REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Management of TransMontaigne Partners LLC
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TransMontaigne Partners LLC (formerly TransMontaigne Partners L.P.) and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of income, partners' equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in point (C) “Accounting for operations” in note 1 “summary of significant accounting policies” to the financial statements, the Company changed its method of accounting for leases effective January 1, 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842 – Leases. The Company used the modified retrospective transition method upon adoption, which had a material impact on the financial statements.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Emphasis of Matter
As discussed in Note 1 to the financial statements, effective June 1, 2019, TLP Management Services LLC (“TMS”) was contributed to the Company and recorded at carryover basis as a reorganization of entities under common control. As such, prior periods include the assets, liabilities, and results of operations of TMS for all periods presented.
/s/ Deloitte & Touche LLP
Denver, Colorado
March 13, 2020
We have served as the Company's auditor since 2012
TransMontaigne Partners LLC and subsidiaries
Consolidated balance sheets
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,090
|
|
$
|
1,026
|
|
Trade accounts receivable, net
|
|
|
16,500
|
|
|
14,049
|
|
Due from affiliates
|
|
|
2,882
|
|
|
1,953
|
|
Other current assets
|
|
|
6,346
|
|
|
8,097
|
|
Total current assets
|
|
|
26,818
|
|
|
25,125
|
|
Property, plant and equipment, net
|
|
|
727,220
|
|
|
689,170
|
|
Goodwill
|
|
|
9,428
|
|
|
9,428
|
|
Investments in unconsolidated affiliates
|
|
|
225,425
|
|
|
227,031
|
|
Right-of-use assets, operating leases
|
|
|
35,765
|
|
|
—
|
|
Other assets, net
|
|
|
47,397
|
|
|
51,254
|
|
|
|
$
|
1,072,053
|
|
$
|
1,002,008
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
$
|
24,650
|
|
$
|
28,212
|
|
Operating lease liabilities
|
|
|
3,001
|
|
|
—
|
|
Accrued liabilities
|
|
|
36,558
|
|
|
31,946
|
|
Total current liabilities
|
|
|
64,209
|
|
|
60,158
|
|
Other liabilities
|
|
|
4,990
|
|
|
4,643
|
|
Long-term operating lease liabilities
|
|
|
34,605
|
|
|
—
|
|
Long-term debt
|
|
|
644,162
|
|
|
598,622
|
|
Total liabilities
|
|
|
747,966
|
|
|
663,423
|
|
Commitments and contingencies (Note 14)
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common units - 16,229,123 issued and outstanding at December 31, 2018
|
|
|
—
|
|
|
285,095
|
|
General partner interest - 2% interest with 331,206 equivalent units outstanding at December 31, 2018
|
|
|
—
|
|
|
53,490
|
|
Member interest
|
|
|
324,087
|
|
|
—
|
|
Total equity
|
|
|
324,087
|
|
|
338,585
|
|
|
|
$
|
1,072,053
|
|
$
|
1,002,008
|
|
See accompanying notes to consolidated financial statements. Prior periods have been recast as a result of the TMS Contribution (see Note 1 of Notes to consolidated financial statements)
TransMontaigne Partners LLC and subsidiaries
Consolidated statements of operations
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
234,275
|
|
$
|
211,303
|
|
$
|
176,079
|
Affiliates
|
|
|
28,767
|
|
|
20,994
|
|
|
8,368
|
Total revenue
|
|
|
263,042
|
|
|
232,297
|
|
|
184,447
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
(103,022)
|
|
|
(98,977)
|
|
|
(81,327)
|
General and administrative expenses
|
|
|
(23,660)
|
|
|
(23,707)
|
|
|
(23,692)
|
Insurance expenses
|
|
|
(4,995)
|
|
|
(4,976)
|
|
|
(4,064)
|
Deferred compensation expense
|
|
|
(2,308)
|
|
|
(3,478)
|
|
|
(2,999)
|
Depreciation and amortization
|
|
|
(52,535)
|
|
|
(49,793)
|
|
|
(36,188)
|
Total costs and expenses
|
|
|
(186,520)
|
|
|
(180,931)
|
|
|
(148,270)
|
Earnings from unconsolidated affiliates
|
|
|
4,894
|
|
|
8,852
|
|
|
7,071
|
Gain from insurance proceeds
|
|
|
3,351
|
|
|
—
|
|
|
—
|
Loss on disposition of assets
|
|
|
—
|
|
|
(901)
|
|
|
—
|
Operating income
|
|
|
84,767
|
|
|
59,317
|
|
|
43,248
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(36,196)
|
|
|
(31,900)
|
|
|
(10,473)
|
Amortization of deferred debt issuance costs
|
|
|
(2,657)
|
|
|
(3,037)
|
|
|
(1,221)
|
Total other expenses
|
|
|
(38,853)
|
|
|
(34,937)
|
|
|
(11,694)
|
Net earnings
|
|
$
|
45,914
|
|
$
|
24,380
|
|
$
|
31,554
|
See accompanying notes to consolidated financial statements. Prior periods have been recast as a result of the TMS Contribution (see Note 1 of Notes to consolidated financial statements)
.
TransMontaigne Partners LLC and subsidiaries
Consolidated statements of equity
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
|
|
|
|
|
|
|
|
Common
|
|
partner
|
|
Member
|
|
|
|
|
|
units
|
|
interest
|
|
interest
|
|
Total
|
|
Balance December 31, 2016
|
|
$
|
317,525
|
|
$
|
52,692
|
|
$
|
—
|
|
$
|
370,217
|
|
Distributions to unitholders
|
|
|
(47,349)
|
|
|
(11,985)
|
|
|
—
|
|
|
(59,334)
|
|
Equity-based compensation
|
|
|
2,729
|
|
|
—
|
|
|
—
|
|
|
2,729
|
|
Issuance of 6,498 common units pursuant to our long-term incentive plan
|
|
|
270
|
|
|
—
|
|
|
—
|
|
|
270
|
|
Issuance of 33,205 common units pursuant to our savings and retention program
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Settlement of tax withholdings on equity-based compensation
|
|
|
(711)
|
|
|
—
|
|
|
—
|
|
|
(711)
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
Contribution from TLP Holdings
|
|
|
17,179
|
|
|
—
|
|
|
—
|
|
|
17,179
|
|
Net earnings for year ended December 31, 2017
|
|
|
18,850
|
|
|
12,704
|
|
|
|
|
|
31,554
|
|
Balance December 31, 2017
|
|
|
308,493
|
|
|
53,447
|
|
|
—
|
|
|
361,940
|
|
Distributions to unitholders
|
|
|
(51,152)
|
|
|
(15,672)
|
|
|
—
|
|
|
(66,824)
|
|
Equity-based compensation
|
|
|
3,208
|
|
|
—
|
|
|
—
|
|
|
3,208
|
|
Issuance of 6,972 common units pursuant to our long-term incentive plan
|
|
|
270
|
|
|
—
|
|
|
—
|
|
|
270
|
|
Issuance of 44,798 common units pursuant to our savings and retention program
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Settlement of tax withholdings on equity-based compensation
|
|
|
(658)
|
|
|
—
|
|
|
—
|
|
|
(658)
|
|
Contribution of cash by TransMontaigne GP to maintain its 2% general partner interest
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
Contribution from TLP Holdings
|
|
|
16,230
|
|
|
—
|
|
|
—
|
|
|
16,230
|
|
Net earnings for year ended December 31, 2018
|
|
|
8,704
|
|
|
15,676
|
|
|
—
|
|
|
24,380
|
|
Balance December 31, 2018
|
|
|
285,095
|
|
|
53,490
|
|
|
—
|
|
|
338,585
|
|
Distributions to unitholders
|
|
|
(13,064)
|
|
|
(4,186)
|
|
|
—
|
|
|
(17,250)
|
|
Purchase of common units and conversion to member interest
|
|
|
(279,895)
|
|
|
(51,978)
|
|
|
331,873
|
|
|
—
|
|
Reclassification of outstanding equity-based compensation to liability
|
|
|
—
|
|
|
—
|
|
|
(6,199)
|
|
|
(6,199)
|
|
Contribution from TLP Holdings
|
|
|
4,829
|
|
|
—
|
|
|
491
|
|
|
5,320
|
|
Equity-based compensation
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
45
|
|
Distributions to TLP Finance
|
|
|
—
|
|
|
—
|
|
|
(42,328)
|
|
|
(42,328)
|
|
Net earnings for year ended December 31, 2019
|
|
|
2,990
|
|
|
2,674
|
|
|
40,250
|
|
|
45,914
|
|
Balance December 31, 2019
|
|
$
|
—
|
|
$
|
—
|
|
$
|
324,087
|
|
$
|
324,087
|
|
See accompanying notes to consolidated financial statements. Prior periods have been recast as a result of the TMS Contribution (see Note 1 of Notes to consolidated financial statements).
TransMontaigne Partners LLC and subsidiaries
Consolidated statements of cash flows
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
45,914
|
|
$
|
24,380
|
|
$
|
31,554
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
52,535
|
|
|
49,793
|
|
|
36,188
|
Loss on disposition of assets
|
|
|
—
|
|
|
901
|
|
|
—
|
Earnings from unconsolidated affiliates
|
|
|
(4,894)
|
|
|
(8,852)
|
|
|
(7,071)
|
Distributions from unconsolidated affiliates
|
|
|
11,432
|
|
|
15,565
|
|
|
17,128
|
Equity-based compensation
|
|
|
45
|
|
|
3,478
|
|
|
2,999
|
Amortization of deferred debt issuance costs
|
|
|
2,657
|
|
|
3,037
|
|
|
1,221
|
Amortization of deferred revenue
|
|
|
(714)
|
|
|
(324)
|
|
|
(333)
|
Unrealized (gain) loss on derivative instruments
|
|
|
623
|
|
|
433
|
|
|
(232)
|
Gain from insurance proceeds
|
|
|
(3,351)
|
|
|
—
|
|
|
—
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
(2,451)
|
|
|
(3,696)
|
|
|
(807)
|
Due from affiliates
|
|
|
(819)
|
|
|
690
|
|
|
(1,989)
|
Other current assets
|
|
|
(152)
|
|
|
3,116
|
|
|
1,353
|
Amounts due under long-term terminaling services agreements, net
|
|
|
1,268
|
|
|
1,160
|
|
|
801
|
Right-of-use assets, operating leases
|
|
|
2,235
|
|
|
—
|
|
|
—
|
Deposits
|
|
|
10
|
|
|
(456)
|
|
|
—
|
Other assets, net
|
|
|
1,257
|
|
|
—
|
|
|
—
|
Trade accounts payable
|
|
|
(880)
|
|
|
3,092
|
|
|
2,047
|
Accrued liabilities
|
|
|
(2,068)
|
|
|
10,893
|
|
|
3,178
|
Operating lease liabilities
|
|
|
(2,058)
|
|
|
—
|
|
|
|
Net cash provided by operating activities
|
|
|
100,589
|
|
|
103,210
|
|
|
86,037
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of terminal assets
|
|
|
—
|
|
|
—
|
|
|
(276,760)
|
Investments in unconsolidated affiliates
|
|
|
(4,932)
|
|
|
(1,413)
|
|
|
(2,145)
|
Return of investment in unconsolidated affiliates
|
|
|
—
|
|
|
850
|
|
|
—
|
Capital expenditures
|
|
|
(91,023)
|
|
|
(66,331)
|
|
|
(58,050)
|
Proceeds from sale of assets
|
|
|
—
|
|
|
10,025
|
|
|
—
|
Proceeds from insurance claims
|
|
|
4,988
|
|
|
—
|
|
|
—
|
Net cash used in investing activities
|
|
|
(90,967)
|
|
|
(56,869)
|
|
|
(336,955)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from senior notes
|
|
|
—
|
|
|
300,000
|
|
|
—
|
Borrowings under revolving credit facility
|
|
|
174,900
|
|
|
166,400
|
|
|
442,100
|
Repayments under revolving credit facility
|
|
|
(130,200)
|
|
|
(453,600)
|
|
|
(140,700)
|
Debt issuance costs
|
|
|
—
|
|
|
(7,871)
|
|
|
(7,695)
|
Taxes paid for equity compensation awards
|
|
|
—
|
|
|
(658)
|
|
|
(711)
|
Distributions paid to unitholders
|
|
|
(17,250)
|
|
|
(66,824)
|
|
|
(59,334)
|
Distributions to TLP Finance
|
|
|
(42,328)
|
|
|
—
|
|
|
—
|
Contributions from TLP Holdings and TransMontaigne GP
|
|
|
5,320
|
|
|
16,269
|
|
|
17,215
|
Net cash provided by (used in) financing activities
|
|
|
(9,558)
|
|
|
(46,284)
|
|
|
250,875
|
Increase (decrease) in cash and cash equivalents
|
|
|
64
|
|
|
57
|
|
|
(43)
|
Cash and cash equivalents at beginning of period
|
|
|
1,026
|
|
|
969
|
|
|
1,012
|
Cash and cash equivalents at end of period
|
|
$
|
1,090
|
|
$
|
1,026
|
|
$
|
969
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
35,667
|
|
$
|
24,635
|
|
$
|
10,077
|
Property, plant and equipment acquired with accounts payable
|
|
$
|
16,869
|
|
$
|
19,353
|
|
$
|
3,207
|
See accompanying notes to consolidated financial statements. Prior periods have been recast as a result of the TMS Contribution (see Note 1 of Notes to consolidated financial statements).
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of business
TransMontaigne Partners LLC (“we,” “us,” “our,” “the Company”) provides integrated terminaling, storage, transportation and related services for companies engaged in the trading, distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. We conduct our operations in the United States along the Gulf Coast, in the Midwest, in Houston and Brownsville, Texas, along the Mississippi and Ohio rivers, in the Southeast and along the West Coast.
We were originally formed as TransMontaigne Partners L.P. (“the Partnership”) in February 2005 as a Delaware limited partnership. Through February 26, 2019, the Partnership’s common units were listed and publicly traded on the New York Stock Exchange under the symbol “TLP”. The Partnership was controlled by a general partner, TransMontaigne GP L.L.C. (“TransMontaigne GP”), which was an indirect, controlled subsidiary of ArcLight Energy Partners Fund VI, L.P. (“ArcLight”). TransMontaigne GP also held the Partnership’s incentive distribution rights, which were non‑voting limited partner interests with the rights set forth in the First Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of May 27, 2005, as amended from time to time.
On February 26, 2019, an affiliate of ArcLight completed its previously announced acquisition of all of the Partnership’s outstanding publicly traded common units not already held by ArcLight and its affiliates by way of our merger (the “Merger”) with a wholly owned subsidiary of TLP Finance Holdings, LLC (“TLP Finance”), an indirect controlled subsidiary of Arclight. At the effective time of the Merger, each of the Partnership’s general partner units issued and outstanding immediately prior to the acquisition effective time was converted into (i)(a) one Partnership common unit, and (b) in aggregate, a non-economic general partner interest in the Partnership, (ii) each of the Partnership’s incentive distribution rights issued and outstanding immediately prior to the acquisition effective time was converted into 100 Partnership common units, (iii) our general partner distributed its common units in the Partnership (the “Transferred GP Units”) to TLP Acquisition Holdings, LLC, a Delaware limited liability company (“TLP Holdings”), and TLP Holdings contributed the Transferred GP Units to TLP Finance, (iv) the Partnership converted into the Company (a Delaware limited liability company) pursuant to Section 17-219 of the Delaware Limited Partnership Act and changed its name to “TransMontaigne Partners LLC”, and all of our common units owned by TLP Finance were converted into limited liability company interests (“member interest”), (v) the non-economic interest in the Company owned by our general partner was automatically cancelled and ceased to exist and our general partner merged with and into the Company with the Company surviving, and (vi) the Company became 100% owned by TLP Finance (the transactions described in the foregoing clauses (i) through (vi), collectively with the Merger, the “Take-Private Transaction”).
As a result of the Take-Private Transaction, our common units ceased to be publicly traded, and our common units are no longer listed on the New York Stock Exchange. Our 6.125% senior unsecured notes due in 2026 remain outstanding, and we are voluntarily filing with the Securities and Exchange Commission pursuant to the covenants contained in those notes.
Effective June 1, 2019, TLP Finance contributed all of the issued and outstanding equity of its wholly-owned subsidiary, TLP Management Services LLC (“TMS” and such interest, the “TMS Interest”) to the Company, and the Company immediately contributed the TMS Interest to its 100% owned operating company subsidiary TransMontaigne Operating Company L.P. (the “TMS Contribution”). Prior to the TMS Contribution, we had no employees and all of our management and operational activities were provided by TMS. Further, TMS provided all payroll programs and maintained all employee benefits programs on behalf of our Company with respect to applicable TMS employees (as well as on behalf of certain other Arclight affiliates). As a result of the TMS Contribution, we have assumed the employees and operational activities previously provided by TMS, except for our executive officers as further described below. The TMS Contribution has been recorded at carryover basis as a reorganization of entities under common control. As such, prior periods include the assets, liabilities, and results of operations of TMS for all periods presented.
As a result of the TMS Contribution, the omnibus agreement in place in various forms since the inception of the Partnership, and immediately prior to the TMS Contribution between TMS and us, which, among other things, governed the provision of management and operational services provided for us by TMS, is no longer relevant and was terminated.
Following the TMS Contribution, the executive officers who provide services to the Company are employed by TransMontaigne Management Company, LLC (“TMC”), a wholly owned subsidiary of ArcLight, which also provides services to certain other ArcLight affiliates. As a result, we do not directly employ any of the persons responsible for the executive management of our business. Nonetheless, TMS continues to provide certain payroll functions and maintains all employee benefits programs on our behalf of TMC pursuant to a services agreement between TMC and TMS.
