- Declared quarterly distribution of $0.79 per limited partner unit; increased by 10.5% percent year-over-year
- Distributable cash flow up 50% year over year in the third quarter
- Distributable cash flow coverage ratio for the third quarter 2018 was 1.25x
- Balance sheet positioned to support future growth
BRENTWOOD, Tenn., Nov. 06, 2018 (GLOBE NEWSWIRE) -- Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") today announced its financial results for the third quarter 2018. For the three months ended September 30, 2018, Delek Logistics reported net income attributable to all partners of $23.3 million, or $0.68 per diluted common limited partner unit. This compares to net income attributable to all partners of $16.9 million, or $0.50 per diluted common limited partner unit, in the third quarter 2017. Net cash from operating activities was $6.0 million in the third quarter 2018 compared to $30.2 million in the prior year period. Distributable cash flow was $32.4 million in the third quarter 2018, compared to $21.6 million in the prior-year period.
For the third quarter 2018, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $43.0 million compared to $29.7 million in the prior-year period. This increase was primarily due to the contribution from the Big Spring logistics assets acquired from Delek US Holdings, Inc. (“Delek US”) effective March 1, 2018, improved performance from the Paline Pipeline and higher gross margin per barrel in west Texas that benefited from increased crude oil drilling activity in the Permian Basin.
Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics' general partner, remarked: "Our operations performed well during the quarter with a 45 percent increase in EBITDA and 50 percent increase in distributable cash flow on a year-over-year basis that was driven by the completion of the Big Spring acquisition and the Paline Pipeline expansion. This performance supported a distributable cash flow coverage ratio of 1.25x, which improved on a year-over-year basis. On a year to date basis through the third quarter 2018, our distributable coverage ratio is 1.26x. We were pleased to announce the 10.5 percent year-over-year increase in our declared third quarter distribution."
Yemin concluded, "We continue to explore opportunities to build on our Permian Basin position to create long-term value for our unitholders. These include ways to partner with Delek US to support its Permian Basin crude oil supply needs for its refining system, as well as third party growth options. Delek US has recently announced additional growth in its midstream assets through construction of its Big Spring crude oil gathering system in the Permian Basin and proposed participation in a long haul crude oil pipeline project. This should increase the drop down inventory beyond the Krotz Springs logistic assets. We increased our borrowing capacity on our revolver and expect that our leverage ratio should continue to improve to a range of 4.1x to 4.3x by year end, which should better prepare us to support future growth. The combination of our financial flexibility provided by our balance sheet and our focus on growth initiatives should support a distribution per limited partner unit increase of at least 10% annually through 2019."
Distribution and Liquidity
On October 23, 2018, Delek Logistics declared a quarterly cash distribution of $0.79 per common limited partner unit for the third quarter, which equates to $3.16 per common limited partner unit on an annualized basis. This distribution will be paid on November 9, 2018 to unitholders of record on November 2, 2018. This represents a 2.6 percent increase from the second quarter 2018 distribution of $0.77 per common limited partner unit, or $3.08 per common limited partner unit on an annualized basis, and a 10.5 percent increase over Delek Logistics’ third quarter 2017 distribution of $0.715 per common limited partner unit, or $2.86 per common limited partner unit annualized. For the third quarter 2018, the total cash distribution declared to all partners, including IDRs, was approximately $26.0 million. Based on the declared distribution for the third quarter 2018, the distributable cash flow coverage ratio for the third quarter was 1.25x.
As of September 30, 2018, Delek Logistics had total debt of approximately $776.7 million and cash of $19.0 million. Additional borrowing capacity, subject to certain covenants, under the $850.0 million credit facility was $316.8 million. The total leverage ratio for the third quarter 2018 was approximately 4.53x, which is within the current requirements of the maximum allowable leverage of 5.50x. At the end of September 2018, the credit facility commitments were increased from $700.0 million to $850.0 million and the maturity was extended to September 2023 from the previous maturity of December 2019.
Financial Results
Revenue for the third quarter 2018 was $164.1 million compared to $130.6 million in the prior-year period. The increase in revenue is primarily due to higher sales prices in the west Texas wholesale business, combined with the Big Spring acquisition that was effective March 1, 2018. Total operating expenses were $15.4 million in the third quarter 2018, compared to $10.7 million in the third quarter 2017. This increase was primarily due to the contribution from the acquired Big Spring assets and employee-related expenses. Total segment contribution margin was $43.1 million in the third quarter 2018 compared to $30.8 million in the third quarter 2017. General and administrative expenses were $3.1 million for the third quarter 2018, compared to $2.8 million in the prior-year period.
