Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") today
announced its financial results for the third quarter 2019. For the
three months ended September 30, 2019, Delek Logistics reported net
income attributable to all partners of $30.5 million, or $0.89 per
diluted common limited partner unit. This compares to net income
attributable to all partners of $23.3 million, or $0.68 per diluted
common limited partner unit, in the third quarter 2018. Net cash
from operating activities was $34.3 million in the third quarter
2019 compared to $6.0 million in the prior year period.
Distributable cash flow was $33.7 million in the third quarter
2019, compared to $32.4 million in the prior-year period.
Reconciliation of net cash from operating activities as reported
under U.S. GAAP to distributable cash flow is included in the
financial tables attached to this release.
For the third quarter 2019, earnings before
interest, taxes, depreciation and amortization ("EBITDA") was $51.5
million compared to $43.0 million in the prior-year period. The
year-over-year improvements are primarily due to a $6.5 million
increase to income from equity method investments, as well as
increased contribution from the Paline Pipeline and SALA Gathering.
This was partially offset by lower West Texas gross margin on a
year-over-year basis. Reconciliation of net income attributable to
all partners as reported under U.S. GAAP to EBITDA is included in
the financial tables attached to this release.
Uzi Yemin, Chairman, President and Chief
Executive Officer of Delek Logistics' general partner, remarked:
"During the third quarter we realized increased contributions from
the recent Red River pipeline joint venture acquisition. This
investment continues to bolster Delek Logistics' cash flow stream,
which should further increase following the pipeline expansion,
expected to be completed in the first half of 2020. Our
strategy remains focused on supporting cash flow coverage and
reducing leverage to better position the balance sheet, along with
exploring organic growth opportunities. Simultaneously, our
sponsor, Delek US Holdings, Inc. (NYSE: DK) ("Delek US"), continues
building its midstream portfolio, providing potential longer-term
options for Delek Logistics. We were pleased to announce an 11.4%
year-over-year increase in our third quarter distribution, and we
remain committed to grow our distribution per limited partner unit
by at least 10% annually through 2019."
Distribution and Liquidity
On October 25, 2019, Delek Logistics
declared a quarterly cash distribution of $0.88 per common limited
partner unit for the third quarter, which equates to $3.52 per
common limited partner unit on an annualized basis. This
distribution is to be paid on November 12, 2019 to unitholders
of record on November 4, 2019. This represents a 3.5 percent
increase from the second quarter 2019 distribution of $0.85 per
common limited partner unit, or $3.40 per common limited partner
unit on an annualized basis, and an 11.4% increase over Delek
Logistics’ third quarter 2018 distribution of $0.79 per common
limited partner unit, or $3.16 per common limited partner unit
annualized. For the third quarter 2019, the total cash distribution
declared to all partners, including incentive distribution rights
(IDRs), was approximately $30.4 million. Based on the distribution
for the third quarter 2019, the distributable cash flow coverage
ratio for the third quarter was 1.11x.
As of September 30, 2019, Delek Logistics
had total debt of approximately $840.8 million and cash of $6.4
million. Additional borrowing capacity, subject to certain
covenants, under the $850.0 million credit facility was $253.7
million. The total leverage ratio, calculated in accordance with
the credit facility, for the third quarter 2019 was approximately
4.6x, which is within the current requirements of the maximum
allowable leverage ratio of 5.25x.
Financial Results
Revenue for the third quarter 2019 was $137.6
million compared to $164.1 million in the prior-year period. The
decrease in revenue is primarily due to lower prices and volumes in
the west Texas wholesale business, partially offset by improved
performance from the Tyler Terminal along with the SALA Gathering
System, Paline Pipeline and trucking. Total operating expenses were
$18.4 million in the third quarter 2019, compared to $15.4 million
in the third quarter 2018. The increase was primarily due to higher
maintenance/repair, outside services and allocated employee
expenses. Total contribution margin was $46.5 million in the third
quarter 2019 compared to $43.1 million in the third quarter 2018.
General and administrative expenses were $5.3 million for the third
quarter 2019, compared to $3.1 million in the prior-year period,
with such increase being primarily due to employee related expenses
and expense related to a canceled capital project.
Pipelines and Transportation
Segment
Contribution margin in the third quarter 2019
was $27.1 million compared to $25.2 million in the third quarter
2018. This improvement was primarily due to improved performance
from the SALA Gathering System, trucking and the Paline Pipeline,
partially offset by lower performance on the Lion Oil Pipeline
system due to lower throughput at Delek US' El Dorado, Arkansas
refinery. Operating expenses were $12.5 million in the third
quarter 2019 compared to $9.5 million in the prior-year period and
such increase was primarily related to employee expenses.
