entitle our general partner toany vote other than its rights as general partner under our Partnership Agreement, will not be entitled to vote on any action required orpermitted to be taken by the unitholders and will not count toward or be considered outstanding when calculating required votes, determiningthe presence of a quorum, or for similar purposes.Each record holder of a unit has a vote according to its percentage interest in us. However, if at any time any person or group, other thanour general partner and its affiliates, a direct transferee of our general partner and its affiliates, a transferee of such direct transferee, who isnotified by our general partner that it will not lose its voting rights, or a person or a group who acquired 20% or more of any class of unitsissued by us with the prior approval of the board of directors of our general partner, acquires, in the aggregate, beneficial ownership of 20%or more of any class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted onany matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes,determining the presence of a quorum, or for other similar purposes.The following matters require the unitholder vote specified below. Matters requiring the approval of a "unit majority" requires theapproval of a majority of the outstanding common units. Matter Vote Requirement Issuance of additional units No approval rights. Amendment of the Partnership Agreement Certain amendments may be made by the general partner without the approval ofthe unitholders. Other amendments generally require the approval of a unitmajority. Merger of our partnership or the sale of all orsubstantially all of our assets Unit majority. Dissolution of our partnership Unit majority. Reconstitution of our partnership upon dissolution Unit majority. Withdrawal of the general partner The approval of a majority of the outstanding common units, excluding commonunits held by the general partner and its affiliates, is required for the withdrawalof the general partner prior to September 30, 2012 in a manner which would causea dissolution of our partnership. Removal of the general partner Not less than 66 2/3% of the outstanding units, including units held by ourgeneral partner and its affiliates. Transfer of ownership interests in the general partner Our general partner may transfer its general partner interest without a vote of ourunitholders in connection with the general partner’s merger or consolidation withor into, or sale of all or substantially all of its assets to, a third person. Our generalpartner may also transfer all of its general partner interest to an affiliate without avote of our unitholders. The approval of a majority of the outstanding commonunits, excluding common units held by the general partner and its affiliates, isrequired in other circumstances for a transfer of the general partner interest to athird party prior to September 30, 2012. Transfer of incentive distribution rights Except for transfers to an affiliate or another person as part of the generalpartner’s merger or consolidation with or into, or sale of all or substantially all ofits assets to, such affiliate or person, the approval of a majority of the outstandingcommon units is required in most circumstances for a transfer of the incentivedistribution rights to a third party prior to September 30, 2012. Transfer of ownership interests in the general partner No approval required at any time.Amendments of Our Partnership AgreementAmendments to our Partnership Agreement may be proposed only by or with the consent of our general partner, which consent may be givenor withheld in its sole discretion. In order to adopt a proposed amendment, other than the amendments discussed below, our general partnermust seek written approval of the holders of the number ofunits required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Exceptas described below, an amendment must be approved by a unit majority.Prohibited Amendments. No amendment may be made that would:•enlarge the obligations of any limited partner without its consent, unless approved by at least a majority of the type or class oflimited partner interests so affected;•enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable,reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our generalpartner, which may be given or withheld in its sole discretion;•change the duration of our partnership;•provide that our partnership is not dissolved upon an election to dissolve our partnership by our general partner that isapproved by a unit majority; or;•give any person the right to dissolve our partnership other than our general partner’s right to dissolve our partnership with theapproval of a unit majority.The provision of our Partnership Agreement preventing the amendments having the effects described in any of the clauses above canbe amended upon the approval of the holders of at least 90% of the outstanding units voting together as a single class.Additionally, our general partner may generally make amendments to our Partnership Agreement without the approval of any limitedpartner in certain circumstances.Limitations on LiabilityAssuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Act and that itotherwise acts in conformity with the provisions of our Partnership Agreement, its liability under the Delaware Act will be limited, subject topossible exceptions, to the amount of capital it is obligated to contribute to us for its common units plus its share of any undistributed profitsand assets.Issuance of Additional Partnership InterestsSubject to certain limitations, our Partnership Agreement authorizes us to issue an unlimited number of additional partnershipinterests and options, rights, warrants and appreciation rights relating to the partnership interests for any partnership purpose at any time andfrom time to time to such persons for such consideration and on such terms and conditions as our general partner shall determine in its solediscretion, all without the approval of any partners.In accordance with Delaware law and the provisions of our Partnership Agreement, we may also issue additional partnership intereststhat, as determined by our general partner, may have special voting rights to which the common units are not entitled.Change of Management ProvisionsOur Partnership Agreement contains specific provisions that are intended to discourage a person or group from attempting to removeMartin Midstream GP LLC as our general partner or otherwise change our management. If any person