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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________________________

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File No.: 1-16335
 __________________________________

 Magellan Midstream Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware 73-1599053
(State or other jurisdiction of
incorporation or organization)
 (IRS Employer
Identification No.)
One Williams Center, P.O. Box 22186, Tulsa, Oklahoma 74121-2186
(Address of principal executive offices and zip code)
(918) 574-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsMMPNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x    Accelerated filer     Non-accelerated filer      
Smaller reporting company  Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes      No  x
As of May 4, 2022, there were 211,561,364 common units outstanding.



TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
 
ITEM 1.CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
1.
2.
Discontinued Operations and Assets Held for Sale
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.CONTROLS AND PROCEDURES
PART II
OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
INDEX TO EXHIBITS
SIGNATURES
 
1


Forward-Looking Statements

Except for statements of historical fact, all statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words like “anticipates,” “believes,” “cause,” “continue,” “could,” “depend,” “develop,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “have,” “impact,” “implement,” “increase,” “intends,” “lead,” “maintain,” “may,” “might,” “plans,” “potential,” “possible,” “projected,” “reduce,” “remain,” “result,” “scheduled,” “seek,” “should,” “will,” “would” and other similar words or expressions. The absence of such words or expressions does not necessarily mean the statements are not forward-looking. Although we believe our forward-looking statements are reasonable, statements made regarding future results are not guarantees of future performance and are subject to numerous assumptions, uncertainties and risks that are difficult to predict, including those described in Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K. Actual outcomes and results may be materially different from the results stated or implied in such forward-looking statements included in this report. You should not put any undue reliance on any forward-looking statement.
 
The following are among the important factors that could cause future results to differ materially from any expected, projected, forecasted or estimated amounts, events or circumstances we have discussed in this report:
 
changes in demand for refined products, crude oil or liquefied petroleum gases (“LPGs”);
price fluctuations for refined products, crude oil or LPGs and expectations about future prices for these products;
changes in the production of crude oil in the basins served by our pipelines or terminals;
changes in general economic conditions, including market and macro-economic disruptions resulting from pandemics and related governmental responses;
changes in the financial condition of our customers, vendors, derivatives counterparties, lenders or joint venture co-owners;
our ability to secure financing in the credit and capital markets in amounts and on terms that will allow us to execute our business strategy, refinance our existing obligations when due and maintain adequate liquidity;
development and increasing use of alternative sources of energy, including but not limited to electric and battery-powered motors, natural gas, hydrogen and renewable fuels such as ethanol, biodiesel and renewable diesel, as well as increased conservation or fuel efficiency and regulatory or technological developments that could affect demand for our services;
changes in population in the markets served by our refined products pipeline system and changes in consumer preferences, driving patterns or rates of automobile ownership;
changes in the product quality, throughput or interruption in service of refined products or crude oil pipelines owned and operated by third parties and connected to our assets;
changes in demand for transportation, storage or other services we provide for refined products or crude oil;
changes in supply and demand patterns for our facilities due to geopolitical events, the activities of the Organization of the Petroleum Exporting Countries (“OPEC”) and other non-OPEC oil producing countries with large production capacity;
changes in United States (“U.S.”) trade policies or in laws governing the importing or exporting of petroleum products;
our ability to manage interest rate and commodity price exposures;
changes in our tariff rates or other terms of service required by the Federal Energy Regulatory Commission or state regulatory agencies;
shut-downs or cutbacks at refineries, oil fields, petrochemical plants or other customers or businesses that use or supply our assets;
the effect of weather patterns or other natural phenomena, including climate change, on our operations and demand for our services;
an increase in the competition our operations encounter, including the effects of capacity over-build in the areas where we operate;
2


