Item 1.
Financial Statements
PBF LOGISTICS LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(
unaudited, in thousands, except unit data
)
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June 30,
2019
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|
December 31,
2018
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ASSETS
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Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,000
|
|
|
$
|
19,908
|
|
Accounts receivable - affiliates
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|
47,279
|
|
|
37,052
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|
Accounts receivable
|
|
5,129
|
|
|
7,511
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|
Prepaids and other current assets
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|
5,883
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|
|
4,598
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|
Total current assets
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78,291
|
|
|
69,069
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|
Property, plant and equipment, net
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|
855,958
|
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|
862,117
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|
Goodwill
|
|
6,332
|
|
|
6,332
|
|
Other non-current assets
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|
18,992
|
|
|
18,835
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|
Total assets
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$
|
959,573
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|
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$
|
956,353
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable - affiliates
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|
$
|
5,469
|
|
|
$
|
12,047
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|
Accounts payable
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|
5,422
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|
|
4,660
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|
Accrued liabilities
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|
44,642
|
|
|
46,312
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|
Deferred revenue
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|
2,875
|
|
|
2,960
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|
Total current liabilities
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|
58,408
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|
|
65,979
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|
Long-term debt
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|
769,219
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|
|
673,324
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|
Other long-term liabilities
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|
24,952
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|
|
23,860
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|
Total liabilities
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|
852,579
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|
|
763,163
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Commitments and contingencies (Note 9)
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Equity:
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Common unitholders (62,107,210 and 45,348,663 units issued and outstanding, as of June 30, 2019 and December 31, 2018, respectively)
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106,994
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|
23,718
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Total PBF Logistics LP equity
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106,994
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|
23,718
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Noncontrolling interest
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—
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169,472
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|
Total equity
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106,994
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|
|
193,190
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|
Total liabilities and equity
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$
|
959,573
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|
|
$
|
956,353
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|
See Notes to Condensed Consolidated Financial Statements.
6
PBF LOGISTICS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except unit and per unit data)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2019
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2018
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2019
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|
2018
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Revenue:
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Affiliate
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$
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74,656
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$
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63,785
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$
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145,988
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$
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124,649
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Third-party
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8,094
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|
4,314
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|
|
15,607
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|
|
8,190
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Total revenue
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82,750
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68,099
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161,595
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132,839
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Costs and expenses:
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Operating and maintenance expenses
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28,553
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20,724
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58,469
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40,604
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General and administrative expenses
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7,580
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6,488
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13,590
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10,779
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Depreciation and amortization
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8,854
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|
|
7,091
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17,575
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13,734
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|
Total costs and expenses
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44,987
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34,303
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89,634
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65,117
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Income from operations
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37,763
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33,796
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71,961
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67,722
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Other expense:
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Interest expense, net
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(11,216
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)
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|
(10,029
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)
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(22,129
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)
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(19,614
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)
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Amortization of loan fees and debt premium
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(446
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)
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(396
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)
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(895
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)
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(759
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)
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Accretion on discounted liabilities
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(773
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)
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—
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(1,533
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)
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—
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Net income
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25,328
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|
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23,371
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|
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47,404
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47,349
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Less: Net loss attributable to Predecessor
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—
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(1,084
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)
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—
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(2,363
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)
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Less: Net income attributable to noncontrolling interest
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3,162
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4,363
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7,881
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8,385
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Net income attributable to the partners
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22,166
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20,092
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39,523
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41,327
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Less: Net income attributable to the IDR holder
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—
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3,415
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|
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—
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|
6,370
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|
Net income attributable to PBF Logistics LP unitholders
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$
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22,166
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$
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16,677
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$
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39,523
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$
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34,957
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Net income per limited partner unit:
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Common units - basic
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$
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0.37
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$
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0.39
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$
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0.72
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$
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0.83
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Common units - diluted
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0.37
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0.39
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0.72
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0.83
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Weighted-average limited partner units outstanding:
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Common units - basic
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60,279,287
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42,231,119
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|
54,748,755
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42,176,202
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Common units - diluted
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60,364,347
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42,294,616
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54,776,257
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|
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42,190,136
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See Notes to Condensed Consolidated Financial Statements.
7
PBF LOGISTICS LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
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Six Months Ended June 30,
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2019
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|
2018
|
Cash flows from operating activities:
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Net income
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$
|
47,404
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|
|
$
|
47,349
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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17,575
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|
13,734
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|
Amortization of loan fees and debt premium
|
|
895
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|
|
759
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|
Accretion on discounted liabilities
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|
1,533
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|
|
—
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|
Unit-based compensation expense
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|
4,351
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|
|
3,497
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|
Changes in operating assets and liabilities:
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Accounts receivable - affiliates
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|
(10,227
|
)
|
|
9,344
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|
Accounts receivable
|
|
2,382
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|
|
(1,077
|
)
|
Prepaids and other current assets
|
|
(1,285
|
)
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|
242
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|
Accounts payable - affiliates
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|
(2,630
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)
|
|
(1,607
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)
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Accounts payable
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|
762
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(2,572
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)
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Accrued liabilities
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|
(2,857
|
)
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(2,754
|
)
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Deferred revenue
|
|
(85
|
)
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(286
|
)
|
Other assets and liabilities
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(1,932
|
)
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(1,302
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)
|
Net cash provided by operating activities
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|
55,886
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|
65,327
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Cash flows from investing activities:
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Knoxville Terminals Purchase
|
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—
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|
|
(58,000
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)
|
Expenditures for property, plant and equipment
|
|
(15,152
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)
|
|
(7,671
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)
|
Net cash used in investing activities
|
|
(15,152
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)
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(65,671
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)
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Cash flows from financing activities:
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Proceeds from issuance of common units
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132,483
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|
|
—
|
|
Acquisition of TVPC noncontrolling interest
|
|
(200,000
|
)
|
|
—
|
|
Distributions to unitholders
|
|
(59,625
|
)
|
|
(46,611
|
)
|
Distributions to TVPC members
|
|
(8,500
|
)
|
|
(11,250
|
)
|
Contribution from parent
|
|
—
|
|
|
4,193
|
|
Proceeds from revolving credit facility
|
|
196,000
|
|
|
64,000
|
|
Repayment of revolving credit facility
|
|
(101,000
|
)
|
|
(9,700
|
)
|
Deferred financing costs
|
|
—
|
|
|
(271
|
)
|
Net cash (used in) provided by financing activities
|
|
(40,642
|
)
|
|
361
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
92
|
|
|
17
|
|
Cash and cash equivalents at beginning of year
|
|
19,908
|
|
|
19,664
|
|
Cash and cash equivalents at end of period
|
|
$
|
20,000
|
|
|
$
|
19,681
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
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|
|
|
|
Accrued capital expenditures
|
|
$
|
405
|
|
|
$
|
24
|
|
Contribution of net assets from PBF LLC
|
|
242
|
|
|
—
|
|
Units issued in connection with the IDR Restructuring
|
|
215,300
|
|
|
—
|
|
Assets acquired under operating leases
|
|
482
|
|
|
—
|
|
See Notes to Condensed Consolidated Financial Statements.
8
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of
June 30, 2019
, owned
99.0%
of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC owns
29,953,631
PBFX common units constituting an aggregate
48.2%
limited partner interest in PBFX, with the remaining
51.8%
limited partner interest owned by public unitholders as of
June 30, 2019
.
PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates. The Partnership does not take ownership of or receive any payments based on the value of the crude oil, products, natural gas or intermediates that it handles and does not engage in the trading of any commodities. PBFX’s assets are integral to the operations of PBF Holding’s refineries, and as a result, the Partnership continues to generate a substantial majority of its revenue from transactions with PBF Holding. Additionally, certain of PBFX’s assets also generate revenue from third-party transactions.
On February 28, 2019, the Partnership closed on an Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and PBF GP, pursuant to which PBFX’s incentive distribution rights (“IDRs”) held by PBF LLC were canceled and converted into
10,000,000
newly issued PBFX common units (the “IDR Restructuring”). Transaction costs related to the IDR Restructuring were
$2,057
for the six months ended June 30, 2019 and were included in “General and administrative expenses” within the Partnership’s condensed consolidated statements of operations. Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs, and the newly issued PBFX common units are entitled to normal distributions.
On April 24, 2019, the Partnership entered into a Contribution Agreement with PBF LLC (the “TVPC Contribution Agreement”), pursuant to which PBF LLC contributed to the Partnership all of the issued and outstanding limited liability company interests of TVP Holding Company LLC (“TVP Holding”) for total consideration of
$200,000
(the “TVPC Acquisition”). Subsequent to the closing of the TVPC Acquisition on May 31, 2019, the Partnership owns
100%
of the equity interest in Torrance Valley Pipeline Company LLC (“TVPC”). Refer to Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements for further discussion regarding the TVPC Acquisition.
Principles of Combination and Consolidation and Basis of Presentation
In connection with, and subsequent to, PBFX’s initial public offering (“IPO”), the Partnership has acquired certain assets from PBF LLC (collectively referred to as the “Contributed Assets”). Such acquisitions completed subsequent to the IPO were made through a series of drop-down transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). The assets, liabilities and results of operations of the Contributed Assets prior to their acquisition by PBFX are collectively referred to as the “Predecessor.” The transactions through which PBFX acquired the Contributed Assets were transfers of assets between entities under common control. Accordingly, the accompanying condensed consolidated financial statements and related notes present the results of operations and cash flows of our Predecessor for all periods presented prior to the effective date of each transaction. The financial statements of our Predecessor have been prepared from the separate records maintained by PBF Energy and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Predecessor had been operated as an unaffiliated entity. See (i) the Annual Report on Form 10-K for the year ended
December 31, 2018
(the “
2018
Form 10-K”) for additional information regarding the Acquisitions from PBF and the agreements that were entered into or amended with related parties in connection with these acquisitions and (ii) Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements for further discussion regarding the TVPC Acquisition.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, PBFX has included all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows of PBFX for the periods presented. The results of operations for the
three and six months ended
June 30, 2019
are not necessarily indicative of the results that may be expected for the full year.
The Predecessor generally did not historically operate its respective assets for the purpose of generating revenue independent of other PBF Energy businesses prior to the IPO or the effective dates of the Acquisitions from PBF, with the exception of the Paulsboro Lube Oil Terminal (as defined in Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements). All intercompany accounts and transactions have been eliminated.
Summary of Significant Accounting Policies
Reclassifications
Certain amounts previously reported in the Partnership’s condensed consolidated financial statements for prior periods have been reclassified to conform to the presentation within this Quarterly Report on Form 10-Q. These reclassifications include the separation of “Accounts payable” and “Accrued liabilities” into two line items within the Partnership’s condensed consolidated balance sheets and statements of cash flows, as well as the corresponding statements within Note 13 “Condensed Consolidating Financial Statements of PBF Logistics” of the Notes to Condensed Consolidated Financial Statements.
Recently Adopted Accounting Guidance
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASC 842”) to increase the transparency and comparability of leases among entities. ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases,” and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Partnership adopted ASC 842 effective January 1, 2019, using a modified retrospective approach. The adoption of ASC 842 resulted in the inclusion of less than
$1,000
of operating leases recorded on the Partnership’s balance sheets, with operating lease right of use assets recorded in “Other non-current assets” and operating lease liabilities recorded in “Accrued liabilities” or “Other long-term liabilities” based on the future timing of lease payments. The adoption of ASC 842 did not materially impact the Partnership’s statements of operations or statements of cash flows. The Partnership’s condensed consolidated financial statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in accordance with the Partnership’s historical accounting policy. See Note 2 “Revenue” of the Notes to Condensed Consolidated Financial Statements for additional information about the impact of ASC 842 to the Partnership as a lessor.
In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) to provide updated guidance on goodwill impairment testing. Under ASU 2017-04, Step 2 of the goodwill impairment analysis would be eliminated. This step required a comparison of the implied fair value to the carrying value of goodwill of the reporting unit. Subsequent to the effective date of ASU 2017-04, during the annual, or if applicable, interim goodwill impairment assessment, entities would perform the test by comparing the fair value of the reporting unit with the carrying value of the reporting unit. The impairment charge would be the excess amount of which carrying value is greater than fair value, with the total amount limited to the carrying value of goodwill. ASU 2017-04 is effective for goodwill impairment assessments beginning after December 15, 2019. The Partnership early adopted the new standard effective January 1, 2019, and the adoption did not have a material impact on its condensed consolidated financial statements and related disclosures.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This guidance amends the guidance on measuring credit losses on financial assets held at amortized cost. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Partnership does not expect that the adoption of this guidance will have a material impact on its condensed consolidated financial statements and related disclosures.
2. REVENUE
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration the Partnership expects to be entitled to in exchange for those goods or services.
As noted in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements, the Partnership’s business consists of
two
reportable segments: (i) Transportation and Terminaling and (ii) Storage.
The following table provides information relating to the Partnership’s revenue for each service category by segment for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Transportation and Terminaling Segment
|
|
|
|
|
|
|
|
|
Terminaling
|
|
$
|
34,152
|
|
|
$
|
29,410
|
|
|
$
|
66,505
|
|
|
$
|
56,461
|
|
Pipeline
|
|
20,326
|
|
|
19,217
|
|
|
38,953
|
|
|
37,706
|
|
Other
|
|
15,178
|
|
|
12,506
|
|
|
30,157
|
|
|
24,637
|
|
Total
|
|
69,656
|
|
|
61,133
|
|
|
135,615
|
|
|
118,804
|
|
Storage Segment
|
|
|
|
|
|
|
|
|
Storage
|
|
13,094
|
|
|
6,966
|
|
|
25,980
|
|
|
14,035
|
|
Total
|
|
13,094
|
|
|
6,966
|
|
|
25,980
|
|
|
14,035
|
|
Total Revenue
|
|
$
|
82,750
|
|
|
$
|
68,099
|
|
|
$
|
161,595
|
|
|
$
|
132,839
|
|
PBFX recognizes revenue by charging fees for crude oil and refined products terminaling, storage and pipeline services based on the greater of the contractual minimum volume commitment (“MVC”), as applicable, or the delivery of actual volumes transferred or stored based on contractual rates applied to throughput or storage volumes.
Minimum Volume Commitments
Transportation and Terminaling Segment
The Partnership’s Transportation and Terminaling segment consists of product terminals, pipelines, crude unloading facilities and other facilities capable of transporting and handling crude oil, refined products and natural gas. Certain of the Transportation and Terminaling commercial agreements contain MVCs. Under these commercial agreements, if the Partnership’s customer fails to transport its minimum throughput volumes during any specified period, the customer will pay the Partnership a deficiency payment equal to the volume of the deficiency multiplied by the contractual rate then in effect. The deficiency payment is initially recorded as deferred revenue
on the
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Partnership’s balance sheets for all contracts in which the MVC deficiency makeup period is contractually longer than a fiscal quarter.
Certain of the Partnership’s customers may apply the amount of any such deficiency payments as a credit for volumes transported on the applicable pipeline or terminal system in excess of its MVC during the following quarters under the terms of the applicable agreement. The Partnership recognizes operating revenue for the deficiency payments when credits are used for volumes transported in excess of MVCs or at the end of the contractual period. If the Partnership determines, based on all available information, that it is remote that the Partnership’s customer will utilize these deficiency payments, the amount of the expected unused credits will be recognized as operating revenue in the period when that determination is made. The use or recognition of the credits is recorded as a reduction to deferred revenue.
Storage Segment
The Partnership earns storage revenue under crude oil and refined products storage contracts through capacity reservation agreements, where the Partnership collects a fee for reserving storage capacity for customers in its facilities. Customers generally pay reservation fees based on the level of storage capacity reserved rather than the actual volumes stored.
