DKL
$30.00
Delek Logistics Partners LP
$.65
2.21%
Earnings Details
2nd Quarter June 2017
Wednesday, August 02, 2017 5:45:42 PM
Tweet Share Watch
Summary

Delek Logistics Partners LP (DKL) Recent Earnings

Delek Logistics Partners LP (DKL) reported 2nd Quarter June 2017 earnings of $0.59 per share on revenue of $126.8 million. The consensus earnings estimate was $0.65 per share on revenue of $144.0 million. Revenue grew 13.3% on a year-over-year basis.

Delek Logistics Partners LP is a limited partnership. It owns, operates, acquires and constructs crude oil and refined products logistics and marketing assets.

Results
Reported Earnings
$0.59
Earnings Whisper
-
Consensus Estimate
$0.65
Reported Revenue
$126.8 Mil
Revenue Estimate
$144.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Delek Logistics Partners, LP Reports Second Quarter 2017 Results

Permian Basin position benefiting performance of operations on year-over-year basis

Declared quarterly distribution of $0.705 per limited partner unit; increased by 11.9 percent year-over-year

Reported second quarter 2017 net cash from operating activities of $23.9 million and distributable cash flow of $23.4 million

Increased potential dropdown inventory at Delek US following completion of the acquisition of Alon USA on July 1

Delek Logistics Partners, LP (DKL) ("Delek Logistics") today announced its financial results for the second quarter 2017. For the three months ended June 30, 2017, Delek Logistics reported net income attributable to all partners of $19.0 million, or $0.59 per diluted common limited partner unit. This compares to net income attributable to all partners of $18.9 million, or $0.66 per diluted common limited partner unit, in the second quarter 2016. Distributable cash flow was $23.4 million in the second quarter 2017, compared to $23.7 million in the prior-year period.

For the second quarter 2017, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $30.3 million compared to $27.1 million in the prior-year period. Improved performance in the wholesale marketing and terminalling segment, led by a higher gross margin per barrel in west Texas, was the primary factor offsetting the effect of lower performance on a year-over-year basis from the SALA Gathering System and the Paline Pipeline.

Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics’ general partner, remarked: "On July 1, our sponsor, Delek US, successfully completed the acquisition of Alon USA Energy, Inc. We believe this should provide a clear path for growth through future potential dropdowns, the ability to provide logistics support to a larger refining system of the combined company and by creating synergies with Delek US in west Texas. Our financial flexibility should support these growth opportunities, and we remain focused on creating long term value for our unit holders. We anticipate that the financial flexibility provided by our balance sheet and focus on growth initiatives should support a distribution per limited partner unit increase of at least 10% annually through 2019."

Yemin concluded, "We experienced sequential improvement in our west Texas operations in the second quarter as drilling activity increased and light product demand was strong. This environment resulted in better margins in our west Texas wholesale operation. Crude oil price differentials in the market supported third party crude oil shipments to the Gulf Coast on the Paline Pipeline during the second quarter. We completed our first high yield note offering in May with a $250.0 million issue and proceeds were used to reduce borrowings on our credit facility. We ended the quarter with approximately $539.0 million of capacity on our credit facility and a total leverage ratio of approximately 3.9 times. This financial position supported the 11.9 percent year-over-year increase in our declared second quarter distribution."

Distribution and Liquidity

On July 24, 2017, Delek Logistics declared a quarterly cash distribution for the second quarter of $0.705 per limited partner unit, which equates to $2.82 per limited partner unit on an annualized basis. This distribution is expected to be paid on August 11, 2017 to unitholders of record on August 4, 2017. This represents a 2.2 percent increase from the first quarter 2017 distribution of $0.69 per limited partner unit, or $2.76 per limited partner unit on an annualized basis, and an 11.9 percent increase over Delek Logistics’ second quarter 2016 distribution of $0.63 per limited partner unit, or $2.52 per limited partner unit annualized. For the second quarter 2017, the total cash distribution declared to all partners, including IDRs, was approximately $21.8 million. Based on the declared distribution for the second quarter 2017, the distributable cash flow coverage ratio for the second quarter was 1.07x.

As of June 30, 2017, Delek Logistics had total debt of approximately $396.9 million and cash of $4.9 million. Additional borrowing capacity, subject to certain covenants, under the $700.0 million credit facility was approximately $538.5 million. In May 2017, $250.0 million of 6.75 percent senior unsecured notes due 2025 were issued of which approximately $242.0 million were used to reduce borrowings on the credit facility.

Financial Results

Revenue for the second quarter 2017 was $126.8 million compared to $111.9 million in the prior year period. The increase in revenue is primarily due to higher sales prices in the west Texas wholesale business. Total operating expenses were $10.0 million, compared to $8.7 million in the second quarter 2016. This increase was primarily due to employee related expenses and contract services. Total segment contribution margin was $31.8 million in the second quarter of 2017 compared to $30.0 million in the second quarter 2016. General and administrative expenses were $2.7 million for the second quarter 2017, which is in line with the prior-year period.