Our basis in the assets and liabilities of TMS at December 31, 2018 was as follows (in thousands):
|
|
|
|
Cash
|
|
$
|
694
|
Trade accounts receivable
|
|
|
7
|
Due from affiliates
|
|
|
456
|
Other current assets
|
|
|
456
|
Property, plant and equipment, net
|
|
|
991
|
Other assets, net
|
|
|
484
|
Trade accounts payable
|
|
|
(1,205)
|
Accrued and other liabilities
|
|
|
(3,025)
|
Equity
|
|
$
|
(1,142)
|
(b) Basis of presentation and use of estimates
Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of TransMontaigne Partners LLC and its controlled subsidiaries. Investments where we do not have the ability to exercise control, but do have the ability to exercise significant influence, are accounted for using the equity method of accounting. All inter‑company accounts and transactions have been eliminated in the preparation of the accompanying consolidated financial statements. The accompanying consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly our financial position as of December 31, 2019 and 2018 and our results of operations for the years ended December 31, 2019, 2018 and 2017. Certain reclassifications of previously reported amounts have been made to conform to the current year presentation.
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. The following estimates, in management’s opinion, are subjective in nature, require the exercise of judgment, and/or involve complex analyses: useful lives of our plant and equipment, accrued environmental obligations and business combinations estimates and assumptions. Changes in these estimates and assumptions will occur as a result of the passage of time and the occurrence of future events. Actual results could differ from these estimates.
(c) Accounting for terminal and pipeline operations
Effective January 1, 2019, we adopted Accounting Standards Codification (“ASC”) Topic 842, Leases and the series of related Accounting Standards Updates that followed (collectively referred to as “ASC 842”). The most significant changes under the new guidance include clarification of the definition of a lease, and the requirements for lessees to recognize a right-of-use asset and a lease liability for all qualifying leases in the consolidated balance sheet. Further, under ASC 842, additional disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. We used the modified retrospective transition method applied at the effective date of the standard. By electing this optional transition method, information prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period (“ASC 840”) (See Note 14 of Notes to consolidated financial statements).
Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), applying the modified retrospective transition method, which required us to apply the new standard to (i) all new revenue contracts entered into after January 1, 2018, and (ii) revenue contracts which were not completed as of January 1, 2018. ASC 606 replaces existing revenue recognition requirements in GAAP and requires entities to recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. ASC 606 also requires certain disclosures regarding qualitative and quantitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The adoption of ASC 606 did not result in a transition adjustment nor did it have an impact on the timing or amount of our revenue recognition (See Note 16 of Notes to consolidated financial statements).
The adoption of ASC 606 did not result in changes to our accounting for trade accounts receivable (see Note 4 of Notes to consolidated financial statements), contract assets or contract liabilities. We recognize contract assets in situations where revenue recognition under ASC 606 occurs prior to billing the customer based on our rights under the contract. Contract assets are transferred to accounts receivable when the rights become unconditional. At December 31, 2019, we did not have any contract assets related to ASC 606.
Contract liabilities primarily relate to consideration received from customers in advance of completing the performance obligation. A performance obligation is a promise in a contract to transfer goods or services to the customer. We recognize contract liabilities under these arrangements as revenue once all contingencies or potential performance obligations have been satisfied by the (i) performance of services or (ii) expiration of the customer’s rights under the contract. Short-term contract liabilities include customer advances and deposits (see Note 10 of Notes to consolidated financial statements). Long-term contract liabilities include deferred revenue (See Note 11 of Notes to consolidated financial statements).
We generate revenue from terminaling services fees, pipeline transportation fees and management fees. Under ASC 606 and ASC 842, we recognize revenue over time or at a point in time, depending on the nature of the performance obligations contained in the respective contract with our customer. The contract transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our revenue is recognized pursuant to ASC 842. The following is an overview of our significant revenue streams, including a description of the respective performance obligations and related method of revenue recognition.
Terminaling services fees. Our terminaling services agreements are structured as either throughput agreements or storage agreements. Our throughput agreements contain provisions that require our customers to make minimum payments, which are based on contractually established minimum volumes of throughput of the customer’s product at our facilities, over a stipulated period of time. Due to this minimum payment arrangement, we recognize a fixed amount of revenue from the customer over a certain period of time, even if the customer throughputs less than the minimum volume of product during that period. In addition, if a customer throughputs a volume of product exceeding the minimum volume, we would recognize additional revenue on this incremental volume. Our storage agreements require our customers to make minimum payments based on the volume of storage capacity available to the customer under the agreement, which results in a fixed amount of recognized revenue. We refer to the fixed amount of revenue recognized pursuant to our terminaling services agreements as being “firm commitments.”
Our terminaling services agreements include revenue recognized in accordance with ASC 606 and ASC 842. Upon adoption of these standards, we evaluated our contracts to determine whether the contract contained a lease. Significant assumptions used in this process include the determination of whether substantive substitution rights exist based on the terms of the contract and available capacity at the terminal at the time of contract inception. Our terminaling services agreements do not allow our customers to purchase the underlying asset and vary in terms and conditions with respect to extension or termination options. If a contract is accounted for as a lease under ASC 842, we recognize the minimum payments as lease revenue and revenue recognized in excess of firm commitments as a variable payment of the lease. All other components of the contracts accounted for as a lease are treated as non-lease components (ancillary revenue) and are accounted for in accordance with ASC 606. The majority of our firm commitments under our terminaling services agreements are accounted for as lease revenue in accordance with ASC 842 (“ASC 842 revenue”). The remaining firm commitments under our terminaling services agreements not accounted for as lease revenue are
accounted for in accordance with ASC 606 (“ASC 606 revenue”), where the minimum payment arrangement in each contract is considered a single performance obligation that is primarily satisfied over time through the contract term.
Revenue recognized in excess of firm commitments and revenue recognized based solely on the volume of product distributed or injected are referred to as ancillary. The ancillary revenue associated with terminaling services include volumes of product throughput that exceed the contractually established minimum volumes, injection fees based on the volume of product injected with additive compounds, heating and mixing of stored products, product transfer, railcar handling, butane blending, proceeds from the sale of product gains, wharfage and vapor recovery. The revenue generated by these services is required to be estimated under ASC 606 for any uncertainty that is not resolved in the period of the service. We account for the majority of ancillary revenue at individual points in time when the services are delivered to the customer. The majority of our ancillary revenue is recognized in accordance with ASC 606 (See Note 16 of Notes to consolidated financial statements).
Pipeline transportation fees. We earn pipeline transportation fees at our Diamondback pipeline either based on the volume of product transported or under capacity reservation agreements. Revenue associated with the capacity reservation is recognized ratably over the respective term, regardless of whether the capacity is actually utilized. We earn pipeline transportation fees at our Razorback pipeline based on an allocation of the aggregate fees charged under the capacity agreement with our customer who has contracted for 100% of our Razorback system. Pipeline transportation revenue is primarily accounted for in accordance with ASC 842.
Management fees. We manage and operate certain tank capacity at our Port Everglades South terminal for a major oil company and receive a reimbursement of its proportionate share of operating and maintenance costs. We manage and operate the Frontera joint venture and receive a management fee based on our costs incurred. We manage and operate terminals that are owned by affiliates of ArcLight, including for SeaPort Midstream Partners, LLC (“SMP”) in Seattle, Washington and Portland, Oregon and another terminal for SeaPort Sound Terminal, LLC (“SeaPort Sound”) in Tacoma, Washington and, in each case, receive a management fee based on our costs incurred plus an annual fee. We also manage additional terminal facilities that are owned by affiliates of ArcLight, including Lucknow-Highspire Terminals, LLC (“LHT”), which operates terminals throughout Pennsylvania encompassing approximately 9.9 million barrels of storage capacity, and prior to July 1, 2019, a terminal in Baltimore, Maryland for Pike Baltimore Terminals, LLC (the “Baltimore Terminal”), and receive a management fee based on our costs incurred. Our management of the Baltimore Terminal ended on July 1, 2019. We manage and operate rail sites at certain Southeast terminals on behalf of a major oil company and receive reimbursement for operating and maintenance costs. We lease land under operating leases as the lessor or sublessor with third parties and affiliates. We also managed and operated for an affiliate of PEMEX, Mexico’s state-owned petroleum company, a products pipeline connected to our Brownsville terminal facility and received a management fee through August 23, 2018. Management fee revenue is recognized at individual points in time as the services are performed or as the costs are incurred and is primarily accounted for in accordance with ASC 606. Management fees related to lease revenue are accounted for in accordance with ASC 842.
(d) Cash and cash equivalents
We consider all short‑term investments with a remaining maturity of three months or less at the date of purchase to be cash equivalents.
(e) Property, plant and equipment
Depreciation is computed using the straight‑line method. Estimated useful lives are 15 to 25 years for terminals and pipelines and 3 to 25 years for furniture, fixtures and equipment. All items of property, plant and equipment are carried at cost. Expenditures that increase capacity or extend useful lives are capitalized. Repairs and maintenance are expensed as incurred.
We evaluate long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable based on expected undiscounted future cash flows attributable to that asset group. If an asset group is impaired, the impairment loss to be recognized is the excess of the carrying amount of the asset group over its estimated fair value.
(f) Investments in unconsolidated affiliates
We account for our investments in unconsolidated affiliates, which we do not control but do have the ability to exercise significant influence over, using the equity method of accounting. Under this method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions received and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the book value of the net assets of the investment entity. We evaluate our investments in unconsolidated affiliates for impairment whenever events or circumstances indicate there is a loss in value of the investment that is other than temporary. In the event of impairment, we would record a charge to earnings to adjust the carrying amount to estimated fair value.
(g) Environmental obligations
We accrue for environmental costs that relate to existing conditions caused by past operations when probable and reasonably estimable (see Note 10 of Notes to consolidated financial statements). Environmental costs include initial site surveys and environmental studies of potentially contaminated sites, costs for remediation and restoration of sites determined to be contaminated and ongoing monitoring costs, as well as fines, damages and other costs, including direct legal costs. Liabilities for environmental costs at a specific site are initially recorded, on an undiscounted basis, when it is probable that we will be liable for such costs, and a reasonable estimate of the associated costs can be made based on available information. Such an estimate includes our share of the liability for each specific site and the sharing of the amounts related to each site that will not be paid by other potentially responsible parties, based on enacted laws and adopted regulations and policies. Adjustments to initial estimates are recorded, from time to time, to reflect changing circumstances and estimates based upon additional information developed in subsequent periods. Estimates of our ultimate liabilities associated with environmental costs are difficult to make with certainty due to the number of variables involved, including the early stage of investigation at certain sites, the lengthy time frames required to complete remediation, technology changes, alternatives available and the evolving nature of environmental laws and regulations. We periodically file claims for insurance recoveries of certain environmental remediation costs with our insurance carriers under our comprehensive liability policies (see Note 5 of Notes to consolidated financial statements).
In connection with our acquisition of the Florida (other than Pensacola), Midwest, Brownsville, Texas, River, Southeast, and Pensacola, Florida terminal and facilities, a third party agreed to indemnify us against certain potential environmental claims, losses and expenses. Based on our current knowledge, we expect that the active remediation projects subject to the benefit of this indemnification obligation are winding down and will not involve material additional claims, losses, and expenses. Nonetheless, the forgoing environmental indemnification obligations of a third party to us remain in place and were not affected by the Take-Private Transaction.
(h) Asset retirement obligations
Asset retirement obligations are legal obligations associated with the retirement of long‑lived assets that result from the acquisition, construction, development or normal use of the asset. GAAP requires that the fair value of a liability related to the retirement of long‑lived assets be recorded at the time a legal obligation is incurred. Once an asset retirement obligation is identified and a liability is recorded, a corresponding asset is recorded, which is depreciated over the remaining useful life of the asset. After the initial measurement, the liability is adjusted to reflect changes in the asset retirement obligation. If and when it is determined that a legal obligation has been incurred, the fair value of any liability is determined based on estimates and assumptions related to retirement costs, future inflation rates and interest rates. Our long‑lived assets consist of above‑ground storage facilities and underground pipelines. We are unable to predict if and when these long‑lived assets will become completely obsolete and require dismantlement. We have not recorded an asset retirement obligation, or corresponding asset, because the future dismantlement and removal dates of our long‑lived assets is indeterminable and the amount of any associated costs are believed to be insignificant. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events.
(i) Deferred compensation expense
We have a savings and retention program to compensate certain employees who provide services to the Company. Prior to the Take-Private Transaction, we had the ability to settle the awards in our common units, and accordingly, we accounted for the awards as an equity award. Following the Take-Private Transaction, we index the awards to other forms of investments, and have the intent and ability to settle the awards in cash, and accordingly, we account for the awards as liability awards (see Note 13 of Notes to consolidated financial statements).
(j) Accounting for derivative instruments
Generally accepted accounting principles require us to recognize all derivative instruments at fair value in the consolidated balance sheets as assets or liabilities. Changes in the fair value of our derivative instruments are recognized in earnings.
At December 31, 2019 our derivative instruments were limited to interest rate swap agreements with an aggregate notional amount of $300 million with the agreements expiring in June 2020. The derivative instrument outstanding at December 31, 2018 and 2017 expired on March 11, 2019. Pursuant to the terms of the current outstanding interest rate swap agreements, we pay a blended fixed rate of approximately 2.04% and receive interest payments based on the one-month LIBOR. The net difference to be paid or received under the interest rate swap agreements is settled monthly and is recognized as an adjustment to interest expense. The fair value of our interest rate swap agreements were determined using a pricing model based on the LIBOR swap rate and other observable market data.
(k) Income taxes
No provision for U.S. federal income taxes has been reflected in the accompanying consolidated financial statements because we are treated as a partnership for federal income tax purposes. As a partnership, all income, gains, losses, expenses, deductions and tax credits generated by us flow up to our owners.
(l) Comprehensive income
Entities that report items of other comprehensive income have the option to present the components of net earnings and comprehensive income in either one continuous financial statement, or two consecutive financial statements. As the Partnership has no components of comprehensive income other than net earnings, no statement of comprehensive income has been presented.
(m) Recent accounting pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment, to simplify the accounting for goodwill impairment by eliminating step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. We do not expect the adoption to have an impact on our financial position, results of operations and cash flows.
In May 2019, the FASB issued ASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief, which provides transition relief and allows entities to elect the fair value option on certain financial instruments. ASU 2019-05 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. We do not expect the adoption to have an impact on our financial position, results of operations and cash flows.
(2) TRANSACTIONS WITH AFFILIATES
Operations and reimbursement agreement—Frontera. We have a 50% ownership interest in the Frontera Brownsville LLC joint venture (Frontera). We operate Frontera, in accordance with an operations and reimbursement agreement executed between us and Frontera, for a management fee that is based on our costs incurred. Our agreement with Frontera stipulates that we may resign as the operator at any time with the prior written consent of Frontera, or that we may be removed as the operator for good cause, which includes material noncompliance with laws and material failure to adhere to good industry practice regarding health, safety or environmental matters. For the years ended December 31, 2019, 2018 and 2017 we recognized approximately $5.8 million, $5.8 million and $5.3 million, respectively, of revenue related to this operations and reimbursement agreement.
Terminaling services agreements—Brownsville terminals. We have two terminaling services agreements with Frontera relating to our Brownsville, Texas facility that will expire in June 2020, subject to automatic renewals unless terminated by either party upon 90 days’ and 180 days’ prior notice, respectively. In exchange for its minimum throughput commitments, we have agreed to provide Frontera with approximately 301,000 barrels of storage capacity. For the years ended December 31, 2019, 2018 and 2017 we recognized revenue related to this agreement of approximately $2.6 million, $2.5 million and $1.9 million, respectively.
Terminaling services agreement—Gulf Coast terminals. Associated Asphalt Marketing, LLC is a wholly-owned indirect subsidiary of ArcLight. Effective January 1, 2018, a third party customer assigned their terminaling services agreement relating to our Gulf Coast terminals to Associated Asphalt Marketing, LLC. The agreement will expire in April 2021, subject to two, two-year automatic renewals unless terminated by either party upon 180 days’ prior notice. In exchange for its minimum throughput commitment, we have agreed to provide Associated Asphalt Marketing, LLC with approximately 750,000 barrels of storage capacity. For the years ended December 31, 2019, 2018 and 2017 we recognized revenue related to this agreement with Associated Asphalt Marketing, LLC of approximately $8.5 million, $8.5 million and $nil, respectively.
Operating and administrative agreement—SeaPort Midstream Partners, LLC (“SMP”)—Central services. We operate two refined products terminals in Seattle, Washington and Portland, Oregon, on behalf of SMP, in accordance with an operating and administrative agreement executed between us and SMP, for a management fee that is based on our costs incurred plus an annual fee. SMP is a joint venture between SeaPort Midstream Holdings LLC, an ArcLight subsidiary, and BP West Coast Products LLC. SeaPort Midstream Holdings LLC owns 51% of SMP. The operating and administrative agreement will expire in November 2020, subject to one-year automatic renewals unless terminated by either party upon 180 days’ prior notice. Our agreement with SMP stipulates that we may resign as the operator at any time with the prior written consent of SMP, or that we may be removed as the operator for good cause, which includes material noncompliance with laws and material failure to adhere to good industry practice regarding health, safety or environmental matters. For the years ended December 31, 2019, 2018 and 2017 we recognized revenue related to this operations and administrative agreement of approximately $3.4 million, $3.4 million and $1.2 million, respectively.
Operations and reimbursement agreement—SeaPort Sound Terminal, LLC (“SeaPort Sound”)—Central services. Our subsidiary, TMS, operates a refined products terminal in Tacoma, Washington on behalf of SeaPort Midstream Holdings LLC, an ArcLight subsidiary. We receive a management fee based on our costs incurred plus an annual fee. For the years ended December 31, 2019, 2018 and 2017 we recognized revenue related to this operations and reimbursement agreement of approximately $7.2 million, $0.7 million and $nil, respectively.
Other affiliates—Central services. We manage additional terminal facilities that are owned by affiliates of ArcLight, including LHT, and, prior to July 1, 2019, the Baltimore Terminal. For the years ended December 31, 2019, 2018 and 2017 we recognized revenue related to reimbursements from these affiliates of approximately $1.2 million, $0.1 million and $nil, respectively. Our management of the Baltimore Terminal terminated on July 1, 2019.