As of
June 30, 2019
, future fees for MVCs to be received related to noncancelable commercial terminaling, pipeline and storage agreements were as follows:
|
|
|
|
|
Remainder of 2019
|
$
|
58,496
|
|
2020
|
114,253
|
|
2021
|
113,355
|
|
2022
|
91,476
|
|
2023
|
87,199
|
|
Thereafter
|
170,794
|
|
Total MVC payments to be received
(1)(2)
|
$
|
635,573
|
|
(1) All fixed consideration from contracts with customers is included in the amounts presented above. Variable consideration that is constrained or not required to be estimated as it reflects our efforts to perform is excluded.
(2) Arrangements deemed implicit leases are excluded from this table.
Leases
Lessor Disclosure Following the Adoption of ASC 842
The Partnership has leased certain of its assets under lease agreements with terms generally up to
fifteen years
, including leases of storage, terminaling and pipeline assets. Some leases include options to terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Partnership’s agreements generally do not provide an option for the lessee to purchase the leased equipment at the end of the lease term. However, in connection with the affiliate lease agreement for the interstate natural gas pipeline at PBF Holding’s Paulsboro Refinery (the “Paulsboro Natural Gas Pipeline”), the Partnership granted a right of first refusal in favor of PBF LLC such that the Partnership would be required to give PBF Holding the first opportunity to purchase the Paulsboro Natural Gas Pipeline at market value prior to selling to an unrelated third party if PBF Holding refused to purchase it.
At inception, the Partnership determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. As of
June 30, 2019
, all of the Partnership’s leases have been determined to be operating leases. Some of the Partnership’s lease arrangements contain lease components (
e.g.,
MVCs) and non-lease components (
e.g.,
maintenance, labor charges, etc.). The Partnership accounts for the lease and non-lease components as a single lease component.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Certain of the Partnership’s lease agreements include MVCs that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Partnership’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Partnership expects to derive significant future benefits from its leased assets following the end of the lease term, as the remaining useful life would be sufficient to allow the Partnership to enter into new leases for such assets.
In the normal course of business, the Partnership enters into contracts with PBF Holding and its refineries whereby PBF Holding and its refineries lease certain of the Partnership’s storage, terminaling and pipeline assets. The Partnership believes the terms and conditions under these leases are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. The terms for these affiliate leases range from
one
to
fifteen
years. Leases with affiliates represent approximately
95%
of the undiscounted future rental income from the Partnership’s leased assets. These affiliate lease arrangements accounted for
$38,693
of total lease revenue of
$43,046
and
$74,780
of total lease revenue of
$83,482
for the
three and six months ended
June 30, 2019
, respectively, and
$28,556
of total lease revenue of
$30,149
and
$56,827
of total lease revenue of
$59,925
for the
three and six months ended
June 30, 2018
, respectively.
Undiscounted Cash Flows
The table below presents the fixed component of the undiscounted cash flows to be received for each of the first five years and the total remaining years for the Partnership’s operating leases as of
June 30, 2019
:
|
|
|
|
|
Remainder of 2019
|
$
|
71,940
|
|
2020
|
150,193
|
|
2021
|
148,971
|
|
2022
|
138,768
|
|
2023
|
137,406
|
|
Thereafter
|
371,578
|
|
Total undiscounted future cash to be received
|
$
|
1,018,856
|
|
Assets Under Lease
The Partnership’s assets subject to lease are included in “Property, plant and equipment, net” within the Partnership’s condensed consolidated balance sheets. The table below quantifies by property, plant and equipment category the assets that are subject to lease as of
June 30, 2019
:
|
|
|
|
|
|
June 30,
2019
|
Land
|
$
|
98,337
|
|
Pipelines
|
315,212
|
|
Terminals and equipment
|
50,235
|
|
Storage facilities
|
198,870
|
|
|
662,654
|
|
Accumulated depreciation
|
(62,988
|
)
|
Net assets under lease
|
$
|
599,666
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Deferred Revenue
The Partnership records deferred revenue when cash payments are received or due in advance of performance, including amounts which are refundable. Deferred revenue was
$2,875
and
$2,960
as of
June 30, 2019
and
December 31, 2018
, respectively. The decrease in the deferred revenue balance as of
June 30, 2019
is primarily driven by the timing and extent of cash payments received in advance of satisfying the Partnership’s performance obligations for the comparative periods.
The Partnership’s payment terms vary by the type and location of our customer and the services offered. The period between invoicing and when payment is due is not significant (
i.e.,
generally within two months). For certain services and customer types, the Partnership requires payment before the services are performed for the customer.
3. ACQUISITIONS
Third-Party Acquisitions
Knoxville Terminals Purchase
On April 16, 2018, the Partnership’s wholly-owned subsidiary, PBF Logistics Products Terminals LLC (“PLPT”), completed the purchase of
two
refined product terminals located in Knoxville, Tennessee (the “Knoxville Terminals Purchase”), which include product tanks, pipeline connections to the Colonial Pipeline Company and Plantation Pipe Line Company pipeline systems and truck loading facilities (the “Knoxville Terminals”) from Cummins Terminals, Inc. (“Cummins”).
The aggregate purchase price for the Knoxville Terminals Purchase was
$58,000
, excluding working capital. The consideration was financed through a combination of cash on hand and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). The final purchase price and fair value allocation were completed as of December 31, 2018.
PBFX accounted for the Knoxville Terminals Purchase as a business combination in accordance with GAAP whereby the Partnership recognizes assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. Any excess consideration transferred over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.
The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:
|
|
|
|
|
|
Purchase Price
|
Gross purchase price
|
$
|
58,000
|
|
Working capital
|
356
|
|
Total consideration
|
$
|
58,356
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
The following table summarizes the final amounts recognized for assets acquired and liabilities assumed as of the acquisition date:
|
|
|
|
|
|
Fair Value Allocation
|
Prepaids and other current assets
|
$
|
356
|
|
Property, plant and equipment
|
45,768
|
|
Intangibles*
|
5,900
|
|
Goodwill
|
6,332
|
|
Fair value of net assets acquired
|
$
|
58,356
|
|
* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.
The Partnership’s condensed consolidated financial statements for the
six months ended
June 30, 2019
include the results of operations of the Knoxville Terminals subsequent to the Knoxville Terminals Purchase whereas the same period in 2018 does not include the results of operations of such assets prior to April 16, 2018. On an unaudited pro forma basis, the revenue and net income of PBFX assuming the acquisition had occurred on January 1, 2017, for the periods indicated, are shown below. The unaudited pro forma information does not purport to present what PBFX’s actual results would have been had the Knoxville Terminals Purchase occurred on January 1, 2017, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition and interest expense associated with the Knoxville Terminals Purchase financing.
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
(Unaudited)
|
Pro forma revenue
|
$
|
136,369
|
|
Pro forma net income attributable to PBF Logistics LP unitholders
|
35,153
|
|
East Coast Storage Assets Acquisition
On October 1, 2018, the Partnership closed the acquisition of CPI Operations LLC (“CPI”), whose assets include a storage facility with multi-use storage capacity, an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and certain other idled assets (collectively, the “East Coast Storage Assets”) located on the Delaware River near Paulsboro, New Jersey (the “East Coast Storage Assets Acquisition”), which had been contemplated by an agreement dated as of July 16, 2018 between the Partnership and Crown Point International LLC (“Crown Point”). Additionally, the East Coast Storage Assets Acquisition includes an earn-out provision related to an existing commercial agreement with a third party, based on the future results of certain of the acquired idled assets (the “Contingent Consideration”), which are expected to be restarted in the fourth quarter of 2019.
The aggregate purchase price for the East Coast Storage Assets Acquisition was
$126,989
, including working capital and the Contingent Consideration, which was comprised of an initial payment at closing of
$75,000
with a remaining balance of
$32,000
payable one year after closing. The residual purchase consideration consists of the Contingent Consideration. The consideration was financed through a combination of cash on hand and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). The fair value allocation is subject to adjustment pending completion of the final purchase valuation, which was in process as of June 30, 2019, as the purchase price and fair value allocation may be subject to adjustment due to changes in assumptions and timing that may impact the Contingent Consideration.
PBFX accounted for the East Coast Storage Assets Acquisition as a business combination under GAAP whereby the Partnership recognizes assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
The total purchase consideration and the estimated fair values of the assets and liabilities at the acquisition date were as follows:
|
|
|
|
|
|
Purchase Price
|
Gross purchase price*
|
$
|
105,900
|
|
Estimated working capital adjustments
|
(11
|
)
|
Contingent Consideration **
|
21,100
|
|
Total consideration
|
$
|
126,989
|
|
* Includes
$30,900
net present value payable of
$32,000
due to Crown Point one year after closing, which is included in “Accrued liabilities” within the Partnership’s condensed consolidated balance sheets.
** Contingent Consideration is included in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets.
The following table summarizes the estimated amounts recognized for assets acquired and liabilities assumed as of the acquisition date:
|
|
|
|
|
|
Fair Value Allocation
|
Accounts receivable
|
$
|
436
|
|
Prepaids and other current assets
|
1,770
|
|
Property, plant and equipment
|
114,406
|
|
Intangibles*
|
13,300
|
|
Accounts payable
|
(902
|
)
|
Accrued liabilities
|
(1,271
|
)
|
Other long-term liabilities
|
(750
|
)
|
Estimated fair value of net assets acquired
|
$
|
126,989
|
|
* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.
The East Coast Storage Assets Acquisition includes consideration in the form of the Contingent Consideration. Pursuant to the agreement, the Partnership and Crown Point will share equally in the future operating profits of the restarted assets, as defined in the agreement, over a contractual term of up to
three
years starting in 2019. The Partnership recorded the Contingent Consideration based on its estimated fair value of
$21,100
at the acquisition date, which was recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets.
The Partnership’s condensed consolidated financial statements for the
six months ended
June 30, 2019
include the results of operations of the East Coast Storage Assets subsequent to the East Coast Storage Assets Acquisition. The same period in 2018 does not include the results of operations of such assets. On an unaudited pro forma basis, the revenue and net income of PBFX assuming the acquisition had occurred on January 1, 2017, for the periods indicated, are shown below. The unaudited pro forma information does not purport to present what PBFX’s actual results would have been had the East Coast Storage Assets Acquisition occurred on January 1, 2017, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense related to the acquisition and interest expense associated with the East Coast Storage Assets Acquisition financing.
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
(Unaudited)
|
Pro forma revenue
|
$
|
144,454
|
|
Pro forma net income attributable to PBF Logistics LP unitholders
|
30,117
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Acquisitions from PBF
The following Acquisitions from PBF were transactions between affiliate companies. As a result, the acquisitions were accounted for as transfers of assets between entities under common control in accordance with GAAP. The assets and liabilities of the Acquisitions from PBF were transferred at their historical carrying value.
Development Assets Acquisition
On July 16, 2018, the Partnership entered into four contribution agreements with PBF LLC, pursuant to which PBF Energy contributed to PBFX certain of its subsidiaries (the “Development Assets Contribution Agreements”). Pursuant to the Development Assets Contribution Agreements, the Partnership acquired from PBF LLC all of the issued and outstanding limited liability company interests of: Toledo Rail Logistics Company LLC (“TRLC”), whose assets consist of a loading and unloading rail facility located at PBF Holding’s Toledo Refinery (the “Toledo Rail Products Facility”); Chalmette Logistics Company LLC (“CLC”), whose assets consist of a truck loading rack facility (the “Chalmette Truck Rack”) and a rail yard facility (the “Chalmette Rosin Yard”), both of which are located at PBF Holding’s Chalmette Refinery; Paulsboro Terminaling Company LLC (“PTC”), whose assets consist of a lube oil terminal facility located at PBF Holding’s Paulsboro Refinery (the “Paulsboro Lube Oil Terminal”); and DCR Storage and Loading Company LLC (“DSLC”), whose assets consist of an ethanol storage facility located at PBF Holding’s Delaware City Refinery (the “Delaware Ethanol Storage Facility” and collectively with the Toledo Rail Products Facility, the Chalmette Truck Rack, the Chalmette Rosin Yard, and the Paulsboro Lube Oil Terminal, the “Development Assets”). The acquisition of the Development Assets closed on July 31, 2018 for total consideration of
$31,586
, consisting of
1,494,134
common units issued to PBF LLC (the “Development Assets Acquisition”).
TVPC Acquisition
On April 24, 2019, the Partnership entered into the TVPC Contribution Agreement, pursuant to which the Partnership acquired from PBF LLC all of the issued and outstanding limited liability company interests of TVP Holding, which held the remaining
50%
equity interests in TVPC. The TVPC Acquisition closed on May 31, 2019 for total consideration of
$200,000
in cash, which was financed through proceeds from the April Registered Direct Offering (as defined in Note 7 “Equity” of the Notes to Condensed Consolidated Financial Statements) and borrowings under the Partnership’s Revolving Credit Facility (as defined in Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements). As a result of the TVPC Acquisition, the Partnership owns
100%
of the equity interest in TVPC.
Acquisition Expenses
PBFX incurred acquisition related costs of
$930
and
$1,051
for the
three and six months ended
June 30, 2019
, respectively, primarily consisting of consulting and legal expenses related to the TVPC Acquisition and other pending and non-consummated acquisitions. PBFX incurred acquisition related costs of
$669
and
$1,152
for the
three and six months ended
June 30, 2018
, respectively, primarily consisting of consulting and legal expenses related to the Knoxville Terminals Purchase and other pending and non-consummated acquisitions. These costs are included in “General and administrative expenses” within the Partnership’s condensed consolidated statements of operations.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
4. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
Land
|
|
$
|
115,957
|
|
|
$
|
115,957
|
|
Pipelines
|
|
339,286
|
|
|
337,474
|
|
Terminals and equipment
|
|
279,325
|
|
|
259,441
|
|
Storage facilities
|
|
216,714
|
|
|
213,937
|
|
Construction in progress
|
|
6,910
|
|
|
20,439
|
|
|
|
958,192
|
|
|
947,248
|
|
Accumulated depreciation
|
|
(102,234
|
)
|
|
(85,131
|
)
|
Property, plant and equipment, net
|
|
$
|
855,958
|
|
|
$
|
862,117
|
|
Depreciation expense was
$17,324
and
$13,611
for the
six months ended
June 30, 2019
and
2018
, respectively.
5. INTANGIBLES
The Partnership’s net intangibles balance consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
Customer contracts
|
|
$
|
13,300
|
|
|
$
|
13,300
|
|
Customer relationships
|
|
5,900
|
|
|
5,900
|
|
|
|
19,200
|
|
|
19,200
|
|
Accumulated amortization
|
|
(646
|
)
|
|
(395
|
)
|
Total intangibles*
|
|
$
|
18,554
|
|
|
$
|
18,805
|
|
* Intangibles are included in “Other non-current assets” within the Partnership’s condensed consolidated balance sheets.
Amortization expense was
$251
and
$123
for the
six months ended
June 30, 2019
and
2018
, respectively.
6. DEBT
Total debt was comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
2023 Notes
|
|
$
|
525,000
|
|
|
$
|
525,000
|
|
Revolving credit facility (a)(b)
|
|
251,000
|
|
|
156,000
|
|
Total debt outstanding
|
|
776,000
|
|
|
681,000
|
|
Unamortized debt issuance costs
|
|
(9,310
|
)
|
|
(10,496
|
)
|
Unamortized 2023 Notes premium
|
|
2,529
|
|
|
2,820
|
|
Net carrying value of debt
|
|
$
|
769,219
|
|
|
$
|
673,324
|
|
___________________
|
|
(a)
|
PBFX had
$4,110
outstanding letters of credit and
$244,890
available under its
$500,000
amended and restated revolving credit facility with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of lenders (as amended, the “Revolving Credit Facility”) as of
June 30, 2019
.
