Net Income Per Limited Partner Unit

9 Months Ended

Sep. 30, 2023

Note 13. NET INCOME PER LIMITED PARTNER UNIT

We compute income per unit using the two-class method under which any excess of distributions declared over net income shall be allocated to the partners based on their respective sharing of income as specified in the Partnership Agreement. Net income per unit applicable to limited partners is computed by dividing the limited partners’ interest in net income by the weighted-average number of outstanding common units.

We applied the if-converted method to the preferred membership interests in accordance with Accounting Standards Update No. 2020-06 for purposes of computing diluted earnings per unit.

The following table provides a reconciliation of net income and weighted-average units used in computing basic and diluted net income per limited partner unit for the following periods (in thousands, except unit and per unit amounts):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Numerator:
Distributions paid on common units	$	19,934		$	19,913	$	59,777		$	59,713
Allocation of distributions in excess of net income		(8,271	)		7,105		(35,773	)		(14,245	)
Limited partners’ interest in net income - basic		11,663			27,018		24,004			45,468
Accretion of preferred membership interests		—			575		—			—
Limited partners’ interest in net income - diluted	$	11,663		$	27,593	$	24,004		$	45,468
Denominator:
Weighted-average common units outstanding - basic		37,966,474			37,925,082		37,953,348			37,912,737
Adjustment for phantom and phantom performance units (a)		172,784			35,809		173,044			37,625
Adjustment for preferred membership interests (a)		—			1,076,769		—			—
Weighted-average common units outstanding - diluted		38,139,258			39,037,660		38,126,392			37,950,362
Net income per common unit - basic	$	0.31		$	0.71	$	0.63		$	1.20
Net income per common unit - diluted	$	0.31		$	0.71	$	0.63		$	1.20

Distributions paid per common unit	$	0.5250		$	0.5250	$	1.5750		$	1.5750
Distributions declared (with respect to each respective period) per common unit	$	0.5250		$	0.5250	$	1.5750		$	1.5750

(a)

For the three and nine months ended September 30, 2023, 1,176,998 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive. For the nine months ended September 30, 2022, 729,679 potentially dilutive units related to the preferred membership interests were excluded from the calculation of diluted earnings per unit because including them would have been antidilutive.

For the three months ended September 30, 2022, dilutive units related to the preferred membership interests were included in the denominator of the calculation of diluted earnings per unit. Similarly, the accretion of the preferred membership interests was added back in the numerator of the calculation as if the preferred membership interests had been converted to common units at the beginning of the period, in which case no accretion would have been recorded.

Distributions

Distribution activity for 2023 is as follows:

Quarter Ended

Record Date

Payment Date

Cash
Distribution
(per unit)

Cash
Distribution
(in thousands)

December 31, 2022

February 3, 2023

February 10, 2023

0.5250

19,918

March 31, 2023

May 3, 2023

May 10, 2023

0.5250

19,925

June 30, 2023

August 4, 2023

August 11, 2023

0.5250

19,934

September 30, 2023

November 3, 2023

November 10, 2023

0.5250

19,935

The amount of any distribution is subject to the discretion of the Board, which may modify or revoke our cash distribution policy at any time. Our Partnership Agreement does not require us to pay any distributions. As such, there can be no assurance we will continue to pay distributions in the future.