Services Agreement – TMC. Following the TMS Contribution, our executive officers who provide services to the Company are employed by TMC, a wholly owned subsidiary of ArcLight, which also provides services to certain other ArcLight affiliates. Pursuant to a services agreement, dated August 18, 2019, between TMS and TMC, TMS
continues to provide certain payroll functions and maintains all employee benefits programs on behalf of TMC. TMC is reimbursed for the payroll and benefits expenses related to the executive officers, plus a 1% administration fee. Aggregate fees paid by us to TMC with respect to the services agreement were approximately $0.8 million for the year ended December 31, 2019. TMC officer awards vested in 2019 were insignificant and accounted for as a Contribution from TLP Holdings.
See also Note 1(a) of Notes to consolidated financial statements, Nature of business, for information regarding the TMS Contribution.
(3) BUSINESS COMBINATION AND TERMINAL ACQUISITION
On December 15, 2017, we acquired the West Coast terminals from a third party for a total purchase price of $276.8 million. The West Coast terminals represent two waterborne refined product and crude oil terminals located in the San Francisco Bay Area refining complex with a total of 64 storage tanks with approximately 5.4 million barrels of active storage capacity. The West Coast terminals have access to domestic and international crude oil and refined products markets through marine, pipeline, truck and rail logistics capabilities. The accompanying consolidated financial statements include the assets, liabilities and results of operations of the West Coast terminals from December 15, 2017.
The purchase price and estimated assessment of the fair value of the assets acquired and liabilities assumed in the business combination were as follows (in thousands):
|
|
|
|
Other current assets
|
|
$
|
1,037
|
Property, plant and equipment
|
|
|
228,000
|
Goodwill
|
|
|
943
|
Customer relationships
|
|
|
47,000
|
Total assets acquired
|
|
|
276,980
|
Environmental obligation
|
|
|
220
|
Total liabilities assumed
|
|
|
220
|
Allocated purchase price
|
|
$
|
276,760
|
Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents the premium we paid to acquire the skilled workforce.
These unaudited pro forma results for the Company as a whole are for comparative purposes only and may not be indicative of the results that would have occurred had this acquisition been completed on January 1, 2016 or the results that will be attained in the future (in thousands):
|
|
|
|
|
|
|
|
|
Pro Forma year ended December 31,
|
|
|
|
2017
|
|
|
2016
|
Revenue
|
|
$
|
226,653
|
|
$
|
205,605
|
Net earnings
|
|
$
|
38,920
|
|
$
|
26,958
|
Significant pro forma adjustments include depreciation expense and interest expense on the incremental borrowings necessary to finance this acquisition as well as adjustments to remove the related party transactions included in the historical financial statements of the West Coast terminals.
(4) CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE
Our primary market areas are located in the United States along the Gulf Coast, in the Southeast, in Brownsville, Texas, along the Mississippi and Ohio Rivers, in the Midwest and along the West Coast. We have a concentration of trade receivable balances due from companies engaged in the trading, distribution and marketing of refined products and crude oil. These concentrations of customers may affect our overall credit risk in that the customers may be similarly affected by changes in economic, regulatory or other factors. Our customers’ historical financial and
operating information is analyzed prior to extending credit. We manage our exposure to credit risk through credit analysis, credit approvals, credit limits and monitoring procedures, and for certain transactions we may request letters of credit, prepayments or guarantees. Amounts included in trade accounts receivable that are accounted for as ASC 606 revenue in accordance with ASC 606 approximate $4.7 million at December 31, 2019. We maintain allowances for potentially uncollectible accounts receivable.
Trade accounts receivable, net consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Trade accounts receivable
|
|
$
|
16,627
|
|
$
|
14,158
|
Less allowance for doubtful accounts
|
|
|
(127)
|
|
|
(109)
|
|
|
$
|
16,500
|
|
$
|
14,049
|
The following table presents a roll forward of our allowance for doubtful accounts (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
Balance at
|
|
|
beginning
|
|
Charged to
|
|
|
|
|
end of
|
|
|
of period
|
|
expenses
|
|
Deductions
|
|
period
|
2019
|
|
$
|
109
|
|
$
|
18
|
|
$
|
—
|
|
$
|
127
|
2018
|
|
$
|
111
|
|
$
|
—
|
|
$
|
(2)
|
|
$
|
109
|
2017
|
|
$
|
119
|
|
$
|
—
|
|
$
|
(8)
|
|
$
|
111
|
The following customers accounted for at least 10% of our consolidated revenue in at least one of the periods presented in the accompanying consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
NGL Energy Partners LP
|
|
16
|
%
|
22
|
%
|
26
|
%
|
RaceTrac Petroleum Inc.
|
|
10
|
%
|
11
|
%
|
13
|
%
|
Castleton Commodities International LLC
|
|
9
|
%
|
10
|
%
|
13
|
%
|
|
|
|
|
|
|
|
|
(5) OTHER CURRENT ASSETS
Other current assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
Amounts due from insurance companies
|
|
$
|
1,147
|
|
$
|
2,861
|
|
Prepaid insurance
|
|
|
2,595
|
|
|
1,371
|
|
Additive detergent
|
|
|
1,342
|
|
|
1,218
|
|
Unrealized gain on derivative instrument
|
|
|
—
|
|
|
143
|
|
Deposits and other assets
|
|
|
1,262
|
|
|
2,504
|
|
|
|
$
|
6,346
|
|
$
|
8,097
|
|
Amounts due from insurance companies. We periodically file claims for recovery of environmental remediation costs with our insurance carriers under our comprehensive liability policies. We recognize our insurance recoveries in the period that we assess the likelihood of recovery as being probable (i.e., likely to occur). At December 31, 2019 and 2018, we have recognized amounts due from insurance companies of approximately $1.1 million and $2.9 million, respectively, representing our best estimate of our probable insurance recoveries. During the year ended December 31, 2019, we received reimbursements from insurance companies of approximately $2.4 million. During the year ended December 31, 2019, we increased our estimate of probable future insurance recoveries by approximately $0.7 million.
(6) PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net is as follows (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Land
|
|
$
|
83,451
|
|
$
|
83,451
|
Terminals, pipelines and equipment
|
|
|
995,666
|
|
|
918,537
|
Furniture, fixtures and equipment
|
|
|
9,788
|
|
|
7,289
|
Construction in progress
|
|
|
73,302
|
|
|
64,763
|
|
|
|
1,162,207
|
|
|
1,074,040
|
Less accumulated depreciation
|
|
|
(434,987)
|
|
|
(384,870)
|
|
|
$
|
727,220
|
|
$
|
689,170
|
At December 31, 2019, Property, plant and equipment, net utilized by our customers in operating lease arrangements consisted of $523.9 million of terminals, pipelines and equipment. The terminals, pipelines and equipment primarily relates to our storage tanks and associated internal piping.
(7) GOODWILL
Goodwill is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
Brownsville terminals
|
|
$
|
8,485
|
|
$
|
8,485
|
|
West Coast terminals
|
|
|
943
|
|
|
943
|
|
|
|
$
|
9,428
|
|
$
|
9,428
|
|
Goodwill is required to be tested for impairment annually unless events or changes in circumstances indicate it is more likely than not that an impairment loss has been incurred at an interim date. Our annual test for the impairment of goodwill is performed as of December 31. The impairment test is performed at the reporting unit level. Our reporting units are our operating segments (see Note 17 of Notes to consolidated financial statements). The fair value of each reporting unit is determined on a stand‑alone basis from the perspective of a market participant and represents an estimate of the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired.
At December 31, 2019 and 2018 our Brownsville and West Coast terminals contained goodwill. Our estimate of the fair value of our Brownsville and West Coast terminals at December 31, 2019 and 2018 substantially exceeded the carrying amount. Accordingly, we did not recognize any goodwill impairment charges during the years ended December 31, 2019, 2018 and 2017, respectively. However, an increase in the assumed market participants’ weighted average cost of capital, the loss of a significant customer, the disposition of significant assets, or an unforeseen increase in the costs to operate and maintain the Brownsville and West Coast terminals, could result in the recognition of an impairment charge in the future.
(8) INVESTMENTS IN UNCONSOLIDATED AFFILIATES
At December 31, 2019 and 2018, our investments in unconsolidated affiliates include a 42.5% Class A ownership interest in Battleground Oil Specialty Terminal Company LLC (“BOSTCO”) and a 50% ownership interest in Frontera Brownsville LLC (“Frontera”). BOSTCO is a terminal facility located on the Houston Ship Channel that encompasses approximately 7.1 million barrels of distillate, residual and other black oil product storage. Class A and Class B ownership interests share in cash distributions on a 96.5% and 3.5% basis, respectively. Class B ownership interests do not have voting rights and are not required to make capital investments. Frontera is a terminal facility located in Brownsville, Texas that encompasses approximately 1.7 million barrels of light petroleum product storage, as well as related ancillary facilities.
The following table summarizes our investments in unconsolidated affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
Carrying value
|
|
|
ownership
|
|
(in thousands)
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
BOSTCO
|
|
42.5
|
%
|
42.5
|
%
|
$
|
201,743
|
|
$
|
203,005
|
Frontera
|
|
50
|
%
|
50
|
%
|
|
23,682
|
|
|
24,026
|
Total investments in unconsolidated affiliates
|
|
|
|
|
|
$
|
225,425
|
|
$
|
227,031
|
At December 31, 2019 and 2018, our investment in BOSTCO includes approximately $6.6 million and $6.8 million, respectively, of excess investment related to a one time buy-in fee to acquire our 42.5% interest and capitalization of interest on our investment during the construction of BOSTCO amortized over the useful life of the assets. Excess investment is the amount by which our investment exceeds our proportionate share of the book value of the net assets of the BOSTCO entity.
Earnings from investments in unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
BOSTCO
|
|
$
|
2,356
|
|
$
|
5,767
|
|
$
|
3,543
|
Frontera
|
|
|
2,538
|
|
|
3,085
|
|
|
3,528
|
Total earnings from investments in unconsolidated affiliates
|
|
$
|
4,894
|
|
$
|
8,852
|
|
$
|
7,071
|
Additional capital investments in unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
BOSTCO
|
|
$
|
4,707
|
|
$
|
—
|
|
$
|
145
|
Frontera
|
|
|
225
|
|
|
1,413
|
|
|
2,000
|
Additional capital investments in unconsolidated affiliates
|
|
$
|
4,932
|
|
$
|
1,413
|
|
$
|
2,145
|
Cash distributions received from unconsolidated affiliates were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
BOSTCO
|
|
$
|
8,325
|
|
$
|
12,135
|
|
$
|
12,256
|
Frontera
|
|
|
3,107
|
|
|
4,280
|
|
|
4,872
|
Cash distributions received from unconsolidated affiliates
|
|
$
|
11,432
|
|
$
|
16,415
|
|
$
|
17,128
|
The summarized financial information of our unconsolidated affiliates was as follows (in thousands):
Balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOSTCO
|
|
Frontera
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Current assets
|
|
$
|
12,478
|
|
$
|
19,299
|
|
$
|
4,870
|
|
$
|
5,866
|
Long-term assets
|
|
|
464,085
|
|
|
455,984
|
|
|
44,344
|
|
|
45,115
|
Current liabilities
|
|
|
(13,607)
|
|
|
(12,471)
|
|
|
(1,850)
|
|
|
(2,845)
|
Long-term liabilities
|
|
|
(6,036)
|
|
|
(1,259)
|
|
|
—
|
|
|
(84)
|
Net assets
|
|
$
|
456,920
|
|
$
|
461,553
|
|
$
|
47,364
|
|
$
|
48,052
|
Statements of income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOSTCO
|
|
Frontera
|
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
Revenue
|
|
$
|
60,751
|
|
$
|
66,288
|
|
$
|
66,235
|
|
$
|
20,076
|
|
$
|
24,017
|
|
$
|
22,193
|
Expenses
|
|
|
(54,033)
|
|
|
(51,993)
|
|
|
(55,687)
|
|
|
(15,000)
|
|
|
(17,847)
|
|
|
(15,137)
|
Net income
|
|
$
|
6,718
|
|
$
|
14,295
|
|
$
|
10,548
|
|
$
|
5,076
|
|
$
|
6,170
|
|
$
|
7,056
|
(9) OTHER ASSETS, NET
Other assets, net are as follows (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Customer relationships, net of accumulated amortization of $7,237 and $4,887, respectively
|
|
$
|
42,193
|
|
$
|
44,543
|
Revolving credit facility unamortized deferred debt issuance costs, net of accumulated amortization of $9,353 and $7,656, respectively
|
|
|
3,818
|
|
|
5,515
|
Amounts due under long-term terminaling services agreements
|
|
|
215
|
|
|
422
|
Deposits and other assets
|
|
|
1,171
|
|
|
774
|
|
|
$
|
47,397
|
|
$
|
51,254
|
Customer relationships. Other assets, net include certain customer relationships at our West Coast terminals. These customer relationships are being amortized on a straight‑line basis over approximately twenty years. Expected future amortization expense for the customer relationships as of December 31, 2019 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ending December 31,
|
|
|
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Amortization expense
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
2,350
|
|
$
|
30,443
|
|
Deferred debt issuance costs. Deferred debt issuance costs are amortized using the effective interest method over the term of the related credit facility.
Amounts due under long‑term terminaling services agreements. We have long‑term terminaling services agreements with certain of our customers that provide for minimum payments that increase at stated amounts over the terms of the respective agreements. We recognize as revenue the minimum payments under the long‑term terminaling services agreements on a straight‑line basis over the terms of the respective agreements. At December 31, 2019, included in amounts due under long-term terminaling services agreements is approximately $0.2 million related to terminaling services agreements accounted for as operating leases under ASC 842. At December 31, 2019 and 2018, we have
recognized revenue in excess of the minimum payments that are due through those respective dates under the long‑term terminaling services agreements resulting in an asset of approximately $0.2 million and $0.4 million, respectively.
(10) ACCRUED LIABILITIES
Accrued liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
Accrued compensation expense
|
|
$
|
13,272
|
|
$
|
5,860
|
|
Customer advances and deposits
|
|
|
7,850
|
|
|
11,927
|
|
Accrued property taxes
|
|
|
3,149
|
|
|
3,003
|
|
Accrued environmental obligations
|
|
|
1,531
|
|
|
1,556
|
|
Interest payable
|
|
|
7,763
|
|
|
7,814
|
|
Accrued expenses and other
|
|
|
2,993
|
|
|
1,786
|
|
|
|
$
|
36,558
|
|
$
|
31,946
|
|
Accrued compensation expense. Accrued compensation expense includes our bonus, payroll, and savings and retention program awards accruals. The increase at December 31, 2019 is primarily a result of accounting for the savings and retention program awards as accrued liabilities following the Take-Private Transaction as we have the intent and ability to settle the awards in cash. Prior to the Take-Private Transaction, we had the ability to settle the savings and retention program awards in our common units, and accordingly, we accounted for the awards as an equity award.
Customer advances and deposits. We bill certain of our customers one month in advance for terminaling services to be provided in the following month. At December 31, 2019, approximately $7.0 million of the customer advances and deposits balance is related to terminaling services agreements accounted for as operating leases under ASC 842. At December 31, 2019, approximately $0.9 million of the customer advances and deposits balance is considered contract liabilities under ASC 606. Revenue recognized during the year ended December 31, 2019 from amounts included in contract liabilities at the beginning of the period was approximately $0.8 million. At December 31, 2019 and 2018, we have billed and collected from certain of our customers approximately $7.9 million and $11.9 million, respectively, in advance of the terminaling services being provided.
Accrued environmental obligations. At December 31, 2019 and 2018, we have accrued environmental obligations of approximately $1.5 million and $1.6 million, respectively, representing our best estimate of our remediation obligations. Changes in our estimates of our future environmental remediation obligations may occur as a result of the passage of time and the occurrence of future events.
The following table presents a roll forward of our accrued environmental obligations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
Balance at
|
|
|
|
beginning
|
|
|
|
|
Increase
|
|
end of
|
|
|
|
of period
|
|
Payments
|
|
in estimate
|
|
period
|
|
2019
|
|
$
|
1,556
|
|
$
|
(671)
|
|
$
|
646
|
|
$
|
1,531
|
|
2018
|
|
$
|
1,855
|
|
$
|
(457)
|
|
$
|
158
|
|
$
|
1,556
|
|
2017
|
|
$
|
2,107
|
|
$
|
(1,204)
|
|
$
|
952
|
|
$
|
1,855
|
|
(11) OTHER LIABILITIES
Other liabilities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
Advance payments received under long-term terminaling services agreements
|
|
$
|
3,782
|
|
$
|
2,721
|
|
Deferred revenue
|
|
|
1,208
|
|
|
1,922
|
|
|
|
$
|
4,990
|
|
$
|
4,643
|
|
Advance payments received under long‑term terminaling services agreements. We have long‑term terminaling services agreements with certain of our customers that provide for advance minimum payments. We recognize the advance minimum payments as revenue under ASC 842 on a straight‑line basis over the term of the respective agreements. At December 31, 2019 and 2018, we have received advance minimum payments in excess of revenue recognized under these long‑term terminaling services agreements resulting in a liability of approximately $3.8 million and $2.7 million, respectively. At December 31, 2019, approximately $3.8 million of advance payments received under long-term terminaling services agreements is related to terminaling services agreements accounted for as operating leases under ASC 842.
Deferred revenue. Pursuant to historical agreements with our customers, we agreed to undertake certain capital projects. Upon completion of the projects, our customers have paid us lump‑sum amounts that will be recognized as revenue on a straight‑line basis over the remaining term of the agreements. At December 31, 2019 and 2018, we have unamortized deferred revenue for completed projects of approximately $1.2 million and $1.9 million, respectively. During the years ended December 31, 2019, 2018 and 2017, we billed our customers approximately $0.1 million, $1.7 million and $0.5 million, respectively, for completed projects. During the years ended December 31, 2019, 2018 and 2017, we recognized revenue on a straight‑line basis of approximately $0.8 million, $1.8 million and $0.7 million, respectively, for completed projects. At December 31, 2019, approximately $nil of the deferred revenue balance is considered contract liabilities under ASC 606. At December 31, 2019, approximately $1.2 million of deferred revenue is related to terminaling services agreements accounted for as operating leases under ASC 842. Revenue recognized during the year ended December 31, 2019 from amounts included in contract liabilities under ASC 606 at the beginning of the period was approximately $0.2 million.