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
|
|
(b)
|
During the
six months ended
June 30, 2019
, PBFX incurred net borrowings of
$95,000
under the Revolving Credit Facility to fund the TVPC Acquisition, other capital expenditures and working capital requirements.
|
Fair Value Measurement
A fair value hierarchy (Level 1, Level 2, or Level 3) is used to categorize fair value amounts based on the quality of inputs used to measure fair value. Accordingly, fair values derived from Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair values derived from Level 2 inputs are based on quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are either directly or indirectly observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
The estimated fair value of the Revolving Credit Facility approximates its carrying value, categorized as a Level 2 measurement, as this borrowing bears interest based upon short-term floating market interest rates. The estimated fair value of the Partnership’s
6.875%
Senior Notes due 2023 (the “2023 Notes”), categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the 2023 Notes and was approximately
$542,778
and
$515,336
at
June 30, 2019
and
December 31, 2018
, respectively. The carrying value and fair value of PBFX’s debt, exclusive of unamortized debt issuance costs and unamortized premium on the 2023 Notes, was
$776,000
and
$793,778
as of
June 30, 2019
, respectively, and
$681,000
and
$671,336
as of
December 31, 2018
, respectively.
7. EQUITY
PBFX had
32,153,579
common units held by the public outstanding as of
June 30, 2019
. PBF LLC owns
29,953,631
PBFX common units constituting an aggregate of
48.2%
of PBFX’s limited partner interest as of
June 30, 2019
.
Share Activity
The partnership agreement authorizes PBFX to issue an unlimited number of additional partnership interests for the consideration of, and on the terms and conditions determined by, PBFX’s general partner without the approval of the unitholders. It is possible that PBFX will fund future acquisitions through the issuance of additional common units, subordinated units or other partnership interests.
The following table presents changes in PBFX common units outstanding:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2019
|
|
2018
|
Balance at beginning of period
|
|
55,348,821
|
|
|
41,900,708
|
|
Vesting of phantom units, net of forfeitures
|
|
172,889
|
|
|
172,354
|
|
New units issued
|
|
6,585,500
|
|
|
—
|
|
Balance at end of period
|
|
62,107,210
|
|
|
42,073,062
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2019
|
|
2018
|
Balance at beginning of period
|
|
45,348,663
|
|
|
41,900,708
|
|
Vesting of phantom units, net of forfeitures
|
|
173,047
|
|
|
172,354
|
|
New units issued
|
|
16,585,500
|
|
|
—
|
|
Balance at end of period
|
|
62,107,210
|
|
|
42,073,062
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
On February 28, 2019, as a result of the closing of the IDR Restructuring, PBFX’s IDRs held by PBF LLC were canceled and converted into
10,000,000
newly issued PBFX common units. On April 24, 2019, the Partnership entered into subscription agreements to sell an aggregate of
6,585,500
common units to certain institutional investors in a registered direct public offering (the “April Registered Direct Offering”) for gross proceeds of approximately
$135,000
. The April Registered Direct Offering closed on April 29, 2019.
Additionally,
233,993
of the Partnership’s phantom units issued under the PBFX 2014 Long-Term Incentive Plan (“LTIP”) vested and were converted into common units held by certain directors, officers and current and former employees of our general partner or its affiliates during the year ended December 31,
2018
.
Holders of any additional common units PBFX issues will be entitled to share equally with the then-existing common unitholders in PBFX’s distributions of available cash.
Noncontrolling Interest
Prior to the TVPC Acquisition, PBFX’s wholly-owned subsidiary, PBFX Operating Company LP (“PBF Op Co”), held a
50%
controlling interest in TVPC, with the other
50%
equity interest in TVPC held by TVP Holding, a subsidiary of PBF Holding. PBFX Op Co was the sole managing member of TVPC. PBFX, through its ownership of PBFX Op Co, consolidated the financial results of TVPC and recorded a noncontrolling interest for the economic interest in TVPC held by TVP Holding. Noncontrolling interest on the condensed consolidated statements of operations included the portion of net income or loss attributable to the economic interest in TVPC held by TVP Holding. Noncontrolling interest on the condensed consolidated balance sheets included the portion of net assets of TVPC attributable to TVP Holding.
Subsequent to the TVPC Acquisition, PBFX owns
100%
of the equity interest in TVPC and no longer records a noncontrolling interest related to TVPC.
Equity Activity
The following tables summarize the changes in the carrying amount of the Partnership’s equity during the
six
months ended
June 30, 2019
and
2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Units
|
|
Noncontrolling Interest
|
|
Total Equity
|
Balance at December 31, 2018
|
|
$
|
23,718
|
|
|
$
|
169,472
|
|
|
$
|
193,190
|
|
Quarterly distributions to unitholders
($0.5050 per unit)
|
|
(28,313
|
)
|
|
—
|
|
|
(28,313
|
)
|
Distributions to TVPC members
|
|
—
|
|
|
(6,500
|
)
|
|
(6,500
|
)
|
Net income attributable to the partners
|
|
17,357
|
|
|
4,719
|
|
|
22,076
|
|
Unit-based compensation expense
|
|
964
|
|
|
—
|
|
|
964
|
|
Other
|
|
259
|
|
|
—
|
|
|
259
|
|
Balance at March 31, 2019
|
|
$
|
13,985
|
|
|
$
|
167,691
|
|
|
$
|
181,676
|
|
Quarterly distributions to unitholders
($0.5100 per unit)
|
|
(32,079
|
)
|
|
—
|
|
|
(32,079
|
)
|
Distributions to TVPC members
|
|
—
|
|
|
(2,000
|
)
|
|
(2,000
|
)
|
Net income attributable to the partners
|
|
22,166
|
|
|
3,162
|
|
|
25,328
|
|
Acquisition of TVPC noncontrolling interest
|
|
(31,147
|
)
|
|
(168,853
|
)
|
|
(200,000
|
)
|
Unit-based compensation expense
|
|
3,387
|
|
|
—
|
|
|
3,387
|
|
Issuance of common units, net of expenses
|
|
132,483
|
|
|
—
|
|
|
132,483
|
|
Other
|
|
(1,801
|
)
|
|
—
|
|
|
(1,801
|
)
|
Balance at June 30, 2019
|
|
$
|
106,994
|
|
|
$
|
—
|
|
|
$
|
106,994
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment
|
|
Common Units
|
|
IDR Holder
|
|
Noncontrolling Interest
|
|
Total Equity
|
Balance at December 31, 2017
|
|
$
|
10,665
|
|
|
$
|
(17,544
|
)
|
|
$
|
2,736
|
|
|
$
|
171,903
|
|
|
$
|
167,760
|
|
Net loss attributable to the Development Assets
|
|
(1,279
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,279
|
)
|
Contributions to the Development Assets
|
|
1,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,131
|
|
Quarterly distributions to unitholders (including IDRs)
($0.4850 per unit)
|
|
—
|
|
|
(20,618
|
)
|
|
(2,736
|
)
|
|
—
|
|
|
(23,354
|
)
|
Distributions to TVPC members
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|
(5,000
|
)
|
Net income attributable to the partners
|
|
—
|
|
|
18,276
|
|
|
2,959
|
|
|
4,022
|
|
|
25,257
|
|
Unit-based compensation expense
|
|
—
|
|
|
834
|
|
|
—
|
|
|
—
|
|
|
834
|
|
Other
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
Balance at March 31, 2018
|
|
$
|
10,517
|
|
|
$
|
(19,063
|
)
|
|
$
|
2,959
|
|
|
$
|
170,925
|
|
|
$
|
165,338
|
|
Net loss attributable to the Development Assets
|
|
(1,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,084
|
)
|
Contributions to the Development Assets
|
|
3,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,062
|
|
Quarterly distributions to unitholders (including IDRs)
($0.4900 per unit)
|
|
—
|
|
|
(20,942
|
)
|
|
(2,955
|
)
|
|
—
|
|
|
(23,897
|
)
|
Distributions to TVPC members
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,250
|
)
|
|
(6,250
|
)
|
Net income attributable to the partners
|
|
—
|
|
|
16,681
|
|
|
3,411
|
|
|
4,363
|
|
|
24,455
|
|
Unit-based compensation expense
|
|
—
|
|
|
2,663
|
|
|
—
|
|
|
—
|
|
|
2,663
|
|
Other
|
|
—
|
|
|
(1,048
|
)
|
|
—
|
|
|
—
|
|
|
(1,048
|
)
|
Balance at June 30, 2018
|
|
$
|
12,495
|
|
|
$
|
(21,709
|
)
|
|
$
|
3,415
|
|
|
$
|
169,038
|
|
|
$
|
163,239
|
|
Cash Distributions
PBFX’s partnership agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the unitholders and general partner will receive.
During the
six months ended
June 30, 2019
, PBFX made distribution payments as follows:
|
|
|
|
|
|
|
|
Related Earnings Period:
|
Q4 2018
|
|
Q1 2019
|
|
Distribution date
|
March 14, 2019
|
|
May 30, 2019
|
|
Record date
|
March 1, 2019
|
|
May 15, 2019
|
|
Per unit
|
$
|
0.5050
|
|
$
|
0.5100
|
|
To public common unitholders
|
$
|
12,825
|
|
$
|
16,398
|
|
To PBF LLC
|
15,126
|
|
15,276
|
|
Total distribution
|
$
|
27,951
|
|
$
|
31,674
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
The allocation of total quarterly distributions to general and limited partners for the
three and six
months ended
June 30, 2019
and
2018
is shown in the table below. The Partnership’s distributions are declared subsequent to quarter end (distributions of
$0.5150
and
$0.4950
per unit declared for the three months ended June 30, 2019 and 2018, respectively, and
$0.5100
and
$0.4900
per unit declared for the three months ended March 31, 2019 and 2018, respectively); therefore, the table represents total estimated distributions applicable to the period in which the distributions are earned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
IDR - PBF LLC
(1)
|
|
$
|
—
|
|
|
$
|
3,415
|
|
|
$
|
—
|
|
|
$
|
6,370
|
|
Limited partners’ distributions:
|
|
|
|
|
|
|
|
|
Common
|
|
32,398
|
|
|
22,800
|
|
|
64,481
|
|
|
43,770
|
|
Total distributions
|
|
32,398
|
|
|
26,215
|
|
|
64,481
|
|
|
50,140
|
|
Total cash distributions
(2)
|
|
$
|
31,986
|
|
|
$
|
25,866
|
|
|
$
|
63,660
|
|
|
$
|
49,419
|
|
(1) Subsequent to the closing of the IDR Restructuring, the IDRs were canceled, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions.
(2) Excludes phantom unit distributions, which are accrued and paid upon vesting.
8. NET INCOME PER UNIT
Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to PBFX’s unitholders are determined in relation to actual distributions declared and are not based on the net income (loss) allocations used in the calculation of net income (loss) per unit.
Diluted net income per unit includes the effect of potentially dilutive units of PBFX’s common units that consist of unvested phantom units. There were
1,000
and
340,198
anti-dilutive phantom units for the
three and six months ended
June 30, 2019
, respectively, compared to
146,065
and
429,503
anti-dilutive phantom units for the
three and six months ended
June 30, 2018
, respectively.
In addition to the common units, PBFX has also identified the IDRs (prior to the IDR Restructuring) as participating securities and used the two-class method when calculating the net income per unit applicable to limited partners that is based on the weighted-average number of common units outstanding during the prior period.
When calculating basic earnings per unit under the two-class method for a master limited partnership, net income for the current reporting period is reduced by the amount of available cash that has been or will be distributed to the limited partners and IDR holder (prior to the IDR Restructuring) for that reporting period.
The following table shows the calculation of net income per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2019
|
|
Six Months Ended
June 30, 2019
|
Net income attributable to the partners:
|
|
|
|
|
Distributions declared
|
|
$
|
32,398
|
|
|
$
|
64,481
|
|
Earnings less distributions
|
|
(10,232
|
)
|
|
(24,958
|
)
|
Net income attributable to the partners
|
|
$
|
22,166
|
|
|
$
|
39,523
|
|
|
|
|
|
|
Weighted-average units outstanding - basic
|
|
60,279,287
|
|
|
54,748,755
|
|
Weighted-average units outstanding - diluted
|
|
60,364,347
|
|
|
54,776,257
|
|
|
|
|
|
|
Net income per limited partner unit - basic
|
|
$
|
0.37
|
|
|
$
|
0.72
|
|
Net income per limited partner unit - diluted
|
|
0.37
|
|
|
0.72
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
Limited Partner Common Units
|
|
IDRs - PBF LLC
|
|
Total
|
Net income attributable to the partners:
|
|
|
|
|
|
|
Distributions declared
|
|
$
|
22,800
|
|
|
$
|
3,415
|
|
|
$
|
26,215
|
|
Earnings less distributions
|
|
(6,123
|
)
|
|
—
|
|
|
(6,123
|
)
|
Net income attributable to the partners
|
|
$
|
16,677
|
|
|
$
|
3,415
|
|
|
$
|
20,092
|
|
|
|
|
|
|
|
|
Weighted-average units outstanding - basic
|
|
42,231,119
|
|
|
|
|
|
Weighted-average units outstanding - diluted
|
|
42,294,616
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic
|
|
$
|
0.39
|
|
|
|
|
|
Net income per limited partner unit - diluted
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
|
Limited Partner Common Units
|
|
IDRs - PBF LLC
|
|
Total
|
Net income attributable to the partners:
|
|
|
|
|
|
|
Distributions declared
|
|
$
|
43,770
|
|
|
$
|
6,370
|
|
|
$
|
50,140
|
|
Earnings less distributions
|
|
(8,813
|
)
|
|
—
|
|
|
(8,813
|
)
|
Net income attributable to the partners
|
|
$
|
34,957
|
|
|
$
|
6,370
|
|
|
$
|
41,327
|
|
|
|
|
|
|
|
|
Weighted-average units outstanding - basic
|
|
42,176,202
|
|
|
|
|
|
Weighted-average units outstanding - diluted
|
|
42,190,136
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per limited partner unit - basic
|
|
$
|
0.83
|
|
|
|
|
|
Net income per limited partner unit - diluted
|
|
0.83
|
|
|
|
|
|
9. COMMITMENTS AND CONTINGENCIES
Environmental Matters
PBFX’s assets, along with PBF Energy’s refineries, are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment, waste management and the characteristics and the composition of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the Partnership’s assets, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.
PBFX recorded a total liability related to environmental remediation costs at certain of its assets of
$2,493
and
$2,587
for the period ended June 30, 2019 and December 31, 2018, respectively, related to existing environmental liabilities.
During the first quarter of 2019, the Partnership notified certain agencies of an oil sheen in the Schuylkill River potentially sourcing from one of its facilities. Clean up was immediately initiated, and oil is no longer being released into the waterway. The source of the oil is currently under investigation. Although full clean-up and remediation activities have not been completed, such incremental costs are not expected to be material to the Partnership.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
Contingent Consideration
In connection with the East Coast Storage Assets Acquisition, the purchase agreement between the Partnership and Crown Point included the Contingent Consideration. Pursuant to the agreement, the Partnership and Crown Point will share equally in the future operating profits of the restarted assets, as defined in the agreement, over a contractual term of up to
three
years starting in 2019. The Contingent Consideration was
$22,534
as of
June 30, 2019
(
$21,100
as of December 31, 2018) representing the present value of expected future payments discounted at a blended rate of
8.79%
and is recorded in “Other long-term liabilities” within the Partnership’s condensed consolidated balance sheets. At
June 30, 2019
, the estimated undiscounted liability totaled
$27,978
, based on the Partnership’s anticipated total annual earn-out payments.
10. RELATED PARTY TRANSACTIONS
Agreements with PBF Energy Entities
Commercial Agreements
PBFX currently derives a majority of its revenue from long-term, fee-based agreements with PBF Holding, supported by MVCs, as applicable, and contractual fee escalations for inflation adjustments and certain increases in operating costs. PBFX believes the terms and conditions under these agreements, as well as the Omnibus Agreement and the Services Agreement (each as defined below), each with PBF Holding, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.