Wholesale Marketing and Terminalling
Segment
During the third quarter 2019, contribution
margin was $19.4 million, compared to $17.9 million in the third
quarter 2018. This increase was primarily due to a higher gross
margin in east Texas marketing and Big Spring marketing and
Terminalling assets, partially offset by lower gross margin in west
Texas. Operating expenses of $5.9 million in the third
quarter 2019 were in line with the $5.9 million in the prior-year
period.
In the west Texas wholesale business, average
throughput in the third quarter 2019 was 9,535 barrels per day
compared to 12,197 barrels per day in the third quarter 2018. The
west Texas gross margin per barrel increased year-over-year to
$4.82 per barrel and included approximately $0.3 million, or $0.38
per barrel, from renewable identification numbers (RINs) generated
in the quarter. During the third quarter 2018, the west Texas gross
margin per barrel was $4.65 per barrel and included $0.3 million
from RINs, or $0.29 per barrel.
Average terminalling throughput volume of
170,727 barrels per day during the third quarter 2019 increased on
a year-over-year basis from 167,491 barrels per day in the third
quarter 2018. During the third quarter 2019, average volume
under the East Texas marketing agreement with Delek US was 83,953
barrels per day compared to 79,404 barrels per day during the third
quarter 2018.
Third Quarter 2019 Results | Conference
Call Information
Delek Logistics will hold a conference call to
discuss its third quarter 2019 results on Tuesday, November 5, 2019
at 7:30 a.m. Central Time. Investors will have the opportunity to
listen to the conference call live by going to
www.DelekLogistics.com. Participants are encouraged to register at
least 15 minutes early to download and install any necessary
software. For those who cannot listen to the live broadcast, a
telephonic replay will be available through February 5, 2020 by
dialing (855) 859-2056, passcode 3489149. An archived version of
the replay will also be available at
www.DelekLogistics.com for 90 days.
Investors may also wish to listen to Delek US’
(NYSE: DK) third quarter 2019 earnings conference call on Tuesday,
November 5, 2019 at 8:30 a.m. Central Time and review Delek
US’ earnings press release. Market trends and information disclosed
by Delek US may be relevant to Delek Logistics, as it is a
consolidated subsidiary of Delek US. Investors can find information
related to Delek US and the timing of its earnings release online
by going to www.DelekUS.com.
About Delek Logistics Partners,
LP
Delek Logistics Partners, LP, headquartered in
Brentwood, Tennessee, was formed by Delek US Holdings, Inc. (NYSE:
DK) to own, operate, acquire and construct crude oil and refined
products logistics and marketing assets.
Safe Harbor Provisions Regarding
Forward-Looking Statements
This press release contains forward-looking
statements that are based upon current expectations and involve a
number of risks and uncertainties. Statements concerning current
estimates, expectations and projections about future results,
performance, prospects, opportunities, plans, actions and events
and other statements, concerns, or matters that are not historical
facts are “forward-looking statements,” as that term is defined
under the federal securities laws. These statements contain
words such as “possible,” “believe,” “should,” “could,” “would,”
“predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,”
“will,” “if,” “expect” or similar expressions, as well as
statements in the future tense, and can be impacted by numerous
factors, including the fact that a substantial majority of Delek
Logistics' contribution margin is derived from Delek US, thereby
subjecting us to Delek US' business risks; risks relating to the
securities markets generally; risks and costs relating to the age
and operational hazards of our assets including, without
limitation, costs, penalties, regulatory or legal actions and other
effects related to releases, spills and other hazards inherent in
transporting and storing crude oil and intermediate and finished
petroleum products; the impact of adverse market conditions
affecting the utilization of Delek Logistics' assets and business
performance, including margins generated by its wholesale fuel
business; an inability of Delek US to grow as expected as it
relates to our potential future growth opportunities, including
dropdowns, and other potential benefits; the results of our
investments in joint ventures; the ability of the Red River joint
venture to complete the expansion to increase the Red River
pipeline capacity; adverse changes in laws including with respect
to tax and regulatory matters; and other risks as disclosed in our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
other reports and filings with the United States Securities and
Exchange Commission. Forward looking statements include, but are
not limited to, statements regarding future growth at Delek
Logistics; distributions and the amounts and timing thereof;
potential dropdown inventory, expected earnings or returns from
joint ventures or other acquisitions; ability to create long-term
value for our unit holders; financial flexibility and borrowing
capacity; and distribution growth of 10% or at all. Forward-looking
statements should not be read as a guarantee of future performance
or results and will not be accurate indications of the times at, or
by, which such performance or results will be achieved.
