Net Income Per Unit

6 Months Ended

Jun. 30, 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 for the GP Additional Units 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 GP Additional Units. An additional waiver letter was signed that waived 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 June 30, 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 June 30, 2020 is August 12, 2020. The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):



	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
Net income attributable to partners	$	44,415	$	24,885		$	72,211	$	44,581
Less: General partner's distribution (including IDRs) ⁽¹⁾	9,479		8,160			18,618		15,583
Less: Limited partners' distribution	26,490		20,754			48,229		40,769
Earnings in excess (deficit) of distributions	$	8,446	$	(4,029	)	$	5,364	$	(11,771	)

General partner's earnings:
Distributions (including IDRs) ⁽¹⁾	$	9,479	$	8,160		$	18,618	$	15,583
Allocation of earnings in excess (deficit) of distributions	168		(81		)	106		(235		)
Total general partner's earnings	$	9,647	$	8,079		$	18,724	$	15,348

Limited partners' earnings on common units:
Distributions	$	26,490	$	20,754		$	48,229	$	40,769
Allocation of earnings in excess (deficit) of distributions	8,278		(3,948		)	5,258		(11,536		)
Total limited partners' earnings on common units	$	34,768	$	16,806		$	53,487	$	29,233

Weighted average limited partner units outstanding:
Common units - basic	29,427,298		24,409,359			26,953,934		24,408,270
Common units - diluted	29,430,555		24,414,343			26,956,523		24,414,077

Net income per limited partner unit:
Common units - basic	$	1.18	$	0.69		$	1.98	$	1.20
Common units - diluted ⁽²⁾	$	1.18	$	0.69		$	1.98	$	1.20

⁽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⁾ Outstanding common unit equivalents totaling 18,270 were excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2020. There were no outstanding common units excluded from the diluted earnings per unit calculation for the three and six months ended June 30, 2019.