(12) LONG‑TERM DEBT
Long-term debt is as follows (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Revolving credit facility due in 2022
|
|
$
|
350,700
|
|
$
|
306,000
|
6.125% senior notes due in 2026
|
|
|
300,000
|
|
|
300,000
|
Senior notes unamortized deferred issuance costs, net of accumulated amortization of $1,544 and $704, respectively
|
|
|
(6,538)
|
|
|
(7,378)
|
|
|
$
|
644,162
|
|
$
|
598,622
|
On February 12, 2018, the Company and TLP Finance Corp., our wholly owned subsidiary, issued at par $300 million of 6.125% senior notes. Net proceeds, after $8.1 million of issuance costs, were used to repay indebtedness under our revolving credit facility. The senior notes are due in 2026 and are guaranteed on a senior unsecured basis by each of our 100% owned domestic subsidiaries that guarantee obligations under our revolving credit facility. These subsidiary guarantees are full and unconditional and joint and several, and the subsidiaries that did not guarantee our senior notes are minor. TransMontaigne Partners LLC has no independent assets or operations unrelated to its investments in its consolidated subsidiaries. TLP Finance Corp. has no assets or operations. Our operations are conducted by subsidiaries of TransMontaigne Partners LLC, including primarily through our 100% owned operating company subsidiary,
TransMontaigne Operating Company L.P. None of the assets of TransMontaigne Partners LLC or a guarantor represent restricted net assets pursuant to the guidelines established by the SEC.
Our revolving credit facility provides for a maximum borrowing line of credit equal to $850 million. The terms of our revolving credit facility include covenants that restrict our ability to make cash distributions, acquisitions and investments, including investments in joint ventures. We may make distributions of cash to the extent of our “available cash” as defined in our LLC agreement. We may make acquisitions and investments that meet the definition of “permitted acquisitions”; “other investments” which may not exceed 5% of “consolidated net tangible assets”; and additional future “permitted JV investments” up to $175 million, which may include additional investments in BOSTCO. The primary financial covenants contained in our revolving credit facility are (i) a total leverage ratio test (not to exceed 5.25 to 1.0), (ii) a senior secured leverage ratio test (not to exceed 3.75 to 1.0), and (iii) a minimum interest coverage ratio test (not less than 2.75 to 1.0). The principal balance of loans and any accrued and unpaid interest are due and payable in full on the maturity date, March 13, 2022. We were in compliance with all financial covenants as of and during the years ended December 31, 2019 and 2018.
We may elect to have loans under our revolving credit facility bear interest either (i) at a rate of LIBOR plus a margin ranging from 1.75% to 2.75% depending on the total leverage ratio then in effect, or (ii) at the base rate plus a margin ranging from 0.75% to 1.75% depending on the total leverage ratio then in effect. We also pay a commitment fee on the unused amount of commitments, ranging from 0.375% to 0.5% per annum, depending on the total leverage ratio then in effect. Our obligations under our revolving credit facility are secured by a first priority security interest in favor of the lenders in the majority of our assets, including our investments in unconsolidated affiliates. For the years ended December 31, 2019, 2018 and 2017, the weighted average interest rate on borrowings under our revolving credit facility was approximately 5.7%, 5.2% and 3.5%, respectively. At December 31, 2019 and 2018, our outstanding borrowings under our revolving credit facility were $350.7 million and $306 million, respectively. At December 31, 2019 and 2018 our outstanding letters of credit were $1.3 million and $0.4 million, respectively.
(13) DEFERRED COMPENSATION EXPENSE
We have a savings and retention program to compensate certain employees who provide services to the Company. Prior to the Take-Private Transaction, we also had a long‑term incentive plan to compensate the independent directors of our general partner. Awards under the long-term incentive plan were settled in our common units, and accordingly, we accounted for the awards as an equity award.
The purpose of the savings and retention program is to provide for the reward and retention of participants by providing them with awards that vest over future service periods. Awards under the program with respect to individuals providing services to the Company generally become vested as to 50% of a participant’s annual award as of the first day of the month that falls closest to the second anniversary of the grant date, and the remaining 50% as of the first day of the month that falls closest to the third anniversary of the grant date, subject to earlier vesting upon a participant’s attainment of the age and length of service thresholds, retirement, death or disability, involuntary termination without cause, or termination of a participant’s employment following a change in control of the Company as specified in the program. The awards are increased for the value of any accrued growth based on underlying investments deemed made with respect to the awards. The awards (including any accrued growth relating thereto) are subject to forfeiture until the vesting date. The Take-Private Transaction did not accelerate the vesting of any of the awards.
A person will satisfy the age and length of service thresholds of the program upon the attainment of the earliest of (a) age sixty, (b) age fifty-five and ten years of service as an officer of the Company or any of its affiliates or predecessors, or (c) age fifty and twenty years of service as an employee of the Company or any of its affiliates or predecessors.
Prior to the Take-Private Transaction, we had the ability to settle the savings and retention program awards in our common units, and accordingly, we accounted for the awards as an equity award. Following the Take-Private Transaction, we index the awards to other forms of investments, and have the intent and ability to settle the awards in cash, and accordingly, we account for the awards as accrued liabilities.
(14) COMMITMENTS AND CONTINGENCIES
Effective January 1, 2019, we adopted Accounting Standards Codification (“ASC”) Topic 842, Leases and the series of related Accounting Standards Updates that followed (collectively referred to as “ASC 842”), using the modified retrospective transition method applied at the effective date of the standard. By electing this optional transition method, information prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for that period (ASC 840).
The Company elected the following practical expedients permitted under the transition guidance within the new standard; 1) the option to carry forward the historical lease classifications and assessment of initial direct costs, 2) the option to not include leases with an initial term of less than twelve months in the lease assets and liabilities and 3) the option to account for lease and non-lease components as a single lease component.
We lease property including corporate offices, vehicles and land. We determine if an arrangement is a lease at inception and evaluate identified leases for operating or finance lease treatment at lease commencement. Operating or finance lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our leases have remaining lease terms of less than one year to 42 years, some of which have options to extend or terminate the lease. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
The impact of ASC 842 on our consolidated balance sheet beginning January 1, 2019 was the recognition of right-of-use assets and lease liabilities for operating leases. Unamortized lease incentives were reclassified into right-of-use assets on January 1, 2019. Amounts recognized at January 1, 2019 and December 31, 2019 for operating leases was as follows (in thousands):
|
|
|
|
Right-of-use assets, operating leases - January 1, 2019
|
|
$
|
37,881
|
Additions
|
|
|
119
|
Right-of-use assets reduction
|
|
|
(2,235)
|
Right-of-use assets, operating leases - December 31, 2019
|
|
$
|
35,765
|
|
|
|
|
Operating lease liabilities - January 1, 2019
|
|
$
|
39,545
|
Additions
|
|
|
119
|
Liability reduction
|
|
|
(2,058)
|
Operating lease liabilities - December 31, 2019
|
|
$
|
37,606
|
Current portion of operating lease liabilities
|
|
$
|
3,001
|
Long-term operating lease liabilities
|
|
$
|
34,605
|
No impact was recorded to the statement of operations or beginning equity for ASC 842.
The $37.9 million right-of-use asset and the $39.5 million operating liability at January 1, 2019 represents the right-of-use assets and lease labilities at the time of ASC 842 adoption. Additions to right-of-use assets and liabilities represent the present value of future lease payments at the inception of the new leases. Both the January 1, 2019 right-of-use assets and liabilities and additions are non-cash transactions that do not impact the Statement of Cash Flows.
Beginning January 1, 2019, operating right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. The Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. We determined our incremental borrowing rate using the borrowing rate of our revolving credit facility. The terms of our vehicle, office and land leases are in line with our revolving credit facility, our primary finance mechanism. We have certain land and vehicle lease agreements with lease and non-lease components. We have elected the practical expedient to account for our lease components and non-lease components as a single lease
component. Non-lease components (primarily variable lease costs) include payments for taxes and other operating and maintenance expenses incurred by the lessor but payable by us in connection with the leasing arrangement. As of December 31, 2019, the Company was party to certain subleasing arrangements whereby the Company, as the primary obligor on the lease, has recognized sublease income for lease payments made by affiliates to the lessor.
Following are components of our lease costs (in thousands):
|
|
|
|
|
|
Year ended
|
|
|
December 31,
|
|
|
2019
|
Operating leases
|
|
$
|
4,548
|
Variable lease costs (including insignificant short-term leases)
|
|
|
892
|
Sublease income as primary obligor
|
|
|
(992)
|
Total lease costs
|
|
$
|
4,448
|
Other information related to our operating leases was as follows (in thousands, except lease term and discount rate):
|
|
|
|
|
|
Year ended
|
|
|
December 31,
|
|
|
2019
|
Cash outflows for operating leases
|
|
$
|
4,371
|
Weighted average remaining lease term (years)
|
|
|
18.79
|
Weighted average discount rate
|
|
|
5.2%
|
Undiscounted cash flows owed by the Company to lessors pursuant to contractual agreements in effect as of December 31, 2019 and related imputed interest was as follows (in thousands):
|
|
|
|
2020
|
|
$
|
4,583
|
2021
|
|
|
4,469
|
2022
|
|
|
4,459
|
2023
|
|
|
3,920
|
2024
|
|
|
3,660
|
Thereafter
|
|
|
39,831
|
Total lease payments
|
|
|
60,922
|
Less imputed interest
|
|
|
(23,316)
|
Present value of operating lease liabilities
|
|
$
|
37,606
|
At December 31, 2018, future minimum lease payments under operating leases accounted for under ASC 840 was as follows (in thousands):
|
|
|
|
Years ending December 31:
|
|
|
|
2019
|
|
$
|
4,050
|
2020
|
|
|
4,308
|
2021
|
|
|
3,973
|
2022
|
|
|
3,050
|
2023
|
|
|
2,508
|
Thereafter
|
|
|
6,287
|
|
|
$
|
24,176
|
Contract commitments. At December 31, 2019, we have contractual commitments of approximately $21.0 million for the supply of services, labor and materials related to capital projects that currently are under development. We expect that these contractual commitments will primarily be paid within a year.
Legal proceedings. We are party to various legal, regulatory and other matters arising from the day-to-day operations of our business that may result in claims against us. While the ultimate impact of any proceedings cannot be predicted with certainty, our management believes that the resolution of any of our pending legal proceedings will not have a material adverse effect on our business, financial position, results of operations or cash flows.
(15) DISCLOSURES ABOUT FAIR VALUE
GAAP defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. GAAP also establishes a fair value hierarchy that prioritizes the use of higher‑level inputs for valuation techniques used to measure fair value. The three levels of the fair value hierarchy are: (1) Level 1 inputs, which are quoted prices (unadjusted) in active markets for identical assets or liabilities; (2) Level 2 inputs, which are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and (3) Level 3 inputs, which are unobservable inputs for the asset or liability.
The fair values of the following financial instruments represent our best estimate of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Our fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects our judgments about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. The following methods and assumptions were used to estimate the fair value of financial instruments at December 31, 2019 and 2018.
Cash equivalents. The carrying amount approximates fair value because of the short‑term maturity of these instruments. The fair value is categorized in Level 1 of the fair value hierarchy.
Derivative instruments. The carrying amount of our interest rate swaps was determined using a pricing model based on the LIBOR swap rate and other observable market data. The fair value is categorized in Level 2 of the fair value hierarchy.
Debt. The carrying amount of our revolving credit facility debt approximates fair value since borrowings under the facility bear interest at current market interest rates. The estimated fair value of our $300 million publicly traded senior notes at December 31, 2019 was approximately $289.7 million based on observable market trades. The fair value of our debt is categorized in Level 2 of the fair value hierarchy.
(16) REVENUE FROM CONTRACTS WITH CUSTOMERS
The majority of our terminaling services agreements contain minimum payment arrangements, resulting in a fixed amount of revenue recognized, which we refer to as “firm commitments” and are accounted for in accordance with ASC 840, Leases (“ASC 840 revenue”). The remainder is recognized in accordance with ASC 606, Revenue From Contracts With Customers (“ASC 606 revenue”).
The following table provides details of our revenue disaggregated by category of revenue (in thousands):
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
2019
|
|
2018
|
Terminaling services fees:
|
|
|
|
|
|
|
Firm commitments (ASC 842/840 revenue)
|
|
$
|
178,214
|
|
$
|
158,055
|
Firm commitments (ASC 606 revenue)
|
|
|
14,226
|
|
|
13,719
|
Total firm commitments revenue
|
|
|
192,440
|
|
|
171,774
|
Ancillary revenue (ASC 606 revenue)
|
|
|
44,062
|
|
|
42,079
|
Ancillary revenue (ASC 842/840 revenue)
|
|
|
4,448
|
|
|
2,378
|
Total ancillary revenue
|
|
|
48,510
|
|
|
44,457
|
Total terminaling services fees
|
|
|
240,950
|
|
|
216,231
|
Pipeline transportation fees (ASC 842/840 revenue)
|
|
|
3,457
|
|
|
3,295
|
Management fees (ASC 606 revenue)
|
|
|
16,836
|
|
|
12,548
|
Management fees (ASC 842/840 revenue)
|
|
|
1,799
|
|
|
223
|
Total management fees
|
|
|
18,635
|
|
|
12,771
|
Total revenue
|
|
$
|
263,042
|
|
$
|
232,297
|
The following table includes our estimated future revenue associated with our firm commitments under terminaling services fees which is expected to be recognized as ASC 606 revenue in the specified period related to our future performance obligations as of the end of the reporting period (in thousands):
Estimated Future ASC 606 Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Midwest
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
Central
|
|
|
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Services
|
|
Total
|
2020
|
$
|
4,658
|
|
$
|
576
|
|
$
|
—
|
|
$
|
1,090
|
|
$
|
—
|
|
$
|
4,804
|
|
$
|
—
|
|
$
|
11,128
|
2021
|
|
1,513
|
|
|
47
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|
4,022
|
|
|
—
|
|
|
6,104
|
2022
|
|
964
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,258
|
|
|
—
|
|
|
2,222
|
2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Thereafter
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Total estimated future ASC 606 revenue
|
$
|
7,135
|
|
$
|
623
|
|
$
|
—
|
|
$
|
1,612
|
|
$
|
—
|
|
$
|
10,084
|
|
$
|
—
|
|
$
|
19,454
|
Our estimated future ASC 606 revenue, for purposes of the tabular presentation above, excludes estimates of future rate changes due to changes in indices or contractually negotiated rate escalations and is generally limited to contracts that have minimum payment arrangements. The balances disclosed include the full amount of our customer commitments accounted for as ASC 606 revenue as of December 31, 2019 through the expiration of the related contracts. The balances disclosed exclude all performance obligations for which the original expected term is one year or less, the term of the contract with the customer is open and cannot be estimated, the contract includes options for future purchases or the consideration is variable.
Estimated future ASC 606 revenue in the table above excludes revenue arrangements accounted for in accordance with ASC 842 in the amount of $158.7 million for 2020, $119.8 million for 2021, $86.3 million for 2022, $72.0 million for 2023, $47.0 million for 2024 and $489.8 million thereafter.
(17) BUSINESS SEGMENTS
We provide integrated terminaling, storage, transportation and related services to companies engaged in the trading, distribution and marketing of refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Our chief operating decision maker is our chief executive officer. Our chief executive officer reviews the financial performance of our business segments using disaggregated financial information about “net margins” for purposes of making operating decisions and assessing financial performance. “Net margins” is composed of revenue less operating costs and expenses. Accordingly, we present “net margins” for each of our business segments: (i) Gulf Coast
terminals, (ii) Midwest terminals, (iii) Brownsville terminals including management of Frontera, (iv) River terminals, (v) Southeast terminals, (vi) West Coast terminals and (vii) Central services. Our Central services segment primarily represents the costs of employees performing operating oversight functions, engineering, health, safety and environmental services to our terminals and terminals that we operate or manage, including for affiliate terminals owned by ArcLight. In addition, Central services represent the cost of employees at affiliate terminals owned by ArcLight that we operate. We receive a fee from these affiliates based on our costs incurred.