See the
2018
Form 10-K for a more complete description of PBFX’s commercial agreements with PBF Holding, including those identified as leases, which were entered into prior to
2019
. The following table reflects activity during 2019 related to commercial agreements between PBFX and PBF Holding:
|
|
|
|
|
|
|
Agreements
|
Initiation Date
|
Initial Term
|
Renewals (a)
|
MVC
|
Force Majeure
|
Transportation and Terminaling
|
|
|
|
|
|
Amended and Restated Rail Agreements (b)
|
5/8/2014
|
7 years, 8 months
|
N/A
|
125,000 bpd
|
PBFX or PBF Holding can declare
|
Delaware Pipeline Services Agreement- Magellan Connection
|
11/1/2016
|
2 years, 5 months
|
See note
(c)
|
See note
(c)
|
Delaware City Terminaling Services Agreement (d)
|
1/1/2022
|
4 years
|
2 x 5
|
95,000 bpd
|
Amended and Restated Torrance Valley Pipeline Transportation Services Agreement- South Pipeline
|
8/31/2016
|
10 years
|
2 x 5
|
75,000 bpd (e)
|
Storage
|
|
|
|
|
|
East Coast Storage Assets Terminal Storage Agreement
|
1/1/2019
|
8 years
|
Evergreen
|
2,953,725 barrels (f)
|
PBFX or PBF Holding can declare
|
___________________
|
|
(a)
|
PBF Holding has the option to extend the agreements for up to
two
additional
five
-year terms, as applicable.
|
|
|
(b)
|
In 2019, the Partnership amended (effective as of January 1, 2019) the existing Amended and Restated Rail Agreements between Delaware City Terminaling Company LLC (“DCTC”) and PBF Holding for the inclusion of services through certain rail infrastructure at the East Coast Storage Assets.
|
|
|
(c)
|
In connection with the inclusion of an additional destination at the Magellan connection under the Delaware Pipeline Services Agreement, Delaware Pipeline Company LLC (“DPC”) and PBF Holding agreed to a two-year, five-month MVC (the “Magellan MVC”) under the Delaware Pipeline Services Agreement.
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
The Magellan MVC expired on March 31, 2019, subsequent to which, the Partnership has been billing actual throughput on the Magellan connection.
|
|
(d)
|
The Delaware City Terminaling Services Agreement between DCTC and PBF Holding will commence in 2022 subsequent to the expiration of the Amended and Restated Rail Agreements and includes additional services to be provided by PBFX as operator of other rail facilities owned by PBF Holding’s subsidiaries.
|
|
|
(e)
|
In connection with the TVPC Acquisition on May 31, 2019, the Torrance Valley Pipeline Transportation Services Agreement- South Pipeline was amended and restated to increase the MVC from
70,000
bpd to
75,000
bpd.
|
|
|
(f)
|
Reflects the overall shell capacity as stipulated by the storage agreement. The storage MVC is subject to the effective operating capacity of each tank, which can be impacted by routine tank maintenance and other factors.
|
Other Agreements
In addition to the commercial agreements described above, PBFX has entered into an omnibus agreement with PBF GP, PBF LLC and PBF Holding, which has been amended and restated in connection with certain of the Acquisitions from PBF (as amended, the “Omnibus Agreement”). This agreement addresses the payment of an annual fee for the provision of various general and administrative services and reimbursement of salary and benefit costs for certain PBF Energy employees.
Additionally, PBFX has entered into an operation and management services and secondment agreement with PBF Holding and certain of its subsidiaries (as amended, the “Services Agreement”), pursuant to which PBF Holding and its subsidiaries provide PBFX with the personnel necessary for the Partnership to perform its obligations under its commercial agreements. PBFX reimburses PBF Holding for the use of such employees and the provision of certain infrastructure-related services to the extent applicable to its operations, including storm water discharge and waste water treatment, steam, potable water, access to certain roads and grounds, sanitary sewer access, electrical power, emergency response, filter press, fuel gas, API solids treatment, fire water and compressed air. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that the Partnership may terminate any service upon 30-days’ notice.
See the
2018
Form 10-K for a more complete description of the Omnibus Agreement and the Services Agreement.
Summary of Transactions
A summary of revenue and expense transactions with the Partnership’s affiliates, including expenses directly charged and allocated to the Partnership, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
|
$
|
74,656
|
|
|
$
|
63,785
|
|
|
$
|
145,988
|
|
|
$
|
124,649
|
|
Operating and maintenance expenses
|
|
2,171
|
|
|
1,674
|
|
|
4,276
|
|
|
3,348
|
|
General and administrative expenses
|
|
1,752
|
|
|
1,737
|
|
|
3,514
|
|
|
3,437
|
|
11. SEGMENT INFORMATION
The Partnership’s operations are comprised of operating segments, which are strategic business units that offer different services in various geographical locations. PBFX has evaluated the performance of each operating segment based on its respective operating income. The operating segments adhere to the accounting polices used
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
for the consolidated financial statements, as described in Note 2 “Summary of Accounting Policies” of the Notes to Consolidated Financial Statements in the
2018
Form 10-K.
The Partnership’s operating segments are organized into
two
reportable segments: (i) Transportation and Terminaling and (ii) Storage. Operations that are not included in either the Transportation and Terminaling or the Storage segments are included in Corporate.
The Partnership’s Transportation and Terminaling segment consists of operating segments that include product terminals, pipelines, crude unloading facilities and other facilities capable of transporting and handling crude oil, refined products and natural gas. The Partnership’s Storage segment consists of operating segments that include storage facilities capable of handling crude oil, refined products and intermediates.
Revenue is generated from third-party transactions as well as commercial agreements entered into with PBF Holding under which the Partnership receives fees for transportation, terminaling and storage of crude oil, refined products and natural gas. The commercial agreements with PBF Holding are discussed in Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements. The Partnership does not have any foreign operations. Certain general and administrative expenses and interest and financing costs are included in Corporate as they are not directly attributable to a specific reporting segment. Identifiable assets are those used by the operating segments, whereas assets included in Corporate are principally cash, deposits and other assets that are not associated with operations specific to a reporting segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total revenue
|
|
$
|
69,656
|
|
|
$
|
13,094
|
|
|
$
|
—
|
|
|
$
|
82,750
|
|
Depreciation and amortization
|
|
6,879
|
|
|
1,975
|
|
|
—
|
|
|
8,854
|
|
Income (loss) from operations
|
|
40,529
|
|
|
4,814
|
|
|
(7,580
|
)
|
|
37,763
|
|
Interest expense, net, amortization of loan fees and debt premium and accretion on discounted liabilities
|
|
—
|
|
|
—
|
|
|
12,435
|
|
|
12,435
|
|
Capital expenditures
|
|
1,689
|
|
|
2,243
|
|
|
—
|
|
|
3,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total revenue
|
|
$
|
61,133
|
|
|
$
|
6,966
|
|
|
$
|
—
|
|
|
$
|
68,099
|
|
Depreciation and amortization
|
|
6,166
|
|
|
925
|
|
|
—
|
|
|
7,091
|
|
Income (loss) from operations
|
|
36,234
|
|
|
4,050
|
|
|
(6,488
|
)
|
|
33,796
|
|
Interest expense, net and amortization of loan fees and debt premium
|
|
—
|
|
|
—
|
|
|
10,425
|
|
|
10,425
|
|
Capital expenditures, including the Knoxville Terminals Purchase
|
|
61,716
|
|
|
2
|
|
|
—
|
|
|
61,718
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total revenue
|
|
$
|
135,615
|
|
|
$
|
25,980
|
|
|
$
|
—
|
|
|
$
|
161,595
|
|
Depreciation and amortization
|
|
13,780
|
|
|
3,795
|
|
|
—
|
|
|
17,575
|
|
Income (loss) from operations
|
|
77,080
|
|
|
8,471
|
|
|
(13,590
|
)
|
|
71,961
|
|
Interest expense, net, amortization of loan fees and debt premium and accretion on discounted liabilities
|
|
—
|
|
|
—
|
|
|
24,557
|
|
|
24,557
|
|
Capital expenditures
|
|
12,233
|
|
|
2,919
|
|
|
—
|
|
|
15,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total revenue
|
|
$
|
118,804
|
|
|
$
|
14,035
|
|
|
$
|
—
|
|
|
$
|
132,839
|
|
Depreciation and amortization
|
|
11,884
|
|
|
1,850
|
|
|
—
|
|
|
13,734
|
|
Income (loss) from operations
|
|
70,460
|
|
|
8,041
|
|
|
(10,779
|
)
|
|
67,722
|
|
Interest expense, net and amortization of loan fees and debt premium
|
|
—
|
|
|
—
|
|
|
20,373
|
|
|
20,373
|
|
Capital expenditures, including the Knoxville Terminals Purchase
|
|
65,583
|
|
|
88
|
|
|
—
|
|
|
65,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total assets
|
|
$
|
730,250
|
|
|
$
|
220,030
|
|
|
$
|
9,293
|
|
|
$
|
959,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
|
Transportation and Terminaling
|
|
Storage
|
|
Corporate
|
|
Consolidated Total
|
Total assets
|
|
$
|
731,505
|
|
|
$
|
219,326
|
|
|
$
|
5,522
|
|
|
$
|
956,353
|
|
12. SUBSEQUENT EVENTS
Cash Distribution
On August 1, 2019, PBF GP’s board of directors announced a cash distribution, based on the results of the second quarter of 2019, of
$0.5150
per unit. The distribution is payable on August 30, 2019 to PBFX unitholders of record at the close of business on August 15, 2019.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
Delaware City Logistics Company LLC, DPC, DCTC, Toledo Terminaling Company LLC, PLPT, PBFX Op Co, TVPC, Paulsboro Natural Gas Pipeline Company LLC, TRLC, CLC, PTC, DSLC and CPI serve as guarantors of the obligations under the 2023 Notes. These guarantees are full and unconditional and joint and several. For purposes of the following footnote, the Partnership is referred to as “Issuer.” The indenture dated May 12, 2015, as supplemented, among the Partnership, PBF Logistics Finance Corporation (“PBF Logistics Finance”), the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, governs subsidiaries designated as “Guarantor Subsidiaries.” In addition, PBF LLC provides a limited guarantee of collection of the principal amount of the 2023 Notes but is not otherwise subject to the covenants of the indenture. Refer to PBF LLC’s condensed consolidated financial statements, which are included in its Quarterly Report on Form 10-Q for the period ended
June 30, 2019
.
The 2023 Notes were co-issued by PBF Logistics Finance. For purposes of the following footnote, PBF Logistics Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.
The following supplemental combining and condensed consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following combining and consolidating information, the Issuer’s investment in its subsidiaries and the Guarantor Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting.
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
6,836
|
|
|
$
|
13,164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
Accounts receivable - affiliates
|
580
|
|
|
46,699
|
|
|
—
|
|
|
—
|
|
|
47,279
|
|
Accounts receivable
|
365
|
|
|
4,764
|
|
|
—
|
|
|
—
|
|
|
5,129
|
|
Prepaids and other current assets
|
1,512
|
|
|
4,371
|
|
|
—
|
|
|
—
|
|
|
5,883
|
|
Due from related parties
|
180,784
|
|
|
654,745
|
|
|
—
|
|
|
(835,529
|
)
|
|
—
|
|
Total current assets
|
190,077
|
|
|
723,743
|
|
|
—
|
|
|
(835,529
|
)
|
|
78,291
|
|
Property, plant and equipment, net
|
—
|
|
|
855,958
|
|
|
—
|
|
|
—
|
|
|
855,958
|
|
Goodwill
|
—
|
|
|
6,332
|
|
|
—
|
|
|
—
|
|
|
6,332
|
|
Other non-current assets
|
—
|
|
|
18,992
|
|
|
—
|
|
|
—
|
|
|
18,992
|
|
Investment in subsidiaries
|
1,382,665
|
|
|
—
|
|
|
—
|
|
|
(1,382,665
|
)
|
|
—
|
|
Total assets
|
$
|
1,572,742
|
|
|
$
|
1,605,025
|
|
|
$
|
—
|
|
|
$
|
(2,218,194
|
)
|
|
$
|
959,573
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable - affiliates
|
$
|
1,085
|
|
|
$
|
4,384
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,469
|
|
Accounts payable
|
1,121
|
|
|
4,301
|
|
|
—
|
|
|
—
|
|
|
5,422
|
|
Accrued liabilities
|
39,578
|
|
|
5,064
|
|
|
—
|
|
|
—
|
|
|
44,642
|
|
Deferred revenue
|
—
|
|
|
2,875
|
|
|
—
|
|
|
—
|
|
|
2,875
|
|
Due to related parties
|
654,745
|
|
|
180,784
|
|
|
—
|
|
|
(835,529
|
)
|
|
—
|
|
Total current liabilities
|
696,529
|
|
|
197,408
|
|
|
—
|
|
|
(835,529
|
)
|
|
58,408
|
|
Long-term debt
|
769,219
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
769,219
|
|
Other long-term liabilities
|
—
|
|
|
24,952
|
|
|
—
|
|
|
—
|
|
|
24,952
|
|
Total liabilities
|
1,465,748
|
|
|
222,360
|
|
|
—
|
|
|
(835,529
|
)
|
|
852,579
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Net investment
|
—
|
|
|
1,382,665
|
|
|
—
|
|
|
(1,382,665
|
)
|
|
—
|
|
Common unitholders
|
106,994
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106,994
|
|
Total equity
|
106,994
|
|
|
1,382,665
|
|
|
—
|
|
|
(1,382,665
|
)
|
|
106,994
|
|
Total liabilities and equity
|
$
|
1,572,742
|
|
|
$
|
1,605,025
|
|
|
$
|
—
|
|
|
$
|
(2,218,194
|
)
|
|
$
|
959,573
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
4,010
|
|
|
$
|
15,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,908
|
|
Accounts receivable - affiliates
|
9
|
|
|
37,043
|
|
|
—
|
|
|
—
|
|
|
37,052
|
|
Accounts receivable
|
365
|
|
|
7,146
|
|
|
—
|
|
|
—
|
|
|
7,511
|
|
Prepaids and other current assets
|
1,137
|
|
|
3,461
|
|
|
—
|
|
|
—
|
|
|
4,598
|
|
Due from related parties
|
161,613
|
|
|
561,605
|
|
|
—
|
|
|
(723,218
|
)
|
|
—
|
|
Total current assets
|
167,134
|
|
|
625,153
|
|
|
—
|
|
|
(723,218
|
)
|
|
69,069
|
|
Property, plant and equipment, net
|
—
|
|
|
862,117
|
|
|
—
|
|
|
—
|
|
|
862,117
|
|
Goodwill
|
—
|
|
|
6,332
|
|
|
—
|
|
|
—
|
|
|
6,332
|
|
Other non-current assets
|
—
|
|
|
18,835
|
|
|
—
|
|
|
—
|
|
|
18,835
|
|
Investment in subsidiaries
|
1,133,775
|
|
|
—
|
|
|
—
|
|
|
(1,133,775
|
)
|
|
—
|
|
Total assets
|
$
|
1,300,909
|
|
|
$
|
1,512,437
|
|
|
$
|
—
|
|
|
$
|
(1,856,993
|
)
|
|
$
|
956,353
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable - affiliates
|
$
|
1,239
|
|
|
$
|
10,808
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,047
|
|
Accounts payable
|
1,176
|
|
|
3,484
|
|
|
—
|
|
|
—
|
|
|
4,660
|
|
Accrued liabilities
|
39,847
|
|
|
6,465
|
|
|
—
|
|
|
—
|
|
|
46,312
|
|
Deferred revenue
|
—
|
|
|
2,960
|
|
|
—
|
|