Pipelines and Transportation Segment

The contribution margin in the second quarter 2017 was $17.9 million compared to $20.3 million in the second quarter 2016. This change was primarily due to reduced performance on the Paline Pipeline. During the second quarter 2017, the Paline Pipeline was a FERC regulated pipeline with a tariff established for potential shippers, compared to the prior year period when the pipeline capacity was under contract with two third-parties for a monthly fee. Also, lower volume on the SALA Gathering System on a year-over-year basis was a factor in the change in contribution margin. Operating expenses were $7.9 million in the second quarter 2017 compared to $6.9 million in the prior year period.

Wholesale Marketing and Terminalling Segment

During the second quarter 2017, contribution margin was $13.9 million, compared to $9.7 million in the second quarter 2016. This increase was primarily due to improved performance in the west Texas wholesale operations and east Texas marketing agreement on a year-over-year basis. Operating expenses increased to $2.0 million in the second quarter 2017, compared to $1.8 million in the prior year period.

In the west Texas wholesale business, average throughput in the second quarter 2017 was 13,422 barrels per day compared to 12,594 barrels per day in the second quarter 2016. The wholesale gross margin in west Texas increased year-over-year to $4.26 per barrel and included approximately $1.2 million, or $1.00 per barrel, from renewable identification numbers (RINs) generated in the quarter. During the second quarter 2016, the wholesale gross margin was $2.13 per barrel and included $1.3 million from RINs, or $1.12 per barrel. On a year-over-year basis, continued growth in drilling activity in the Permian Basin increased fuel demand and improved the supply/demand balance, which led to higher margins in the west Texas wholesale business.

Average terminalling throughput volume of 128,111 barrels per day during the quarter increased on a year-over-year basis from 126,476 barrels per day in the second quarter 2016 primarily due to higher throughput at the Tyler, Texas terminal, partially offset by a decline at other locations. During the second quarter 2017, average volume under the east Texas marketing agreement with Delek US was 77,878 barrels per day compared to 70,188 barrels per day during the second quarter 2016.

Second Quarter 2017 Results | Conference Call Information

Delek Logistics will hold a conference call to discuss its second quarter 2017 results on Thursday, August 3, 2017 at 8:00 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 November 3, 2017 by dialing (855) 859-2056, passcode 56760801. 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’ (DK) second quarter 2017 earnings conference call on Thursday, August 3, 2017 at 9:00 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. (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 Holdings, thereby subjecting us to Delek US Holdings’ 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 to successfully integrate the businesses of Delek 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. 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:

EBITDA, distributable cash flow and distributable cash flow coverage ratio are non-U.S. GAAP supplemental financial measures that management and external users of our combined 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 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. EBITDA, distributable cash flow and distributable cash flow coverage ratio 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 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. Please see the tables below for a reconciliation of EBITDA and distributable cash flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. Also, please see the accompanying table providing the calculation of distributable cash flow coverage ratio.