The financial performance of our business segments is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Gulf Coast Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
$
|
73,380
|
|
$
|
64,338
|
|
$
|
61,889
|
Management fees
|
|
|
36
|
|
|
284
|
|
|
1,052
|
Revenue
|
|
|
73,416
|
|
|
64,622
|
|
|
62,941
|
Operating costs and expenses
|
|
|
(22,196)
|
|
|
(22,817)
|
|
|
(22,829)
|
Net margins
|
|
|
51,220
|
|
|
41,805
|
|
|
40,112
|
Midwest Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
9,804
|
|
|
10,127
|
|
|
9,265
|
Pipeline transportation fees
|
|
|
1,851
|
|
|
1,772
|
|
|
1,732
|
Revenue
|
|
|
11,655
|
|
|
11,899
|
|
|
10,997
|
Operating costs and expenses
|
|
|
(3,443)
|
|
|
(3,053)
|
|
|
(2,859)
|
Net margins
|
|
|
8,212
|
|
|
8,846
|
|
|
8,138
|
Brownsville Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
11,560
|
|
|
8,339
|
|
|
9,186
|
Pipeline transportation fees
|
|
|
1,606
|
|
|
1,523
|
|
|
3,987
|
Management fees
|
|
|
5,787
|
|
|
7,384
|
|
|
7,472
|
Revenue
|
|
|
18,953
|
|
|
17,246
|
|
|
20,645
|
Operating costs and expenses
|
|
|
(9,053)
|
|
|
(7,812)
|
|
|
(10,447)
|
Net margins
|
|
|
9,900
|
|
|
9,434
|
|
|
10,198
|
River Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
10,233
|
|
|
10,654
|
|
|
10,883
|
Management fees
|
|
|
—
|
|
|
—
|
|
|
64
|
Revenue
|
|
|
10,233
|
|
|
10,654
|
|
|
10,947
|
Operating costs and expenses
|
|
|
(6,040)
|
|
|
(6,832)
|
|
|
(6,624)
|
Net margins
|
|
|
4,193
|
|
|
3,822
|
|
|
4,323
|
Southeast Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
87,813
|
|
|
82,821
|
|
|
75,122
|
Management fees
|
|
|
964
|
|
|
891
|
|
|
882
|
Revenue
|
|
|
88,777
|
|
|
83,712
|
|
|
76,004
|
Operating costs and expenses
|
|
|
(23,500)
|
|
|
(26,836)
|
|
|
(24,302)
|
Net margins
|
|
|
65,277
|
|
|
56,876
|
|
|
51,702
|
West Coast Terminals:
|
|
|
|
|
|
|
|
|
|
Terminaling services fees
|
|
|
48,160
|
|
|
39,952
|
|
|
1,738
|
Management fees
|
|
|
36
|
|
|
8
|
|
|
—
|
Revenue
|
|
|
48,196
|
|
|
39,960
|
|
|
1,738
|
Operating costs and expenses
|
|
|
(16,339)
|
|
|
(14,678)
|
|
|
(639)
|
Net margins
|
|
|
31,857
|
|
|
25,282
|
|
|
1,099
|
Central Services:
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
|
11,812
|
|
|
4,204
|
|
|
1,175
|
Revenue
|
|
|
11,812
|
|
|
4,204
|
|
|
1,175
|
Operating costs and expenses
|
|
|
(22,451)
|
|
|
(16,949)
|
|
|
(13,627)
|
Net margins
|
|
|
(10,639)
|
|
|
(12,745)
|
|
|
(12,452)
|
Total net margins
|
|
|
160,020
|
|
|
133,320
|
|
|
103,120
|
General and administrative expenses
|
|
|
(23,660)
|
|
|
(23,707)
|
|
|
(23,692)
|
Insurance expenses
|
|
|
(4,995)
|
|
|
(4,976)
|
|
|
(4,064)
|
Deferred compensation expense
|
|
|
(2,308)
|
|
|
(3,478)
|
|
|
(2,999)
|
Depreciation and amortization
|
|
|
(52,535)
|
|
|
(49,793)
|
|
|
(36,188)
|
Earnings from unconsolidated affiliates
|
|
|
4,894
|
|
|
8,852
|
|
|
7,071
|
Gain from insurance proceeds
|
|
|
3,351
|
|
|
—
|
|
|
—
|
Loss on disposition of assets
|
|
|
—
|
|
|
(901)
|
|
|
—
|
Operating income
|
|
|
84,767
|
|
|
59,317
|
|
|
43,248
|
Other expenses
|
|
|
(38,853)
|
|
|
(34,937)
|
|
|
(11,694)
|
Net earnings
|
|
$
|
45,914
|
|
$
|
24,380
|
|
$
|
31,554
|
Supplemental information about our business segments is summarized below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Midwest
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
Central
|
|
|
|
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Services
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
64,879
|
|
$
|
11,655
|
|
$
|
10,535
|
|
$
|
10,233
|
|
$
|
88,777
|
|
$
|
48,196
|
|
$
|
—
|
|
$
|
234,275
|
Affiliate customers
|
|
|
8,537
|
|
|
—
|
|
|
8,418
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,812
|
|
|
28,767
|
Revenue
|
|
$
|
73,416
|
|
$
|
11,655
|
|
$
|
18,953
|
|
$
|
10,233
|
|
$
|
88,777
|
|
$
|
48,196
|
|
$
|
11,812
|
|
$
|
263,042
|
Capital expenditures
|
|
$
|
7,697
|
|
$
|
722
|
|
$
|
27,068
|
|
$
|
2,978
|
|
$
|
39,947
|
|
$
|
10,458
|
|
$
|
2,153
|
|
$
|
91,023
|
Identifiable assets
|
|
$
|
125,062
|
|
$
|
19,595
|
|
$
|
93,903
|
|
$
|
45,263
|
|
$
|
262,462
|
|
$
|
278,610
|
|
$
|
13,329
|
|
$
|
838,224
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,090
|
Investments in unconsolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,425
|
Revolving credit facility unamortized deferred debt issuance costs, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,818
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,496
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,072,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Midwest
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
Central
|
|
|
|
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Services
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
56,144
|
|
$
|
11,899
|
|
$
|
8,934
|
|
$
|
10,654
|
|
$
|
83,712
|
|
$
|
39,960
|
|
$
|
—
|
|
$
|
211,303
|
Affiliate customers
|
|
|
8,478
|
|
|
—
|
|
|
8,312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,204
|
|
|
20,994
|
Revenue
|
|
$
|
64,622
|
|
$
|
11,899
|
|
$
|
17,246
|
|
$
|
10,654
|
|
$
|
83,712
|
|
$
|
39,960
|
|
$
|
4,204
|
|
$
|
232,297
|
Capital expenditures
|
|
$
|
5,357
|
|
$
|
568
|
|
$
|
15,673
|
|
$
|
1,596
|
|
$
|
35,070
|
|
$
|
7,858
|
|
$
|
209
|
|
$
|
66,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gulf Coast
|
|
Midwest
|
|
Brownsville
|
|
River
|
|
Southeast
|
|
West Coast
|
|
Central
|
|
|
|
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Terminals
|
|
Services
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External customers
|
|
$
|
62,941
|
|
$
|
10,997
|
|
$
|
13,452
|
|
$
|
10,947
|
|
$
|
76,004
|
|
$
|
1,738
|
|
$
|
—
|
|
$
|
176,079
|
Affiliate customers
|
|
|
—
|
|
|
—
|
|
|
7,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,175
|
|
|
8,368
|
Revenue
|
|
$
|
62,941
|
|
$
|
10,997
|
|
$
|
20,645
|
|
$
|
10,947
|
|
$
|
76,004
|
|
$
|
1,738
|
|
$
|
1,175
|
|
$
|
184,447
|
Capital expenditures
|
|
$
|
6,233
|
|
$
|
174
|
|
$
|
11,678
|
|
$
|
2,075
|
|
$
|
37,957
|
|
$
|
48
|
|
$
|
(115)
|
|
$
|
58,050
|
(18) FINANCIAL RESULTS BY QUARTER (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
|
|
(in thousands except per unit amounts)
|
|
Revenue
|
|
$
|
61,268
|
|
$
|
64,969
|
|
$
|
66,573
|
|
$
|
70,232
|
|
$
|
263,042
|
|
Direct operating costs and expenses
|
|
|
(25,325)
|
|
|
(26,464)
|
|
|
(24,395)
|
|
|
(26,838)
|
|
|
(103,022)
|
|
General and administrative expenses
|
|
|
(8,164)
|
|
|
(5,212)
|
|
|
(4,603)
|
|
|
(5,681)
|
|
|
(23,660)
|
|
Insurance expenses
|
|
|
(1,361)
|
|
|
(1,218)
|
|
|
(1,240)
|
|
|
(1,176)
|
|
|
(4,995)
|
|
Equity-based compensation expense
|
|
|
(799)
|
|
|
(294)
|
|
|
(376)
|
|
|
(839)
|
|
|
(2,308)
|
|
Depreciation and amortization
|
|
|
(12,652)
|
|
|
(13,107)
|
|
|
(13,362)
|
|
|
(13,414)
|
|
|
(52,535)
|
|
Earnings from unconsolidated affiliates
|
|
|
1,140
|
|
|
1,225
|
|
|
1,476
|
|
|
1,053
|
|
|
4,894
|
|
Gain from insurance proceeds
|
|
|
—
|
|
|
3,351
|
|
|
—
|
|
|
—
|
|
|
3,351
|
|
Operating income
|
|
|
14,107
|
|
|
23,250
|
|
|
24,073
|
|
|
23,337
|
|
|
84,767
|
|
Interest expense
|
|
|
(8,842)
|
|
|
(9,708)
|
|
|
(9,107)
|
|
|
(8,539)
|
|
|
(36,196)
|
|
Amortization of deferred issuance costs
|
|
|
(749)
|
|
|
(632)
|
|
|
(636)
|
|
|
(640)
|
|
|
(2,657)
|
|
Net earnings
|
|
$
|
4,516
|
|
$
|
12,910
|
|
$
|
14,330
|
|
$
|
14,158
|
|
$
|
45,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
2018
|
|
|
|
(in thousands except per unit amounts)
|
|
Revenue
|
|
$
|
57,405
|
|
$
|
56,148
|
|
$
|
57,752
|
|
$
|
60,992
|
|
$
|
232,297
|
|
Direct operating costs and expenses
|
|
|
(24,502)
|
|
|
(23,562)
|
|
|
(23,514)
|
|
|
(27,399)
|
|
|
(98,977)
|
|
General and administrative expenses
|
|
|
(6,179)
|
|
|
(5,320)
|
|
|
(4,823)
|
|
|
(7,385)
|
|
|
(23,707)
|
|
Insurance expenses
|
|
|
(1,246)
|
|
|
(1,271)
|
|
|
(1,227)
|
|
|
(1,232)
|
|
|
(4,976)
|
|
Equity-based compensation expense
|
|
|
(2,017)
|
|
|
(441)
|
|
|
(483)
|
|
|
(537)
|
|
|
(3,478)
|
|
Depreciation and amortization
|
|
|
(11,871)
|
|
|
(13,225)
|
|
|
(12,375)
|
|
|
(12,322)
|
|
|
(49,793)
|
|
Earnings from unconsolidated affiliates
|
|
|
2,889
|
|
|
2,444
|
|
|
1,862
|
|
|
1,657
|
|
|
8,852
|
|
Loss on disposition of assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(901)
|
|
|
(901)
|
|
Operating income
|
|
|
14,479
|
|
|
14,773
|
|
|
17,192
|
|
|
12,873
|
|
|
59,317
|
|
Interest expense
|
|
|
(6,461)
|
|
|
(8,273)
|
|
|
(8,608)
|
|
|
(8,558)
|
|
|
(31,900)
|
|
Amortization of deferred issuance costs
|
|
|
(501)
|
|
|
(1,289)
|
|
|
(622)
|
|
|
(625)
|
|
|
(3,037)
|
|
Net earnings
|
|
$
|
7,517
|
|
$
|
5,211
|
|
$
|
7,962
|
|
$
|
3,690
|
|
$
|
24,380
|
|
(19) SUBSEQUENT EVENTS
No subsequent transactions or events warranted recognition or disclosure in the accompanying financials or notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to our management, including our executive and principal financial officer (whom we refer to as the Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. The management of our sole equity-holder (TLP Finance Holdings, LLC) evaluated, with the participation of the Certifying Officers, the effectiveness of our disclosure controls and procedures as of December 31, 2019, pursuant to Rule 13a‑15(b) under the Exchange Act. Based upon that evaluation, the Certifying Officers concluded that, as of December 31, 2019, our disclosure controls and procedures were effective at the reasonable assurance level. In addition, our Certifying Officers concluded that there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
The management of our sole equity-holder is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
The management of our sole equity-holder has used the framework set forth in the report entitled “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate the effectiveness of our internal control over financial reporting. Based on that evaluation, the management of our sole equity-holder has concluded that our internal control over financial reporting was effective as of December 31, 2019.
March 13, 2020
ITEM 9B. OTHER INFORMATION
No information was required to be disclosed in a report on Form 8‑K, but not so reported, for the quarter ended December 31, 2019.
Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
TLP Finance Holdings, LLC (“TLP Finance”) is our sole equity-holder and manages our operations and activities. Further, our company’s executive officers are employees of an affiliate of ArcLight, TransMontaigne Management Company, LLC (“TMC”). As a result, our management activities are entirely conducted by affiliates of ArcLight. As we are managed by our sole equity- holder, TLP Finance, we do not have a board of directors and the decisions of TLP Finance are not governed by any specific policies. TLP Finance may adopt certain policies governing its decision-making processes with respect to our management in the future.
Corporate Governance Guidelines; Code of Business Conduct and Ethics
To address governance changes in connection with our being wholly owned by an indirect controlled subsidiary of ArcLight following the Take-Private Transaction, the Company adopted a Code of Ethics for Senior Financial Officers, which includes substantially similar terms to the policies in place for our general partner prior to the Take-Private Transaction. The Code of Ethics for Senior Financial Officers applies to the senior financial officers of the Company, including the chief executive officer, the chief financial officer, the chief accounting officer, the chief operating officer and the president or persons performing similar functions.
In addition, to address governance changes in connection with our being wholly owned by an indirect controlled subsidiary of ArcLight following the Take Private Transaction, the Company adopted a Code of Business Conduct and Ethics, which applies to all employees providing services to the Company and all officers of the Company.
Management of the Company and Officers
TLP Finance, our sole equity-holder, manages and oversees our operations. As part of its oversight function, TLP Finance monitors how management operates the Company. When granting authority to management, approving strategies and receiving management reports, TLP Finance considers, among other things, the risks and vulnerabilities we face.
As of the date of this report, the Company does not have its own board of directors. In connection with the Take-Private Transaction, on February 26, 2019, TransMontaigne GP L.L.C., the general partner of the Partnership prior to its conversion to a Delaware limited liability company, merged with and into the Company, with the Company surviving. In addition, as a result of the Take-Private Transaction, and the adoption of our limited liability company agreement on February 26, 2019, management of the Company was vested in TLP Finance, an indirect controlled subsidiary of ArcLight. Accordingly, the board of directors of TransMontaigne GP L.L.C. was dissolved, and each of our former independent directors, Jay A. Wiese, Steven A. Blank, and Barry E. Welch resigned from the board of directors of TransMontaigne GP L.L.C. Each of Messrs. Wiese, Blank and Welch resigned without any claims for compensation (or otherwise), or any disagreements with any matter relating to the operations, internal controls, policies, or practices of the Partnership, the general partner, or the board of directors of the general partner, and the resignation of each was solely as a result of the Take-Private Transaction. In addition, as a result of the Take-Private Transaction and our management by TLP Finance following the effective-time thereof, none of Daniel R. Revers, Kevin M. Crosby, Lucius H. Taylor, or Theodore D. Burke, each of whom previously sat on the board of directors of TransMontaigne GP L.L.C. and are employees of ArcLight, continue to serve in such capacity.
Executive Officers
The following table sets forth the names, ages and titles of the executive officers of the Company, each of whom is an employee of an ArcLight affiliate, as of March 13, 2020:
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
Frederick W. Boutin
|
|
64
|
|
Chief Executive Officer
|
James F. Dugan
|
|
62
|
|
Executive Vice President and Chief Operating Officer
|
Robert T. Fuller
|
|
50
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
Michael A. Hammell
|
|
49
|
|
Executive Vice President, General Counsel and Secretary
|
Mark S. Huff
|
|
60
|
|
President
|
Frederick W. Boutin has served as Chief Executive Officer of the Company, and prior to the Take-Private Transaction, our general partner and its subsidiaries since November of 2014. Prior to then he served as Executive Vice President and Chief Financial Officer beginning in January 2008. Mr. Boutin also managed business development and commercial contracting activities from December 2007 to July 2010 and from August 2013 to January 2015. Prior to February 1, 2016, Mr. Boutin also served in various other capacities at our general partner and its subsidiaries, and TransMontaigne and its predecessors, since 1995. Prior to his affiliation with TransMontaigne, Mr. Boutin was a Vice President at Associated Natural Gas Corporation, and its successor Duke Energy Field Services, and a certified public accountant with Peat Marwick. Mr. Boutin holds a B.S. in Electrical Engineering and an M.S. in Accounting from Colorado State University.
James F. Dugan has served as Executive Vice President and Chief Operating Officer of the Company, and prior to the Take-Private Transaction, our general partner and its subsidiaries since August 30, 2017. Mr. Dugan previously served as Executive Vice President, Engineering and Operations of our general partner and its subsidiaries from June 30, 2017 to August 30, 2017 and served as the Senior Vice President, Engineering and Operations of our general partner and its subsidiaries from January 2008 to June 30, 2017. Mr. Dugan joined TransMontaigne Inc. as Engineering Manager in 1998. He has over 16 years of experience in senior leadership positions overseeing domestic and international petroleum marine terminals, pipelines and engineering divisions. Mr. Dugan began his career as a Project Engineer for Gulf Interstate Energy in 1983 and in 1993 he joined Louis Dreyfus Energy as a Project Engineer. He has served on the Board of Directors for the International Liquid Terminals Association (ILTA) since 2011, and he holds certification through the American Petroleum Institute.
Robert T. Fuller has served as Executive Vice President, Chief Financial Officer and Treasurer of the Company, and prior to the Take-Private Transaction, our general partner and its subsidiaries since November of 2014. Prior to November of 2014, Mr. Fuller served as Vice President and Chief Accounting Officer of our general partner and its subsidiaries since January 2011 and as its Assistant Treasurer since February 2012. Prior to his affiliation with TransMontaigne, Mr. Fuller spent 13 years as a certified public accountant with KPMG LLP. Mr. Fuller has a B.A. in Political Science from Fort Lewis College and a M.S. in Accounting from the University of Colorado. Mr. Fuller is licensed as a certified public accountant in Colorado and New York.
Michael A. Hammell has served as Executive Vice President, General Counsel and Secretary of the Company, and prior to the Take-Private Transaction, our general partner and its subsidiaries since October 2012. Mr. Hammell served as the Senior Vice President, Assistant General Counsel and Secretary of each of our general partner and the TransMontaigne entities from July 2011 to October 2012; as Vice President, Assistant General Counsel and Secretary from January 2011 to July 2011; as Vice President, Assistant General Counsel and Assistant Secretary from November 2007 until January 2011 and as Assistant General Counsel from April 2007 to November 2007. Prior to joining TransMontaigne, Mr. Hammell practiced at the law firm of Hogan & Hartson LLP (now Hogan Lovells). Mr. Hammell received a B.S. in Business Administration from the University of Colorado at Boulder and a J.D. from Northwestern University School of Law.
Mark S. Huff has served as President of the Company, and prior to the Take-Private Transaction, our general partner and its subsidiaries since August 2017. Mr. Huff served as Executive Vice President, Commercial Operations of our general partner and its subsidiaries from September 2016 to August 2017 and prior thereto as Senior Vice President,
Commercial Operations since returning to the Partnership in January 2015. Prior thereto he served as Director of Business Development with Colonial Pipeline from November 2012 to January 2015 and as Managing Director of Vecenergy from 2008 to 2012. Mr. Huff was previously employed with a former affiliate of the Partnership from 1996 to 2007 where he was responsible at various times for the business development and product marketing activities of TransMontaigne Partners and its affiliates. Mr. Huff holds a B.S. in Nautical Science from the United States Merchant Marine Academy at Kings Point, NY.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the executive officers and directors of our general partner, and persons who own more than ten percent of a registered class of our equity securities (collectively, “Reporting Persons”) to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of our common units and our other equity securities. Specific due dates for those reports have been established, and we are required to report herein any failure to file reports by those due dates. Reporting Persons are also required by SEC regulations to furnish TransMontaigne Partners with copies of all Section 16(a) reports they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required during the year ended December 31, 2019, all Section 16(a) filing requirements applicable to such Reporting Persons were satisfied. Following the Take-Private Transaction, we do not expect to be required to file future Section 16(a) filings at this time.