Pipelines and Transportation Segment
Contribution margin in the third quarter 2018 was $25.2 million compared to $17.5 million in the third quarter 2017. This increase was primarily due to the contribution from the Big Spring acquisition in March 2018 and improved performance from the Paline Pipeline. Operating expenses were $9.5 million in the third quarter 2018 compared to $8.6 million in the prior-year period, primarily due to the Big Spring acquisition.
Wholesale Marketing and Terminalling Segment
During the third quarter 2018, contribution margin was $17.9 million, compared to $13.3 million in the third quarter 2017. This increase was primarily due to the contribution from the Big Spring acquisition in March 2018 and improved margin performance in the west Texas wholesale operations. Operating expenses increased to $5.9 million in the third quarter 2018, compared to $2.1 million in the prior-year period primarily due to the Big Spring acquisition.
In the west Texas wholesale business, average throughput in the third quarter 2018 was 12,197 barrels per day compared to 12,929 barrels per day in the third quarter 2017. The west Texas gross margin per barrel increased year-over-year to $4.65 per barrel and included approximately $0.3 million, or $0.29 per barrel, from renewable identification numbers (RINs) generated in the quarter. During the third quarter 2017, the west Texas gross margin per barrel was $4.00 per barrel and included $1.6 million from RINs, or $1.32 per barrel. On a year-over-year basis, continued growth in crude oil drilling activity in the Permian Basin increased fuel demand and improved the supply/demand balance, which led to improved performance in the west Texas wholesale business.
Average terminalling throughput volume of 167,491 barrels per day during the third quarter 2018 increased on a year-over-year basis from 127,229 barrels per day in the third quarter 2017 primarily due to the addition of the Big Spring terminal. During the third quarter 2018, average volume under the East Texas marketing agreement with Delek US was 79,404 barrels per day compared to 74,357 barrels per day during the third quarter 2017. During the third quarter 2018, average volume under the Big Spring marketing agreement with Delek US was 80,687 barrels per day.
Third Quarter 2018 Results | Conference Call Information
Delek Logistics will hold a conference call to discuss its third quarter 2018 results on Wednesday, November 7, 2018 at 7:30 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekLogistics.com. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. For those who cannot listen to the live broadcast, a telephonic replay will be available through February 7, 2019 by dialing (866) 326-3086, passcode 7994276. An archived version of the replay will also be available at www.DelekLogistics.com for 90 days.
Investors may also wish to listen to Delek US’ (NYSE: DK) third quarter 2018 earnings conference call on Wednesday, November 7, 2018 at 8:30 a.m. Central Time and review Delek US’ earnings press release. Market trends and information disclosed by Delek US may be relevant to Delek Logistics, as it is a consolidated subsidiary of Delek US. Investors can find information related to Delek US and the timing of its earnings release online by going to www.DelekUS.com.
About Delek Logistics Partners, LP
Delek Logistics Partners, LP, headquartered in Brentwood, Tennessee, was formed by Delek US Holdings, Inc. (NYSE: DK) to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.
Safe Harbor Provisions Regarding Forward-Looking Statements
This press release contains “forward-looking” statements within the meaning of the federal securities laws. These statements contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if,” “expect” or similar expressions, as well as statements in the future tense, and can be impacted by numerous factors, including the fact that a substantial majority of Delek Logistics' contribution margin is derived from Delek US, thereby subjecting us to Delek US ' business risks; risks relating to the securities markets generally; risks and costs relating to the age and operational hazards of our assets including, without limitation, costs, penalties, regulatory or legal actions and other effects related to releases, spills and other hazards inherent in transporting and storing crude oil and intermediate and finished petroleum products; the impact of adverse market conditions affecting the utilization of Delek Logistics' assets and business performance, including margins generated by its wholesale fuel business; an inability of Delek US to successfully integrate the businesses of Delek US and Alon USA Energy, Inc., to grow as expected and realize the synergies and the other anticipated benefits of its merger with Alon, which became effective as of July 1, 2017, as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits; the results of our investments in joint ventures; adverse changes in laws including with respect to tax and regulatory matters and other risks as disclosed in our annual report on Form 10-K, quarterly reports on Form 10-Q and other reports and filings with the United States Securities and Exchange Commission. Forward looking statements include, but are not limited to, statements regarding future growth at Delek Logistics; expansion of the Paline Pipeline and potential benefits therefrom; distributions and the amounts and timing thereof; potential dropdown inventory; ability to create long-term value for our unit holders; financial flexibility and borrowing capacity; and distribution growth of 10% or at all. There can be no assurance that actual results will not differ from those expected by management or described in forward-looking statements of Delek Logistics. Delek Logistics undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof.
