Fair Value of Financial Instruments

12 Months Ended

Mar. 31, 2024

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.

Derivatives

The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our derivative assets and liabilities reported in our consolidated balance sheets at the dates indicated:


	March 31, 2024				March 31, 2023
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(in thousands)
Level 1 measurements	$	4,798	$	(7,517)	$	63,553	$	(6,043)
Level 2 measurements	54,040		(37,345)		25,128		(15,827)
	58,838		(44,862)		88,681		(21,870)

Netting of counterparty contracts (1)	(4,798)		4,798		(6,670)		6,670
Net cash collateral provided (held)	630		2,719		(47,686)		(114)
Derivatives	$	54,670	$	(37,345)	$	34,325	$	(15,314)

(1) Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a master netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such master netting arrangements.

The following table summarizes the accounts that include our derivative assets and liabilities in our consolidated balance sheets at the dates indicated:


	March 31,
	2024		2023
	(in thousands)
Prepaid expenses and other current assets	$	54,670	$	33,875
Other noncurrent assets	—		450
Accrued expenses and other payables	(36,679)		(14,752)
Other noncurrent liabilities	(666)		(562)
Net derivative asset	$	17,325	$	19,011

The following table summarizes our open derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.


Contracts	Settlement Period	Net Long (Short) Notional Units (in barrels)	Fair Value of Net Assets (Liabilities)
		(in thousands)
At March 31, 2024:
Crude oil fixed-price (1)	April 2024–March 2025	(174)	$	(3,000)
Propane fixed-price (1)	April 2024–April 2025	6,980	1,870
Refined products fixed-price (1)	April 2024–December 2024	(244)	518
Butane fixed-price (1)	April 2024–March 2025	(982)	(2,222)
Variable-to-fixed interest rate swap (2)	April 2024–April 2026		515
Other	April 2024–March 2025		16,295
			13,976
Net cash collateral provided			3,349
Net derivative asset			$	17,325

At March 31, 2023:
Crude oil fixed-price (1)	April 2023–March 2024	1,069	$	52,613
Propane fixed-price (1)	April 2023–March 2025	(320)	(4,047)
Refined products fixed-price (1)	April 2023–July 2024	(429)	4,468
Butane fixed-price (1)	April 2023–March 2024	(830)	3,485
Other	April 2023–September 2024		10,292
			66,811
Net cash collateral held			(47,800)
Net derivative asset			$	19,011

(1) We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.

(2) In March 2024, we entered into a $200.0 million interest rate swap to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B. Under this arrangement, we pay a fixed interest rate of 4.32% in exchange for SOFR-based variable interest through April 2026. The change in the fair value of the interest rate swap is recorded as a net gain or loss within interest expense in our consolidated statement of operations. There was $0.5 million of unrealized gains on our interest rate swap as of March 31, 2024.

The following table summarizes the net losses recorded from our commodity derivatives to revenues and cost of sales in our consolidated statements of operations for the periods indicated (in thousands):


Year Ended March 31,
2024	$	(1,562)
2023	$	(5,383)
2022	$	(116,556)

Credit Risk

We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions. At March 31, 2024, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our consolidated balance sheets and recognized in our net income.

Interest Rate Risk

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR. At March 31, 2024, there were no borrowings under the ABL Facility.

The Term Loan B is variable-rate debt with interest rates that are generally indexed to the SOFR. At March 31, 2024, there was $700.0 million of outstanding borrowings under the Term Loan B at a weighted average interest rate of 5.33% plus a margin of 4.50%.

In March 2024, we entered into a $200.0 million interest rate swap to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B.

The current distribution rate for the Class B Preferred Units is a floating rate of the three-month LIBOR interest rate (5.3314% for the quarter ended March 31, 2024) plus a spread of 7.213%. Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd., plus a tenor spread adjustment of 0.26161% in accordance with the LIBOR Act, and the rules implementing the LIBOR Act.

On April 15, 2024, the distributions for the Class C Preferred Units will accumulate at a percentage of the $25.00 liquidation preference equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our Partnership Agreement) plus a spread of 7.384%. On or after July 1, 2024, the holders of our Class D Preferred Units can elect, from time to time, for the distributions to be calculated based on a floating rate equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our Partnership Agreement) plus the Class D Variable Rate. Each Class D Variable Rate election shall be effective for at least four quarters following such election.

Fair Value of Fixed-Rate Notes

The following table provides fair values estimates of our fixed-rate notes at March 31, 2024 (in thousands):


2029 Senior Secured Notes	$	921,375
2032 Senior Secured Notes	$	1,332,500

For the 2029 Senior Secured Notes and 2032 Senior Secured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.