Forward-looking information is based on information available at
the time and/or management's good faith belief with respect to
future events, and is subject to risks and uncertainties that could
cause actual performance or results to differ materially from those
expressed in the statements. Delek Logistics undertakes no
obligation to update or revise any such forward-looking statements
to reflect events or circumstances that occur, or which Delek
Logistics becomes aware of, after the date hereof, except as
required by applicable law or regulation
Non-GAAP Disclosures:
Our management uses certain "non-GAAP"
operational measures to evaluate our operating segment performance
and non-GAAP financial measures to evaluate past performance and
prospects for the future to supplement our GAAP financial
information presented in accordance with U.S. GAAP. These financial
and operational non-GAAP measures are important factors in
assessing our operating results and profitability and include:
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") - calculated as net income before net interest expense,
income tax expense, depreciation and amortization expense,
including amortization of customer contract intangible assets,
which is included as a component of net revenues in our
accompanying condensed consolidated statements of income.
- Distributable cash flow - calculated as net cash flow from
operating activities plus or minus changes in assets and
liabilities, less maintenance capital expenditures net of
reimbursements and other adjustments not expected to settle in
cash. Delek Logistics believes this is an appropriate
reflection of a liquidity measure by which users of its financial
statements can assess its ability to generate cash.
EBITDA and distributable cash flow are non-U.S.
GAAP supplemental financial measures that management and external
users of our condensed consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies, may use
to assess:
- Delek Logistics' operating
performance as compared to other publicly traded partnerships in
the midstream energy industry, without regard to historical cost
basis or, in the case of EBITDA, financing methods;
- the ability of our assets to
generate sufficient cash flow to make distributions to our
unitholders;
- Delek Logistics' ability to incur
and service debt and fund capital expenditures; and
- the viability of acquisitions and
other capital expenditure projects and the returns on investment of
various investment opportunities.
Delek Logistics believes that the presentation
of EBITDA, distributable cash flow and distributable cash flow
coverage ratio provide useful information to investors in assessing
its financial condition, its results of operations and the cash
flow its business is generating. EBITDA, distributable cash flow
and distributable cash flow coverage ratio should not be considered
in isolation or as alternatives to net income, operating income,
cash flow from operating activities or any other measure of
financial performance or liquidity presented in accordance with
U.S. GAAP.
Non-GAAP measures have important limitations as
analytical tools, because they exclude some, but not all, items
that affect net income and net cash provided by operating
activities. These measures should not be considered substitutes for
their most directly comparable U.S. GAAP financial measures.
Additionally, because EBITDA and distributable cash flow may be
defined differently by other partnerships in its industry, Delek
Logistics' definitions of EBITDA and distributable cash flow may
not be comparable to similarly titled measures of other
partnerships, thereby diminishing their utility. See the
accompanying tables in this earnings release for a reconciliation
of these non-GAAP measures to the most directly comparable GAAP
measures.
|
Delek
Logistics Partners, LP |
Condensed
Consolidated Balance Sheets (Unaudited) |
(In
thousands, except unit and per unit