Non-GAAP Disclosures:
Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:
- Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income (loss) before net interest expense, income tax expense, depreciation and amortization expense, and adjusted to include amortization of customer contract intangible assets which is included as a component of net revenues in our accompanying condensed consolidated statements of income.
- Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash. Delek Logistics believes this revision is a more appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.
EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
- Delek Logistics' operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;
- the ability of our assets to generate sufficient cash flow to make distributions to Delek Logistics' unitholders;
- Delek Logistics' ability to incur and service debt and fund capital expenditures; and
- the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
Delek Logistics believes that the presentation of EBITDA, distributable cash flow and distributable cash flow coverage ratio provide useful information to investors in assessing its financial condition, its results of operations and the cash flow its business is generating. EBITDA, distributable cash flow and distributable cash flow coverage ratio should not be considered in isolation or as alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP.
Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net income and net cash provided by operating activities. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in its industry, Delek Logistics' definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships. See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.
Delek Logistics Partners, LP
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except unit and per unit data)
| ASSETS | September 30, 2018 | December 31, 2017 | ||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 19,006 | $ | 4,675 | ||||||||||||||||
| Accounts receivable | 21,815 | 23,013 | ||||||||||||||||||
| Accounts receivable from related parties | 51,235 | 1,124 | ||||||||||||||||||
| Inventory | 4,198 | 20,855 | ||||||||||||||||||
| Other current assets | 418 | 783 | ||||||||||||||||||
| Total current assets | 96,672 | 50,450 | ||||||||||||||||||
| Property, plant and equipment: | ||||||||||||||||||||
| Property, plant and equipment | 448,722 | 367,179 | ||||||||||||||||||
| Less: accumulated depreciation | (134,052 | ) | (112,111 | ) | ||||||||||||||||
| Property, plant and equipment, net | 314,670 | 255,068 | ||||||||||||||||||
| Equity method investments | 105,233 | 106,465 | ||||||||||||||||||
| Goodwill | 12,203 | 12,203 | ||||||||||||||||||
| Intangible assets, net | 155,840 | 15,917 | ||||||||||||||||||
| Other non-current assets | 8,951 | 3,427 | ||||||||||||||||||
| Total assets | $ | 693,569 | $ | 443,530 | ||||||||||||||||
| LIABILITIES AND DEFICIT | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 11,513 | $ | 19,147 | ||||||||||||||||
| Excise and other taxes payable | 2,849 | 4,700 | ||||||||||||||||||
| Tank inspection liabilities | 902 | 902 | ||||||||||||||||||
| Pipeline release liabilities | 1,019 | 1,000 | ||||||||||||||||||
| Accrued expenses and other current liabilities | 9,953 | 6,033 | ||||||||||||||||||
| Total current liabilities | 26,236 | 31,782 | ||||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||
| Long-term debt | 776,684 | 422,649 | ||||||||||||||||||
| Asset retirement obligations | 5,099 | 4,064 | ||||||||||||||||||
| Other non-current liabilities | 15,977 | 14,260 | ||||||||||||||||||
| Total non-current liabilities | 797,760 | 440,973 | ||||||||||||||||||
| Deficit: | ||||||||||||||||||||
| Common unitholders - public; 9,101,137 units issued and outstanding at September 30, 2018 (9,088,587 at December 31, 2017) | 172,875 | 174,378 | ||||||||||||||||||
| Common unitholders - Delek; 15,294,046 units issued and outstanding at September 30, 2018 (15,294,046 at December 31, 2017) | (296,427 | ) | (197,206 | ) | ||||||||||||||||
| General partner - 497,861 units issued and outstanding at September 30, 2018 (497,604 at December 31, 2017) | (6,875 | ) | (6,397 | ) | ||||||||||||||||
| Total deficit | (130,427 | ) | (29,225 | ) | ||||||||||||||||