the occurrence of wars, natural disasters, epidemics, terrorism, cyberattacks, sabotage, protests, activism, operational hazards, equipment failures, system failures or other unforeseen interruptions, as well as global and domestic repercussions from and any government responses to any such events;
our ability to obtain adequate levels of insurance at a reasonable cost, and the potential for losses to exceed the insurance coverage we do obtain;
the treatment of us as a corporation for federal or state income tax purposes or if we become subject to significant forms of other taxation or more aggressive interpretation or increased assessments under existing forms of taxation;
our ability to identify expansion projects, accretive acquisitions and joint ventures with acceptable expected returns and to complete these projects on time and at projected costs;
our ability to consummate announced divestitures;
our ability to successfully execute our capital allocation priorities, including unit repurchases, with acceptable expected returns;
the effect of changes in accounting policies and uncertainty of estimates, including accruals and costs of environmental remediation;
our ability to cooperate with and rely on our joint venture co-owners;
actions by rating agencies concerning our credit ratings;
our ability to timely obtain and maintain all necessary approvals, consents and permits required to operate our existing assets and to construct, acquire and operate any new or modified assets;
our ability to promptly obtain all necessary services, materials, labor, supplies and rights-of-way required for maintenance and operation of our current assets and construction of our growth projects, without significant delays, disputes or cost overruns;
risks inherent in the use and security of information systems in our business and implementation of new software and hardware;
changes in laws and regulations or the interpretation of laws and regulations that govern our gas liquids blending activities or changes regarding product quality specifications or renewable fuel obligations that impact our ability to produce gasoline volumes through our gas liquids blending activities or that require significant capital outlays for compliance;
changes in laws and regulations or the interpretation of laws and regulations to which we or our customers are or could become subject, including those related to tax withholding requirements, safety, security, employment, hydraulic fracturing, derivatives transactions, trade and the environment, including laws and regulations designed to address climate change;
the cost and effects of legal and administrative claims and proceedings against us, our subsidiaries or our joint ventures;
the amount of our indebtedness, which could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds, place us at competitive disadvantages compared to our competitors that have less debt or have other adverse consequences;
the potential that our internal controls may not be adequate, weaknesses may be discovered or remediation of any identified weaknesses may not be successful;
the ability and intent of our customers, vendors, lenders, joint venture co-owners or other third parties to perform their contractual obligations to us;
petroleum products supply disruptions whether due to international military conflicts or otherwise; and
other factors and uncertainties inherent in the transportation, storage and distribution of petroleum products and the operation, acquisition and construction of assets related to such activities.

This list of important factors is not exhaustive. The forward-looking statements in this Quarterly Report speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changes in assumptions or otherwise, unless required by law.
3


PART I
FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per unit amounts)
(Unaudited)
 
Three Months Ended
 March 31,
 20212022
Transportation and terminals revenue$412.0 $422.9 
Product sales revenue213.7 246.1 
Affiliate management fee revenue5.4 5.7 
Total revenue631.1 674.7 
Costs and expenses:
Operating127.3 124.2 
Cost of product sales170.9 243.4 
Depreciation, amortization and impairment54.6 57.7 
General and administrative46.0 62.8 
Total costs and expenses398.8 488.1 
Other operating income (expense)(0.4)(2.0)
Earnings of non-controlled entities39.1 35.4 
Operating profit271.0 220.0 
Interest expense57.0 57.3 
Interest capitalized(0.5)(0.4)
Interest income(0.1)(0.1)
Gain on disposition of assets (0.2)
Other (income) expense1.1 0.6 
Income from continuing operations before provision for income taxes213.5 162.8 
Provision for income taxes0.8 0.8 
Income from continuing operations212.7 162.0 
Income from discontinued operations8.6 3.5 
Net income$221.3 $165.5 
Earnings per common unit
Basic:
  Continuing operations$0.95 $0.76 
  Discontinued operations0.04 0.02 
    Net income per common unit$0.99 $0.78 
  Weighted average number of common units outstanding223.6 212.9 
Diluted:
  Continuing operations$0.95 $0.76 
  Discontinued operations0.04 0.02 
    Net income per common unit$0.99 $0.78 
  Weighted average number of common units outstanding223.6 212.9 
See notes to consolidated financial statements.
4


MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in millions)
 
 Three Months Ended March 31,
 20212022
Net income$221.3 $165.5 
Other comprehensive income:
Derivative activity:
Reclassification of net loss on cash flow hedges to income0.9 0.9 
Changes in employee benefit plan assets and benefit obligations
    recognized in other comprehensive income:
Recognition of actuarial loss amortization in income1.6 1.2 
Total other comprehensive income2.5 2.1 
Comprehensive income$223.8 $167.6 



