data) |
|
|
|
September 30, 2019 |
|
December 31, 2018 |
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
6,353 |
|
|
$ |
4,522 |
|
Accounts receivable |
|
19,998 |
|
|
21,586 |
|
Inventory |
|
7,695 |
|
|
5,491 |
|
Other current assets |
|
2,714 |
|
|
969 |
|
Total current assets |
|
36,760 |
|
|
32,568 |
|
Property, plant and
equipment: |
|
|
|
|
Property, plant and equipment |
|
457,716 |
|
|
452,746 |
|
Less: accumulated depreciation |
|
(159,623 |
) |
|
(140,184 |
) |
Property, plant and equipment, net |
|
298,093 |
|
|
312,562 |
|
Equity method investments |
|
246,998 |
|
|
104,770 |
|
Operating lease right-of-use
assets |
|
18,297 |
|
|
— |
|
Goodwill |
|
12,203 |
|
|
12,203 |
|
Marketing Contract Intangible,
net |
|
132,802 |
|
|
138,210 |
|
Other non-current assets |
|
22,654 |
|
|
24,280 |
|
Total assets |
|
$ |
767,807 |
|
|
$ |
624,593 |
|
|
|
|
|
|
LIABILITIES AND
DEFICIT |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
12,477 |
|
|
$ |
14,226 |
|
Accounts payable to related parties |
|
2,817 |
|
|
7,833 |
|
Excise and other taxes payable |
|
1,722 |
|
|
4,069 |
|
Current portion of operating lease liabilities |
|
4,836 |
|
|
— |
|
Accrued expenses and other current liabilities |
|
10,489 |
|
|
10,377 |
|
Total current liabilities |
|
32,341 |
|
|
36,505 |
|
Non-current liabilities: |
|
|
|
|
Long-term debt |
|
840,765 |
|
|
700,430 |
|
Asset retirement obligations |
|
5,489 |
|
|
5,191 |
|
Operating lease liabilities, net of current portion |
|
13,462 |
|
|
— |
|
Other non-current liabilities |
|
18,240 |
|
|
17,290 |
|
Total non-current liabilities |
|
877,956 |
|
|
722,911 |
|
Total liabilities |
|
910,297 |
|
|
759,416 |
|
Deficit: |
|
|
|
|
Common unitholders - public; 9,123,239 units issued and
outstanding at September 30, 2019 (9,109,807 at December 31,
2018) |
|
167,650 |
|
|
171,023 |
|
Common unitholders - Delek Holdings; 15,294,046 units issued and
outstanding at September 30, 2019 (15,294,046 at December 31,
2018) |
|
(305,152 |
) |
|
(299,360 |
) |
General partner - 498,312 units issued and outstanding at September
30, 2019 (498,038 at December 31, 2018) |
|
(4,988 |
) |
|
(6,486 |
) |
Total deficit |
|
(142,490 |
) |
|
(134,823 |
) |
Total liabilities and deficit |
|
$ |
767,807 |
|
|
$ |
624,593 |
|
|
Delek
Logistics Partners, LP |
Condensed
Consolidated Statements of Income (Unaudited) |
(In
thousands, except unit and per unit
data) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net revenues: |
|
|
|
|
|
|
|
|
Affiliate |
|
$ |
66,647 |
|
|
$ |
63,835 |
|
|
$ |
191,530 |
|
|
$ |
178,559 |
|
Third-party |
|
70,909 |
|
|
100,275 |
|
|
253,852 |
|
|
319,752 |
|
Net revenues |
|
137,556 |
|
|
164,110 |
|
|
445,382 |
|
|
498,311 |
|
Cost of Sales: |
|
|
|
|
|
|
|
|
Cost of materials and other |
|
72,594 |
|
|
105,596 |
|
|
262,713 |
|
|
330,644 |
|
Operating expenses (excluding depreciation and amortization
presented below) |
|
17,490 |
|
|
14,489 |
|
|
49,318 |
|
|
40,501 |
|
Depreciation and amortization |
|
6,138 |
|
|
6,252 |
|
|
18,450 |
|
|
18,287 |
|
Total cost of sales |
|
96,222 |
|
|
126,337 |
|
|
330,481 |
|
|
389,432 |
|
Operating expenses related to wholesale business (excluding
depreciation and amortization presented below) |
|
945 |
|
|
906 |
|
|
2,502 |
|
|
2,388 |
|
General and administrative expenses |
|
5,280 |
|
|
3,076 |
|
|
15,046 |
|
|
9,798 |
|
Depreciation and amortization |
|
450 |
|
|
450 |
|
|
1,351 |
|
|
1,434 |
|
(Gain) loss on asset disposals |
|
(70 |
) |
|
717 |
|
|
(95 |
) |
|
648 |
|
Total operating costs and expenses |
|
102,827 |
|
|
131,486 |
|
|
349,285 |
|
|
403,700 |
|
Operating income |
|
34,729 |
|
|
32,624 |
|
|
96,097 |
|
|
94,611 |
|
Interest expense, net |
|
12,509 |
|
|
11,108 |
|
|
35,164 |
|
|
30,096 |
|
Income from equity method
investments |
|
(8,394 |
) |
|
(1,924 |
) |
|
(14,860 |
) |
|
(4,681 |
) |
Other expense, net |
|
— |
|
|
8 |
|
|
461 |
|
|
8 |
|