| Total liabilities and deficit | $ | 693,569 | $ | 443,530 | ||||||||||||||||
Delek Logistics Partners, LP
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except unit and per unit data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net revenues: | |||||||||||||||
| Affiliate | $ | 63,835 | $ | 40,131 | $ | 178,559 | $ | 116,574 | |||||||
| Third-party | 100,275 | 90,495 | 319,752 | 270,294 | |||||||||||
| Net revenues | 164,110 | 130,626 | 498,311 | 386,868 | |||||||||||
| Operating costs and expenses: | |||||||||||||||
| Cost of materials and other | 105,596 | 89,120 | 330,644 | 266,749 | |||||||||||
| Operating expenses (excluding depreciation and amortization presented below) | 14,489 | 9,940 | 40,501 | 28,789 | |||||||||||
| Depreciation and amortization | 6,252 | 4,744 | 18,287 | 14,227 | |||||||||||
| Total cost of sales | 126,337 | 103,804 | 389,432 | 309,765 | |||||||||||
| Operating expenses related to wholesale business (excluding depreciation and amortization presented below) | 906 | 722 | 2,388 | 2,197 | |||||||||||
| General and administrative expenses | 3,076 | 2,751 | 9,798 | 8,255 | |||||||||||
| Depreciation and amortization | 450 | 718 | 1,434 | 2,170 | |||||||||||
| Loss (gain) on asset disposals | 717 | (5 | ) | 648 | 2 | ||||||||||
| Total operating costs and expenses | 131,486 | 107,990 | 403,700 | 322,389 | |||||||||||
| Operating income | 32,624 | 22,636 | 94,611 | 64,479 | |||||||||||
| Interest expense, net | 11,108 | 7,124 | 30,096 | 16,657 | |||||||||||
| Income from equity method investments | (1,924 | ) | (1,584 | ) | (4,681 | ) | (3,005 | ) | |||||||
| Other expense (income), net | 8 | (1 | ) | 8 | (1 | ) | |||||||||
| Income before income tax expense | 23,432 | 17,097 | 69,188 | 50,828 | |||||||||||
| Income tax expense | 106 | 174 | 285 | 333 | |||||||||||
| Net income attributable to partners | $ | 23,326 | $ | 16,923 | 68,903 | 50,495 | |||||||||
| Comprehensive income attributable to partners | $ | 23,326 | $ | 16,923 | $ | 68,903 | $ | 50,495 | |||||||
| Less: General partner's interest in net income, including incentive distribution rights | 6,636 | 4,745 | 18,478 | 13,406 | |||||||||||
| Limited partners' interest in net income | $ | 16,690 | $ | 12,178 | $ | 50,425 | $ | 37,089 | |||||||
| Net income per limited partner unit: | |||||||||||||||
| Common units - (basic) | $ | 0.68 | $ | 0.50 | $ | 2.07 | $ | 1.52 | |||||||
| Common units - (diluted) | $ | 0.68 | $ | 0.50 | $ | 2.07 | $ | 1.52 | |||||||
| Weighted average limited partner units outstanding: | |||||||||||||||
| Common units - basic | 24,395,183 | 24,361,457 | 24,387,995 | 24,341,921 | |||||||||||
| Common units - diluted | 24,401,908 | 24,389,582 | 24,395,880 | 24,382,426 | |||||||||||
| Cash distribution per limited partner unit | $ | 0.790 | $ | 0.715 | $ | 2.310 | $ | 2.110 | |||||||
Delek Logistics Partners, LP
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| Nine Months Ended September 30, | |||||||
| 2018 | 2017 | ||||||
| Cash flows from operating activities | |||||||
| Net income | $ | 68,903 | $ | 50,495 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 19,721 | 16,397 | |||||
| Amortization of customer contract intangible assets | 4,207 | — | |||||
| Amortization of deferred revenue | (1,095 | ) | (1,004 | ) | |||
| Amortization of deferred financing costs and debt discount | 1,984 | 1,438 | |||||
| Accretion of asset retirement obligations | 267 | 219 | |||||
| Deferred income taxes | — | 158 | |||||
| Income from equity method investments | (4,681 | ) | (3,005 | ) | |||
| Dividends from equity method investments | 5,128 | 765 | |||||
| Loss on asset disposals | 648 | 2 | |||||
| Unit-based compensation expense | 518 | 545 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 1,198 | (1,115 | ) | ||||
| Inventories and other current assets | 17,022 | 2,028 | |||||
| Accounts payable and other current liabilities | (4,311 | ) | 8,501 | ||||
| Accounts receivable/payable to related parties | (50,030 | ) | 2,092 | ||||
| Non-current assets and liabilities, net | (1,879 | ) | (365 | ) | |||
| Net cash provided by operating activities | 57,600 | 77,151 | |||||
| Cash flows from investing activities | |||||||
| Asset acquisitions, net of assumed ARO liabilities | (72,222 | ) | (6,443 | ) | |||
