SEGMENT REPORTING

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

We manage our business in two reportable segments: Terminalling services and Fleet services. The Terminalling services segment charges minimum monthly commitment fees under multi-year take-or-pay contracts to load and unload various grades of crude oil into and from railcars, as well as fixed fees per gallon to transload ethanol and renewable diesel from railcars, including related logistics services. We also facilitate rail-to-pipeline shipments of crude oil. Our Terminalling services segment also charges minimum monthly fees to store crude oil in tanks that are leased to our customers. The Fleet services segment provides our customer with railcars and fleet services related to the transportation of liquid hydrocarbons under take-or-pay contracts. Corporate activities are not considered a reportable segment, but are included to present shared services and financing activities which are not allocated to our established reporting segments. We have concluded that disaggregating revenue by reporting segments appropriately depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Our segments offer different services and are managed accordingly. Our CODM regularly reviews financial information about both segments in order to allocate resources and evaluate performance. Our CODM assesses segment performance based on the cash flows produced by our established reporting segments using Segment Adjusted EBITDA. Segment Adjusted EBITDA is a measure of segment profitability disclosed in accordance with GAAP. We define Segment Adjusted EBITDA as “Net income (loss)” of each segment adjusted for depreciation and amortization, interest, income taxes, changes in contract assets and liabilities, deferred revenues, foreign currency transaction gains and losses and other items which do not affect the underlying cash flows produced by our businesses.

	Three Months Ended September 30, 2023
	Terminalling services		Fleet services		Corporate		Total
	(in thousands)
Revenues
Terminalling services	$	9,785	$	—	$	—	$	9,785
Terminalling services — related party	740		—		—		740
Fleet leases — related party	—		373		—		373
Fleet services — related party	—		—		—		—
Freight and other reimbursables	5		—		—		5
Freight and other reimbursables — related party	44		130		—		174
Total revenues	10,574		503		—		11,077
Operating costs
Subcontracted rail services	2,210		—		—		2,210
Pipeline fees	2,991		—		—		2,991
Freight and other reimbursables	49		130		—		179
Operating and maintenance	807		372		—		1,179
Selling, general and administrative	837		14		2,942		3,793
Impairment of intangible and long-lived assets	—		—		—		—
Gain on sale of business	—		—		(9)		(9)
Depreciation and amortization	1,313		—		—		1,313
Total operating costs	8,207		516		2,933		11,656
Operating income (loss)	2,367		(13)		(2,933)		(579)
Interest expense	4		—		4,925		4,929
Gain associated with derivative instruments	—		—		(3,187)		(3,187)
Foreign currency transaction loss (gain)	114		(4)		(110)		—
Other income, net	(61)		—		(16)		(77)
Provision for (benefit from) income taxes	571		(10)		—		561
Net income (loss)	$	1,739	$	1	$	(4,545)	$	(2,805)

	Three Months Ended September 30, 2022
	Terminalling services		Fleet services		Corporate		Total
	(in thousands)
Revenues
Terminalling services	$	19,345	$	—	$	—	$	19,345
Terminalling services — related party	670		—		—		670
Fleet leases — related party	—		912		—		912
Fleet services — related party	—		298		—		298
Freight and other reimbursables	254		—		—		254
Freight and other reimbursables — related party	—		—		—		—
Total revenues	20,269		1,210		—		21,479
Operating costs
Subcontracted rail services	2,742		—		—		2,742
Pipeline fees	5,735		—		—		5,735
Freight and other reimbursables	254		—		—		254
Operating and maintenance	1,919		969		—		2,888
Selling, general and administrative	1,653		36		3,262		4,951
Impairment of intangible and long-lived assets	71,612		—		—		71,612
Gain on sale of business	—		—		—		—
Depreciation and amortization	5,758		—		—		5,758
Total operating costs	89,673		1,005		3,262		93,940
Operating income (loss)	(69,404)		205		(3,262)		(72,461)
Interest expense	4		—		3,122		3,126
Gain associated with derivative instruments	—		—		(6,904)		(6,904)
Foreign currency transaction loss	97		1		54		152
Other income, net	(23)		(1)		(4)		(28)
Provision for income taxes	473		73		—		546
Net income (loss)	$	(69,955)	$	132	$	470	$	(69,353)

