NET LOSS PER LIMITED PARTNER UNIT AND DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' |
NET LOSS PER LIMITED PARTNER UNIT AND DISTRIBUTIONS | ' |
NET (LOSS) INCOME PER LIMITED PARTNER UNIT AND DISTRIBUTIONS |
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Net (Loss) Income Per Limited Partner Unit |
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The following is a reconciliation of the net loss attributable to our limited partners and our limited partner units and the basic and diluted earnings per unit calculations for the three and nine months ended September 30, 2013 (in thousands, except unit and per unit data): |
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| | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | |
Net loss | | $ | (4,069 | ) | | $ | (16,645 | ) | | | | | | | | | | | | | | | | | |
Series A Preferred Unit distribution | | (696 | ) | | (1,255 | ) | | | | | | | | | | | | | | | | | |
Series A Preferred Unit valuation adjustment to maximum redemption value (1) | | 4,667 | | | — | | | | | | | | | | | | | | | | | | |
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Net loss attributable to partners | | $ | (98 | ) | | $ | (17,900 | ) | | | | | | | | | | | | | | | | | |
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General partner’s interest | | $ | (81 | ) | | $ | (334 | ) | | | | | | | | | | | | | | | | | |
Limited partners’ interest: | | | | | | | | | | | | | | | | | | | | | |
Common (1) | | $ | 2,323 | | | $ | (8,784 | ) | | | | | | | | | | | | | | | | | |
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Subordinated | | $ | (2,340 | ) | | $ | (8,782 | ) | | | | | | | | | | | | | | | | | |
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Common Units | | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | |
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Interest in net (loss) income | | $ | 2,323 | | | $ | (8,784 | ) | | | | | | | | | | | | | | | | | |
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Effect of dilutive units - numerator: | | | | | | | | | | | | | | | | | | | | | | | |
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Series A Preferred Unit distribution | | 341 | | | — | | | | | | | | | | | | | | | | | | |
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Series A Preferred Unit valuation adjustment to maximum redemption value (1) | | (4,667 | ) | | — | | | | | | | | | | | | | | | | | | |
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Dilutive interest in net loss | | $ | (2,003 | ) | | $ | (8,784 | ) | | | | | | | | | | | | | | | | | |
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Weighted-average units - basic | | 12,222,692 | | | 12,219,699 | | | | | | | | | | | | | | | | | | |
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Effect of dilutive units - denominator (2): | | | | | | | | | | | | | | | | | | | | | |
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Series A Preferred Units | | 1,739,473 | | | — | | | | | | | | | | | | | | | | | | |
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Awards granted under long-term incentive plan | | 27,972 | | | — | | | | | | | | | | | | | | | | | | |
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Weighted-average units - dilutive | | 13,990,137 | | | 12,219,699 | | | | | | | | | | | | | | | | | | |
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Basic earnings per unit: | | | | | | | | | | | | | | | | | | | | | |
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Net (loss) income per unit | | $ | 0.19 | | | $ | (0.72 | ) | | | | | | | | | | | | | | | | | |
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Dilutive earnings per unit: | | | | | | | | | | | | | | | | | | | | | |
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Net loss per unit | | $ | (0.14 | ) | | $ | (0.72 | ) | | | | | | | | | | | | | | | | | |
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Subordinated Units | | Three Months Ended September 30, 2013 | | Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | |
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Interest in net loss | | $ | (2,340 | ) | | $ | (8,782 | ) | | | | | | | | | | | | | | | | | |
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Weighted-average units - basic | | 12,213,713 | | | 12,213,713 | | | | | | | | | | | | | | | | | | |
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Effect of dilutive units (2) | | — | | | — | | | | | | | | | | | | | | | | | | |
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Weighted-average units - dilutive | | 12,213,713 | | | 12,213,713 | | | | | | | | | | | | | | | | | | |
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Basic and diluted net loss per subordinated unit | | $ | (0.19 | ) | | $ | (0.72 | ) | | | | | | | | | | | | | | | | | |
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(1) The valuation adjustment to maximum redemption value of the Series A Preferred Units as of September 30, 2013 increased income available to common units in the calculation of earnings per unit (See Note 11) for the three months ended September 30, 2013. There is no valuation adjustment to maximum redemption value for the Series A Preferred Units as of September 30, 2013 in the calculation of earnings per unit (See Note 11) for the nine months ended September 30, 2013. |