See notes to consolidated financial statements.
5


MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(In millions)
 
December 31,
2021
March 31,
2022
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$2.0 $4.6 
Trade accounts receivable
135.2 129.8 
Other accounts receivable
34.6 35.0 
Inventory281.1 308.2 
Commodity derivatives contracts, net1.4 3.1 
Commodity derivatives deposits46.3 130.8 
Assets held for sale299.5 304.0 
Other current assets43.1 35.7 
        Total current assets843.2 951.2 
Property, plant and equipment8,045.9 8,081.9 
Less: accumulated depreciation2,141.2 2,195.4 
        Net property, plant and equipment5,904.7 5,886.5 
Investments in non-controlled entities980.8 978.6 
Right-of-use asset, operating leases174.2 168.3 
Long-term receivables10.1 9.8 
Goodwill50.1 50.1 
Other intangibles (less accumulated amortization of $11.9 and $12.6 at December 31, 2021 and March 31, 2022, respectively)
43.2 42.5 
Restricted cash
7.0 6.7 
Other noncurrent assets16.7 17.3 
        Total assets$8,030.0 $8,111.0 
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable$109.5 $98.0 
Accrued payroll and benefits74.9 43.9 
Accrued interest payable59.0 50.0 
Accrued taxes other than income76.5 51.7 
Deferred revenue92.5 106.4 
Accrued product liabilities153.5 126.6 
Commodity derivatives contracts, net18.6 50.5 
Current portion of operating lease liability25.8 30.7 
Liabilities held for sale15.8 23.5 
Other current liabilities53.5 54.5 
        Total current liabilities679.6 635.8 
Long-term debt, net5,088.8 5,317.2 
Long-term operating lease liability147.3 138.5 
Long-term pension and benefits145.0 145.8 
Other noncurrent liabilities69.5 71.0 
Commitments and contingencies
Partners’ capital:
Common unitholders (212.4 units and 211.6 units outstanding at December 31, 2021 and March 31, 2022, respectively)
2,054.8 1,955.6 
Accumulated other comprehensive loss(155.0)(152.9)
        Total partners’ capital1,899.8 1,802.7 
        Total liabilities and partners’ capital$8,030.0 $8,111.0 
See notes to consolidated financial statements.
6


MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
 Three Months Ended
March 31,
 20212022
Operating Activities:
Net income$221.3 $165.5 
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations(8.6)(3.5)
Depreciation, amortization and impairment expense54.6 57.7 
Gain on disposition of assets (0.2)
Earnings of non-controlled entities(39.1)(35.4)
Distributions from operations of non-controlled entities51.4 38.4 
Equity-based incentive compensation expense4.7 14.4 
Settlement cost, amortization of prior service credit and actuarial loss1.6 1.2 
Changes in operating assets and liabilities:
Trade accounts receivable and other accounts receivable(31.3)5.0 
Inventory(46.5)(27.1)
Accounts payable10.1 (9.3)
Accrued payroll and benefits(12.3)(31.0)
Accrued interest payable(9.0)(9.0)
Accrued taxes other than income(19.9)(24.8)
Accrued product liabilities58.9 (26.9)
Deferred revenue(0.6)13.9 
Other current and noncurrent assets and liabilities(7.1)(36.3)
Net cash provided by operating activities of continuing operations228.2 92.6 
Net cash provided by operating activities of discontinued operations12.2 7.8 
Net cash provided by operating activities240.4 100.4 
Investing Activities:
Additions to property, plant and equipment, net(1)
(29.7)(44.9)
Proceeds from sale and disposition of assets0.7 0.2 
Investments in non-controlled entities(1.9)(0.8)
Net cash used by investing activities of continuing operations (30.9)(45.5)
Net cash used by investing activities of discontinued operations(0.3)(1.1)
Net cash used by investing activities(31.2)(46.6)
Financing Activities:
Distributions paid(229.4)(220.6)
Repurchases of common units (50.0)
Net borrowings under revolver17.0 228.0 
Payments associated with settlement of equity-based incentive compensation(6.2)(8.9)
Net cash used by financing activities(218.6)(51.5)
Change in cash, cash equivalents and restricted cash(9.4)2.3 
Cash, cash equivalents and restricted cash at beginning of period22.4 9.0 
Cash, cash equivalents and restricted cash at end of period$13.0 $11.3 
Supplemental non-cash investing activities:
(1) Additions to property, plant and equipment
$(20.4)$(39.4)
   Changes in accounts payable and other current liabilities related to capital expenditures(9.3)(5.5)
   Additions to property, plant and equipment, net$(29.7)$(44.9)
See notes to consolidated financial statements.
7