Committees of the Board of Directors and Management following the Take-Private Transaction
Prior to the Take-Private Transaction, the board of directors of our general partner had three standing committees: an audit committee, a conflicts committee and a compensation committee. Following the Take-Private Transaction, we no longer have a board of directors and are instead managed by our sole equity-holder. The Company is not required to have, and does not have, a separately designated standing audit committee composed of independent directors, as its securities are not listed on a national securities exchange that requires such independence. The Company has determined that it is not necessary to designate, and has not designated, an “audit committee financial expert” as it is privately held and solely a voluntary filer with the Securities and Exchange Commission following the Take-Private Transaction as required by the covenants contained in the Company’s outstanding senior notes. As we do not have a board of directors, there are no applicable board nomination procedures to report.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
We do not directly employ any of the persons responsible for the executive-level management of our business. Instead, we are managed by ArcLight, and our executive officers are employees of an affiliate of ArcLight, TMC, which also provides services to other ArcLight affiliates. As a result, we do not incur any direct compensation costs for our executive officers. Instead, prior to the TMS Contribution, in accordance with the Omnibus Agreement, we paid ArcLight and its affiliates, an annual administration fee intended to compensate ArcLight and its affiliates for providing services related to the management of our business, including services provided to us by our executive officers. Following the TMS Contribution, pursuant to a services agreement, we pay TMC a fee intended to reimburse TMC for the services provided to us by our executive officers (each of whom are employed by TMC). For additional information, refer to the discussion under the heading “Certain Relationships and Related Transactions, and Director Independence Relationship and Agreements With our Affiliates—TMS Contribution and TMC Services Agreement.”
Employment and Other Agreements
We have not entered into any employment agreements with any of our officers.
Compensation Committee Report
Following the Take-Private Transaction, we do not have a compensation committee.
COMPENSATION OF DIRECTORS
Following the Take-Private Transaction, we are managed by our sole equity-holder, TLP Finance Holdings, LLC, and we do not have a board of directors.
Prior to the Take-Private Transaction, employees of our general partner or its affiliates (including employees of ArcLight and its affiliates) who also served as directors of our general partner did not receive additional compensation. Pursuant to our independent director annual compensation program in place prior to the Take-Private Transaction, the independent directors received annual compensation consisting of: (i) $60,000 annual cash retainer; paid quarterly in arrears, and (ii) common units valued at $90,000 and issued pursuant to the TLP Management Services long-term incentive plan, which common units were immediately vested and were not subject to forfeiture. For each annual award of common units issued to the independent directors under the TLP Management Services long-term incentive plan prior to the Take-Private Transaction, the awards were made on the third Friday of October (or the next trading day if the NYSE is closed), based on the closing sales price during normal trading hours of the common units on the NYSE. In addition, each director was reimbursed for out‑of‑pocket expenses in connection with attending meetings of the board of directors or committees. In 2019, and as a result of the Take-Private Transaction closing on February 26, 2019, we paid the independent directors (i) a pro rata portion of the annual cash retainer and (ii) the pro rata portion of the $90,000 compensation previously settled by issuing common units pursuant to the TLP Management Services long-term incentive plan, settled in cash, in each case for their services prior to the closing of the Take-Private Transaction. In addition, each of our independent directors received additional compensation in connection with their review, evaluation, regulation, and approval of the Take-Private Transaction, as duly approved by the board of directors of our general partner on July 27, 2018. For their additional services in the fourth quarter of 2018 (paid in 2019) and 2019, Messrs. Blank and Wiese received an additional $144,055, and Mr. Welch received an additional $166,555. No additional consideration was paid to the independent directors for service on any committee of the board of directors of our general partner or for service as a committee chairperson unless approved by the board in advance for a specific engagement or transaction.
Pursuant to our Partnership Agreement in place at the time of the Take-Private Transaction, each director prior to the Take-Private Transaction shall be fully indemnified by us for actions associated with being a director to the extent permitted under Delaware law. The following table provides information concerning the compensation of our general partner’s directors for 2019.
Director Compensation Table for 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned or
|
|
Stock
|
|
All other
|
|
|
|
|
|
|
paid in cash ($)
|
|
awards ($)
|
|
compensation ($)
|
|
Total ($)
|
|
Name (a)
|
|
(b)
|
|
(c)
|
|
(g)
|
|
(h)
|
|
Theodore D. Burke(1)
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
Kevin M. Crosby(1)
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
Daniel R. Revers(1)
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
Lucius H. Taylor(1)
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
Steven A. Blank
|
|
$
|
144,055
|
|
|
—
|
|
—
|
|
$
|
144,055
|
|
Barry E. Welch
|
|
$
|
166,555
|
|
|
—
|
|
—
|
|
$
|
166,555
|
|
Jay A. Wiese
|
|
$
|
144,055
|
|
|
—
|
|
—
|
|
$
|
144,055
|
|
|
(1)
|
|
Because Messrs. Burke, Crosby, Revers and Taylor are employees of an affiliate of our general partner prior to the Take-Private Transaction, none of them received compensation for service as a director of our general partner.
|
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Following the Take-Private Transaction, we do not have a compensation committee.
SAVINGS AND RETENTION PROGRAM
On February 26, 2016, the board of directors approved the savings and retention program, which constituted a “program” under, and be subject to, the TLP Management Services long-term incentive plan in place prior to the Take-Private Transaction, for employees who provide services with respect to our business. TLP Management Services LLC (“TMS”) adopted an amended and restated savings and retention plan on February 25, 2019, which, among other items, accounted for the closing of the Take-Private Transaction. The purpose of the plan is to provide for the reward and retention of certain key employees by providing them with awards that vest over future service periods. Following the Take-Private Transaction, our executive officers no longer receive awards under the plan. Awards under the plan vest as to 50% of a participant’s annual award on the first day of the month containing the second anniversary of the grant date and the remaining 50% on the first day of the month containing the third anniversary of the grant date, subject to earlier vesting upon a participant’s attainment of certain age or length of service thresholds as specified in the plan. Awards are payable as to 50% of a participant’s annual award in the month containing the second anniversary of the grant date, and the remaining 50% in the month containing the third anniversary of the grant date, subject to earlier payment upon the participant’s retirement after achieving the age or service thresholds, death or disability, involuntary termination without cause or termination of a participant’s employment following a change in control, each as specified in the plan. The awards are increased for the value of any accrued growth based on underlying “investments” deemed made with respect to the awards. The awards (including any accrued growth relating thereto) are subject to forfeiture until the vesting date. The Take-Private Transaction did not accelerate the vesting of any of the awards.
Pursuant to the provisions of the plan, once participating employees of TMS reach the age and length of service thresholds set forth below, awards are immediately vested and become payable as set forth above, and such vested awards remain subject to forfeiture as specified in the plan. A person will satisfy the age and length of service thresholds of the plan upon the attainment of the earliest of (a) age sixty, (b) age fifty-five and ten years of service as an officer of TMS or its affiliates, including us, or (c) age fifty and twenty years of service as an employee of TMS or its affiliates. Each of Messrs. Boutin, Huff and Dugan have satisfied the age and length of service thresholds of the plan. Generally, only senior level management employees of TMS receive awards under the savings and retention program. Although no assets are segregated or otherwise set aside with respect to a participant’s account, the amount ultimately payable to a participant shall be the amount credited to such participant’s account as if such account had been invested in some or all of the investment funds selected by the plan administrator.
As a result of the TMS Contribution, we have assumed the employees and operational activities previously provided by TMS, including liabilities with respect to awards granted under the savings and retention program. In connection with the Take-Private Transaction, the awards that were previously allocated to the common units fund (tracking the performance of the Partnership’s common units on the New York Stock Exchange) were reallocated to a different investment fund and will be settled in cash, rather than via the issuance of common units. For the vested awards payable in 2019, as a result of the Take-Private Transaction, the Company did not issue common units; instead the plan paid out an aggregate cash amount of approximately $2.7 million, which included $467,087 for Mr. Boutin, $225,839 for Mr. Fuller, $236,867 for Mr. Dugan, $204,917 for Mr. Hammell and $381,636 for Mr. Huff. Following the Take-Private Transaction and the TMS Contribution, we plan to index our award obligations to other forms of investments set forth in the plan, and pay them out in cash.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS
As a result of the Take-Private Transaction, TLP Finance Holdings, LLC is the beneficial owner of 100 percent of our outstanding equity interests.
EQUITY COMPENSATION PLAN INFORMATION
Following the Take-Private Transaction, the Company does not have an equity compensation plan.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
RELATIONSHIP AND AGREEMENTS WITH OUR AFFILIATES
Following the Take-Private Transaction, TLP Finance Holdings, LLC, an indirect controlled subsidiary of ArcLight, has acquired 100 percent of the equity interests in the Company, and the Company is no longer listed on the NYSE and our equity is no longer publicly traded. Certain related party agreements and other related party transactions, in each case with ArcLight, are set forth below.
TMS Contribution and TMC Services Agreement. Effective June 1, 2019, TLP Finance contributed all of the issued and outstanding equity of its wholly-owned subsidiary, TLP Management Services LLC (“TMS” and such interest, the “TMS Interest”) to the Company, and the Company immediately contributed the TMS Interest to its 100% owned operating company subsidiary TransMontaigne Operating Company L.P. (the “TMS Contribution”). Prior to the TMS Contribution, we had no employees and all of our management and operational activities were provided by TMS. Further, TMS provided all payroll programs and maintained all employee benefits programs on behalf of our Company with respect to applicable TMS employees (as well as on behalf of certain other Arclight affiliates). As a result of the TMS Contribution, we have assumed the employees and operational activities previously provided by TMS. The TMS Contribution has been recorded at carryover basis as a reorganization of entities under common control. As such, prior periods include the assets, liabilities, and results of operations of TMS for all periods presented.
As a result of the TMS Contribution, the omnibus agreement in place in various forms since the inception of the Partnership, and immediately prior to the TMS Contribution between TMS and us, which, among other things, governed the provision of management and operational services provided for us by TMS, is no longer relevant and was terminated.
Following the TMS Contribution, our executive officers who provide services to the Company are employed by TMC, a wholly owned subsidiary of ArcLight, which also provides services to certain other ArcLight affiliates. As a result, we do not directly employ any of the persons responsible for the executive management of our business. Nonetheless, TMS continues to provide certain payroll functions and maintains all employee benefits programs on behalf of TMC pursuant to a services agreement between TMC and TMS. Aggregate fees paid with respect to the services agreement for the years ended December 31, 2019, 2018 and 2017 were approximately $0.8 million, $nil and $nil, respectively.
Central Services. We manage and operate terminals that are owned by affiliates of ArcLight, including SeaPort Midstream Partners, LLC (“SMP”) in Seattle, Washington and Portland, Oregon and SeaPort Sound Terminal, LLC (“SeaPort Sound”) in Tacoma, Washington and, in each case, receive a management fee based on our costs incurred, plus an annual fee. Aggregate annual fees received with respect to services provided for SMP for the years ended December 31, 2019, 2018 and 2017 were approximately $3.4 million, $3.4 million and $1.2 million, respectively. Aggregate annual fees received with respect to services provided for SeaPort Sound for the years ended December 31, 2019, 2018, and 2017, were approximately $7.2 million, $0.9 million and $nil, respectively.
We also manage additional terminal facilities that are owned by affiliates of ArcLight, including Lucknow-Highspire Terminals, LLC (“LHT”), which operates terminals throughout Pennsylvania encompassing approximately 9.8 million barrels of storage capacity, and prior to July 1, 2019, a terminal in Baltimore, Maryland for Pike Baltimore Terminals, LLC (the “Baltimore Terminal”), and receive a management fee based on our costs incurred. Our management of the Baltimore terminal ended on July 1, 2019. Aggregate annual fees received with respect to services performed for LHT and the Baltimore Terminal for the years ended December 31, 2019, 2018 and 2017 were approximately $1.2 million, $0.1 million and $nil, respectively.
DIRECTOR INDEPENDENCE
Following the Take-Private Transaction, we are managed by our sole equity-holder, TLP Finance Holdings, LLC, an indirect controlled subsidiary of ArcLight, and we do not have a board of directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Deloitte & Touche LLP is our independent auditor. Deloitte & Touche LLP’s accounting fees and services were as follows:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Audit fees(1)
|
|
$
|
785,000
|
|
$
|
695,000
|
|
Comfort letter and consents
|
|
|
—
|
|
|
80,000
|
|
Audit-related fees
|
|
|
—
|
|
|
—
|
|
Tax fees
|
|
|
—
|
|
|
—
|
|
All other fees
|
|
|
—
|
|
|
—
|
|
Total accounting fees and services
|
|
$
|
785,000
|
|
$
|
775,000
|
|
(1) Represents an estimate of fees for professional services provided in connection with the annual audit of our financial
statements and the reviews of our quarterly financial statements, and other services provided by the auditor in connection with statutory and regulatory filings.
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(A)
|
|
1—The following documents are filed as a part of this Annual Report.
|
|
1.
|
|
Consolidated Financial Statements and Schedules. See the index to the consolidated financial statements of TransMontaigne Partners L.P. and its subsidiaries that appears under Item 8. “Financial Statements and Supplementary Data” of this Annual Report.
|
|
2.
|
|
Financial Statement Schedules. Financial statement schedules included in this Item 15 are the financial statements of Battleground Oil Specialty Terminal Company LLC. Other schedules are omitted because they are not required, are inapplicable or the required information is included in the financial statements or notes thereto.
|
|
3.
|
|
Exhibits. A list of exhibits required by Item 601 of Regulation S‑K to be filed as part of this Annual Report.
|
|
(A)
|
|
2— Battleground Oil Specialty Terminal Company LLC Financial Statements, with a Report of Independent Registered Public Accounting Firm, as of December 31, 2019 and 2018 and for the Years Ended December 31, 2019, 2018 and 2017.
|
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Members of
Battleground Oil Specialty Terminal Company LLC:
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Battleground Oil Specialty Terminal Company LLC (the “Company”) as of December 31, 2018, and the related statements of income, of members’ equity, and of cash flows for each of the two years in the period ended December 31, 2018, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.
The accompanying balance sheet of the Company as of December 31, 2019, and the related statements of income, of members’ equity, and of cash flows for the year then ended are presented for purposes of complying with Rule 3-09 of SEC Regulation S-X; however, Rule 3-09 does not require the 2019 financial statements to be audited and they are therefore not covered by this report.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the auditing standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Significant Transactions with Related Parties
As discussed in Note 4 to the financial statements, the Company has extensive operations and relationships with its member, Kinder Morgan Battleground Oil, LLC and other affiliated companies.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 27, 2019
We have served as the Company's auditor since 2013.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF INCOME
(In Thousands)
aaw
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019 (a)
|
|
2018
|
|
2017
|
Revenues
|
|
$
|
60,751
|
|
$
|
66,288
|
|
$
|
66,235
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses
|
|
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
13,963
|
|
|
13,362
|
|
|
17,407
|
Operations and maintenance-affiliate
|
|
|
10,826
|
|
|
10,682
|
|
|
10,645
|
Depreciation and amortization
|
|
|
19,123
|
|
|
18,682
|
|
|
18,543
|
General and administrative-affiliate
|
|
|
3,621
|
|
|
3,506
|
|
|
3,134
|
Taxes other than income taxes
|
|
|
6,940
|
|
|
5,695
|
|
|
5,622
|
Total Operating Costs and Expenses
|
|
|
54,473
|
|
|
51,927
|
|
|
55,351
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
6,278
|
|
|
14,361
|
|
|
10,884
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
565
|
|
|
19
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Income Before Taxes
|
|
|
6,843
|
|
|
14,380
|
|
|
10,884
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
|
125
|
|
|
85
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
6,718
|
|
$
|
14,295
|
|
$
|
10,548
|
(a) This information is not covered by the Report of Independent Registered Public Accounting Firm.
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
BALANCE SHEETS
(In Thousands)
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019 (a)
|
|
2018
|
ASSETS
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,443
|
|
$
|
14,058
|
Accounts receivable, net
|
|
|
4,148
|
|
|
3,165
|
Inventories
|
|
|
1,265
|
|
|
907
|
Other current assets
|
|
|
2,622
|
|
|
1,169
|
Total current assets
|
|
|
12,478
|
|
|
19,299
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
458,857
|
|
|
455,984
|
Lease asset (Note 6)
|
|
|
5,228
|
|
|
—
|
Total Assets
|
|
$
|
476,563
|
|
$
|
475,283
|
|
|
|
|
|
|
|
LIABILITIES AND MEMBERS' EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
11,429
|
|
$
|
5,928
|
Accrued taxes, other than income taxes
|
|
|
544
|
|
|
5,540
|
Other current liabilities
|
|
|
1,634
|
|
|
1,003
|
Total current liabilities
|
|
|
13,607
|
|
|
12,471
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
Contract liabilities
|
|
|
930
|
|
|
1,259
|
Lease liabilities (Note 6)
|
|
|
5,106
|
|
|
—
|
Total non-current liabilities
|
|
|
6,036
|
|
|
1,259
|
Total liabilities
|
|
|
19,643
|
|
|
13,730
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 2 and Note 6)
|
|
|
|
|
|
|
Members' Equity
|
|
|
456,920
|
|
|
461,553
|
Total Liabilities and Members' Equity
|
|
$
|
476,563
|
|
$
|
475,283
|
(a) This information is not covered by the Report of Independent Registered Public Accounting Firm.