| Purchases of property, plant and equipment | (8,674 | ) | (9,187 | ) | |||
| Proceeds from sales of property, plant and equipment | 465 | — | |||||
| Purchases of intangible assets | (144,219 | ) | (2,560 | ) | |||
| Distributions from equity method investments | 957 | 753 | |||||
| Equity method investment contributions | (172 | ) | (3,531 | ) | |||
| Net cash provided by (used in) financing activities | (223,865 | ) | (20,968 | ) | |||
| Cash flows from financing activities | |||||||
| Proceeds from issuance of additional units to maintain 2% General Partner interest | 20 | 21 | |||||
| Distributions to general partner | (17,010 | ) | (12,839 | ) | |||
| Distributions to common unitholders - public | (20,500 | ) | (19,208 | ) | |||
| Distributions to common unitholders - Delek | (34,335 | ) | (31,555 | ) | |||
| Distributions to Delek unitholders and general partner related to Big Spring Logistic Assets Acquisition | (98,798 | ) | — | ||||
| Proceeds from revolving credit facility | 678,000 | 205,700 | |||||
| Payments of revolving credit facility | (324,700 | ) | (439,500 | ) | |||
| Proceeds from issuance of senior notes | — | 248,112 | |||||
| Deferred financing costs paid | (5,264 | ) | (5,937 | ) | |||
| Reimbursement of capital expenditures by Delek | 3,183 | 4,254 | |||||
| Net cash provided by (used in) financing activities | 180,596 | (50,952 | ) | ||||
| Net increase in cash and cash equivalents | 14,331 | 5,231 | |||||
| Cash and cash equivalents at the beginning of the period | 4,675 | 59 | |||||
| Cash and cash equivalents at the end of the period | $ | 19,006 | $ | 5,290 | |||
| Supplemental disclosures of cash flow information: | |||||||
| Cash paid during the period for: | |||||||
| Interest | $ | 24,446 | $ | 9,288 | |||
| Income taxes | $ | 136 | $ | 60 | |||
| Non-cash investing activities: | |||||||
| Decrease in accrued capital expenditures | $ | (1,836 | ) | $ | (491 | ) | |
| Non-cash financing activities: | |||||||
| Sponsor contribution of fixed assets | $ | — | $ | 67 | |||
Delek Logistics Partners, LP
Reconciliation of Amounts Reported Under U.S. GAAP
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Reconciliation of net income to EBITDA: | |||||||||||||||
| Net income | $ | 23,326 | $ | 16,923 | $ | 68,903 | $ | 50,495 | |||||||
| Add: | |||||||||||||||
| Income tax expense | 106 | 174 | 285 | 333 | |||||||||||
| Depreciation and amortization | 6,702 | 5,462 | 19,721 | 16,397 | |||||||||||
| Amortization of customer contract intangible assets | 1,803 | — | 4,207 | — | |||||||||||
| Interest expense, net | 11,108 | 7,124 | 30,096 | 16,657 | |||||||||||
| EBITDA | $ | 43,045 | $ | 29,683 | $ | 123,212 | $ | 83,882 | |||||||
| Reconciliation of net cash from operating activities to distributable cash flow: | |||||||||||||||
| Net cash provided by operating activities | $ | 5,957 | $ | 30,241 | $ | 57,600 | $ | 77,151 | |||||||
| Changes in assets and liabilities | 28,079 | (8,460 | ) | 38,000 | (11,141 | ) | |||||||||
| Distributions from equity method investments in investing activities | 297 | 252 | 957 | 753 | |||||||||||
| Maintenance and regulatory capital expenditures | (2,380 | ) | (698 | ) | (3,721 | ) | (5,011 | ) | |||||||
| Reimbursement from Delek for capital expenditures (1) | 1,292 | 392 | 2,179 | 1,730 | |||||||||||
| Accretion of asset retirement obligations | (92 | ) | (73 | ) | (267 | ) | (219 | ) | |||||||
| Deferred income taxes | — | (39 | ) | — | (158 | ) | |||||||||
| Gain (loss) on asset disposals | (717 | ) | 5 | (648 | ) | (2 | ) | ||||||||
| Distributable Cash Flow | $ | 32,436 | $ | 21,620 | $ | 94,100 | $ | 63,103 | |||||||
(1) During the year ended December 31, 2017, the reimbursed capital expenditure amounts in the determination of distributable cash flow were revised to reflect the accrual of reimbursable capital expenditures from Delek US rather than the cash amounts received for reimbursed capital expenditures during the three and nine months period ended September 30, 2017. This resulted in decreases to the distributable cash flow of a nominal amount and $2.5 million from the amounts presented on our Quarterly Report on Form 10-Q for the three and nine months period ended September 30, 2017, respectively.