MAGELLAN MIDSTREAM PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(Unaudited, in millions)

Common Unitholders Accumulated Other Comprehensive LossTotal Partners’ Capital
Balance, January 1, 2021$2,487.0 $(183.2)$2,303.8 
Comprehensive income:
Net income221.3 — 221.3 
Total other comprehensive income— 2.5 2.5 
Total comprehensive income221.3 2.5 223.8 
Distributions(229.4)— (229.4)
Equity-based incentive compensation expense4.7 — 4.7 
Issuance of common units in settlement of equity-based
incentive plan awards
0.5 — 0.5 
Payments associated with settlement of equity-based incentive
compensation
(6.2)— (6.2)
Other(0.2)— (0.2)
Three Months Ended March 31, 2021$2,477.7 $(180.7)$2,297.0 
Balance, January 1, 2022$2,054.8 $(155.0)$1,899.8 
Comprehensive income:
Net income165.5 — 165.5 
Total other comprehensive income— 2.1 2.1 
Total comprehensive income165.5 2.1 167.6 
Distributions(220.6)— (220.6)
Repurchase of common units(50.0)— (50.0)
Equity-based incentive compensation expense14.4 — 14.4 
Issuance of common units in settlement of equity-based
incentive plan awards
0.7 — 0.7 
Payments associated with settlement of equity-based incentive
compensation
(8.9)— (8.9)
Other(0.3)— (0.3)
Three Months Ended March 31, 2022$1,955.6 $(152.9)$1,802.7 









See notes to consolidated financial statements.
8






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Organization, Description of Business and Basis of Presentation

Organization

Unless indicated otherwise, the terms “our,” “we,” “us” and similar language refer to Magellan Midstream Partners, L.P. together with its subsidiaries. Magellan Midstream Partners, L.P. is a Delaware limited partnership, and our common units are traded on the New York Stock Exchange under the ticker symbol “MMP.” Magellan GP, LLC, a wholly owned Delaware limited liability company, serves as our general partner. The board of directors of our general partner is referred to herein as our “board.”

Description of Business

We are principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil. As of March 31, 2022, our asset portfolio, excluding assets associated with discontinued operations, consisted of:

our refined products segment, comprised of our approximately 9,800-mile refined petroleum products pipeline system with 54 terminals and two marine storage terminals (one of which is owned through a joint venture); and

our crude oil segment, comprised of approximately 2,200 miles of crude oil pipelines, a condensate splitter and 39 million barrels of aggregate storage capacity, of which approximately 29 million barrels are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 31 million barrels of this storage capacity (including 25 million barrels used for contract storage) are wholly-owned, with the remainder owned through joint ventures.

The following terms are commonly used in our industry to describe products that we transport, store, distribute or otherwise handle through our petroleum pipelines and terminals:

refined products are the output from crude oil refineries that are primarily used as fuels by consumers. Refined products include gasoline, diesel fuel, aviation fuel, kerosene and heating oil. Diesel fuel, kerosene and heating oil are also referred to as distillates;

transmix is a mixture that forms when different refined products are transported in pipelines. Transmix is fractionated and blended into usable refined products;

LPGs are liquids produced as by-products of the crude oil refining process and in connection with natural gas production. LPGs include gas liquids such as butane, natural gasoline and propane;

blendstocks are products blended with refined products to change or enhance their characteristics such as increasing a gasoline’s octane or oxygen content. Blendstocks include alkylates and oxygenates; and

crude oil, which includes condensate, is a naturally occurring unrefined petroleum product recovered from underground that is used as feedstock by refineries, splitters and petrochemical facilities.

We use the term petroleum products to describe any, or a combination, of the above-noted products. In addition, we handle, store and distribute renewable fuels, such as ethanol and biodiesel.
 