|
—
|
|
|
2,960
|
|
Due to related parties
|
561,605
|
|
|
161,613
|
|
|
—
|
|
|
(723,218
|
)
|
|
—
|
|
Total current liabilities
|
603,867
|
|
|
185,330
|
|
|
—
|
|
|
(723,218
|
)
|
|
65,979
|
|
Long-term debt
|
673,324
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
673,324
|
|
Other long-term liabilities
|
—
|
|
|
23,860
|
|
|
—
|
|
|
—
|
|
|
23,860
|
|
Total liabilities
|
1,277,191
|
|
|
209,190
|
|
|
—
|
|
|
(723,218
|
)
|
|
763,163
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Net investment
|
—
|
|
|
1,133,775
|
|
|
—
|
|
|
(1,133,775
|
)
|
|
—
|
|
Common unitholders
|
23,718
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,718
|
|
Total
PBF Logistics LP equity
|
23,718
|
|
|
1,133,775
|
|
|
—
|
|
|
(1,133,775
|
)
|
|
23,718
|
|
Noncontrolling interest
|
—
|
|
|
169,472
|
|
|
—
|
|
|
—
|
|
|
169,472
|
|
Total equity
|
23,718
|
|
|
1,303,247
|
|
|
—
|
|
|
(1,133,775
|
)
|
|
193,190
|
|
Total liabilities and equity
|
$
|
1,300,909
|
|
|
$
|
1,512,437
|
|
|
$
|
—
|
|
|
$
|
(1,856,993
|
)
|
|
$
|
956,353
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Affiliate
|
$
|
—
|
|
|
$
|
74,656
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
74,656
|
|
Third-party
|
—
|
|
|
8,094
|
|
|
—
|
|
|
—
|
|
|
8,094
|
|
Total revenue
|
—
|
|
|
82,750
|
|
|
—
|
|
|
—
|
|
|
82,750
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
—
|
|
|
28,553
|
|
|
—
|
|
|
—
|
|
|
28,553
|
|
General and administrative expenses
|
7,580
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,580
|
|
Depreciation and amortization
|
—
|
|
|
8,854
|
|
|
—
|
|
|
—
|
|
|
8,854
|
|
Total costs and expenses
|
7,580
|
|
|
37,407
|
|
|
—
|
|
|
—
|
|
|
44,987
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
(7,580
|
)
|
|
45,343
|
|
|
—
|
|
|
—
|
|
|
37,763
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
44,846
|
|
|
—
|
|
|
—
|
|
|
(44,846
|
)
|
|
—
|
|
Interest expense, net
|
(11,216
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,216
|
)
|
Amortization of loan fees and debt premium
|
(446
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(446
|
)
|
Accretion on discounted liabilities
|
(276
|
)
|
|
(497
|
)
|
|
—
|
|
|
—
|
|
|
(773
|
)
|
Net income
|
25,328
|
|
|
44,846
|
|
|
—
|
|
|
(44,846
|
)
|
|
25,328
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
3,162
|
|
|
—
|
|
|
—
|
|
|
3,162
|
|
Net income attributable to PBF Logistics LP unitholders
|
$
|
25,328
|
|
|
$
|
41,684
|
|
|
$
|
—
|
|
|
$
|
(44,846
|
)
|
|
$
|
22,166
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Affiliate
|
$
|
—
|
|
|
$
|
63,785
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63,785
|
|
Third-party
|
—
|
|
|
4,314
|
|
|
—
|
|
|
—
|
|
|
4,314
|
|
Total revenue
|
—
|
|
|
68,099
|
|
|
—
|
|
|
—
|
|
|
68,099
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
—
|
|
|
20,724
|
|
|
—
|
|
|
—
|
|
|
20,724
|
|
General and administrative expenses
|
6,488
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,488
|
|
Depreciation and amortization
|
—
|
|
|
7,091
|
|
|
—
|
|
|
—
|
|
|
7,091
|
|
Total costs and expenses
|
6,488
|
|
|
27,815
|
|
|
—
|
|
|
—
|
|
|
34,303
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
(6,488
|
)
|
|
40,284
|
|
|
—
|
|
|
—
|
|
|
33,796
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
40,284
|
|
|
—
|
|
|
—
|
|
|
(40,284
|
)
|
|
—
|
|
Interest expense, net
|
(10,029
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,029
|
)
|
Amortization of loan fees and debt premium
|
(396
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(396
|
)
|
Net income
|
23,371
|
|
|
40,284
|
|
|
—
|
|
|
(40,284
|
)
|
|
23,371
|
|
Less: Net loss attributable to Predecessor
|
—
|
|
|
(1,084
|
)
|
|
—
|
|
|
—
|
|
|
(1,084
|
)
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
4,363
|
|
|
—
|
|
|
—
|
|
|
4,363
|
|
Net income attributable to the partners
|
23,371
|
|
|
37,005
|
|
|
—
|
|
|
(40,284
|
)
|
|
20,092
|
|
Less: Net income attributable to the IDR holder
|
3,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,415
|
|
Net income attributable to PBF Logistics LP unitholders
|
$
|
19,956
|
|
|
$
|
37,005
|
|
|
$
|
—
|
|
|
$
|
(40,284
|
)
|
|
$
|
16,677
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Affiliate
|
$
|
—
|
|
|
$
|
145,988
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
145,988
|
|
Third-party
|
—
|
|
|
15,607
|
|
|
—
|
|
|
—
|
|
|
15,607
|
|
Total revenue
|
—
|
|
|
161,595
|
|
|
—
|
|
|
—
|
|
|
161,595
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
—
|
|
|
58,469
|
|
|
—
|
|
|
—
|
|
|
58,469
|
|
General and administrative expenses
|
13,590
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,590
|
|
Depreciation and amortization
|
—
|
|
|
17,575
|
|
|
—
|
|
|
—
|
|
|
17,575
|
|
Total costs and expenses
|
13,590
|
|
|
76,044
|
|
|
—
|
|
|
—
|
|
|
89,634
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
(13,590
|
)
|
|
85,551
|
|
|
—
|
|
|
—
|
|
|
71,961
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
84,568
|
|
|
—
|
|
|
—
|
|
|
(84,568
|
)
|
|
—
|
|
Interest expense, net
|
(22,129
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,129
|
)
|
Amortization of loan fees and debt premium
|
(895
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(895
|
)
|
Accretion on discounted liabilities
|
(550
|
)
|
|
(983
|
)
|
|
—
|
|
|
—
|
|
|
(1,533
|
)
|
Net income
|
47,404
|
|
|
84,568
|
|
|
—
|
|
|
(84,568
|
)
|
|
47,404
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
7,881
|
|
|
—
|
|
|
—
|
|
|
7,881
|
|
Net income attributable to PBF Logistics LP unitholders
|
$
|
47,404
|
|
|
$
|
76,687
|
|
|
$
|
—
|
|
|
$
|
(84,568
|
)
|
|
$
|
39,523
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Affiliate
|
$
|
—
|
|
|
$
|
124,649
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,649
|
|
Third-party
|
—
|
|
|
8,190
|
|
|
—
|
|
|
—
|
|
|
8,190
|
|
Total revenue
|
—
|
|
|
132,839
|
|
|
—
|
|
|
—
|
|
|
132,839
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
—
|
|
|
40,604
|
|
|
—
|
|
|
—
|
|
|
40,604
|
|
General and administrative expenses
|
10,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,779
|
|
Depreciation and amortization
|
—
|
|
|
13,734
|
|
|
—
|
|
|
—
|
|
|
13,734
|
|
Total costs and expenses
|
10,779
|
|
|
54,338
|
|
|
—
|
|
|
—
|
|
|
65,117
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
(10,779
|
)
|
|
78,501
|
|
|
—
|
|
|
—
|
|
|
67,722
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries
|
78,501
|
|
|
—
|
|
|
—
|
|
|
(78,501
|
)
|
|
—
|
|
Interest expense, net
|
(19,614
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,614
|
)
|
Amortization of loan fees and debt premium
|
(759
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(759
|
)
|
Net income
|
47,349
|
|
|
78,501
|
|
|
—
|
|
|
(78,501
|
)
|
|
47,349
|
|
Less: Net loss attributable to Predecessor
|
—
|
|
|
(2,363
|
)
|
|
—
|
|
|
—
|
|
|
(2,363
|
)
|
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
8,385
|
|
|
—
|
|
|
—
|
|
|
8,385
|
|
Net income attributable to the partners
|
47,349
|
|
|
72,479
|
|
|
—
|
|
|
(78,501
|
)
|
|
41,327
|
|
Less: Net income attributable to the IDR holder
|
6,370
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,370
|
|
Net income attributable to PBF Logistics LP unitholders
|
$
|
40,979
|
|
|
$
|
72,479
|
|
|
$
|
—
|
|
|
$
|
(78,501
|
)
|
|
$
|
34,957
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
47,404
|
|
|
$
|
84,568
|
|
|
$
|
—
|
|
|
$
|
(84,568
|
)
|
|
$
|
47,404
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
—
|
|
|
17,575
|
|
|
—
|
|
|
—
|
|
|
17,575
|
|
Amortization of loan fees and debt premium
|
895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
895
|
|
Accretion on discounted liabilities
|
550
|
|
|
983
|
|
|
—
|
|
|
—
|
|
|
1,533
|
|
Unit-based compensation expense
|
4,351
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,351
|
|
Equity in earnings of subsidiaries
|
(84,568
|
)
|
|
—
|
|
|
—
|
|
|
84,568
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable - affiliates
|
(571
|
)
|
|
(9,656
|
)
|
|
—
|
|
|
—
|
|
|
(10,227
|
)
|
Accounts receivable
|
—
|
|
|
2,382
|
|
|
—
|
|
|
—
|
|
|
2,382
|
|
Prepaids and other current assets
|
(375
|
)
|
|
(910
|
)
|
|
—
|
|
|
—
|
|
|
(1,285
|
)
|
Accounts payable - affiliates
|
(154
|
)
|
|
(2,476
|
)
|
|
—
|
|
|
—
|
|
|
(2,630
|
)
|
Accounts payable
|
(55
|
)
|
|
817
|
|
|
—
|
|
|
—
|
|
|
762
|
|
Accrued liabilities
|
(1,586
|
)
|
|
(1,271
|
)
|
|
—
|
|
|
—
|
|
|
(2,857
|
)
|
Amounts due to (from) related parties
|
73,969
|
|
|
(73,969
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred revenue
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
Other assets and liabilities
|
(1,784
|
)
|
|
(148
|
)
|
|
—
|
|
|
—
|
|
|
(1,932
|
)
|
Net cash provided by operating activities
|
38,076
|
|
|
17,810
|
|
|
—
|
|
|
—
|
|
|
55,886
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
—
|
|
|
(15,152
|
)
|
|
—
|
|
|
—
|
|
|
(15,152
|
)
|
Investment in subsidiaries
|
(3,108
|
)
|
|
—
|
|
|
—
|
|
|
3,108
|
|
|
—
|
|
Net cash used in investing activities
|
$
|
(3,108
|
)
|
|
$
|
(15,152
|
)
|
|
$
|
—
|
|
|
$
|
3,108
|
|
|
$
|
(15,152
|
)
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common units
|
$
|
132,483
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
132,483
|
|
Acquisition of TVPC noncontrolling interest
|
(200,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(200,000
|
)
|
Distributions to unitholders
|
(59,625
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,625
|
)
|
Distributions to TVPC members
|
—
|
|
|
(8,500
|
)
|
|
—
|
|
|
—
|
|
|
(8,500
|
)
|
Contribution from parent
|
—
|
|
|
3,108
|
|
|
—
|
|
|
(3,108
|
)
|
|
—
|
|
Proceeds from revolving credit facility
|
196,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
196,000
|
|
Repayment of revolving credit facility
|
(101,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(101,000
|
)
|
Net cash used in financing activities
|
(32,142
|
)
|
|
(5,392
|
)
|
|
—
|
|
|
(3,108
|
)
|
|
(40,642
|
)
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
2,826
|
|
|
(2,734
|
)
|
|
—
|
|
|
—
|
|
|
92
|
|
Cash and cash equivalents at beginning of year
|
4,010
|
|
|
15,898
|
|
|
—
|
|
|
—
|
|
|
19,908
|
|
Cash and cash equivalents at end of period
|
$
|
6,836
|
|
|
$
|
13,164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,000
|
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
47,349
|
|
|
$
|
78,501
|
|
|
$
|
—
|
|
|
$
|
(78,501
|
)
|
|
$
|
47,349
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
—
|
|
|
13,734
|
|
|
—
|
|
|
—
|
|
|
13,734
|
|
Amortization of loan fees and debt premium
|
759
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
759
|
|
Unit-based compensation expense
|
3,497
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,497
|
|
Equity in earnings of subsidiaries
|
(78,501
|
)
|
|
—
|
|
|
—
|
|
|
78,501
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable - affiliates
|
—
|
|
|
9,344
|
|
|
—
|
|
|
—
|
|
|
9,344
|
|
Accounts receivable
|
—
|
|
|
(1,077
|
)
|
|
—
|
|
|
—
|
|
|
(1,077
|
)
|
Prepaids and other current assets
|
3
|
|
|
239
|
|
|
—
|
|
|
—
|
|
|
242
|
|
Accounts payable - affiliates
|
300
|
|
|
(1,907
|
)
|
|
—
|
|
|
—
|
|
|
(1,607
|
)
|
Accounts payable
|
328
|
|
|
(2,900
|
)
|
|
—
|
|
|
—
|
|
|
(2,572
|
)
|
Accrued liabilities
|
(489
|
)
|
|
(2,265
|
)
|
|
—
|
|
|
—
|
|
|
(2,754
|
)
|
Amounts due to (from) related parties
|
18,442
|
|
|
(18,442
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred revenue
|
—
|
|
|
(286
|
)
|
|
—
|
|
|
—
|
|
|
(286
|
)
|
Other assets and liabilities
|
(1,049
|
)
|
|
(253
|
)
|
|
—
|
|
|
—
|
|
|
(1,302
|
)
|
Net cash (used in) provided by operating activities
|
(9,361
|
)
|
|
74,688
|
|
|
—
|
|
|
—
|
|
|
65,327
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Knoxville Terminals Purchase
|
—
|
|
|
(58,000
|
)
|
|
—
|
|
|
—
|
|
|
(58,000
|
)
|
Expenditures for property, plant and equipment
|
—
|
|
|
(7,671
|
)
|
|
—
|
|
|
—
|
|
|
(7,671
|
)
|
Investment in subsidiaries
|
(850
|
)
|
|
—
|
|
|
—
|
|
|
850
|
|
|
—
|
|
Net cash used in investing activities
|
$
|
(850
|
)
|
|
$
|
(65,671
|
)
|
|
$
|
—
|
|
|
$
|
850
|
|
|
$
|
(65,671
|
)
|
PBF LOGISTICS LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT BARREL, UNIT AND PER UNIT DATA)
13. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF LOGISTICS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Combining and Consolidating Adjustments
|
|
Total
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Distributions to unitholders
|
$
|
(46,611
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(46,611
|
)
|
Distributions to TVPC members
|
—
|
|
|
(11,250
|
)
|
|
—
|
|
|
—
|
|
|
(11,250
|
)
|
Contribution from parent
|
—
|
|
|
5,043
|
|
|
—
|
|
|
(850
|
)
|
|
4,193
|
|
Proceeds from revolving credit facility
|
64,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,000
|
|
Repayment of revolving credit facility
|
(9,700
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,700
|
)
|
Deferred financing costs and other
|
(271
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
Net cash provided by (used in) financing activities
|
7,418
|
|
|
(6,207
|
)
|
|
—
|
|
|
(850
|
)
|
|
361
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
(2,793
|
)
|
|
2,810
|
|
|
—
|
|
|
—
|
|
|
17
|
|
Cash and cash equivalents at beginning of year
|
10,909
|
|
|
8,755
|
|
|
—
|
|
|
—
|
|
|
19,664
|
|
Cash and cash equivalents at end of period
|
$
|
8,116
|
|
|
$
|
11,565
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,681
|
|
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q. The following information and such unaudited condensed consolidated financial statements should also be read in conjunction with the audited consolidated financial statements and related notes, together with our discussion and analysis of financial condition and results of operations in our
2018
Form 10-K. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. The cautionary statements made in this Form 10-Q should be read as applying to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. You should read “Risk Factors” in our
2018
Form 10-K and “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q. In this Item 2, all references to “we,” “us,” “our,” the “Partnership,” “PBFX” or similar terms for periods prior to the effective dates of each of the Acquisitions from PBF (as defined below) refer to the Predecessor. For periods subsequent to the effective dates of each of the Acquisitions from PBF, these terms refer to the Partnership and its subsidiaries.