Total non-operating expenses, net |
|
4,115 |
|
|
9,192 |
|
|
20,765 |
|
|
25,423 |
|
Income before income tax
expense |
|
30,614 |
|
|
23,432 |
|
|
75,332 |
|
|
69,188 |
|
Income tax expense |
|
84 |
|
|
106 |
|
|
220 |
|
|
285 |
|
Net income attributable to
partners |
|
$ |
30,530 |
|
|
$ |
23,326 |
|
|
$ |
75,112 |
|
|
$ |
68,903 |
|
Comprehensive income
attributable to partners |
|
$ |
30,530 |
|
|
$ |
23,326 |
|
|
$ |
75,112 |
|
|
$ |
68,903 |
|
|
|
|
|
|
|
|
|
|
Less: General partner's
interest in net income, including incentive distribution
rights |
|
8,895 |
|
|
6,636 |
|
|
24,244 |
|
|
18,478 |
|
Limited partners' interest in
net income |
|
$ |
21,635 |
|
|
$ |
16,690 |
|
|
$ |
50,868 |
|
|
$ |
50,425 |
|
|
|
|
|
|
|
|
|
|
Net income per limited
partner unit: |
|
|
|
|
|
|
|
|
Common units - basic |
|
$ |
0.89 |
|
|
$ |
0.68 |
|
|
$ |
2.08 |
|
|
$ |
2.07 |
|
Common units - diluted |
|
$ |
0.89 |
|
|
$ |
0.68 |
|
|
$ |
2.08 |
|
|
$ |
2.07 |
|
|
|
|
|
|
|
|
|
|
Weighted average
limited partner units outstanding: |
|
|
|
|
|
|
|
|
Common units - basic |
|
24,417,285 |
|
|
24,395,183 |
|
|
24,411,308 |
|
|
24,387,995 |
|
Common units - diluted |
|
24,420,582 |
|
|
24,401,908 |
|
|
24,417,466 |
|
|
24,395,880 |
|
|
|
|
|
|
|
|
|
|
Cash distribution per limited
partner unit |
|
$ |
0.880 |
|
|
$ |
0.790 |
|
|
$ |
2.550 |
|
|
$ |
2.310 |
|
|
Delek
Logistics Partners, LP |
Condensed
Consolidated Statements of Cash Flows (Unaudited) |
(In
thousands) |
|
|
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
Cash flows from
operating activities |
|
|
|
|
Net income |
|
$ |
75,112 |
|
|
$ |
68,903 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
19,801 |
|
|
19,721 |
|
Non-cash lease expense |
|
2,554 |
|
|
— |
|
Amortization of customer contract intangible assets |
|
5,408 |
|
|
4,207 |
|
Amortization of deferred revenue |
|
(1,248 |
) |
|
(1,095 |
) |
Amortization of deferred financing costs and debt discount |
|
2,054 |
|
|
1,984 |
|
Accretion of asset retirement obligations |
|
298 |
|
|
267 |
|
Deferred income taxes |
|
115 |
|
|
— |
|
Income from equity method investments |
|
(14,860 |
) |
|
(4,681 |
) |
Dividends from equity method investments |
|
9,188 |
|
|
5,128 |
|
(Gain) loss on asset disposals |
|
(95 |
) |
|
648 |
|
Other non-cash adjustments |
|
484 |
|
|
518 |
|
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
1,588 |
|
|
1,198 |
|
Inventories and other current assets |
|
(3,290 |
) |
|
17,022 |
|
Accounts payable and other current liabilities |
|
(7,613 |
) |
|
(4,311 |
) |
Accounts receivable/payable to related parties |
|
(5,016 |
) |
|
(50,030 |
) |
Non-current assets and liabilities, net |
|
109 |
|
|
(1,879 |
) |
Changes in assets and
liabilities |
|
(14,222 |
) |
|
(38,000 |
) |
Net cash provided by operating activities |
|
84,589 |
|
|
57,600 |
|
Cash flows from
investing activities |
|
|
|
|
Asset acquisitions, net of
assumed asset retirement obligation liabilities |
|
— |
|
|
(72,222 |
) |
Purchases of property, plant
and equipment |
|
(4,964 |
) |
|
(8,674 |
) |
Proceeds from sales of
property, plant and equipment |
|
144 |
|
|
465 |
|
Purchases of intangible
assets |
|
— |
|
|
(144,219 |
) |
Distributions from equity
method investments |
|
804 |
|
|
957 |
|
Equity method investment
contributions |
|
(137,361 |
) |
|
(172 |
) |
Net cash used in investing activities |
|
(141,377 |
) |
|
(223,865 |
) |
Cash flows from
financing activities |
|
|
|
|
Proceeds from issuance of
additional units to maintain 2% General Partner interest |
|
8 |
|
|
20 |
|
Distributions to general
partner |
|
(22,762 |
) |
|
(17,010 |
) |
Distributions to common
unitholders - public |
|
(22,580 |
) |
|
(20,500 |
) |
Distributions to common
unitholders - Delek Holdings |
|
(37,929 |
) |
|
(34,335 |
) |
Distributions to Delek
Holdings unitholders and general partner related to Big Spring
Logistic Assets Acquisition |
|
— |
|
|
(98,798 |
) |
Proceeds from revolving credit