9






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Basis of Presentation

In the opinion of management, our accompanying consolidated financial statements which are unaudited, except for the consolidated balance sheet as of December 31, 2021, which is derived from our audited financial statements, include all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2022, the results of operations for the three months ended March 31, 2021 and 2022 and cash flows for the three months ended March 31, 2021 and 2022. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 for several reasons. Profits from our gas liquids blending activities are realized largely during the first and fourth quarters of each year. Additionally, gasoline demand, which drives transportation volumes and revenues on our refined products pipeline system, generally trends higher during the summer driving months. Further, the volatility of commodity prices impacts the profits from our commodity activities and the volume of petroleum products we transport on our pipelines. 

Pursuant to the rules and regulations of the Securities and Exchange Commission, the financial statements in
this report have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Discontinued Operations

In June 2021, we entered into an agreement to sell our independent terminals network comprised of 26 refined petroleum products terminals with approximately six million barrels of storage located primarily in the southeastern U.S. to Buckeye Partners, L.P. (“Buckeye”). The sale is expected to close upon the receipt of required regulatory approval. The related results of operations, financial position and cash flows have been classified as discontinued operations for all periods presented (see Note 2 – Discontinued Operations and Assets Held for Sale for additional details). Unless indicated otherwise, the information in the Notes to Consolidated Financial Statements relates to continuing operations.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period’s presentation, including amounts related to our discontinued operations.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities that exist at the date of our consolidated financial statements, as well as their impact on the reported amounts of revenue and expense during the reporting periods. Actual results could differ from those estimates.

New Accounting Pronouncements

We evaluate new Accounting Standards Codifications (“ASC”) and updates issued by the Financial Accounting Standards Board on an ongoing basis. There are no new accounting pronouncements that we anticipate will have a material impact on our financial statements.

10






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


2.Discontinued Operations and Assets Held for Sale

Summarized Results of Discontinued Operations

The following table provides the summarized results that have been reclassified from continuing operations to discontinued operations on the consolidated statements of income (in millions):

Three Months Ended March 31,
20212022
Transportation and terminals revenue$13.1 $12.1 
Product sales revenue16.9 6.3 
Total revenue30.0 18.4 
Costs and expenses:
Operating3.4 3.8 
Cost of product sales13.9 10.5 
Depreciation, amortization and impairment3.5  
General and administrative0.6 0.6 
Total costs and expenses21.4 14.9 
Income from discontinued operations$8.6 $3.5 
Summarized Assets and Liabilities of Discontinued Operations

The following table provides the summarized assets and liabilities classified as held for sale on the consolidated balance sheets (in millions):
December 31, 2021March 31,
2022
Assets:
Trade accounts receivable$6.3 $5.9 
Inventory17.0 20.1 
Net property, plant and equipment272.0 274.0 
Goodwill2.7 2.7 
Other assets1.5 1.3 
Total assets classified as held for sale$299.5 $304.0 
Liabilities:
Accounts payable$3.7 $4.7 
Accrued product liabilities8.4 13.4 
Other liabilities3.7 5.4 
Total liabilities classified as held for sale$15.8 $23.5 

11






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


3.Segment Disclosures

Our reportable segments are strategic business units that offer different products and services. Our segments are managed separately because each segment requires different marketing strategies and business knowledge. Management evaluates performance based on segment operating margin, which includes revenue from affiliates and third-party customers, intersegment transactions, operating expense, cost of product sales, other operating (income) expense and earnings of non-controlled entities.
We believe that investors benefit from having access to the same financial measures used by management. Operating margin, which is presented in the following tables, is an important measure used by management to evaluate the economic performance of our core operations. Operating margin is not a GAAP measure, but the components of operating margin are computed using amounts that are determined in accordance with GAAP. A reconciliation of operating margin to operating profit, which is its nearest comparable GAAP financial measure, is included in the tables below. Operating profit includes depreciation, amortization and impairment expense and general and administrative (“G&A”) expense that management does not consider when evaluating the core profitability of our separate operating segments.
 Three Months Ended March 31, 2021
(in millions)
 Refined ProductsCrude OilIntersegment
Eliminations
Total
Transportation and terminals revenue$297.6 $116.2 $(1.8)$412.0 
Product sales revenue184.5 29.2  213.7 
Affiliate management fee revenue1.6 3.8  5.4 
Total revenue483.7 149.2 (1.8)631.1 
Operating expense91.5 39.2 (3.4)127.3 
Cost of product sales140.8 30.1  170.9 
Other operating (income) expense(0.3)0.7  0.4 
Earnings of non-controlled entities(9.2)(29.9) (39.1)
Operating margin260.9 109.1 1.6 371.6 
Depreciation, amortization and impairment expense36.1 16.9 1.6 54.6 
G&A expense33.0 13.0  46.0 
Operating profit$191.8 $79.2 $ $271.0 
 