Overview
We are a fee-based, growth-oriented, Delaware master limited partnership formed in February 2013 by subsidiaries of PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets. PBF GP is our general partner and is wholly-owned by PBF LLC. PBF Energy is the sole managing member of PBF LLC and, as of
June 30, 2019
, owned
99.0%
of the total economic interest in PBF LLC. PBF LLC owns
29,953,631
PBFX common units constituting an aggregate
48.2%
limited partner interest in PBFX, with the remaining
51.8%
limited partner interest owned by public unitholders.
Our business includes the assets, liabilities and results of operations of certain crude oil, refined products, natural gas and intermediates terminaling, pipeline and storage assets, including those previously operated and owned by PBF Holding’s subsidiaries and PBF Holding’s previously held subsidiaries.
Business Developments
IDR Restructuring Agreement
On February 28, 2019, we closed on an Equity Restructuring Agreement (the “IDR Restructuring Agreement”) with PBF LLC and PBF GP, pursuant to which PBFX’s incentive distribution rights (“IDRs”) held by PBF LLC were canceled and converted into
10,000,000
newly issued PBFX common units (the “IDR Restructuring”). Transaction costs related to the IDR Restructuring were
$2.1 million
for the six months ended June 30, 2019 and were included in “General and administrative expenses” within the Partnership’s condensed consolidated statements of operations. Subsequent to the closing of the IDR Restructuring, no distributions were made to PBF LLC with respect to the IDRs, and the newly issued PBFX common units are entitled to normal distributions.
April Registered Direct Offering
On April 24, 2019, we entered into subscription agreements to sell an aggregate of 6,585,500 common units to certain institutional investors in a registered direct public offering (the “April Registered Direct Offering”) for gross proceeds of approximately $135.0 million. The April Registered Direct Offering closed on April 29, 2019.
TVPC Acquisition
On April 24, 2019, we entered into a Contribution Agreement with PBF LLC (the “TVPC Contribution Agreement”), pursuant to which PBF LLC contributed to us all of the issued and outstanding limited liability company interests of TVP Holding Company LLC (“TVP Holding”), which held the remaining 50% equity interest in Torrance Valley Pipeline Company LLC (“TVPC”), for total consideration of $200.0 million (the “TVPC Acquisition”). Subsequent to the closing of the TVPC Acquisition on May 31, 2019, we own 100% of the equity interest in TVPC. The transaction was financed through a combination of proceeds from the April Registered Direct Offering and borrowings under our five-year $500.0 million amended and restated revolving credit facility (as amended, the “Revolving Credit Facility”).
Principles of Combination and Consolidation and Basis of Presentation
In general, our Predecessor did not historically operate its assets for the purpose of generating revenue independent of other PBF Energy businesses that we support. In connection with, and subsequent to, our initial public offering (“IPO”), we have acquired certain assets from PBF LLC (collectively referred to as the “Contributed Assets”). The acquisitions completed subsequent to the IPO were made through a series of drop-down transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). Upon the closing of the IPO and the Acquisitions from PBF, we entered into commercial and service agreements with subsidiaries of PBF Energy, under which we operate our assets for the purpose of generating fee-based revenue. We receive, handle and transfer crude oil, refined products and natural gas from sources located throughout the U.S. and Canada and store crude oil, refined products and intermediates for PBF Energy in support of its refineries located in Paulsboro, New Jersey; Delaware City; Delaware; Toledo, Ohio; Chalmette, Louisiana; and Torrance, California. In addition, we generate third-party revenue from certain of our assets.
Agreements with PBF Energy Entities
Commercial Agreements
We currently derive a majority of our revenue from long-term, fee-based agreements with PBF Holding, supported by minimum volume commitment (“MVC”) stipulations, as applicable, and contractual fee escalations for inflation adjustments and certain increases in operating costs. We believe the terms and conditions under these agreements, as well as the Omnibus Agreement and the Services Agreement (each as defined below), each with PBF Holding, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.
Refer to the
2018
Form 10-K and Note 10 “Related Party Transactions” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for a more complete description of our commercial agreements with PBF Holding, including those identified as leases.
Other Agreements
In addition to the commercial agreements described above, we have entered into an omnibus agreement with PBF GP, PBF LLC and PBF Holding, which has been amended and restated in connection with certain of the Acquisitions from PBF (as amended, the “Omnibus Agreement”). This agreement addresses the payment of an annual fee for the provision of various general and administrative services and reimbursement of salary and benefit costs for certain PBF Energy employees.
We have also entered into an operation and management services and secondment agreement with PBF Holding and certain of its subsidiaries (as amended, the “Services Agreement”), pursuant to which PBF Holding and its subsidiaries provide us with the personnel necessary for us to perform our obligations under our commercial agreements. We reimburse PBF Holding for the use of such employees and the provision of certain infrastructure-
related services to the extent applicable to our operations. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that we may terminate any service upon 30-days’ notice.
See the
2018
Form 10-K for a more complete description of the Omnibus Agreement and the Services Agreement.
Factors Affecting the Comparability of Our Financial Results
Our results of operations may not be comparable to our historical results of operations due to our recent acquisition activity, which is discussed in Note 3 “Acquisitions” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements,” the IDR Restructuring, recent debt and equity transactions and our annual adjustment to our commercial agreements for inflation.
As a result of our recent acquisitions, we incurred additional revenue, operating and maintenance expenses and general and administrative expenses. As a result of the IDR Restructuring, which closed on February 28, 2019, IDRs held by PBF LLC were canceled and converted into 10,000,000 newly issued PBFX common units, no distributions were made to PBF LLC with respect to the IDRs and the newly issued PBFX common units are entitled to normal distributions. As a result of the TVPC Acquisition, we no longer record a noncontrolling interest related to TVPC on either the condensed consolidated balance sheets or the condensed consolidated statements of operations.
Other Factors That Will Significantly Affect Our Results
Supply and Demand for Crude Oil, Refined Products and Natural Gas.
We generate revenue by charging fees for receiving, handling, transferring, storing and throughputting crude oil, refined products and natural gas. A majority of our revenue is derived from MVC, fee-based commercial agreements with subsidiaries of PBF Energy with initial terms ranging from one to fifteen years, which enhance the stability of our cash flows. The volume of crude oil, refined products and natural gas that is throughput or stored depends substantially on PBF Energy’s operational needs which are largely impacted by refining margins. Refining margins are greatly dependent upon the price of crude oil or other refinery feedstocks, refined products and natural gas.
Factors driving the prices of petroleum-based commodities include supply and demand for crude oil, gasoline and other refined products. Supply and demand for these products depend on numerous factors outside of our control, including changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, logistics constraints, availability of imports, marketing of competitive fuels, crude oil price differentials and government regulation. Please read “Risk Factors” included in “Item 1A.” of our
2018
Form 10-K.
Acquisition and Organic Growth Opportunities.
We may acquire additional logistics assets from PBF Energy or third parties. Under our Omnibus Agreement, subject to certain exceptions, we have a right of first offer on certain logistics assets owned by PBF Energy to the extent PBF Energy decides to sell, transfer or otherwise dispose of any of those assets. We also have a right of first offer to acquire additional logistics assets that PBF Energy may construct or acquire in the future. Our commercial agreements provide us with options to purchase certain assets at PBF Holding’s refineries related to our business in the event PBF Energy permanently shuts down PBF Holding’s refineries. In addition, our commercial agreements provide us with the right to use certain assets at PBF Holding’s refineries in the event of a temporary shutdown. Furthermore, we may pursue strategic asset acquisitions from third parties or organic growth projects to the extent such acquisitions or projects complement our or PBF Energy’s existing asset base or provide attractive potential returns. We believe that we are well-positioned to acquire logistics assets from PBF Energy and third parties should such opportunities arise, and identifying and executing acquisitions and organic growth projects is a key part of our strategy. However, if we do not complete acquisitions or organic growth projects on economically acceptable terms, our future growth will be limited, and the acquisitions or projects we do complete may reduce, rather than increase, our cash available for distribution. These acquisitions and organic
growth projects could also affect the comparability of our results from period to period. We expect to fund future growth capital expenditures primarily from a combination of cash-on-hand, borrowings under our Revolving Credit Facility and the issuance of additional equity or debt securities. To the extent we issue additional units to fund future acquisitions or expansion capital expenditures, the payments of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.
Third-Party Business.
As of
June 30, 2019
, PBF Holding accounts for a substantial majority of our revenue and we continue to expect that a majority of our revenue for the foreseeable future will be derived from operations supporting PBF Energy’s refineries. We are examining further diversification of our customer base by potentially developing additional third-party throughput volumes in our existing system and continuing to expand our asset portfolio to service third-party customers. Unless we are successful in attracting additional third-party customers, our ability to increase volumes will be dependent on PBF Holding, which has no obligation under our commercial agreements to supply our facilities with additional volumes in excess of its MVCs. If we are unable to increase throughput or storage volumes, future growth may be limited.
How We Evaluate Our Operations
Our management uses a variety of financial and operating metrics to analyze our business and segment performance. These metrics are significant factors in assessing our operating results and profitability and include, but are not limited to, volumes, including terminal and pipeline throughput and storage capacity; operating and maintenance expenses; and EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow. We define EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow below.
Volumes.
The amount of revenue we generate primarily depends on the volumes of crude oil, refined products and natural gas that we throughput at our terminaling and pipeline operations and our available storage capacity. These volumes are primarily affected by the supply of and demand for crude oil, refined products and natural gas in the markets served directly or indirectly by our assets. Although PBF Energy has committed to minimum volumes under the commercial agreements, our results of operations will be impacted by:
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•
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PBF Energy’s utilization of our assets in excess of the MVCs;
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•
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our ability to identify and execute accretive acquisitions and organic expansion projects and capture incremental PBF Energy or third-party volumes; and
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•
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our ability to increase throughput volumes at our facilities and provide additional ancillary services at those terminals and pipelines.
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Operating and Maintenance Expenses.
Our management seeks to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses are comprised primarily of labor expenses, outside contractor expenses, utility costs, insurance premiums, repairs and maintenance expenses and related property taxes. These expenses generally remain relatively stable across broad ranges of throughput volumes but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of these expenses. We will seek to manage our maintenance expenditures on our assets by scheduling maintenance over time to avoid significant variability in our maintenance expenditures and to minimize their impact on our cash flow.
EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and Distributable Cash Flow.
We define EBITDA as net income (loss) before net interest expense (including amortization of loan fees and debt premium and accretion on discounted liabilities), income tax expense, depreciation and amortization expense. We define EBITDA attributable to PBFX as net income (loss) attributable to PBFX before net interest expense (including amortization of loan fees and debt premium and accretion on discounted liabilities), income tax expense, depreciation and amortization expense attributable to PBFX, which excludes the results of Acquisitions from PBF prior to the effective dates of such transactions. We define Adjusted EBITDA as EBITDA attributable to PBFX excluding acquisition and transaction costs, non-cash unit-based compensation expense and items that meet the conditions
of unusual, infrequent and/or non-recurring charges. We define distributable cash flow as EBITDA attributable to PBFX plus non-cash unit-based compensation expense, less cash interest, maintenance capital expenditures attributable to PBFX and income taxes. Distributable cash flow will not reflect changes in working capital balances. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are not presentations made in accordance with U.S. generally accepted accounting principles (“GAAP”).
EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are non-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:
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•
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our 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;
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•
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the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
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•
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our ability to incur and service debt and fund capital expenditures; and
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•
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the viability of acquisitions and other capital expenditure projects and the economic returns on various investment opportunities.
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We believe that the presentation of EBITDA, EBITDA attributable to PBFX and Adjusted EBITDA provides useful information to investors in assessing our financial condition and results of operations and assists in evaluating our ongoing operating performance for current and comparative periods. We believe that the presentation of distributable cash flow provides useful information to investors as it is a widely accepted financial indicator used by investors to compare partnership performance and provides investors with another perspective of the operating performance of our assets and the cash our business is generating. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, income from operations, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow 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. Additionally, because EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of such measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow are reconciled to net income and net cash provided by operating activities in “—Results of Operations” below.
Results of Operations
A discussion and analysis of the factors contributing to our results of operations are presented below. The financial statements, together with the following information, are intended to provide investors with a reasonable basis for assessing our historical operations but should not serve as the only criteria for predicting our future performance.
Combined Overview.
The following tables summarize our results of operations and financial data for the
three and six months ended
June 30, 2019
and
2018
. The following data should be read in conjunction with our Condensed Consolidated Financial Statements and the Notes thereto included in “Item 1. Financial Statements.”
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2019
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2018
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2019
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2018
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(In thousands)
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Revenue:
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Affiliate
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$
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74,656
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$
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63,785
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$
|
145,988
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$
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124,649
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Third-party
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8,094
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4,314
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15,607
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8,190
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Total revenue
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82,750
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68,099
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161,595
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132,839
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Costs and expenses:
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Operating and maintenance expenses
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28,553
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20,724
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58,469
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40,604
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General and administrative expenses
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7,580
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6,488
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13,590
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10,779
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Depreciation and amortization
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8,854
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7,091
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17,575
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13,734
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Total costs and expenses
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44,987
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34,303
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89,634
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65,117
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Income from operations
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37,763
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33,796
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71,961
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67,722
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Other expense:
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Interest expense, net
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(11,216
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)
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(10,029
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)
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(22,129
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)
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(19,614
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)
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Amortization of loan fees and debt premium
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(446
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)
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(396
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)
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(895
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)
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(759
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)
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Accretion on discounted liabilities
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(773
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)
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—
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(1,533
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)
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—
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Net income
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25,328
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23,371
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47,404
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47,349
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Less: Net loss attributable to Predecessor
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—
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(1,084
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)
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—
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(2,363
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)
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Less: Net income attributable to noncontrolling interest
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3,162
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4,363
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7,881
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8,385
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Net income attributable to the partners
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22,166
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20,092
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39,523
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41,327
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Less: Net income attributable to the IDR holder
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—
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3,415
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—
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6,370
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Net income attributable to PBF Logistics LP unitholders
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$
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22,166
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$
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16,677
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$
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39,523
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$
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34,957
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Other Data:
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EBITDA attributable to PBFX
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$
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42,534
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$
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36,070
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$
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79,356
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$
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72,387
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Adjusted EBITDA
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48,336
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39,402
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91,293
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77,036
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Distributable cash flow
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34,123
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28,100
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59,536
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54,346
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Capital expenditures, including the Knoxville Terminals Purchase
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3,932
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61,718
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15,152
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65,671
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Reconciliation of Non-GAAP Financial Measures
As described in “How We Evaluate Our Operations,” our management uses EBITDA, EBITDA attributable to PBFX, Adjusted EBITDA and distributable cash flow to analyze our performance. The following table presents a reconciliation of EBITDA, EBITDA attributable to PBFX and distributable cash flow to net income, the most directly comparable GAAP financial measure of operating performance on a historical basis, for the periods indicated.