facility |
|
476,400 |
|
|
678,000 |
|
Payments on revolving credit
facility |
|
(336,800 |
) |
|
(324,700 |
) |
Deferred financing costs
paid |
|
— |
|
|
(5,264 |
) |
Reimbursement of capital
expenditures by Delek Holdings |
|
2,282 |
|
|
3,183 |
|
Net cash provided by financing activities |
|
58,619 |
|
|
180,596 |
|
Net increase in cash
and cash equivalents |
|
1,831 |
|
|
14,331 |
|
Cash and cash equivalents at
the beginning of the period |
|
4,522 |
|
|
4,675 |
|
Cash and cash equivalents at
the end of the period |
|
$ |
6,353 |
|
|
$ |
19,006 |
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
Cash paid during the period
for: |
|
|
|
|
Interest |
|
$ |
29,003 |
|
|
$ |
24,446 |
|
Income taxes |
|
$ |
143 |
|
|
$ |
136 |
|
Non-cash investing
activities: |
|
|
|
|
Increase/(Decrease) in accrued capital expenditures |
|
$ |
1,274 |
|
|
$ |
(1,836 |
) |
Non-cash financing
activities: |
|
|
|
|
Non-cash lease liability arising from obtaining right of use assets
during the period |
|
$ |
649 |
|
|
$ |
— |
|
Non-cash lease liability arising from recognition of right of
use assets upon adoption of ASU 2016-02 |
|
$ |
20,202 |
|
|
$ |
— |
|
|
Delek
Logistics Partners, LP |
Reconciliation of Amounts Reported Under U.S.
GAAP |
(In
thousands) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Reconciliation of Net
Income to EBITDA: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
30,530 |
|
|
$ |
23,326 |
|
|
$ |
75,112 |
|
|
$ |
68,903 |
|
Add: |
|
|
|
|
|
|
|
|
Income tax expense |
|
84 |
|
|
106 |
|
|
220 |
|
|
285 |
|
Depreciation and amortization |
|
6,588 |
|
|
6,702 |
|
|
19,801 |
|
|
19,721 |
|
Amortization of customer contract intangible assets |
|
1,803 |
|
|
1,803 |
|
|
5,408 |
|
|
4,207 |
|
Interest expense, net |
|
12,509 |
|
|
11,108 |
|
|
35,164 |
|
|
30,096 |
|
EBITDA |
|
$ |
51,514 |
|
|
$ |
43,045 |
|
|
$ |
135,705 |
|
|
$ |
123,212 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
cash from operating activities to distributable cash
flow: |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
34,261 |
|
|
$ |
5,957 |
|
|
$ |
84,589 |
|
|
$ |
57,600 |
|
Changes in assets and liabilities |
|
3,237 |
|
|
28,079 |
|
|
14,222 |
|
|
38,000 |
|
Non-cash lease expense |
|
(1,145 |
) |
|
— |
|
|
(2,554 |
) |
|
— |
|
Distributions from equity method investments in investing
activities |
|
— |
|
|
297 |
|
|
804 |
|
|
957 |
|
Maintenance and regulatory capital expenditures |
|
(3,728 |
) |
|
(2,380 |
) |
|
(5,515 |
) |
|
(3,721 |
) |
Reimbursement from Delek Holdings for capital expenditures |
|
1,223 |
|
|
1,292 |
|
|
2,607 |
|
|
2,179 |
|
Accretion of asset retirement obligations |
|
(100 |
) |
|
(92 |
) |
|
(298 |
) |
|
(267 |
) |
Deferred income taxes |
|
(118 |
) |
|
— |
|
|
(115 |
) |
|
— |
|
Gain (loss) on asset
disposals |
|
70 |
|
|
(717 |
) |
|
95 |
|
|
(648 |
) |
Distributable Cash
Flow |
|
$ |
33,700 |
|
|
$ |
32,436 |
|
|
$ |
93,835 |
|
|
$ |
94,100 |
|
|
|
Delek
Logistics Partners, LP |
Distributable Coverage Ratio Calculation |
(In
thousands) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Distributions to partners of
Delek Logistics, LP |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Limited partners' distribution on common units |
|
$ |
21,487 |
|
|
$ |
19,272 |
|
|
$ |
62,256 |
|
|
$ |
56,343 |
|
General partner's distributions |
|
439 |
|
|
393 |
|
|
1,270 |
|
|
1,149 |
|
General partner's incentive distribution rights |
|
8,453 |
|
|
6,295 |
|
|
23,205 |
|
|
17,449 |
|
Total distributions to be
paid |
|
$ |
30,379 |
|
|
$ |
25,960 |
|
|
$ |
86,731 |
|
|
$ |
74,941 |
|
|
|
|
|
|
|
|
|
|
Distributable cash flow |
|
$ |
33,700 |
|
|
$ |
32,436 |
|
|
$ |
93,835 |
|
|
$ |
94,100 |
|
Distributable cash flow
coverage ratio (1) |
|
|
1.11x |
|
|
|
1.25x |
|
|
|
1.08x |
|
|
|
1.26x |
|
(1) Distributable cash flow coverage ratio is
calculated by dividing distributable cash flow by distributions to
be paid in each respective period.