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(2) Because we had a net loss for the nine months ended September 30, 2013 for the common units and the three and nine months ended September 30, 2013 for the subordinated units, the effect of the dilutive units would be anti-dilutive to the per unit calculation. Therefore, the weighted average units outstanding are the same for basic and dilutive net loss per unit. The weighted average units included in the computation of diluted per unit amounts were 27,972 unvested awards granted under our long-term incentive plan (See Note 13) and 1,739,473 Series A Preferred Units (See Note 11) for the three months ended September 30, 2013. The weighted average units that were not included in the computation of diluted per unit amounts were 20,221 unvested awards granted under our long-term incentive plan and 1,052,329 Series A Preferred Units for the nine months ended September 30, 2013. Diluted net income per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the long-term incentive plan, were exercised, settled or converted into common units. When it is determined that potential common units resulting from an award should be included in the diluted net income per limited partner unit calculation, the impact is reflected by applying the treasury stock method. |
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Distributions |
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Our Second Amended and Restated Agreement of Limited Partnership (“Partnership Agreement”) requires that, within 45 days after the end of each quarter we distribute all of our available cash to unitholders of record on the applicable record date, as determined by our General Partner. Currently, our Amended Credit Facility (see Note 5) restricts distributions to our unitholders to our established minimum quarterly distribution of $0.40 per unit until the Target Leverage Ratio (see Note 5) has been met. |
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Series A Preferred Units |
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During the second quarter of 2013, we raised $40.0 million of equity through issuances of 1,715,000 Series A Preferred Units and an additional General Partner contribution to satisfy the requirements of the second amendment to our $350.0 million senior secured credit facility with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of lenders (“Credit Facility”) (See Note 5 and Note 11). Under the terms of our Partnership Agreement, we are required to pay the holders of our Series A Preferred Units quarterly distributions of in-kind Series A Preferred Units for the first four full quarters following the issuance of the units and continuing thereafter until we have given notice under the Credit Facility that we have achieved the Target Leverage Ratio (See Note 5) and after the board of directors of our General Partner determines to begin paying quarterly distributions in cash. In-kind distributions will be in the form of Series A Preferred Units at a rate of $0.40 per outstanding Series A Preferred Unit per quarter (or 7% per year of the per unit purchase price) or, beginning after four full quarters, such higher per unit rate as is paid in respect to our common units. Cash distributions will equal the greater of $0.40 per unit per quarter or the quarterly distribution paid with respect to each common unit. |
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The Series A Preferred Units are considered participating securities for purposes of the basic earnings per unit calculation during periods in which they receive cash distributions. As we are required to pay in-kind distributions for the first four full quarters and continuing until the Target Leverage Option (See Note 5) has been achieved, the Series A Preferred Units have been excluded from the basic earnings per unit calculation for the three and nine months ended September 30, 2013. |
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The following table represents the paid in-kind (“PIK”) distribution for the period ended June 30, 2013 and the PIK distribution earned for the period ended September 30, 2013 (in thousands, except per unit and in-kind distribution units): |
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Payment Date | | Attributable to the Quarter Ended | | Per Unit Distribution | | | | In-Kind Series A | | In-Kind | | In-Kind | | In-Kind General Partner Distribution Value(3) | | | |
Preferred Unit | Series A | Unit | | | |
Distributions | Preferred | Distribution | | | |
to Series A | Distributions | to General | | | |
Preferred | Value(3) | Partner | | | |
Holders | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | | |
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14-Nov-13 | | 30-Sep-13 | | $ | 0.4 | | | | | 30,439 | | | $ | 696 | | | 621 | | | $ | 14 | | | | |