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF CASH FLOWS
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019 (a)
|
|
2018
|
|
2017
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,718
|
|
$
|
14,295
|
|
$
|
10,548
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
19,123
|
|
|
18,682
|
|
|
18,543
|
Other non-cash items
|
|
|
639
|
|
|
527
|
|
|
190
|
Changes in components of working capital:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(983)
|
|
|
(2,318)
|
|
|
322
|
Inventories
|
|
|
(358)
|
|
|
756
|
|
|
(986)
|
Accounts payable
|
|
|
470
|
|
|
(3,186)
|
|
|
2,522
|
Accrued taxes, other than income taxes
|
|
|
(4,996)
|
|
|
(129)
|
|
|
(149)
|
Accrued dredging service costs
|
|
|
—
|
|
|
(3,153)
|
|
|
—
|
Other current assets
|
|
|
(1,453)
|
|
|
2,756
|
|
|
(421)
|
Other current liabilities
|
|
|
508
|
|
|
405
|
|
|
(535)
|
Other long-term assets and liabilities
|
|
|
(326)
|
|
|
624
|
|
|
(65)
|
Net Cash Provided by Operating Activities
|
|
|
19,342
|
|
|
29,259
|
|
|
29,969
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(17,606)
|
|
|
(4,404)
|
|
|
(3,028)
|
Other
|
|
|
—
|
|
|
3
|
|
|
250
|
Net Cash Used in Investing Activities
|
|
|
(17,606)
|
|
|
(4,401)
|
|
|
(2,778)
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
Contributions from Members
|
|
|
8,948
|
|
|
—
|
|
|
342
|
Distributions to Members
|
|
|
(20,299)
|
|
|
(29,516)
|
|
|
(29,885)
|
Net Cash Used in Financing Activities
|
|
|
(11,351)
|
|
|
(29,516)
|
|
|
(29,543)
|
|
|
|
|
|
|
|
|
|
|
Net Decrease in Cash and Cash Equivalents
|
|
|
(9,615)
|
|
|
(4,658)
|
|
|
(2,352)
|
Cash and Cash Equivalents, beginning of period
|
|
|
14,058
|
|
|
18,716
|
|
|
21,068
|
Cash and Cash Equivalents, end of period
|
|
$
|
4,443
|
|
$
|
14,058
|
|
$
|
18,716
|
|
|
|
|
|
|
|
|
|
|
Non-cash Investing Activities
|
|
|
|
|
|
|
|
|
|
Right-of-use (ROU) assets and operating lease obligations recognized (Note 6)
|
|
$
|
5,437
|
|
|
|
|
|
|
Net increases in property, plant and equipment accruals
|
|
|
5,031
|
|
$
|
2,243
|
|
|
|
(a) This information is not covered by the Report of Independent Registered Public Accounting Firm.
The accompanying notes are an integral part of these financial statements.
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
STATEMENTS OF MEMBERS' EQUITY
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Class A
unitholders
|
|
Class B
unitholders
|
|
Total
unitholders
|
Balance at December 31, 2016
|
|
$
|
495,769
|
|
$
|
—
|
|
$
|
495,769
|
Net income
|
|
|
9,502
|
|
|
1,046
|
|
|
10,548
|
Contributions
|
|
|
342
|
|
|
—
|
|
|
342
|
Distributions
|
|
|
(28,839)
|
|
|
(1,046)
|
|
|
(29,885)
|
Balance at December 31, 2017
|
|
|
476,774
|
|
|
—
|
|
|
476,774
|
Net income
|
|
|
13,332
|
|
|
963
|
|
|
14,295
|
Distributions
|
|
|
(28,553)
|
|
|
(963)
|
|
|
(29,516)
|
Balance at December 31, 2018
|
|
|
461,553
|
|
|
—
|
|
|
461,553
|
Net income (a)
|
|
|
6,008
|
|
|
710
|
|
|
6,718
|
Contributions (a)
|
|
|
8,948
|
|
|
—
|
|
|
8,948
|
Distributions (a)
|
|
|
(19,589)
|
|
|
(710)
|
|
|
(20,299)
|
Balance at December 31, 2019 (a)
|
|
$
|
456,920
|
|
$
|
—
|
|
$
|
456,920
|
(a) This information is not covered by the Report of Independent Registered Public Accounting Firm.
The accompanying notes are an integral part of these financial statements.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
1. General
We are a Delaware limited liability company, formed on May 26, 2011. When we refer to “us,” “we,” “our,” “ours,” “the Company”, or “BOSTCO,” we are describing Battleground Oil Specialty Terminal Company LLC.
The Members' interests in us (collectively referred to as the Class A Members) are as follows:
|
·
|
|
55.0% - Kinder Morgan Battleground Oil, LLC (KM Battleground Oil), a subsidiary of Kinder Morgan, Inc. (KMI);
|
|
·
|
|
42.5% - TransMontaigne Operating Company L.P. (TransMontaigne), a wholly owned subsidiary of TransMontaigne Partners L.P.; and
|
|
·
|
|
2.5% - Tauber Terminals, L.P. (Tauber), a Texas limited partnership.
|
In addition, we have Class B member interests further described in Note 4.
We own and operate a terminal facility that has 7.1 million barrels of distillate, residual fuel and other black oil product storage at a Houston Ship Channel site. The facility also has deep draft docks and high speed pumps.
2. Summary of Significant Accounting Policies
Basis of Presentation
We have prepared our accompanying financial statements in accordance with the accounting principles contained in the Financial Accounting Standards Board's (FASB) Accounting Standards Codification, the single source of United States Generally Accepted Accounting Principles (GAAP) and referred to in this report as the Codification. Additionally, certain amounts from prior years have been reclassified to conform to the current presentation.
Management has evaluated subsequent events through February 26, 2020, the date the financial statements were available to be issued.
For a discussion of significant Accounting Standards Update (ASU) we adopted on January 1, 2019, see below“ —Leases”.
Use of Estimates
Certain amounts included in or affecting our financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for assets and liabilities, our revenues and expenses during the reporting period, and our disclosures, including as it relates to contingent assets and liabilities at the date of our financial statements. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.
In addition, we believe that certain accounting policies are of more significance in our financial statement preparation process than others, and set out below are the principal accounting policies we apply in the preparation of our financial statements.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
Cash and cash Equivalents
We define cash equivalents as all highly liquid short-term investments with original maturities of three months or less.
Accounts Receivable, net
We establish provisions for losses on accounts receivable due from customers if we determine that we will not collect all or part of the outstanding balance. We regularly review collectability and establish or adjust our allowance as necessary using the specific identification method. As of December 31, 2019 and 2018, our allowance for doubtful accounts were $109,000 and $70,000, respectively.
Inventories
Our inventories, which consist of consumable spare parts used in the operations of the facilities, are valued at weighted-average cost, and we periodically review for physical deterioration and obsolescence.
Property, Plant and Equipment, net
Our property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at the fair value of the assets acquired. For constructed assets, we capitalize all construction-related direct labor and material costs, as well as indirect construction costs. The indirect capitalized labor and related costs are based upon estimates of time spent supporting construction projects. We expense costs for routine maintenance and repairs in the period incurred.
We use the straight-line method to depreciate property, plant and equipment over the estimated useful life for each asset. The cost of property, plant and equipment sold or retired and the related depreciation are removed from the balance sheet in the period of sale or disposition. Gains or losses resulting from property sales or dispositions are recognized in the period incurred. We generally include gains or losses in “Operations and maintenance” on our accompanying Statements of Income.
Asset Retirement Obligations (ARO)
We record liabilities for obligations related to the retirement and removal of long-lived assets used in our businesses. We record, as liabilities, the fair value of ARO on a discounted basis when they are incurred and can be reasonably estimated, which is typically at the time the assets are installed or acquired. Amounts recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the change in their present value, and the initial capitalized costs are depreciated over the useful lives of the related assets. The liabilities are eventually extinguished when the asset is taken out of service.
We are required to operate and maintain our assets, and intend to do so as long as supply and demand for such services exists, which we expect for the foreseeable future. Therefore, we believe that we cannot reasonably estimate the ARO for the substantial majority of assets because these assets have indeterminate lives. We continue to evaluate our ARO and future developments could impact the amounts we record. We had no recorded ARO as of December 31, 2019 and 2018.
Asset Impairments
We evaluate our assets for impairment when events or changes in circumstances indicate that the carrying values may not be recovered. These events include changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset and adverse changes in market conditions or in the legal or business environment such as
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
adverse actions by regulators. If an event occurs, which is a determination that involves judgment, we evaluate the recoverability of the carrying value of our long-lived asset based on the long-lived asset's ability to generate future cash flows on an undiscounted basis. If an impairment is indicated, or if we decide to sell a long-lived asset or group of assets, we adjust the carrying value of the asset downward, if necessary, to its estimated fair value.
Our fair value estimates are generally based on assumptions market participants would use, including market data obtained through the sales process or an analysis of expected discounted future cash flows. There were no impairments for the years ended December 31, 2019, 2018 and 2017.
Revenue Recognition
Revenue from Contracts with Customers
Beginning in 2018, we account for revenue from contracts with customers in accordance with ASU No. 2014-09, “Revenue from Contracts with Customers” and a series of related accounting standard updates (Topic 606). The unit of account in Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) control of the goods or services transfers to the customer and the performance obligation is satisfied.
Our customer services contracts primarily include terminaling service contracts, as described below. Generally, for the majority of these contracts: (i) our promise is to transfer (or stand ready to transfer) a series of distinct integrated services over a period of time, which is a single performance obligation; (ii) the transaction price includes fixed and/or variable consideration, which amount is determinable at contract inception and/or at each month end based on our right to invoice at month end for the value of services provided to the customer that month; and (iii) the transaction price is recognized as revenue over the service period specified in the contract (which can be a day, including each day in a series of promised daily services, a month, a year, or other time increment, including a deficiency makeup period) as the services are rendered using a time-based (passage of time) or units-based (units of service transferred) output method for measuring the transfer of control of the services and satisfaction of our performance obligation over the service period, based on the nature of the promised service (e.g., firm or non-firm) and the terms and conditions of the contract.
Firm Services
Firm services (also called uninterruptible services) are services that are promised to be available to the customer at all times during the period(s) covered by the contract, with limited exceptions. Our firm service contracts are typically structured with take-or-pay provisions. In these arrangements, the customer is obligated to pay for services associated with its take-or-pay obligation regardless of whether or not the customer chooses to utilize the service in that period. Because we make the service continuously available over the service period, we recognize the take-or-pay amount as revenue ratably over such period based on the passage of time.
Non-Firm Services
Non-firm services (also called interruptible services) are the opposite of firm services in that such services are provided to a customer on an “as available” basis. Generally, we do not have an obligation to perform these services until we accept a customer’s periodic request for service. For the majority of our non-firm service contracts, the customer will pay only for the actual quantities of services it chooses to receive or use, and we typically recognize the
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
transaction price as revenue as those units of service are transferred to the customer in the specified service period (typically a daily or monthly period).
Refer to Note 5 for further information.
Revenue Recognition Policy prior to January 1, 2018
Prior to the implementation of Topic 606, we recognized storage revenues on firm contracted capacity ratably over the contract period regardless of the volume of petroleum products stored. We recorded revenues from throughput movements and ancillary services when performed and earned, subject to possible contractual minimums and maximums.
Operations and Maintenance
Operations and maintenance includes $1,147,000, $3,789,000, and $3,787,000 of dredging service costs for the years ended December 31, 2019, 2018 and 2017, respectively. Actual dredging services costs are capitalized and included in “Other current assets” and “Deferred charges and other assets” on our accompanying Balance Sheets. The capitalized dredging costs are amortized until the next expected dredging operation (an approximate 12 to 24 month period). We use the straight-line method to amortize dredging service costs.
Environmental Matters
We capitalize or expense, as appropriate, environmental expenditures. We capitalize certain environmental expenditures required in obtaining rights-of-way, regulatory approvals or permitting as part of the construction of facilities we use in our business operation. We accrue and expense environmental costs that relate to an existing condition caused by past operations, which do not contribute to current or future revenue generation. We generally do not discount environmental liabilities to a net present value, and we record environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably estimate the costs. Generally, our recording of these accruals coincides with our completion of a feasibility study or our commitment to a formal plan of action. We recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable.
We routinely conduct reviews of potential environmental issues and claims that could impact our assets or operations. These reviews assist us in identifying environmental issues and estimating the costs and timing of remediation efforts. We also routinely adjust our environmental liabilities to reflect changes in previous estimates. In making environmental liability estimations, we consider the material effect of environmental compliance, pending legal actions against us, and potential third-party liability claims we may have against others. Often, as the remediation evaluation and effort progresses, additional information is obtained, requiring revisions to estimated costs. These revisions are reflected in our income in the period in which they are reasonably determinable.
We are subject to environmental cleanup and enforcement actions from time to time. In particular, Comprehensive Environmental Response, Compensation and Liability Act generally imposes joint and several liability for cleanup and enforcement costs on current and predecessor owners and operators of a site, among others, without regard to fault or the legality of the original conduct, subject to the right of a liable party to establish a “reasonable basis” for apportionment of costs. Our operations are also subject to federal, state and local laws and regulations relating to protection of the environment. Although we believe our operations are in substantial compliance with applicable environmental law and regulations, risks of additional costs and liabilities are inherent in our operations, and there can be no assurance that we will not incur significant costs and liabilities. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from our operations, could result in substantial costs and liabilities to us.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters, and other matters to which we are a party, will not have a material adverse effect on our business, financial position, results of operations or cash flows. We had no accruals for any outstanding environmental matters as of December 31, 2019 and 2018.
Legal Proceedings
We are party to various legal, regulatory and other matters arising from the day-to-day operations of our business that may result in claims against the Company. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves, that the ultimate resolution of such items will not have a material adverse impact on our business, financial position, results of operations or cash flows. We believe we have meritorious defenses to the matters to which we are a party and intend to vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed.
Vandaven Johnson Personal Injury Claim
Vandaven Johnson, an employee of Petro-Chem Services, filed a lawsuit in the 295th Judicial District for Harris County, Texas against BOSTCO and certain other defendants in which the plaintiff alleges that he incurred personal injuries in connection with an incident which is alleged to have occurred on April 12, 2017 while the plaintiff was walking down a temporary gangway on BOSTCO’s premises from the barg dock to a tanker. Plaintiff alleges that the gangway was placed at an unreasonably steep angle, had an inadequate handrail, and that a vertical support or stanchion failed, causing him to fall from the gangway to the deck of the tanker. Plaintiff alleges injuries to his neck and back and claims to be permanently disabled. Plaintiff subsequently amended his petition to add the manufacturer and distributor of the gangway as defendants. Plaintiff seeks damages of $3.5 million collectively against all defendants inclusive of alleged current and future medical expenses, pain and suffering, and lost wages. A jury trial is scheduled to occur on April 6, 2020. BOSTCO estimates plaintiff’s damages to be considerably less than those claimed in the lawsuit, and we anticipate a jury will place significant responsibility on both the plaintiff and other defendants at trial. We intend to continue to vigorously defend the lawsuit.
Customer Dispute
In January 2018, we settled a dispute with a customer for $1,642,000 related to the commencement of operations. The settlement was implemented as part of an amendment to the original services agreement, in which our settlement obligation was a component of the transaction price for the amended services arrangement. Accordingly, we recognize the amount as a reduction to revenues over the 5 year term of the amended services agreement as we fulfill the contractual performance obligations.
Leases
Lessee
We lease property at the Port of Houston. Our lease has a remaining lease term of 17 years. We determine if an arrangement is a lease at inception or upon modification. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
Beginning January 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019. Leases with variable rate adjustments, such as Consumer Price Index (CPI) adjustments, were reflected based on contractual lease payments as outlined within the lease agreement and not adjusted for any CPI increases or decreases. Because most of our leases do not provide an explicit rate of return, we use our incremental secured borrowing rate based on lease term information available at the commencement date of the lease in determining the present value of lease payments. If we have real estate lease agreements with lease and non-lease components, we will account for these components separately, while for the remainder of our agreements we have elected the practical expedient to account for lease and non-lease components as a single lease component. Leases that were grandfathered under various portions of Topic 842, such as land easements, are reassessed when agreements are modified.
Refer to Note 6 for further information.
Income Taxes
We are a limited liability company that is treated as a partnership for income tax purposes and are not subject to federal or state income taxes. Accordingly, no provision for federal or state income taxes has been recorded in our financial statements. The tax effects of our activities accrue to our Members who report on their individual federal income tax returns their share of revenues and expenses. However, we are subject to Texas margin tax (a revenue based calculation), which is presented as “Income Tax Expense” on our accompanying Statements of Income.
3. Property, Plant and Equipment, net
Our property, plant and equipment, net consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Useful Life in
Years
|
|
2019
|
|
2018
|
Terminal and storage facilities
|
|
5 - 40
|
|
$
|
447,758
|
|
$
|
440,233
|
Buildings
|
|
5 - 30
|
|
|
12,955
|
|
|
12,955
|
Other support equipment
|
|
1 - 30
|
|
|
77,214
|
|
|
77,047
|
Accumulated depreciation and amortization
|
|
|
|
|
(111,016)
|
|
|
(91,986)
|
|
|
|
|
|
426,911
|
|
|
438,249
|
Land
|
|
|
|
|
13,168
|
|
|
13,168
|
Construction work in process
|
|
|
|
|
18,778
|
|
|
4,567
|
Property, plant and equipment, net
|
|
|
|
$
|
458,857
|
|
$
|
455,984
|
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
4. Related Party Transactions
Limited Liability Company Agreement (LLC Agreement)
Our profits and losses, and cash distributions are allocated, and made within 45 days after the end of each quarter, on a pro-rata basis to our Members in accordance with their equity percentage interests and profit interests, subject to other conditions as defined in the LLC Agreement. The Class A and Class B Members share in our profits and losses on a 96.5% and 3.5% pro-rata basis, respectively. Class B Member interests are not required to make capital contributions in order to maintain their profit interests. Class A units outstanding as of December 31, 2019 and 2018 were 14,914,900. Class B units outstanding as of December 31, 2019 and 2018 were 700.