Delek Logistics Partners, LP
Distributable Coverage Ratio Calculation
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| Distributions to partners of Delek Logistics, LP | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Limited partners' distribution on common units | $ | 19,272 | $ | 17,418 | $ | 56,343 | $ | 51,380 | |||||||
| General partner's distributions | 393 | 355 | 1,149 | 1,047 | |||||||||||
| General partner's incentive distribution rights | 6,295 | 4,497 | 17,449 | 12,650 | |||||||||||
| Total distributions to be paid | $ | 25,960 | $ | 22,270 | $ | 74,941 | $ | 65,077 | |||||||
| Distributable cash flow | $ | 32,436 | $ | 21,620 | $ | 94,100 | 63,103 | ||||||||
| Distributable cash flow coverage ratio (1) | 1.25x | 0.97x | 1.26x | 0.97x | |||||||||||
(1) Distributable cash flow coverage ratio is calculated by dividing distributable cash flow by distributions to be paid in each respective period.
Delek Logistics Partners, LP
Segment Data (unaudited)
(In thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Pipelines and Transportation | ||||||||||||||||
| Net revenues: | ||||||||||||||||
| Affiliates | $ | 36,132 | $ | 27,805 | $ | 99,624 | $ | 81,972 | ||||||||
| Third party | 3,653 | 3,177 | 11,618 | 7,910 | ||||||||||||
| Total pipelines and transportation | 39,785 | 30,982 | 111,242 | 89,882 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Cost of materials and other | 5,055 | 4,883 | 14,691 | 13,691 | ||||||||||||
| Operating expenses (excluding depreciation and amortization) | 9,499 | 8,573 | 29,054 | 24,661 | ||||||||||||
| Segment contribution margin | $ | 25,231 | $ | 17,526 | $ | 66,839 | $ | 51,530 | ||||||||
| Total Assets | $ | 431,173 | $ | 344,260 | ||||||||||||
| Wholesale Marketing and Terminalling | ||||||||||||||||
| Net revenues: | ||||||||||||||||
| Affiliates (1) | $ | 27,703 | $ | 12,326 | $ | 78,935 | $ | 34,602 | ||||||||
| Third party | 96,622 | 87,318 | 308,134 | 262,384 | ||||||||||||
| Total wholesale marketing and terminalling | 124,325 | 99,644 | 387,069 | 296,986 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Cost of materials and other | 100,541 | 84,237 | 315,953 | 253,058 | ||||||||||||
| Operating expenses (excluding depreciation and amortization) | 5,896 | 2,089 | 13,835 | 6,325 | ||||||||||||
| Segment contribution margin | $ | 17,888 | $ | 13,318 | $ | 57,281 | $ | 37,603 | ||||||||
| Total Assets | $ | 262,396 | $ | 78,598 | ||||||||||||
| Consolidated | ||||||||||||||||
| Net revenues: | ||||||||||||||||
| Affiliates | $ | 63,835 | $ | 40,131 | $ | 178,559 | $ | 116,574 | ||||||||
| Third party | 100,275 | 90,495 | 319,752 | 270,294 | ||||||||||||
| Total consolidated | 164,110 | 130,626 | 498,311 | 386,868 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Cost of materials and other | 105,596 | 89,120 | 330,644 | 266,749 | ||||||||||||
| Operating expenses (excluding depreciation and amortization presented below) | 15,395 | 10,662 | 42,889 | 30,986 | ||||||||||||
| Contribution margin | 43,119 | 30,844 | 124,778 | 89,133 | ||||||||||||
| General and administrative expenses | 3,076 | 2,751 | 9,798 | 8,255 | ||||||||||||
| Depreciation and amortization | 6,702 | 5,462 | 19,721 | 16,397 | ||||||||||||
| Loss (gain) on asset disposals | 717 | (5 | ) | 648 | 2 | |||||||||||
| Operating income | $ | 32,624 | $ | 22,636 | $ | 94,611 | $ | 64,479 | ||||||||
| Total Assets | $ | 693,569 | $ | 422,858 | ||||||||||||
(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible we acquired in connection with the Big Spring acquisition.