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14-Aug-13 | | 30-Jun-13 | | 0.35 | | | -1 | | 22,276 | | | 509 | | | 455 | | | 10 | | | | |
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14-Aug-13 | | 30-Jun-13 | | 0.2 | | | -2 | | 2,199 | | | 50 | | | 45 | | | 1 | | | | |
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(1) Per unit distribution of $0.35 corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the issuance of 1,466,325 Series A Preferred Units and 29,925 general partner units on April 12, 2013. |
(2) Per unit distribution of $0.20 corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the issuance of 248,675 Series A Preferred Units and 5,075 general partner units on May 15, 2013. |
(3) The value was calculated based on the Series A Preferred Units issue price of $22.86 as stated in our Partnership Agreement, multiplied by the number of units distributed. |
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Common Units |
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The following table represents our distribution declared for the period ended September 30, 2013 and distributions paid for the periods ended June 30, 2013, March 31, 2013 and December 31, 2012 (in thousands, except per unit data): |
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| | Attributable to the | | Per Unit | | | | Limited Partners | | | | |
Payment Date | | Quarter Ended | | Distribution | | | | Common | | Subordinated | | General Partner | | Total |
2013 | | | | | | | | | | | | | | | | | | | |
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14-Nov-13 | | 30-Sep-13 | | $ | 0.4 | | | | | $ | 4,888 | | | $ | 4,885 | | | $ | 214 | | | $ | 9,987 | |
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14-Aug-13 | | 30-Jun-13 | | 0.35 | | | (1 | ) | | — | | | — | | | 10 | | | 10 | |
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14-Aug-13 | | 30-Jun-13 | | 0.2 | | | (2 | ) | | — | | | — | | | 1 | | | 1 | |
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14-Aug-13 | | 30-Jun-13 | | 0.4 | | | | | 4,890 | | | 4,886 | | | 199 | | | 9,975 | |
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15-May-13 | | 31-Mar-13 | | 0.4 | | | | | 4,888 | | | 4,886 | | | 199 | | | 9,973 | |
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2012 | | | | | | | | | | | | | | |
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February 14, 2013 | | December 31, 2012 | | 0.24 | | | (3 | ) | | 2,931 | | | 2,931 | | | 120 | | | 5,982 | |
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(1) Per unit distribution of $0.35 corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the issuance of 29,925 general partner units on April 12, 2013. |
(2) Per unit distribution of $0.20 corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the issuance of 5,075 general partner units on May 15, 2013. |
(3) Per unit distribution of $0.24 corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the closing of our IPO on November 7, 2012. |
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Earnings Per Common Unit of Southcross Energy LLC |
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The following is a reconciliation of net income per common unit used in the basic and diluted earnings per unit calculations for the three and nine months ended September 30, 2012 (in thousands, except unit and per unit data): |
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| Three Months Ended September 30, 2012 | | Nine Months Ended September 30, 2012 | | | | | | | | | | | | | | | | | | |
Net loss attributable to Southcross Energy LLC common unitholders | $ | (12,241 | ) | | $ | (15,014 | ) | | | | | | | | | | | | | | | | | | |
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Weighted-average common units outstanding - basic | 1,213,496 | | | 1,214,321 | | | | | | | | | | | | | | | | | | | |
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Effect of unvested common units | 129,210 | | | 165,276 | | | | | | | | | | | | | | | | | | | |
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Weighted-average common units outstanding - diluted | $ | 1,342,706 | | | $ | 1,379,597 | | | | | | | | | | | | | | | | | | | |
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Basic and diluted net loss per Southcross Energy LLC common unit | $ | (10.09 | ) | | $ | (12.36 | ) | | | | | | | | | | | | | | | | | | |
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Southcross Energy LLC calculated earnings per common unit by first deducting the amount of cumulative returns on both the redeemable preferred and preferred units from net income (loss), and dividing this amount by the weighted average number of vested common units (including both the vested Class A common units and Class B units). The weighted average number of unvested units that would be included in the computation of diluted earnings per unit was 129,210 and 165,276 units for the three and nine months ended September 30, 2012, respectively. Because we had a net loss for the three and nine months ended September 30, 2012, the unvested units were anti-dilutive. Therefore, the weighted average units outstanding are the same for basic and diluted net loss per common unit. |