Changes and amendments to the terms of the LLC Agreement, including its provisions regarding the approval of additional capital contributions, require both KM Battleground Oil and TransMontaigne approvals pursuant to the LLC Agreement. Class A and Class B Members have other rights, preferences, restrictions, obligations, and limitations, including limitations as to the transfer of ownership interests.
Affiliate Agreement
Pursuant to the operations and reimbursement agreement, KM Battleground Oil operates our terminal facility and we pay them a service fee. The service fee for the years ended December 31, 2019, 2018 and 2017 was approximately $1,702,000, $1,657,000 and $1,609,000, respectively, and is reflected in “Operations and maintenance” on our accompanying Statements of Income.
Other Affiliate Balances and Activities
We do not have employees. Employees of KMI provide services to us. In accordance with our governance documents,we reimburse KMI at cost.
The following table summarizes our balance sheet affiliate balances (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019
|
|
2018
|
Accounts receivable, net
|
|
$
|
3
|
|
$
|
18
|
Accounts payable
|
|
|
1,321
|
|
|
1,560
|
The following table shows revenues from our affiliates (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Revenues
|
|
$
|
931
|
|
$
|
802
|
|
$
|
665
|
Subsequent Event
In January 2020, we made cash distributions to our Class A and B Members totaling $3,456,000, and received a cash contribution from a Class A Member of $2,128,000.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
5. Revenue Recognition
Nature of Revenue
We provide various types of liquid tank services. These services are generally comprised of inbound, storage and outbound handling of customer products.
Our liquids tank storage and handling service contracts that include a promised tank storage capacity provision and prepaid volume throughput of the stored product. The handling services we provide generally include blending and mixing, throughput movements, and ancillary services for residual fuel and diesel. In these firm service contracts, we have a stand-ready obligation to perform this contracted service each day over the life of the contract. The customer pays a transaction price typically in the form of a fixed monthly charge and is obligated to pay whether or not it uses the storage capacity and throughput service (i.e., a take-or-pay payment obligation). These contracts generally include a per-unit rate for any quantities we handle at the request of the customer in excess of the prepaid volume throughput amount and also typically include per-unit rates for additional, ancillary services that may be periodically requested by the customer.
Disaggregation of Revenues
The following table present our revenues disaggregated by revenue source and type of revenue for each revenue source (in thousands):
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
Revenues from contracts with customers
|
|
|
|
|
|
|
Services
|
|
|
|
|
|
|
Firm services(a)
|
|
$
|
49,939
|
|
$
|
55,436
|
Fee-based services
|
|
|
10,785
|
|
|
10,737
|
Total services revenues
|
|
|
60,724
|
|
|
66,173
|
Sales
|
|
|
|
|
|
|
Product sales
|
|
|
—
|
|
|
89
|
Total sales revenues
|
|
|
—
|
|
|
89
|
Total revenues from contracts with customers
|
|
|
60,724
|
|
|
66,262
|
Other revenues(b)
|
|
|
27
|
|
|
26
|
Total revenues
|
|
$
|
60,751
|
|
$
|
66,288
|
|
(a)
|
|
Includes non-cancellable firm service customer contracts with take-or-pay, including those contracts where both the price and quantity amount are fixed.
|
|
(b)
|
|
Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606 and primarily include leases.
|
Contract Balances
Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. We did not have any contract assets as of December 31, 2019 and 2018. Our contract liabilities are substantially related to (i) consideration received from customers in connection with the resolution of a customer dispute, see Note 2; and (ii) other items paid for in advance by certain customers generally in our non-regulated businesses,
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
which we subsequently recognize as revenue on a straight-line basis over the initial term of the related customer contracts.
As of December 31, 2019 and 2018, our contract liability balances were $1,878,000 and $1,725,000, respectively. Of the contract liability balance at December 31, 2018, $484,000 was recognized as revenue during the year ended December 31, 2019.
Revenue Allocated to Remaining Performance Obligations
The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of December 31, 2019 that we will invoice or transfer from contract liabilities and recognize in future periods (in thousands):
|
|
|
|
Year
|
|
Estimated
Revenue
|
2020
|
|
$
|
50,664
|
2021
|
|
|
32,135
|
2022
|
|
|
17,096
|
2023
|
|
|
16,077
|
2024
|
|
|
4,750
|
Total
|
|
$
|
120,722
|
Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to service or commodity sale customer contracts which have fixed pricing and fixed volume terms and conditions, generally including contracts with take-or-pay payment obligations. Our contractually committed revenue amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance obligations for: (i) contracts with variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation and (ii) contracts with an original expected duration of one year or less.
Major Customers
For the year ended December 31, 2019, revenues from our five largest non-affiliate customers were approximately $10,502,000, $9,765,000, $8,862,000, $7,549,000, and $7,546,000, respectively, each of which exceeded 10% of our operating revenues. For the year ended December 31, 2018, revenues from our four largest non-affiliate customers were approximately $14,169,000, $12,881,000, $10,452,000, and $9,255,000, respectively, each of which exceeded 10% of our operating revenues. For the year ended December 31, 2017, revenues from our five largest non-affiliate customers were approximately $11,671,000, $11,230,000, $9,648,000, $8,886,000 and $6,994,000, respectively, each of which exceeded 10% of our operating revenues.
6. Leases
Effective January 1, 2019, we adopted ASU No. 2016-02, “Leases (Topic 842)” and the series of related Accounting Standards Updates that followed (collectively referred to as “Topic 842”). The most significant changes under the new guidance include clarification of the definition of a lease, and the requirements for lessees to recognize a ROU asset and a lease liability for all qualifying leases with terms longer than twelve months in the balance sheet. In addition, under Topic 842, additional disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
We elected the practical expedient available to us under ASU 2018-11 “Leases: Targeted Improvements” which allows us to apply the transition provision for Topic 842 at our adoption date instead of at the earliest comparative period presented in our
financial statements. Therefore, we recognized and measured leases existing at January 1, 2019 but without retrospective application. In addition, we elected the optional practical expedient permitted under the transition guidance related to land easements which allows us to carry forward our historical accounting treatment for land easements on existing agreements upon adoption. We also elected all other available practical expedients except the hindsight practical expedient.
The impact of Topic 842 on our balance sheet beginning January 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at January 1, 2019 for operating leases were as follows (in thousands):
|
|
|
|
|
|
|
January 1, 2019
|
ROU assets
|
|
$
|
5,437
|
|
Short-term lease liability
|
|
105
|
|
Long-term lease liability
|
|
5,332
|
|
No impact was recorded to the income statement or beginning retained earnings for Topic 842.
Lessee
Following are components of our lease cost (in thousands):
|
|
|
|
|
|
Year Ended December 31, 2019
|
Operating leases
|
|
470
|
Short-term and variable leases
|
|
16
|
|
Total lease cost
|
|
486
|
|
Other information related to our operating leases are as follows (in thousands, except lease term and discount rate):
|
|
|
|
|
|
Year Ended December 31, 2019
|
Operating cash flows from operating leases
|
|
(486)
|
Amortization of ROU assets
|
|
209
|
|
Weighted average remaining lease term
|
|
17 years
|
Weighted average discount rate
|
|
4.74
|
%
|
Amounts recognized in the accompanying balance sheet are as follows (in thousands):
|
|
|
|
|
|
Lease Activity
|
|
Balance sheet location
|
|
December 31, 2019
|
ROU assets
|
|
Lease asset
|
|
5,228
|
Short-term lease liability
|
|
Other current liabilities
|
|
122
|
|
Long-term lease liability
|
|
Lease liabilities
|
|
5,106
|
|
Table of Contents
BATTLEGROUND OIL SPECIALTY TERMINAL COMPANY LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2019 (not covered by the Report of Independent Registered Public Accounting Firm), 2018, and 2017
Operating lease liabilities under non-cancellable leases (excluding short-term leases) as of December 31, 2019 are as follows (in thousands):
|
|
|
|
|
Year
|
|
Commitment
|
2020
|
|
$
|
377
|
|
2021
|
|
389
|
|
2022
|
|
400
|
|
2023
|
|
412
|
|
2024
|
|
425
|
|
Thereafter
|
|
6,209
|
|
Total lease payments
|
|
8,212
|
|
Less: Interest
|
|
(2,984)
|
Present value of lease liabilities
|
|
$
|
5,228
|
|
Commitment Obligations Prior to January 1, 2019 Under ASC 840
Under the transition provision of Topic 842, we elected the effective date transition option. Following is the additional required transition disclosure for undiscounted future gross minimum operating lease payments as of December 31, 2018 under ASC 840 (in thousands):
|
|
|
|
|
Year
|
|
Total
|
2019
|
|
$
|
367
|
|
2020
|
|
377
|
|
2021
|
|
389
|
|
2022
|
|
400
|
|
2023
|
|
412
|
|
Thereafter
|
|
6,633
|
|
Total payments
|
|
$
|
8,578
|
|
7. Recent Accounting Pronouncement
ASU No. 2016-13
On June 16, 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU modifies the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to utilize a new forward-looking “expected loss” methodology that generally will result in the earlier recognition of allowance for losses. We adopted ASU 2016-13 effective January 1, 2020 with no material impact to our financial statements.
|
|
|
|
Exhibit
Number
|
|
Description
|
|
2.1
|
|
Facilities Sale Agreement, dated as of December 29, 2006, by and between TransMontaigne Product Services LLC (formerly known as TransMontaigne Product Services Inc.) and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on January 5, 2007).
|
|
2.2
|
|
Facilities Sale Agreement, dated as of December 28, 2007, by and between TransMontaigne Product Services LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on January 3, 2008).
|
|
2.3
|
|
Agreement and Plan of Merger, dated as of November 25, 2018, by and among TLP Finance Holdings, LLC, TLP Acquisition Holdings, LLC, TLP Equity Holdings, LLC, TLP Merger Sub, LLC, TransMontaigne Partners L.P. and TransMontaigne GP L.L.C. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on November 26, 2018).
|
|
2.4
|
|
Agreement and Plan of Merger, dated as of February 26, 2019, by and between TransMontaigne Partners LLC and TransMontaigne GP L.L.C. (incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
3.1
|
|
Certificate of Formation of TransMontaigne Partners LLC, dated February 26, 2019 (incorporated by reference to Exhibit 3.3 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
3.2
|
|
Limited Liability Company Agreement of TransMontaigne Partners LLC, dated February 26, 2019 (incorporated by reference to Exhibit 3.4 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
3.3
|
|
Certificate of Merger of TLP Merger Sub, LLC into TransMontaigne Partners L.P., effective as of February 26, 2019 (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
3.4
|
|
Certificate of Conversion of TransMontaigne Partners L.P. into TransMontaigne Partners LLC, effective as of February 26, 2019 (incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
3.5
|
|
Certificate of Merger of TransMontaigne GP L.L.C. into TransMontaigne Partners LLC, effective as of February 26, 2019 (incorporated by reference to Exhibit 3.5 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
4.1
|
|
Indenture, dated February 12, 2018, among TransMontaigne Partners L.P., TLP Finance Corp. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on February 12, 2018).
|
|
4.2
|
|
First Supplemental Indenture, dated as of February 12, 2018, among TransMontaigne Partners L.P., TLP Finance Corp., the guarantors named therein and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on February 12, 2018).
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
10.1
|
|
Third Amended and Restated Senior Secured Credit Facility, dated March 13, 2017, among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as Administrative Agent, US Bank, National Association, as Syndication Agent, Joint Lead Arranger and Joint Book Runner, Bank of America, N.A., Citibank, N.A., MUFG Union Bank N.A. and Royal Bank of Canada, each as Documentation Agents, Wells Fargo Securities, LLC, as Joint Lead Arranger and Joint Lead Book Runner, and the other financial institutions a party thereto (incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K filed by TransMontaigne Partners L.P. with the SEC on March 14, 2017).
|
|
10.2
|
|
Contribution, Conveyance and Assumption Agreement, dated May 27, 2005, by and among TransMontaigne LLC, TransMontaigne Partners L.P., TransMontaigne GP L.L.C., TransMontaigne Operating GP L.L.C., TransMontaigne Operating Company L.P., TransMontaigne Product Services LLC and Coastal Fuels Marketing, Inc., Coastal Terminals L.L.C., Razorback L.L.C., TPSI Terminals L.L.C. and TransMontaigne Services LLC. (incorporated by reference to Exhibit 10.2 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on September 13, 2005).
|
|
10.3
|
|
Registration Rights Agreement, dated May 27, 2005, by and between TransMontaigne Partners L.P. and MSDW Morgan Stanley Strategic Investments, Inc. (formerly MSDW Bondbook Ventures Inc.) (incorporated by reference to Exhibit 10.7 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on September 13, 2005).
|
|
10.4
|
|
Terminaling Services Agreement—Southeast and Collins/Purvis, dated January 1, 2008, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc., as amended (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.16 of the Annual Report on Form 10 K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2008). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b 2 as promulgated under the Securities Exchange Act of 1934.
|
|
10.5
|
|
Sixth Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated July 16, 2013, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc. (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8 K filed by TransMontaigne Partners L.P. with the SEC on July 17, 2013).
|
|
10.6
|
|
Seventh Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated December 20, 2013, between TransMontaigne Partners L.P. and Morgan Stanley Capital Group Inc. (assigned in part to NGL Energy Partners LP on July 1, 2014) (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8 K filed by TransMontaigne Partners L.P. with the SEC on December 23, 2013).
|
|
10.7
|
|
Eighth Amendment to Terminaling Services Agreement—Southeast and Collins/Purvis, dated November 4, 2014, between TransMontaigne Partners L.P. and NGL Energy Partners LP. (incorporated by reference to Exhibit 10.19 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2016).
|
|
10.8
|
|
Amendment No. 9 to Terminaling Services Agreement—Southeast and Collins/Purvis, dated March 1, 2016, between TransMontaigne Partners L.P. and NGL Energy Partners LP (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on March 3, 2016).
|
|
10.9*
|
|
Amendment No. 10 to Terminaling Services Agreement—Southeast and Collins/Purvis, dated June 1, 2019, between TransMontaigne Partners L.P. and NGL Energy Partners LP. Certain portions of this exhibit have been omitted pursuant to Regulation S-K Item 601(b) (10).
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
10.10
|
|
Indemnification Agreement, dated December 31, 2007, among TransMontaigne LLC, TransMontaigne Partners L.P., TransMontaigne GP L.L.C., TransMontaigne Operating GP L.L.C. and TransMontaigne Operating Company L.P. (incorporated by reference to Exhibit 10.17 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 10, 2008)
|
10.11
|
|
Amended and Restated Limited Liability Company Agreement of Battleground Oil Specialty Terminal Company LLC Company, dated October 18, 2011, by and among TransMontaigne Operating Company L.P., Kinder Morgan Battleground Oil LLC and Tauber Terminals, LP (incorporated by reference to Exhibit 10.16 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 12, 2013). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b‑2 as promulgated under the Securities Exchange Act of 1934.
|
10.12
|
|
First Amendment to the Amended and Restated Limited Liability Company Agreement of Battleground Oil Specialty Terminal Company LLC, dated December 20, 2012, by and among TransMontaigne Operating Company L.P., Kinder Morgan Battleground Oil LLC and Tauber Terminals, LP (incorporated by reference to Exhibit 10.17 of the Annual Report on Form 10‑K filed by TransMontaigne Partners L.P. with the SEC on March 12, 2013). Certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b‑2 as promulgated under the Securities Exchange Act of 1934.
|
10.13
|
|
Asset Purchase Agreement, dated November 2, 2017, by and between Plains Products Terminals LLC and TransMontaigne Operating Company L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on November 8, 2017).
|
|
10.14
|
|
First Amendment to Third Amended and Restated Senior Secured Credit Facility, dated as of December 14, 2017, by and among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by TransMontaigne Partners L.P. with the SEC on December 18, 2017).
|
|
10.15
|
|
Second Amendment to Third Amended and Restated Senior Secured Credit Facility, dated as of February 26, 2019, by and among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by TransMontaigne Partners LLC with the SEC on February 28, 2019).
|
|
10.16
|
|
Third Amendment to Third Amended and Restated Senior Secured Credit Facility, dated as of June 3, 2019, by and among TransMontaigne Operating Company L.P., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q filed by TransMontaigne Partners LLC with the SEC on August 9, 2019).
|
|
10.17
|
|
Right of First Offer Agreement dated as of September 12, 2017, by and between Pike West Coast Holdings, LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on September 15, 2017).
|
|
10.18
|
|
Right of First Offer Agreement dated as of August 4, 2017, by and between Pike West Coast Holdings, LLC and TransMontaigne Partners L.P. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8‑K filed by TransMontaigne Partners L.P. with the SEC on August 9, 2017).
|
|
10.19+
|
|
TLP Management Services LLC Amended and Restated Savings and Retention Plan (incorporated by reference to Exhibit 10.18 of the Annual Report on Form 10‑K filed by TransMontaigne Partners LLC with the SEC on March 15, 2019).
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
10.20*
|
|
Services Agreement dated as of August 18, 2019, by and between TransMontaigne Management Company, LLC and TLP Management Services, LLC.
|
|
21.1*
|
|
List of Subsidiaries of TransMontaigne Partners LLC.
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
|
|
32.2*
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.
|
|
101*
|
|
The following financial information from the Annual Report on Form 10‑K of TransMontaigne Partners LLC and subsidiaries for the year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of equity, (iv) consolidated statements of cash flows and (v) notes to consolidated financial statements.
|
|
*Filed with this Annual Report.
+Identifies each management compensation plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.
|
|
|
|
|
TransMontaigne Partners LLC
|
|
|
|
By:
|
TLP FINANCE HOLDINGS, LLC, its Managing Member
|
|
|
|
By:
|
/s/ Frederick W. Boutin
|
|
|
|
Date: March 13, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities with registrant so stated, on the date indicated.
Name and Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Frederick W. Boutin
|
|
Chief Executive Officer
|
|
March 13, 2020
|
Frederick W. Boutin
|
|
|
|
|
|
|
|
/s/ Robert T. Fuller
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
March 13, 2020
|
Robert T. Fuller
|
|
|
|
|
|
|
|
/s/ Lisa M. Kearney
|
|
Vice President, Chief Accounting Officer
|
|
March 13, 2020
|
Lisa M. Kearney
|
|
|
|
|
|
|
|
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