|
Delek
Logistics Partners, LP |
Segment
Data (unaudited) |
(In
thousands) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Pipelines and Transportation |
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
Affiliate |
|
$ |
39,304 |
|
|
$ |
36,132 |
|
|
$ |
112,694 |
|
|
$ |
99,624 |
|
Third party |
|
5,281 |
|
|
3,653 |
|
|
16,733 |
|
|
11,618 |
|
Total pipelines and transportation |
|
44,585 |
|
|
39,785 |
|
|
129,427 |
|
|
111,242 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
Cost of materials and other |
|
4,947 |
|
|
5,055 |
|
|
17,871 |
|
|
14,691 |
|
Operating expenses (excluding depreciation and amortization) |
|
12,547 |
|
|
9,499 |
|
|
36,109 |
|
|
29,054 |
|
Segment contribution margin |
|
$ |
27,091 |
|
|
$ |
25,231 |
|
|
$ |
75,447 |
|
|
$ |
67,497 |
|
Total Assets |
|
$ |
529,219 |
|
|
$ |
431,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Marketing and Terminalling |
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
Affiliates (1) |
|
$ |
27,343 |
|
|
$ |
27,703 |
|
|
$ |
78,836 |
|
|
$ |
78,935 |
|
Third party |
|
65,628 |
|
|
96,622 |
|
|
237,119 |
|
|
308,134 |
|
Total wholesale marketing and terminalling |
|
92,971 |
|
|
124,325 |
|
|
315,955 |
|
|
387,069 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
Cost of materials and other |
|
67,647 |
|
|
100,541 |
|
|
244,842 |
|
|
315,953 |
|
Operating expenses (excluding depreciation and amortization) |
|
5,888 |
|
|
5,896 |
|
|
15,711 |
|
|
13,835 |
|
Segment contribution margin |
|
$ |
19,436 |
|
|
$ |
17,888 |
|
|
$ |
55,402 |
|
|
$ |
57,281 |
|
Total Assets |
|
$ |
238,588 |
|
|
$ |
262,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
Affiliates |
|
$ |
66,647 |
|
|
$ |
63,835 |
|
|
$ |
191,530 |
|
|
$ |
178,559 |
|
Third party |
|
70,909 |
|
|
100,275 |
|
|
253,852 |
|
|
319,752 |
|
Total consolidated |
|
137,556 |
|
|
164,110 |
|
|
445,382 |
|
|
498,311 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
Cost of materials and other |
|
72,594 |
|
|
105,596 |
|
|
262,713 |
|
|
330,644 |
|
Operating expenses (excluding depreciation and amortization
presented below) |
|
18,435 |
|
|
15,395 |
|
|
51,820 |
|
|
42,889 |
|
Contribution margin |
|
46,527 |
|
|
43,119 |
|
|
130,849 |
|
|
124,778 |
|
General and administrative expenses |
|
5,280 |
|
|
3,076 |
|
|
15,046 |
|
|
9,798 |
|
Depreciation and amortization |
|
6,588 |
|
|
6,702 |
|
|
19,801 |
|
|
19,721 |
|
Loss (gain) on asset disposals |
|
(70 |
) |
|
717 |
|
|
(95 |
) |
|
648 |
|
Operating income |
|
$ |
34,729 |
|
|
$ |
32,624 |
|
|
$ |
96,097 |
|
|
$ |
94,611 |
|
Total Assets |
|
$ |
767,807 |
|
|
$ |
693,569 |
|
|
|
|
|
(1) Affiliate revenue for the wholesale
marketing and terminalling segment is presented net of amortization
expense pertaining to the marketing contract intangible we acquired
in connection with the Big Spring acquisition.