12






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


 Three Months Ended March 31, 2022
(in millions)
 Refined ProductsCrude OilIntersegment
Eliminations
Total
Transportation and terminals revenue$309.5 $114.7 $(1.3)$422.9 
Product sales revenue241.6 4.5  246.1 
Affiliate management fee revenue1.8 3.9  5.7 
Total revenue552.9 123.1 (1.3)674.7 
Operating expense88.2 38.8 (2.8)124.2 
Cost of product sales233.1 10.3  243.4 
Other operating (income) expense(0.1)2.1  2.0 
Earnings of non-controlled entities(3.7)(31.7) (35.4)
Operating margin235.4 103.6 1.5 340.5 
Depreciation, amortization and impairment expense39.6 16.6 1.5 57.7 
G&A expense45.7 17.1  62.8 
Operating profit$150.1 $69.9 $ $220.0 
 
4. Revenue

Statements of Income Disclosures

The following tables provide details of our revenue disaggregated by key activities that comprise our performance obligations by operating segment (in millions):
13






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Three Months Ended March 31, 2021
Refined ProductsCrude OilIntersegment EliminationsTotal
Transportation$193.4 $55.0 $ $248.4 
Terminalling22.6 6.1  28.7 
Storage49.0 29.3 (1.8)76.5 
Ancillary services28.5 8.0  36.5 
Lease revenue4.1 17.8  21.9 
Transportation and terminals revenue297.6 116.2 (1.8)412.0 
Product sales revenue184.5 29.2  213.7 
Affiliate management fee revenue1.6 3.8  5.4 
Total revenue483.7 149.2 (1.8)631.1 
Revenue not under the guidance of ASC 606, Revenue from Contracts with Customers:
Lease revenue(4.1)(17.8) (21.9)
(Gains) losses from futures contracts included in product sales revenue47.3 5.4  52.7 
Affiliate management fee revenue(1.6)(3.8) (5.4)
Total revenue from contracts with customers under ASC 606$525.3 $133.0 $(1.8)$656.5 


Three Months Ended March 31, 2022
Refined ProductsCrude OilIntersegment EliminationsTotal
Transportation$213.3 $55.0 $ $268.3 
Terminalling23.3 6.3  29.6 
Storage39.5 27.0 (1.3)65.2 
Ancillary services27.6 7.9  35.5 
Lease revenue5.8 18.5  24.3 
Transportation and terminals revenue309.5 114.7 (1.3)422.9 
Product sales revenue241.6 4.5  246.1 
Affiliate management fee revenue1.8 3.9  5.7 
Total revenue552.9 123.1 (1.3)674.7 
Revenue not under the guidance of ASC 606, Revenue from Contracts with Customers:
Lease revenue(5.8)(18.5) (24.3)
(Gains) losses from futures contracts included in product sales revenue108.2 8.2  116.4 
Affiliate management fee revenue(1.8)(3.9) (5.7)
Total revenue from contracts with customers under ASC 606$653.5 $108.9 $(1.3)$761.1 
14






MAGELLAN MIDSTREAM PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Balance Sheet Disclosures

The following table summarizes our accounts receivable, contract assets and contract liabilities resulting from contracts with customers (in millions):
December 31, 2021March 31, 2022
Accounts receivable from contracts with customers$134.8 $125.1 
Contract assets$12.5 $13.8 
Contract liabilities$100.1 $112.4 

For the three months ended March 31, 2022, we recognized $