	Nine Months Ended September 30, 2023
	Terminalling services		Fleet services		Corporate		Total
	(in thousands)
Revenues
Terminalling services	$	47,888	$	—	$	—	$	47,888
Terminalling services — related party	2,186		—		—		2,186
Fleet leases — related party	—		943		—		943
Fleet services — related party	—		171		—		171
Freight and other reimbursables	195		—		—		195
Freight and other reimbursables — related party	159		132		—		291
Total revenues	50,428		1,246		—		51,674
Operating costs
Subcontracted rail services	7,818		—		—		7,818
Pipeline fees	14,298		—		—		14,298
Freight and other reimbursables	354		132		—		486
Operating and maintenance	2,990		965		—		3,955
Selling, general and administrative	2,973		56		11,501		14,530
Impairment of intangible and long-lived assets	—		—		—		—
Gain on sale of business	—		—		(6,211)		(6,211)
Depreciation and amortization	4,942		—		—		4,942
Total operating costs	33,375		1,153		5,290		39,818
Operating income (loss)	17,053		93		(5,290)		11,856
Interest expense	8		—		13,841		13,849
Gain associated with derivative instruments	—		—		(6,092)		(6,092)
Foreign currency transaction loss (gain)	157		—		(55)		102
Other income, net	(151)		—		(42)		(193)
Provision for (benefit from) income taxes	417		(32)		—		385
Net income (loss)	$	16,622	$	125	$	(12,942)	$	3,805

	Nine Months Ended September 30, 2022
	Terminalling services		Fleet services		Corporate		Total
	(in thousands)
Revenues
Terminalling services	$	84,872	$	—	$	—	$	84,872
Terminalling services — related party	1,987		—		—		1,987
Fleet leases — related party	—		2,737		—		2,737
Fleet services — related party	—		896		—		896
Freight and other reimbursables	514		—		—		514
Freight and other reimbursables — related party	—		—		—		—
Total revenues	87,373		3,633		—		91,006
Operating costs
Subcontracted rail services	10,337		—		—		10,337
Pipeline fees	22,625		—		—		22,625
Freight and other reimbursables	514		—		—		514
Operating and maintenance	6,788		2,934		—		9,722
Selling, general and administrative	8,090		126		12,876		21,092
Impairment of intangible and long-lived assets	71,612		—		—		71,612
Gain on sale of business	—		—		—		—
Depreciation and amortization	17,362		—		—		17,362
Total operating costs	137,328		3,060		12,876		153,264
Operating income (loss)	(49,955)		573		(12,876)		(62,258)
Interest expense	122		—		6,603		6,725
Gain associated with derivative instruments	—		—		(13,800)		(13,800)
Foreign currency transaction loss	1,836		2		104		1,942
Other income, net	(47)		(3)		(5)		(55)
Provision for income taxes	884		121		—		1,005
Net income (loss)	$	(52,750)	$	453	$	(5,778)	$	(58,075)

Segment Adjusted EBITDA

The following tables present the computation of Segment Adjusted EBITDA, which is a measure of segment profitability disclosed in accordance with GAAP, for each of our segments for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
Terminalling Services Segment	2023		2022		2023		2022
	(in thousands)
Net income (loss)	$	1,739	$	(69,955)	$	16,622	$	(52,750)
Interest income, net (1)	(56)		(18)		(139)		97
Depreciation and amortization	1,313		5,758		4,942		17,362
Provision for income taxes	571		473		417		884
Foreign currency transaction loss (2)	114		97		157		1,836
Loss associated with disposal of assets	—		—		—		3
Impairment of intangible and long-lived assets	—		71,612		—		71,612
Non-cash deferred amounts (3)	(180)		(1,475)		(3,482)		(3,361)
Segment Adjusted EBITDA attributable to Hardisty South entities prior to acquisition (4)	—		—		—		(258)
Segment Adjusted EBITDA	$	3,501	$	6,492	$	18,517	$	35,425

(1)    Represents interest expense associated with the construction loan agreement that existed prior to our acquisition of the Hardisty South Terminal entities and interest income associated with our Terminalling Services segment that is included in “Other income, net” in our consolidated statements of operations.

(2)    Represents foreign exchange transaction amounts associated with activities between our U.S. and Canadian subsidiaries.

(3)    Represents the change in non-cash contract assets and liabilities associated with revenue recognized at blended rates based on tiered rate structures in certain of our customer contracts and deferred revenue associated with deficiency credits that are expected to be used in the future prior to their expiration. Amounts presented are net of the corresponding prepaid Gibson pipeline fee that will be recognized as expense concurrently with the recognition of revenue.

(4)    Segment adjusted EBITDA attributable to the Hardisty South entities for the three months ended March 31, 2022 was excluded from the Terminalling Services Segment Adjusted EBITDA, as these amounts were generated by the Hardisty South entities prior to the Partnership’s acquisition.

	Three Months Ended September 30,				Nine Months Ended September 30,
Fleet Services Segment	2023		2022		2023		2022
	(in thousands)
Net income	$	1	$	132	$	125	$	453
Interest income (1)	—		(1)		—		(3)
Foreign currency transaction loss (gain) (2)	(4)		1		—		2
Provision for (benefit from) income taxes	$	(10)	$	73	$	(32)	$	121
Segment Adjusted EBITDA	$	(13)	$	205	$	93	$	573

(1)    Represents interest income associated with our Fleet Services segment that is included in “Other income, net” in our consolidated statements of operations.

(2)    Represents foreign exchange transaction amounts associated with activities between our U.S. and Canadian subsidiaries.