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2019
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2018
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2019
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2018
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(In thousands)
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Net income
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$
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25,328
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$
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23,371
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$
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47,404
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$
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47,349
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Interest expense, net
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11,216
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10,029
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22,129
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19,614
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Amortization of loan fees and debt premium
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446
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396
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895
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|
759
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Accretion on discounted liabilities
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773
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—
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1,533
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—
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Depreciation and amortization
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8,854
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7,091
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17,575
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13,734
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EBITDA
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46,617
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40,887
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89,536
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81,456
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Less: Predecessor EBITDA
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—
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(912
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)
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—
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(2,043
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)
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Less: Noncontrolling interest EBITDA
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4,083
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5,729
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10,180
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11,112
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EBITDA attributable to PBFX
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42,534
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36,070
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79,356
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72,387
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Non-cash unit-based compensation expense
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3,387
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2,663
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4,351
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|
3,497
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Cash interest
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(11,290
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)
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(10,049
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)
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(22,426
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)
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(19,629
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)
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Maintenance capital expenditures attributable to PBFX
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(508
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)
|
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(584
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)
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(1,745
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)
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(1,909
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)
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Distributable cash flow
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$
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34,123
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$
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28,100
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$
|
59,536
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$
|
54,346
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The following table presents a reconciliation of EBITDA, EBITDA attributable to PBFX and distributable cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure of liquidity on a historical basis, for the periods indicated.
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2019
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2018
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2019
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2018
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(In thousands)
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Net cash provided by operating activities
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$
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17,677
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$
|
22,402
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$
|
55,886
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$
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65,327
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Change in operating assets and liabilities
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21,111
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11,119
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15,872
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|
12
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Interest expense, net
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11,216
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|
|
10,029
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22,129
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|
|
19,614
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Non-cash unit-based compensation expense
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|
(3,387
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)
|
|
(2,663
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)
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(4,351
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)
|
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(3,497
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)
|
EBITDA
|
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46,617
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40,887
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|
89,536
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|
81,456
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Less: Predecessor EBITDA
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—
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(912
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)
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—
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|
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(2,043
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)
|
Less: Noncontrolling interest EBITDA
|
|
4,083
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|
|
5,729
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|
|
10,180
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|
|
11,112
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EBITDA attributable to PBFX
|
|
42,534
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|
|
36,070
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|
|
79,356
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|
|
72,387
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|
Non-cash unit-based compensation expense
|
|
3,387
|
|
|
2,663
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|
|
4,351
|
|
|
3,497
|
|
Cash interest
|
|
(11,290
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)
|
|
(10,049
|
)
|
|
(22,426
|
)
|
|
(19,629
|
)
|
Maintenance capital expenditures attributable to PBFX
|
|
(508
|
)
|
|
(584
|
)
|
|
(1,745
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)
|
|
(1,909
|
)
|
Distributable cash flow
|
|
$
|
34,123
|
|
|
$
|
28,100
|
|
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$
|
59,536
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|
|
$
|
54,346
|
|
The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure of operating performance on a historical basis, for the periods indicated.
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|
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Three Months Ended
June 30,
|
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Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(In thousands)
|
Net income
|
|
$
|
25,328
|
|
|
$
|
23,371
|
|
|
$
|
47,404
|
|
|
$
|
47,349
|
|
Interest expense, net
|
|
11,216
|
|
|
10,029
|
|
|
22,129
|
|
|
19,614
|
|
Amortization of loan fees and debt premium
|
|
446
|
|
|
396
|
|
|
895
|
|
|
759
|
|
Accretion on discounted liabilities
|
|
773
|
|
|
—
|
|
|
1,533
|
|
|
—
|
|
Depreciation and amortization
|
|
8,854
|
|
|
7,091
|
|
|
17,575
|
|
|
13,734
|
|
EBITDA
|
|
46,617
|
|
|
40,887
|
|
|
89,536
|
|
|
81,456
|
|
Less: Predecessor EBITDA
|
|
—
|
|
|
(912
|
)
|
|
—
|
|
|
(2,043
|
)
|
Less: Noncontrolling interest EBITDA
|
|
4,083
|
|
|
5,729
|
|
|
10,180
|
|
|
11,112
|
|
EBITDA attributable to PBFX
|
|
42,534
|
|
|
36,070
|
|
|
79,356
|
|
|
72,387
|
|
Acquisition and transaction costs
|
|
955
|
|
|
669
|
|
|
3,108
|
|
|
1,152
|
|
Non-cash unit-based compensation expense
|
|
3,387
|
|
|
2,663
|
|
|
4,351
|
|
|
3,497
|
|
East Coast Terminals environmental remediation costs
|
|
1,460
|
|
|
—
|
|
|
3,596
|
|
|
—
|
|
PNGPC tariff true-up adjustment
|
|
—
|
|
|
—
|
|
|
882
|
|
|
—
|
|
Adjusted EBITDA
|
|
$
|
48,336
|
|
|
$
|
39,402
|
|
|
$
|
91,293
|
|
|
$
|
77,036
|
|
The following table presents a reconciliation of net income attributable to noncontrolling interest and noncontrolling interest EBITDA, for informational purposes, for the periods indicated.
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|
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|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(In thousands)
|
Net income attributable to noncontrolling interest
|
|
$
|
3,162
|
|
|
$
|
4,363
|
|
|
$
|
7,881
|
|
|
$
|
8,385
|
|
Depreciation and amortization related to noncontrolling interest*
|
|
921
|
|
|
1,366
|
|
|
2,299
|
|
|
2,727
|
|
Noncontrolling interest EBITDA
|
|
$
|
4,083
|
|
|
$
|
5,729
|
|
|
$
|
10,180
|
|
|
$
|
11,112
|
|
* Represents 50% of depreciation and amortization for TVPC for the two and five months ended May 31, 2019 and the
three and six months ended
June 30, 2018
. Subsequent to the TVPC Acquisition, we own 100% of the equity interest in TVPC and no longer record noncontrolling interest.
Three Months Ended
June 30, 2019
Compared to the Three Months Ended
June 30, 2018
Summary.
Our net income for the three months ended
June 30, 2019
increased
by approximately
$2.0 million
to
$25.3 million
from
$23.4 million
for the three months ended
June 30, 2018
. The increase in net income was primarily due to the following:
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|
•
|
an
increase
in total revenue of approximately
$14.7 million
, or
21.5%
, primarily attributable to operations of recently acquired or constructed assets, inflation rate adjustments implemented in accordance with certain of our commercial agreements (the “Inflation Rate Increase”) and increased throughput at certain of our TVPC assets;
|
partially offset by the following:
|
|
•
|
an
increase
in operating and maintenance expenses of approximately
$7.8 million
, or
37.8%
, as a result of expenses related to the operations of recently acquired assets, higher environmental clean-up costs, increased utility expenses coinciding with increased throughput at certain of our TVPC assets and increased
|
maintenance activity within our Storage segment, partially offset by lower outside services expenses within our Transportation and Terminaling segment;
|
|
•
|
an
increase
in general and administrative expenses of approximately
$1.1 million
, or
16.8%
, as a result of increased acquisition costs and higher unit-based compensation expense;
|
|
|
•
|
an
increase
in depreciation and amortization expenses of approximately
$1.8 million
, or
24.9%
, related to the timing of acquisitions and new assets being placed in service;
|
|
|
•
|
an
increase
in interest expense, net of approximately
$1.2 million
, or
11.8%
, attributable to higher borrowings under our Revolving Credit Facility; and
|
|
|
•
|
an
increase
in accretion of discounted liabilities of approximately
$0.8 million
attributable to the accretion of the discounted liabilities recorded in connection with our purchase of CPI Operations LLC on October 1, 2018 (the “East Coast Storage Assets Acquisition”).
|
EBITDA attributable to PBFX for the three months ended
June 30, 2019
increased
by approximately
$6.5 million
to
$42.5 million
from
$36.1 million
for the three months ended
June 30, 2018
due to the factors noted above, excluding the impact of depreciation and amortization, interest expense, net, accretion on discounted liabilities and noncontrolling interest.
Adjusted EBITDA for the three months ended
June 30, 2019
increased
by approximately
$8.9 million
to
$48.3 million
from
$39.4 million
for the three months ended
June 30, 2018
due to the factors noted above, excluding the impact of acquisition costs, unit-based compensation and certain environmental remediation costs.
Six Months Ended
June 30, 2019
Compared to the Six Months Ended
June 30, 2018
Summary.
Our net income for the six months ended
June 30, 2019
increased
by approximately
$0.1 million
to
$47.4 million
from
$47.3 million
for the six months ended
June 30, 2018
. The increase in net income was primarily due to the following:
|
|
•
|
an
increase
in total revenue of approximately
$28.8 million
, or
21.6%
, primarily attributable to operations of recently acquired or constructed assets, the Inflation Rate Increase and increased throughput at certain of our TVPC assets, partially offset by a decrease in revenue at our 24” interstate natural gas pipeline servicing PBF Holding’s Paulsboro Refinery (the “Paulsboro Natural Gas Pipeline”) due to a reduction in its pipeline tariff based on the lower than budget Paulsboro Natural Gas Pipeline project costs, which were finalized during the first quarter of 2019 (the “PNGPC Rate Adjustment”);
|
partially offset by the following:
|
|
•
|
an
increase
in operating and maintenance expenses of approximately
$17.9 million
, or
44.0%
, as a result of expenses related to the operations of recently acquired assets, higher environmental clean-up costs and increased utilities expenses coinciding with increased throughput at certain of our TVPC assets;
|
|
|
•
|
an
increase
in general and administrative expenses of approximately
$2.8 million
, or
26.1%
, as a result of transaction costs related to the IDR Restructuring and higher unit-based compensation expense, partially offset by lower acquisition related costs;
|
|
|
•
|
an
increase
in depreciation and amortization expenses of approximately
$3.8 million
, or
28.0%
, related to the timing of acquisitions and new assets being placed in service;
|
|
|
•
|
an
increase
in interest expense, net of approximately
$2.5 million
, or
12.8%
, attributable to higher borrowings under our Revolving Credit Facility; and
|
|
|
•
|
an
increase
in accretion of discounted liabilities of approximately
$1.5 million
attributable to the accretion of the discounted liabilities recorded in connection with the East Coast Storage Assets Acquisition.
|
EBITDA attributable to PBFX for the six months ended
June 30, 2019
increased
by approximately
$7.0 million
to
$79.4 million
from
$72.4 million
for the six months ended
June 30, 2018
due to the factors noted above, excluding the impact of depreciation and amortization, interest expense, net, accretion on discounted liabilities and noncontrolling interest.
Adjusted EBITDA for the six months ended
June 30, 2019
increased
by approximately
$14.3 million
to
$91.3 million
from
$77.0 million
for the six months ended
June 30, 2018
due to the factors noted above, excluding the impact of acquisition and transaction costs, unit-based compensation, certain environmental remediation costs and the PNGPC tariff true-up adjustment.
Segment Information
Our operations are comprised of operating segments, which are strategic business units that offer different services in various geographical locations. We review operations in two reportable segments: (i) Transportation and Terminaling and (ii) Storage. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of our reportable segments based on the segment operating income. Segment operating income is defined as net revenue less operating expenses and depreciation and amortization. General and administrative expenses and interest expenses not included in the Transportation and Terminaling and Storage segments are included in Corporate. Segment reporting is further discussed in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements.”
Transportation and Terminaling Segment
The following table and discussion provide an explanation of our results of operations of the Transportation and Terminaling segment for the
three and six months ended
June 30, 2019
and
2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
(in thousands, except for total throughput and lease tank capacity)
|
Revenue:
|
|
|
|
|
|
|
|
|
Affiliate
|
|
$
|
64,513
|
|
|
$
|
56,819
|
|
|
$
|
125,942
|
|
|
$
|
110,614
|
|
Third-party
|
|
5,143
|
|
|
4,314
|
|
|
9,673
|
|
|
8,190
|
|
Total revenue
|
|
69,656
|
|
|
61,133
|
|
|
135,615
|
|
|
118,804
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
|
22,248
|
|
|
18,733
|
|
|
44,755
|
|
|
36,460
|
|
Depreciation and amortization
|
|
6,879
|
|
|
6,166
|
|
|
13,780
|
|
|
11,884
|
|
Total costs and expenses
|
|
29,127
|
|
|
24,899
|
|
|
58,535
|
|
|
48,344
|
|
Transportation and Terminaling Segment Operating Income
|
|
$
|
40,529
|
|
|
$
|
36,234
|
|
|
$
|
77,080
|
|
|
$
|
70,460
|
|
|
|
|
|
|
|
|
|
|
Key Operating Information
|
|
|
|
|
|
|
|
|
Transportation and Terminaling Segment
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
|
|
|
|
|
|
Total throughput (bpd)
(1)
|
|
275,076
|
|
|
268,430
|
|
|
262,772
|
|
|
255,973
|
|
Lease tank capacity (average lease capacity barrels per month)
(2)
|
|
2,185,882
|
|
|
1,589,784
|
|
|
2,300,813
|
|
|
1,869,693
|
|
Pipelines
|
Total throughput (bpd)
(1)
|
|
161,809
|
|
|
166,900
|
|
|
154,520
|
|
|
159,868
|
|
Lease tank capacity (average lease capacity barrels per month)
(2)
|
|
1,500,714
|
|
|
1,574,740
|
|
|
1,338,769
|
|
|
1,555,930
|
|
(1) Calculated as the sum of the average throughput per day for each asset group for the period presented.
(2) Lease capacity is based on tanks in service and average lease capacity available during the period.
Three Months Ended
June 30, 2019
Compared to the
Three Months Ended
June 30, 2018
Revenue.
Revenue increased by approximately
$8.5 million
, or
13.9%
, to
$69.7 million
for the three months ended
June 30, 2019
compared to
$61.1 million
for the three months ended
June 30, 2018
. The
increase
in revenue was primarily attributable to operations of recently acquired or constructed assets, increased throughput at certain of our TVPC assets and the Inflation Rate Increase.
Operating and maintenance expenses.
Operating and maintenance expenses increased by approximately
$3.5 million
, or
18.8%
, to
$22.2 million
for the three months ended
June 30, 2019
compared to
$18.7 million
for the three months ended
June 30, 2018
. The
increase
in operating and maintenance expenses was primarily attributable to higher environmental clean-up costs, expenses related to the operations of recently acquired assets and increased utility expenses coinciding with increased throughput at certain of our TVPC assets, partially offset by lower outside services expenses.
Depreciation and amortization.
Depreciation and amortization expense increased by approximately
$0.7 million
, or
11.6%
, to
$6.9 million
for the three months ended
June 30, 2019
compared to
$6.2 million
for the three months ended
June 30, 2018
. The
increase
in depreciation and amortization expense was primarily attributable to the timing of new assets being placed in service.
Six Months Ended
June 30, 2019
Compared to the
Six Months Ended
June 30, 2018
Revenue.
Revenue increased by approximately
$16.8 million
, or
14.2%
, to
$135.6 million
for the six months ended
June 30, 2019
compared to
$118.8 million
for the six months ended
June 30, 2018
. The
increase
in revenue was primarily attributable to operations of recently acquired or constructed assets, increased throughput at certain of our TVPC assets and the Inflation Rate Increase, partially offset by a $0.9 million decrease in revenue at the Paulsboro Natural Gas Pipeline due to the PNGPC Rate Adjustment.
Operating and maintenance expenses.
Operating and maintenance expenses increased by approximately
$8.3 million
, or
22.8%
, to
$44.8 million
for the six months ended
June 30, 2019
compared to
$36.5 million
for the six months ended
June 30, 2018
. The
increase
in operating and maintenance expenses was primarily attributable to higher environmental clean-up costs, expenses related to the operations of recently acquired assets and increased utility expenses coinciding with increased throughput at certain of our TVPC assets.
