Net Income Per Unit

3 Months Ended

Mar. 31, 2020

We use the two-class method when calculating the net income per unit applicable to limited partners because we have more than one participating class of securities. Our participating securities consist of common units, general partner units and IDRs. The two-class method is based on the weighted-average number of common units outstanding during the period. Basic net income per unit applicable to limited partners is computed by dividing limited partners’ interest in net income, after deducting our general partner’s 2% interest and IDRs, by the weighted-average number of outstanding common units. Our net income is allocated to our general partner and limited partners in accordance with their respective partnership percentages after giving effect to priority income allocations for IDRs, which are held by our general partner pursuant to our Partnership Agreement. The IDRs are paid following the close of each quarter.

Pursuant to Amendment No. 2 to the Partnership Agreement, an agreement was reached for a waiver of distributions in respect of the IDRs associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. An additional waiver letter has been signed that waives all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer Note 3 for additional details.

Earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units. As of March 31, 2020, the only potentially dilutive units outstanding consist of unvested phantom units.

Our distributions earned with respect to a given period are declared subsequent to quarter end. Therefore, the table below represents total cash distributions applicable to the period in which the distributions are earned. The expected date of distribution for the distributions earned during the period ended March 31, 2020 is May 12, 2020. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):



	Three Months Ended March 31,
	2020			2019
Net income attributable to partners	$	27,796		$	19,696
Less: General partner's distribution (including IDRs) ⁽¹⁾	9,139			7,424
Less: Limited partners' distribution	21,739			20,014
Distributions in excess of earnings	$	(3,082	)	$	(7,742	)

General partner's earnings:
Distributions (including IDRs) ⁽¹⁾	$	9,139		$	7,424
Distributions in excess of earnings	(62		)	(154		)
Total general partner's earnings	$	9,077		$	7,270

Limited partners' earnings on common units:
Distributions	$	21,739		$	20,014
Distributions in excess of earnings	(3,020		)	(7,588		)
Total limited partners' earnings on common units	$	18,719		$	12,426

Weighted average limited partner units outstanding:
Common units - basic	24,480,570			24,407,168
Common units - diluted	24,485,336			24,416,058

Net income per limited partner unit:
Common units - basic	$	0.76		$	0.51
Common units - diluted ⁽²⁾	$	0.76		$	0.51

⁽¹⁾General partner distributions (including IDRs) consist of the 2.0% general partner interest and IDRs, which represent the right of the general partner to receive increasing percentages of quarterly distributions of available cash from operating surplus in excess of 0.43125 per unit per quarter. See Note 8 for further discussion related to IDRs.

⁽²⁾ There were no outstanding common units excluded from the diluted earnings per unit calculation for the three months ended March 31, 2020 and 2019.