|
Delek
Logistics Partners, LP |
Segment
Capital Spending |
(In
thousands) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Pipelines and Transportation |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Maintenance capital spending |
|
$ |
2,731 |
|
|
$ |
1,528 |
|
|
$ |
3,959 |
|
|
$ |
2,585 |
|
Discretionary capital spending |
|
372 |
|
|
558 |
|
|
386 |
|
|
1,735 |
|
Segment capital spending |
|
$ |
3,103 |
|
|
$ |
2,086 |
|
|
$ |
4,345 |
|
|
$ |
4,320 |
|
Wholesale Marketing and Terminalling |
|
|
|
|
|
|
|
|
Maintenance capital spending |
|
$ |
980 |
|
|
$ |
877 |
|
|
1,389 |
|
|
$ |
1,451 |
|
Discretionary capital spending |
|
(91 |
) |
|
28 |
|
|
504 |
|
|
1,669 |
|
Segment capital spending |
|
$ |
889 |
|
|
$ |
905 |
|
|
$ |
1,893 |
|
|
$ |
3,120 |
|
Consolidated |
|
|
|
|
|
|
|
|
Maintenance capital spending |
|
$ |
3,711 |
|
|
$ |
2,405 |
|
|
$ |
5,348 |
|
|
$ |
4,036 |
|
Discretionary capital spending |
|
281 |
|
|
586 |
|
|
890 |
|
|
3,404 |
|
Total capital spending |
|
$ |
3,992 |
|
|
$ |
2,991 |
|
|
$ |
6,238 |
|
|
$ |
7,440 |
|
Delek
Logistics Partners, LP |
|
|
|
|
Segment
Data (Unaudited) |
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Pipelines and
Transportation Segment: |
|
|
|
|
|
|
|
|
Throughputs (average bpd) |
|
|
|
|
|
|
|
|
Lion Pipeline System: |
|
|
|
|
|
|
|
|
Crude pipelines (non-gathered) |
|
49,477 |
|
|
59,150 |
|
|
43,446 |
|
|
56,672 |
|
Refined products pipelines to Enterprise Systems |
|
43,518 |
|
|
43,762 |
|
|
32,242 |
|
|
47,154 |
|
SALA Gathering System |
|
21,632 |
|
|
16,704 |
|
|
21,143 |
|
|
16,705 |
|
East Texas Crude Logistics
System |
|
25,391 |
|
|
14,284 |
|
|
21,045 |
|
|
16,402 |
|
|
|
|
|
|
|
|
|
|
Wholesale Marketing
and Terminalling Segment: |
|
|
|
|
|
|
|
|
East Texas - Tyler Refinery
sales volumes (average bpd) (1) |
|
83,953 |
|
|
79,404 |
|
|
74,607 |
|
|
77,349 |
|
Big Spring marketing
throughputs (average bpd) (2) |
|
80,203 |
|
|
80,687 |
|
|
83,608 |
|
|
79,819 |
|
West Texas marketing
throughputs (average bpd) |
|
9,535 |
|
|
12,197 |
|
|
11,446 |
|
|
13,453 |
|
West Texas gross margin per barrel |
|
$ |
4.82 |
|
|
$ |
4.65 |
|
|
$ |
4.83 |
|
|
$ |
5.88 |
|
Terminalling throughputs
(average bpd) (3) |
|
170,727 |
|
|
167,491 |
|
|
160,621 |
|
|
159,457 |
|
(1) Excludes jet fuel and petroleum coke.
(2) Throughputs for the nine months ended
September 30, 2018 are for the 214 days we marketed certain
finished products produced at or sold from the Big Spring Refinery
following the execution of the Big Spring Marketing Agreement,
effective March 31, 2018.
(3) Consists of terminalling throughputs at our
Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, our El
Dorado and North Little Rock, Arkansas and our Memphis and
Nashville, Tennessee terminals. Throughputs for the Big Spring
terminal for nine months ended September 30, 2018 are for the
214 days we operated the terminal following its acquisition
effective March 1, 2018. Barrels per day are calculated
for only the days we operated each terminal. Total throughput for
the three and nine months ended September 30, 2018 was 41.4
million barrels, which averaged 151,646 bpd for the period.
Investor/Media Relations Contacts:Blake
Fernandez, Senior Vice President of Investor Relations and Market
Intelligence, 615-224-1312Jeb Bachmann, Manager of Investor
Relations and Market Intelligence, 615-224-1118Lenny Raymond,
Manager of Investor Relations and Market Intelligence,
615-224-0828
Keith Johnson, Vice President of Investor Relations,
615-435-1366
Media/Public Affairs Contact:Michael P. Ralsky,
Vice President - Government Affairs, Public Affairs &
Communications, 615-435-1407
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