Depreciation and amortization.
Depreciation and amortization expense increased by approximately
$1.9 million
, or
16.0%
, to
$13.8 million
for the six months ended
June 30, 2019
compared to
$11.9 million
for the six months ended
June 30, 2018
. The
increase
in depreciation and amortization expense was primarily attributable to the timing of our purchase of two refined product terminals located in Knoxville, Tennessee on April 16, 2018 (the “Knoxville Terminals Purchase”) and new assets being placed in service.
Storage Segment
The following table and discussion provide an explanation of our results of operations of the Storage segment for the
three and six months ended
June 30, 2019
and
2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
(in thousands, except for storage capacity reserved)
|
Revenue:
|
|
|
|
|
|
|
|
|
Affiliate
|
|
$
|
10,143
|
|
|
$
|
6,966
|
|
|
$
|
20,046
|
|
|
$
|
14,035
|
|
Third-party
|
|
2,951
|
|
|
—
|
|
|
5,934
|
|
|
—
|
|
Total revenue
|
|
13,094
|
|
|
6,966
|
|
|
25,980
|
|
|
14,035
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
Operating and maintenance expenses
|
|
6,305
|
|
|
1,991
|
|
|
13,714
|
|
|
4,144
|
|
Depreciation and amortization
|
|
1,975
|
|
|
925
|
|
|
3,795
|
|
|
1,850
|
|
Total costs and expenses
|
|
8,280
|
|
|
2,916
|
|
|
17,509
|
|
|
5,994
|
|
Storage Segment Operating Income
|
|
$
|
4,814
|
|
|
$
|
4,050
|
|
|
$
|
8,471
|
|
|
$
|
8,041
|
|
|
|
|
|
|
|
|
|
|
Key Operating Information
|
|
|
|
|
|
|
|
|
Storage Segment
|
|
|
|
|
|
|
|
|
Storage capacity reserved (average shell capacity barrels per month)
(1)
|
|
8,053,983
|
|
|
4,412,673
|
|
|
7,993,338
|
|
|
4,445,714
|
|
(1) Storage capacity is based on tanks in service and average shell capacity available during the period.
Three Months Ended
June 30, 2019
Compared to the
Three Months Ended
June 30, 2018
Revenue.
Revenue increased by approximately
$6.1 million
, or
88.0%
, to
$13.1 million
for the three months ended
June 30, 2019
compared to
$7.0 million
for the three months ended
June 30, 2018
. The
increase
in revenue was primarily attributable to the operations of the assets acquired in connection with the East Coast Storage Assets Acquisition (the “East Coast Storage Assets”) and the Inflation Rate Increase.
Operating and maintenance expenses.
Operating and maintenance expenses increased by approximately
$4.3 million
, or
216.7%
, to
$6.3 million
for the three months ended
June 30, 2019
compared to
$2.0 million
for the three months ended
June 30, 2018
. The
increase
in operating and maintenance expenses was primarily attributable to expenses associated with the East Coast Storage Assets, as well as increased maintenance activity.
Depreciation and amortization.
Depreciation and amortization expense increased by approximately
$1.1 million
, or
113.5%
, to
$2.0 million
for the three months ended
June 30, 2019
compared to
$0.9 million
for the three months ended
June 30, 2018
. The
increase
in depreciation and amortization expense was primarily attributable to the timing of the East Coast Storage Assets Acquisition.
Six Months Ended
June 30, 2019
Compared to the
Six Months Ended
June 30, 2018
Revenue.
Revenue increased by approximately
$11.9 million
, or
85.1%
, to
$26.0 million
for the six months ended
June 30, 2019
compared to
$14.0 million
for the six months ended
June 30, 2018
. The
increase
in revenue was primarily attributable to the East Coast Storage Assets operations and the Inflation Rate Increase.
Operating and maintenance expenses.
Operating and maintenance expenses increased by approximately
$9.6 million
, or
230.9%
, to
$13.7 million
for the six months ended
June 30, 2019
compared to
$4.1 million
for the
six months ended
June 30, 2018
. The
increase
in operating and maintenance expenses was primarily attributable to expenses associated with the East Coast Storage Assets, as well as increased maintenance activity.
Depreciation and amortization.
Depreciation and amortization expense increased by approximately
$1.9 million
, or
105.1%
, to
$3.8 million
for the six months ended
June 30, 2019
compared to
$1.9 million
for the six months ended
June 30, 2018
. The
increase
in depreciation and amortization expense was primarily attributable to the timing of the East Coast Storage Assets Acquisition.
Liquidity and Capital Resources
We expect our ongoing sources of liquidity to include cash generated from operations (including proceeds from our commercial agreements with PBF Holding), borrowings under our Revolving Credit Facility and issuances of additional debt and equity securities as appropriate given market conditions. We expect that these sources of funds will be adequate to provide for our short-term and long-term liquidity needs, including capital expenditures and distributions on our units.
We have paid, and intend to continue to pay, at least the minimum quarterly distribution of $0.30 per unit per quarter, or $1.20 per unit on an annualized basis, which aggregates to approximately $18.9 million per quarter and approximately $75.6 million on an annualized basis based on the number of common units outstanding as of
June 30, 2019
.
During the
six months ended
June 30, 2019
, we made cash distribution payments as follows (in thousands except per unit data):
|
|
|
|
|
|
|
|
Related Earnings Period:
|
Q4 2018
|
|
Q1 2019
|
|
Distribution date
|
March 14, 2019
|
|
May 30, 2019
|
|
Record date
|
March 1, 2019
|
|
May 15, 2019
|
|
Per unit
|
$
|
0.5050
|
|
$
|
0.5100
|
|
To public common unitholders
|
$
|
12,825
|
|
$
|
16,398
|
|
To PBF LLC
|
15,126
|
|
15,276
|
|
Total distribution
|
$
|
27,951
|
|
$
|
31,674
|
|
Credit Facilities
The Revolving Credit Facility is available to fund working capital, acquisitions, distributions and capital expenditures and for other general partnership purposes. We have the ability to increase the maximum amount of the Revolving Credit Facility by an aggregate amount of up to $250.0 million, to a total facility size of $750.0 million, subject to receiving increased commitments from the lenders or other financial institutions and satisfaction of certain conditions. Obligations under the Revolving Credit Facility are guaranteed by our restricted subsidiaries and secured by a first priority lien on our assets and those of our restricted subsidiaries. The maturity date of the Revolving Credit Facility is July 30, 2023 and may be extended for one year on up to two occasions, subject to certain customary terms and conditions. We are in compliance with our covenants under the Revolving Credit Facility as of
June 30, 2019
.
During the
six months ended
June 30, 2019
, we made repayments of
$101.0 million
and borrowed
$196.0 million
under the Revolving Credit Facility to fund the TVPC Acquisition and other capital expenditures and working capital requirements.
Our 2023 Notes have an aggregate principal amount of $525.0 million with interest payable semi-annually on May 15 and November 15. The 2023 Notes mature on May 15, 2023. The 2023 Notes contain customary terms, events of default and covenants for an issuer of non-investment grade debt securities. These covenants include limitations or restrictions on us and our restricted subsidiaries’ ability to, among other things, make distributions.
These covenants are subject to a number of important limitations and exceptions. As of
June 30, 2019
, we are in compliance with all covenants under the 2023 Notes.
Cash Flows
The following table sets forth our cash flows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2019
|
|
2018
|
|
|
(In thousands)
|
Net cash provided by operating activities
|
|
$
|
55,886
|
|
|
$
|
65,327
|
|
Net cash used in investing activities
|
|
(15,152
|
)
|
|
(65,671
|
)
|
Net cash (used in) provided by financing activities
|
|
(40,642
|
)
|
|
361
|
|
Net change in cash and cash equivalents
|
|
$
|
92
|
|
|
$
|
17
|
|
Cash Flows from Operating Activities
Net cash provided by operating activities decreased by approximately
$9.4 million
to
$55.9 million
for the
six
months ended
June 30, 2019
compared to
$65.3 million
for the
six
months ended
June 30, 2018
. The decrease in net cash provided by operating activities was primarily the result of a decrease in the net changes in operating assets and liabilities of approximately
$15.9 million
primarily driven by the timing of collection of accounts receivables and liability payments, partially offset by a net increase in non-cash charges relating to depreciation and amortization, amortization of loan fees and debt premium, accretion on discounted liabilities and unit-based compensation of approximately
$6.4 million
and an increase in net income of approximately
$0.1 million
.
Cash Flows from Investing Activities
Net cash used in investing activities decreased by approximately
$50.5 million
to
$15.2 million
for the
six
months ended
June 30, 2019
compared to
$65.7 million
for the
six
months ended
June 30, 2018
. The decrease in net cash used in investing activities was primarily due to the Knoxville Terminals Purchase of
$58.0 million
in April 2018, partially offset by an increase in capital expenditures of approximately
$7.5 million
primarily related to projects associated with recent acquisitions.
Cash Flows from Financing Activities
Net cash used in financing activities changed by approximately
$41.0 million
to
$40.6 million
for the
six
months ended
June 30, 2019
compared to net cash provided by financing activities of
$0.4 million
for the
six
months ended
June 30, 2018
. The cash outflows for the
six
months ended
June 30, 2019
were primarily driven by the acquisition of the TVPC noncontrolling interest for
$200.0 million
, distributions to unitholders of
$59.6 million
and distributions to TVPC members of
$8.5 million
, partially offset by proceeds from issuance of common units of
$132.5 million
and net borrowings from our Revolving Credit Facility of
$95.0 million
. Net cash provided by financing activities for the
six
months ended
June 30, 2018
consisted of net borrowings under our Revolving Credit Facility of
$54.3 million
and a contribution from PBF LLC of
$4.2 million
related to the pre-acquisition activities of the Acquisitions from PBF in 2018, partially offset by distributions to unitholders of
$46.6 million
, distributions to TVPC members of
$11.3 million
and deferred financing costs of
$0.3 million
.
Capital Expenditures
Our capital requirements have consisted of, and are expected to continue to consist of, expansion , maintenance and regulatory capital expenditures. Expansion capital expenditures are expenditures incurred for acquisitions or capital improvements that we expect will increase our operating income or operating capacity over the long term. Examples of expansion capital expenditures include the acquisition of equipment and the construction, development
or acquisition of unloading equipment or other equipment at our facilities or additional throughput or storage capacity to the extent such capital expenditures are expected to expand our operating capacity or increase our operating income. Maintenance capital expenditures are expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the refurbishment and replacement of terminals and to maintain equipment reliability, integrity and safety. Regulatory capital expenditures are expenditures made to attain or maintain compliance with regulatory standards. Examples of regulatory capital expenditures are expenditures incurred to address environmental laws or regulations.
Capital expenditures for the
six
months ended
June 30, 2019
and
2018
were as follows:
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
2019
|
|
2018
|
|
(In thousands)
|
Expansion*
|
$
|
12,710
|
|
|
$
|
63,582
|
|
Maintenance
|
2,124
|
|
|
2,060
|
|
Regulatory
|
318
|
|
|
29
|
|
Total capital expenditures
|
$
|
15,152
|
|
|
$
|
65,671
|
|
* Expansion capital expenditures include our acquisitions for the periods presented.
We currently expect to spend an additional aggregate of between approximately $15.0 million and $20.0 million for the remainder of
2019
for capital expenditures. Of the total expected capital expenditures, between approximately $11.0 million and $14.0 million relate to maintenance or regulatory capital expenditures. We anticipate the forecasted maintenance capital expenditures will be funded primarily with cash from operations and through borrowings under the Revolving Credit Facility as needed. We currently have not included any potential future acquisitions in our budgeted capital expenditures for the remainder of
2019
. We may rely on external sources including other borrowings under the Revolving Credit Facility, and issuances of equity and debt securities to fund any significant future expansion.
On April 24, 2019, we entered into the TVPC Contribution Agreement, pursuant to which PBF LLC contributed to us all of the issued and outstanding limited liability company interests of TVP Holding for total consideration of $200.0 million. We financed the TVPC Acquisition with $135.0 million of gross proceeds from the April Registered Direct Offering and $65.0 million of borrowings under the Revolving Credit Facility.
Under the Omnibus Agreement, PBF Energy has agreed to reimburse us for any costs up to $20.0 million per event (net of any insurance recoveries) that we incur for repairs required due to the failure of any Contributed Asset to operate in substantially the same manner and condition as such asset was operating prior to the closing of the IPO and each of the Acquisitions from PBF during the first five years after the closings of the IPO and each of the Acquisitions from PBF, and any matters related thereto.
Contractual Obligations
With the exception of activity under the Revolving Credit Facility, including borrowings to fund capital expenditures and working capital requirements, there have been no significant changes in our contractual obligations since those reported in our
2018
Form 10-K. Refer to Note 6 “Debt” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information regarding our debt obligations.
In connection with the East Coast Storage Assets Acquisition, our
$32.0 million
payable to Crown Point International LLC is due on October 1, 2019.
Off-Balance Sheet Arrangements
We have not entered into any transactions, agreements or other contractual arrangements that would result in off-balance sheet liabilities, other than outstanding letters of credit in the amount of
$4.1 million
.
Environmental and Other Matters
Environmental Regulation
Our operations are subject to extensive and frequently changing federal, state and local laws, regulations and ordinances relating to the protection of the environment. Among other things, these laws and regulations govern the emission or discharge of pollutants into or onto the land, air and water, the handling and disposal of solid and hazardous wastes and the remediation of contamination. As with the industry generally, compliance with existing and anticipated environmental laws and regulations increases our overall cost of business, including our capital costs to develop, maintain, operate and upgrade equipment and facilities. While these laws and regulations affect our maintenance and regulatory capital expenditures and net income, we believe they do not necessarily affect our competitive position, as the operations of our competitors are similarly affected. We believe our facilities are in substantial compliance with applicable environmental laws and regulations. However, these laws and regulations, as well as the interpretation of such laws and regulations, are subject to changes by regulatory authorities, and continued and future compliance with such laws and regulations may require us to incur significant expenditures. Additionally, violation of environmental laws, regulations and permits can result in the imposition of significant administrative, civil and criminal penalties, injunctions limiting our operations, investigatory or remedial liabilities or construction bans or delays in the development of additional facilities or equipment. Furthermore, a release of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, subject us to substantial expenses, including costs to comply with applicable laws and regulations and to resolve claims by third parties for personal injury or property damage or by the U.S. federal government or state governments for natural resources damages. These impacts could directly and indirectly affect our business and have an adverse impact on our financial position, results of operations and liquidity. We cannot currently determine the amounts of such future impacts.
Environmental Liabilities
Contaminations resulting from spills of crude oil or petroleum products are not unusual within the petroleum terminaling or transportation industries. Historic spills at truck and rail racks and terminals, as a result of past operations, have resulted in contamination of the environment, including soils and groundwater.
Pursuant to the contribution agreements entered into in connection with the IPO and the Acquisitions from PBF, PBF Energy has agreed to indemnify us for certain known and unknown environmental liabilities that are based on conditions in existence at our Predecessor’s properties and associated with the ownership or operation of the Contributed Assets and arising from the conditions that existed prior to the closings of the IPO and the Acquisitions from PBF. In addition, we have agreed to indemnify PBF Energy for (i) certain events and conditions associated with the ownership or operation of our assets that occur, as applicable, after the closing of each Acquisition from PBF (including the IPO) and (ii) environmental liabilities related to our assets if the environmental liability is the result of the negligence, willful misconduct or criminal conduct of us or our employees, including those seconded to us. As a result, we may incur environmental expenses in the future, which may be substantial.
As of
June 30, 2019
, we have recorded a total liability related to environmental remediation costs of approximately
$2.5 million
related to existing environmental liabilities. Refer to Note 9 “Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements included in “Item 1. Financial Statements” for additional information.