Delek Logistics Partners, LP
Segment Capital Spending
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| Pipelines and Transportation | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Maintenance capital spending | 1,528 | 1,521 | 2,585 | 4,564 | |||||||||||
| Discretionary capital spending | 558 | 1,397 | 1,735 | 2,151 | |||||||||||
| Segment capital spending | $ | 2,086 | $ | 2,918 | $ | 4,320 | $ | 6,715 | |||||||
| Wholesale Marketing and Terminalling | |||||||||||||||
| Maintenance capital spending | $ | 877 | $ | 351 | 1,451 | $ | 768 | ||||||||
| Discretionary capital spending | 28 | 517 | 1,669 | 1,213 | |||||||||||
| Segment capital spending | $ | 905 | $ | 868 | $ | 3,120 | $ | 1,981 | |||||||
| Consolidated | |||||||||||||||
| Maintenance capital spending | $ | 2,405 | $ | 1,872 | $ | 4,036 | $ | 5,332 | |||||||
| Discretionary capital spending | 586 | 1,914 | 3,404 | 3,364 | |||||||||||
| Total capital spending | $ | 2,991 | $ | 3,786 | $ | 7,440 | $ | 8,696 | |||||||
Delek Logistics Partners, LP
Segment Data (Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||
| Pipelines and Transportation Segment: | |||||||||||
| Throughputs (average bpd) | |||||||||||
| Lion Pipeline System: | |||||||||||
| Crude pipelines (non-gathered) | 59,150 | 60,247 | 56,672 | 59,653 | |||||||
| Refined products pipelines | 43,762 | 51,623 | 47,154 | 50,933 | |||||||
| SALA Gathering System | 16,704 | 15,997 | 16,705 | 16,160 | |||||||
| East Texas Crude Logistics System | 14,284 | 15,260 | 16,402 | 15,006 | |||||||
| Wholesale Marketing and Terminalling Segment: | |||||||||||
| East Texas - Tyler Refinery sales volumes (average bpd) (1) | 79,404 | 74,357 | 77,349 | 71,917 | |||||||
| Big Spring Marketing - Refinery sales volume (average bpd) (for period owned) (2) | 80,687 | — | 79,819 | — | |||||||
| West Texas marketing throughputs (average bpd) | 12,197 | 12,929 | 13,453 | 13,647 | |||||||
| West Texas gross margin per barrel | $ | 4.65 | $ | 4.00 | $ | 5.88 | $ | 3.62 | |||
| Terminalling throughputs (average bpd) (3) | 167,491 | 127,229 | 159,457 | 123,780 | |||||||
(1) Excludes jet fuel and petroleum coke.
(2) Throughputs for the nine months ended September 30, 2018 are for the 214 days we marketed certain finished products produced at or sold from the Big Spring Refinery following the execution of the Big Spring Marketing Agreement, effective March 1, 2018.
(3) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, our El Dorado and North Little Rock, Arkansas and our Memphis and Nashville, Tennessee terminals. Throughputs for the Big Spring terminal are for the 214 days we operated the terminal following its acquisition effective March 1, 2018. Barrels per day are calculated for only the days we operated each terminal. Total throughput for the nine months ended September 30, 2018 was 41.4 million barrels, which averaged 151,646 bpd for the period.
Investor / Media Relations Contact:
Keith Johnson
Vice President of Investor Relations
615-435-1366
Media/Public Affairs Contact:
Michael P. Ralsky
Vice President - Government Affairs, Public Affairs & Communications
615-435-1407