v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Provision for income taxes$1,875 $2,084 $2,393 $3,201 

The 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. Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $242 and $270 were recorded in income tax expense for the three months ended June 30, 2026 and 2025, respectively. Current state income taxes attributable to the Texas margin tax relating to the operation of the Partnership of $282 and $687 were recorded in income tax expense for the six months ended June 30, 2026 and 2025, respectively. Deferred taxes applicable to the Texas margin tax relating to the operation of the Partnership are immaterial.

MTI, a wholly owned subsidiary of the Partnership, is subject to income taxes due to its corporate structure (the "Taxable Subsidiary"). Total income tax expense of $1,633 and $1,814, related to the operation of the Taxable Subsidiary, for the three months ended June 30, 2026 and 2025, resulted in an effective income tax rate ("ETR") of 67.04% and 64.50%, respectively. Total income tax expense of $2,111 and $2,514, related to the operation of the Taxable Subsidiary, for the six months ended June 30, 2026 and 2025, resulted in an effective income tax rate of 56.44% and 50.84%, respectively.

The increase in the effective tax rate for the three and six months ended June 30, 2026, compared to the U.S. federal statutory rate of 21%, is primarily due to state income taxes, net of the federal benefit, and nondeductible insurance premiums. The relatively low pre-tax income causes the permanent differences and state taxes to have a proportionately larger effect on the effective tax rate.

    A current federal income tax expense of $984 and $1,514, related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2026 and 2025, respectively. A current federal income tax expense of $1,245 and $2,235, related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2026 and 2025, respectively. A current state income tax expense of $253 and $240, related to the operation of the Taxable Subsidiary, was recorded for the three months ended June 30, 2026 and 2025, respectively. A current state income tax expense of $328 and $433, related to the operation of the Taxable Subsidiary, was recorded for the six months ended June 30, 2026 and 2025, respectively.

With respect to MTI, income taxes are accounted for under the asset and liability method pursuant to the provisions of ASC 740 related to income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

    A deferred tax expense related to the MTI temporary differences of $396 and $60 was recorded for the three months ended June 30, 2026 and 2025, respectively. A deferred tax expense (benefit) related to the MTI temporary differences of $538 and $(154) was recorded for the six months ended June 30, 2026 and 2025, respectively. A net deferred tax asset of $8,488 and $9,026, related to the cumulative book and tax temporary differences, existed at June 30, 2026 and December 31, 2025, respectively.

All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.