or group other than our generalpartner and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all ofits units. This loss of voting rights does not apply to any person or group that acquires the units from our general partner or its affiliates andany transferees of that person or group who are notified by our general partner that they will not lose their voting rights or to any person orgroup who acquires the units with the prior approval of the board of directors of our general partner.Limited Call RightIf at any time our general partner and its affiliates own more than 80% of the then-issued and outstanding limited partner interests ofany class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but notless than all, of the limited partner interests of such class held by unaffiliated persons as of a record date to be selected by our general partner,on at least 10, but not more than 60, days’ written notice.Books and ReportsOur Partnership Agreement states that we will mail or make available to record holders of common units, within 120 days after theclose of each fiscal year, an annual report containing audited financial statements and a report on those financial statements by ourindependent public accountants. Except for our fourth quarter, we will also mail or make available summary financial information within 90days after the close of each quarter. We will furnish each record holder of a unit with information reasonably required for tax reportingpurposes within 90 days after the close of each calendar year.Right to Inspect Our Books and RecordsIn addition to information that a limited partner would otherwise have under Delaware law, our Partnership Agreement provides thata limited partner can, for a purpose reasonably related to its interest as a limited partner, upon reasonable written demand stating the purposeof such demand and at its own expense, have furnished to such limited partner, certain information regarding the status of our business andfinancial condition, in addition to certain information related to our record holders.Exhibit 21.1 SUBSIDIARIES OFMARTIN MIDSTREAM PARTNERS L.P. Subsidiary Jurisdiction of Organization Martin Operating GP LLC Delaware Martin Operating Partnership L.P. Delaware Martin Midstream Finance Corp Delaware Redbird Gas Storage LLC Delaware Martin Transport, Inc. Texas Talen's Marine & Fuel LLC Louisiana Exhibit 23.1 Consent of Independent Registered Public Accounting FirmThe Board of DirectorsMartin Midstream GP LLC:We consent to the incorporation by reference in the registration statements No. 333‑231927 on Form S-3 and No. 333-218693, No. 333-203857, and No. 333-140152 on Form S-8 of Martin Midstream Partners L.P. of our reports dated February 14, 2020, with respect to the consolidated balance sheets of MartinMidstream Partners L.P. and subsidiaries as of December 31, 2019 and 2018, the related consolidated statements of operations, changes in capital (deficit), andcash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, and the effectiveness of internal control over financialreporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10‑K of Martin Midstream Partners L.P.Our report on the audited consolidated financial statements contains an explanatory paragraph that states the acquisition of Martin Transport, Inc. on January 2,2019 has been accounted for as a transfer of net assets between entities under common control in a manner similar to a pooling of interests and the Partnership’shistorical consolidated financial statements have been retrospectively revised to reflect the effects. Our report on the audited consolidated financial statements alsocontains an explanatory paragraph that states the Partnership has changed its method of accounting for leases in 2019 due to the adoption of Accounting StandardsCodification 842, Leases./s/ KPMG LLPDallas, TexasFebruary 14, 2020Exhibit 31.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERPursuant to 17 CFR 240.13a-14(a)/15d-14(a)(Section 302 of the Sarbanes-Oxley Act of 2002) I, Ruben S. Martin, certify that: 1. I have reviewed this annual report on Form 10-K of Martin Midstream Partners L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.February 14, 2020 /s/ Ruben S. Martin Ruben S. Martin, President and Chief Executive Officer of Martin Midstream GP LLC, the General Partner of Martin Midstream Partners L.P. Exhibit 31.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICERPursuant to 17 CFR 240.13a-14(a)/15d-14(a)(Section 302 of the Sarbanes-Oxley Act of 2002)I, Robert D. Bondurant, certify that: 1. I have reviewed this annual report on Form 10-K of Martin Midstream Partners L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting. February 14, 2020 /s/ Robert D. Bondurant Robert D. Bondurant, Executive Vice President and Chief Financial Officer of Martin Midstream GP LLC, the General Partner of Martin Midstream Partners L.P. Exhibit 32.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*In connection with the Annual Report of Martin Midstream Partners L.P., a Delaware limited partnership (the “Partnership”), on Form 10-K for the yearended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Ruben S. Martin, Chief Executive Officer of Martin MidstreamGP LLC, the general partner of the Partnership, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to myknowledge:(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Ruben S. Martin Ruben S. Martin, Chief Executive Officer of Martin Midstream GP LLC, General Partner of Martin Midstream Partners L.P. February 14, 2020*A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished tothe Securities and Exchange Commission or its staff upon request.Exhibit 32.2CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*In connection with the Annual Report of Martin Midstream Partners L.P., a Delaware limited partnership (the “Partnership”), on Form 10-K for the yearended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Robert D. Bondurant, Chief Financial Officer of MartinMidstream GP LLC, the general partner of the Partnership, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to myknowledge:(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Robert D. Bondurant Robert D. Bondurant, Chief Financial Officer of Martin Midstream GP LLC, General Partner of Martin Midstream Partners L.P. February 14, 2020*A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished tothe Securities and Exchange Commission or its staff upon request.

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