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Note 4 - Revenue

12 Months Ended

Dec. 31, 2021

4.	REVENUE

There are two types of asphalt terminalling contracts: (i) operating lease contracts, under which customers operate the facilities, and (ii) storage, throughput and handling contracts, under which the Partnership operates the facilities. The operating lease contracts are accounted for in accordance with ASC 842 - Leases. The storage, throughput and handling contracts contain both lease revenue and non-lease service revenue. In accordance with ASC 842 and 606, fixed consideration is allocated to the lease and service components based on their relative stand-alone selling price. The stand-alone selling price of the lease component is calculated using the average internal rate of return under the operating lease agreements. The stand-alone selling price of the service component is calculated by applying an appropriate margin to the expected costs to operate the facility. The service component contains a single performance obligation that consists of a stand-ready obligation to perform activities as directed by the customer, and revenue is recognized on a straight-line basis over time as the customer receives and consumes benefits. The lease component is recognized on a straight-line basis over the term of the initial lease. Fixed consideration, consisting of the monthly storage and handling fees, is billed a month prior to the performance of services and is due by the first day of the month of service. Payments received in advance of the month of service are recorded as unearned revenue until the service is performed, and the service component is treated as a contract liability.

Asphalt storage, throughput and handling contracts also contain variable consideration in the form of reimbursements of utility, fuel and power expenses and throughput fees. Utility, fuel and power reimbursements are allocated entirely to the service component of the contracts. Utility, fuel and power reimbursements relate directly to the distinct monthly service that makes up the overall performance obligation and revenue is recognized in the period in which the service takes place. Variable consideration related to reimbursements of utility, fuel and power expenses is billed in the month subsequent to the period of service, and payment is due within 30 days of billing. Throughput fees are allocated to both the lease and service component of the contracts using the allocation percentages from contract inception. In accordance with ASC 842, the lease component of variable throughput fees is recognized in the period when the changes in facts and circumstances on which the variable payment is based occur. Additionally, under ASC 842, when variable consideration contains both a lease and non-lease service component, the service component cannot be recognized until the period in which the changes in facts and circumstances on which the variable payment is based occur. At that time, it can be recognized in accordance with ASC 606. The service component of variable throughput fees is treated as a change in estimate in the period changes in facts and circumstances on which the variable payment is based occur and is then recognized on a straight-line basis over time as the customer receives and consumes benefits. Payment on variable throughput consideration is due within 30 days of billing.

The following table includes revenue associated with contractual commitments in place related to future performance obligations as of the end of the reporting period, which are expected to be recognized in revenue in the specified periods (in thousands):

	Revenue from
	Contracts with		Revenue from
	Customers⁽¹⁾		Leases		Total
2022	$	39,697	$	59,647	$	99,344
2023		31,934		47,952		79,886
2024		31,204		47,164		78,368
2025		28,996		41,095		70,091
2026		19,948		24,759		44,707
Thereafter		18,834		22,352		41,186
Total revenue related to future performance obligations	$	170,613	$	242,969	$	413,582

(1)	Excluded from the table is revenue that is either constrained or related to performance obligations that are wholly unsatisfied as of December 31, 2021.

Disaggregation of Revenue

Disaggregation of revenue from contracts with customers by revenue type is presented as follows (in thousands):

	Year ended December 31, 2020
	Revenue from contracts with customers				Lease revenue
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue			Total
Fixed storage and throughput revenue	$	20,303	$	14,531	$	-	$	-	$	34,834
Fixed lease revenue		-		-		32,207		24,547		56,754
Variable cost recovery revenue		6,620		3,076		2,205		763		12,664
Variable throughput and other revenue		2,248		421		2,218		1,106		5,993
Total	$	29,171	$	18,028	$	36,630	$	26,416	$	110,245

	Year ended December 31, 2021
	Revenue from contracts with customers				Lease revenue
	Third-party revenue		Related-party revenue		Third-party revenue		Related-party revenue			Total
Fixed storage and throughput revenue	$	20,315	$	18,883	$	-	$	-	$	39,198
Fixed lease revenue		-		-		31,263		27,142		58,405
Variable cost recovery revenue		8,616		680		1,816		954		12,066
Variable throughput and other revenue		1,784		632		1,986		1,346		5,748
Total	$	30,715	$	20,195	$	35,065	$	29,442	$	115,417

Contract Balances

The timing of revenue recognition, billings and cash collections result in billed accounts receivable and unearned revenue (contract liabilities) on the consolidated balance sheets as noted in the contract discussions above. Accounts receivable are reflected in the line items “Accounts receivable” and “Receivables from related parties” on the consolidated balance sheets. Unearned revenue is included in the line items “Unearned revenue,” “Unearned revenue with related parties,” “Long-term unearned revenue with related parties” and “Other long-term liabilities” on the consolidated balance sheets.

Billed accounts receivable from contracts with customers were $2.1 million and $2.2 million at December 31, 2020 and 2021, respectively.

The Partnership records unearned revenues when cash payments are received in advance of performance. Unearned revenue related to contracts with customers was $3.2 million and $3.4 million at December 31, 2020 and 2021, respectively. For the year ended December 31, 2021, the Partnership recognized $2.3 million of revenues that were previously included in the unearned revenue balance for services provided during the period.

Practical Expedients and Exemptions

The Partnership does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.