BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2016

BUSINESS SEGMENTS

BUSINESS SEGMENTS

(18) BUSINESS SEGMENTS

We provide integrated terminaling, storage, transportation and related services to companies engaged in the trading, distribution and marketing of refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Our chief operating decision maker is our general partner’s chief executive officer. Our general partner’s chief executive officer reviews the financial performance of our business segments using disaggregated financial information about “net margins” for purposes of making operating decisions and assessing financial performance. “Net margins” is composed of revenue less direct operating costs and expenses. Accordingly, we present “net margins” for each of our business segments: (i) Gulf Coast terminals, (ii) Midwest terminals and pipeline system, (iii) Brownsville terminals, (iv) River terminals and (v) Southeast terminals.

The financial performance of our business segments is as follows (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Gulf Coast Terminals:
Terminaling services fees	$	11,259	$	10,844	$	33,958	$	31,305
Other		3,539		2,202		7,869		6,459
Revenue		14,798		13,046		41,827		37,764
Direct operating costs and expenses		(6,013)		(4,920)		(16,750)		(13,815)
Net margins		8,785		8,126		25,077		23,949
Midwest Terminals and Pipeline System:
Terminaling services fees		2,207		2,206		6,427		6,299
Pipeline transportation fees		433		433		1,299		1,261
Other		200		585		697		1,098
Revenue		2,840		3,224		8,423		8,658
Direct operating costs and expenses		(858)		(871)		(2,422)		(2,351)
Net margins		1,982		2,353		6,001		6,307
Brownsville Terminals:
Terminaling services fees		1,948		2,096		6,176		5,979
Pipeline transportation fees		1,223		1,183		3,691		3,687
Other		2,367		2,827		9,909		10,043
Revenue		5,538		6,106		19,776		19,709
Direct operating costs and expenses		(2,573)		(3,269)		(8,742)		(9,479)
Net margins		2,965		2,837		11,034		10,230
River Terminals:
Terminaling services fees		2,591		2,346		7,053		6,899
Other		221		114		2,559		547
Revenue		2,812		2,460		9,612		7,446
Direct operating costs and expenses		(1,753)		(1,898)		(6,034)		(5,255)
Net margins		1,059		562		3,578		2,191
Southeast Terminals:
Terminaling services fees		13,287		11,521		39,864		34,789
Other		1,363		912		2,898		3,834
Revenue		14,650		12,433		42,762		38,623
Direct operating costs and expenses		(5,851)		(5,697)		(16,709)		(16,581)
Net margins		8,799		6,736		26,053		22,042
Total net margins		23,590		20,614		71,743		64,719
Direct general and administrative expenses		(764)		(1,117)		(2,925)		(2,810)
Allocated general and administrative expenses		(2,841)		(2,835)		(8,524)		(8,440)
Allocated insurance expense		(969)		(944)		(2,776)		(2,812)
Reimbursement of bonus awards expense		(251)		(121)		(2,144)		(1,185)
Depreciation and amortization		(8,169)		(7,711)		(24,168)		(22,524)
Earnings from unconsolidated affiliates		2,960		2,191		6,940		9,764
Operating income		13,556		10,077		38,146		36,712
Other expenses		(1,671)		(2,365)		(7,241)		(6,690)
Net earnings	$	11,885	$	7,712	$	30,905	$	30,022

Supplemental information about our business segments is summarized below (in thousands):

	Three months ended September 30, 2016
			Midwest
			Terminals and
	Gulf Coast		Pipeline		Brownsville		River		Southeast
	Terminals		System		Terminals		Terminals		Terminals		Total
Revenue:
External customers	$	14,798	$	2,840	$	4,228	$	2,812	$	14,650	$	39,328
Frontera		—		—		1,310		—		—		1,310
Revenue	$	14,798	$	2,840	$	5,538	$	2,812	$	14,650	$	40,638
Capital expenditures	$	1,465	$	145	$	126	$	209	$	8,194	$	10,139
Identifiable assets	$	127,031	$	21,911	$	43,630	$	52,589	$	185,001	$	430,162
Cash and cash equivalents												441
Investments in unconsolidated affiliates												243,202
Deferred financing costs												1,501
Other												1,485
Total assets											$	676,791

	Three months ended September 30, 2015
			Midwest
			Terminals and
	Gulf Coast		Pipeline		Brownsville		River		Southeast
	Terminals		System		Terminals		Terminals		Terminals		Total
Revenue:
External customers	$	11,980	$	3,224	$	4,995	$	2,343	$	4,601	$	27,143
NGL Energy Partners LP		1,066		—		—		117		7,832		9,015
Frontera		—		—		1,111		—		—		1,111
Revenue	$	13,046	$	3,224	$	6,106	$	2,460	$	12,433	$	37,269
Capital expenditures	$	1,519	$	78	$	1,188	$	832	$	5,167	$	8,784

	Nine months ended September 30, 2016
			Midwest
			Terminals and
	Gulf Coast		Pipeline		Brownsville		River		Southeast
	Terminals		System		Terminals		Terminals		Terminals		Total
Revenue:
External customers	$	41,703	$	8,423	$	15,907	$	9,612	$	39,925	$	115,570
NGL Energy Partners LP		124		—		—		—		2,837		2,961
Frontera		—		—		3,869		—		—		3,869
Revenue	$	41,827	$	8,423	$	19,776	$	9,612	$	42,762	$	122,400
Capital expenditures	$	4,894	$	576	$	759	$	1,565	$	26,311	$	34,105

	Nine months ended September 30, 2015
			Midwest
			Terminals and
	Gulf Coast		Pipeline		Brownsville		River		Southeast
	Terminals		System		Terminals		Terminals		Terminals		Total
Revenue:
External customers	$	32,859	$	8,658	$	16,401	$	7,095	$	14,183	$	79,196
NGL Energy Partners LP		4,905		—		10		351		24,440		29,706
Frontera		—		—		3,298		—		—		3,298
Revenue	$	37,764	$	8,658	$	19,709	$	7,446	$	38,623	$	112,200
Capital expenditures	$	8,503	$	775	$	3,455	$	3,875	$	7,930	$	24,538