Delek Logistics Partners, LP
Condensed Consolidated Balance Sheets (Unaudited)
June 30,
December 31,
2017
2016
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
4,899
$
59
Accounts receivable
18,270
19,202
Accounts receivable from related parties
4,158
2,834
Inventory
6,522
8,875
Other current assets
1,388
1,071
Total current assets
35,237
32,041
Property, plant and equipment:
Property, plant and equipment
347,303
342,407
Less: accumulated depreciation
(101,684
)
(91,378
)
Property, plant and equipment, net
245,619
251,029
Equity method investments
104,659
101,080
Goodwill
12,203
12,203
Intangible assets, net
13,888
14,420
Other non-current assets
3,926
4,774
Total assets
$
415,532
$
415,547
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable
$
10,176
$
10,853
Excise and other taxes payable
4,714
4,841
Tank inspection liabilities
939
1,013
Pipeline release liabilities
1,072
1,097
Accrued expenses and other current liabilities
4,350
2,925
Total current liabilities
21,251
20,729
Non-current liabilities:
Long-term debt
396,897
392,600
Asset retirement obligations
3,918
3,772
Other non-current liabilities
14,545
11,730
Total non-current liabilities
415,360
408,102
Total liabilities
436,611
428,831
Deficit:
Common unitholders - public; 9,067,411 units issued and outstanding at June 30, 2017
177,532
188,013
(9,263,415 at December 31, 2016)
Common unitholders - Delek;
15,294,046 units issued and outstanding at June 30, 2017
(192,348
)
(195,076
)
(15,065,192 at December 31, 2016)
General partner - 497,172 units issued and outstanding at June 30, 2017 (496,502 at December
(6,263
)
(6,221
)
31, 2016)
Total deficit
(21,079
)
(13,284
)
Total liabilities and deficit
$
415,532
$
415,547
Delek Logistics Partners, LP
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended June
Six Months Ended June
30,
30,
2017
2016
2017
2016
(In thousands, except unit and per unit data)
Net sales:
Affiliate
$
39,824
$
36,694
$
76,443
$
75,454
Third-party
86,945
75,159
179,799
140,455
Net sales
126,769
111,853
256,242
215,909
Operating costs and expenses:
Cost of goods sold
85,039
73,101
177,629
139,854
Operating expenses
9,966
8,730
20,324
19,194
General and administrative expenses
2,656
2,698
5,504
5,611
Depreciation and amortization
5,742
4,812
10,935
9,808
(Gain) loss on asset disposals
(5
)
--
7
(44
)
Total operating costs and expenses
103,398
89,341
214,399
174,423
Operating income
23,371
22,512
41,843
41,486
Interest expense, net
5,462
3,284
9,533
6,483
(Income) loss from equity method investments
(1,176
)
206
(1,421
)
435
Income before income tax expense
19,085
19,022
33,731
34,568
Income tax expense
108
129
159
227
Net income attributable to partners
18,977
18,893
33,572
34,341
Comprehensive income attributable to partners
$
18,977
$
18,893
$
33,572
$
34,341
Less: General partner’s interest in net income, including incentive distribution rights
4,552
2,791
8,661
5,044
Limited partners’ interest in net income
$
14,425
$
16,102
$
24,911
$
29,297
Net income per limited partner unit:
Common units - (basic)
$
0.59
$
0.66
$
1.02
$
1.23
Common units - (diluted)
$
0.59
$
0.66
$
1.02
$
1.22
Subordinated units - Delek (basic and diluted)
$
--
$
--
$
--
$
1.09
Weighted average limited partner units outstanding:
Common units - basic
24,335,338
24,281,930
24,331,991
20,653,210
Common units - diluted
24,375,946
24,367,091
24,371,540
20,735,389
Subordinated units - Delek (basic and diluted)
--
--
--
3,626,149
Cash distribution per limited partner unit
$
0.705
$
0.630
$
1.395
$
1.240
Delek Logistics Partners, LP
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended June 30,
2017
2016
Cash Flow Data
Net cash provided by operating activities
$
47,411
$
57,589
Net cash used in investing activities
(8,804
)
(35,919
)
Net cash used in financing activities
(33,767
)
(21,670
)
Net increase in cash and cash equivalents
$
4,840
$
--
Delek Logistics Partners, LP
Reconciliation of
Amounts Reported Under U.S. GAAP
Three Months Ended
Six Months Ended
June 30,
June 30,
($ in thousands)
2017
2016
2017
2016
Reconciliation of net income to EBITDA:
Net income
$
18,977
$
18,893
$
33,572
$
34,341
Add:
Income tax expense
108
129
159
227
Depreciation and amortization
5,742
4,812
10,935
9,808
Interest expense, net
5,462
3,284
9,533
6,483
EBITDA
$
30,289
$
27,118
$
54,199
$
50,859
Reconciliation of net cash from operating activities to distributable cash flow:
Net cash provided by operating activities
$
23,937
$
31,215
$
47,411
$
57,589
Changes in assets and liabilities
881
(7,133
)
(2,681
)
(12,534
)
Maintenance and regulatory capital expenditures
(2,070
)
(897
)
(4,313
)
(1,633
)
Reimbursement from Delek for capital expenditures
784
593
3,835
802
Accretion of asset retirement obligations
(73
)
(64
)
(146
)
(131
)
Deferred income taxes
(94
)
--
(119
)
--
Gain (loss) on asset disposals
5
--
(7
)
44
Distributable Cash Flow
$
23,370
$
23,714
$
43,980
$
44,137
Delek Logistics Partners, LP
Distributable Coverage Ratio Calculation
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
Distributions to partners of Delek Logistics, LP
2017
2016
2017
2016
Limited partners’ distribution on common units
$
17,175
$
15,310
$
33,962
$
30,119
General partner’s distributions
350
313
692
615
General partner’s incentive distribution rights
4,258
2,462
8,153
4,446
Total Distributions to be paid
$
21,783
$
18,085
$
42,807
$
35,180
Distributable Cash Flow
$
23,370
$
23,714
$
43,980
$
44,137
Distributable cash flow coverage ratio
1.07x
1.31x
1.03x
1.25x
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
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Pipelines and Transportation
Net sales:
Affiliate
$
27,668
$
26,136
$
54,168
$
52,442
Third party
2,555
5,874
4,732
12,351
Total pipelines and transportation
30,223
32,010
58,900
64,793
Operating costs and expenses:
Cost of goods sold
4,403
4,814
8,808
9,590
Operating expenses
7,933
6,899
16,088
14,639
Segment contribution margin
$
17,887
$
20,297
$
34,004
$
40,564
Total Assets
$
338,781
$
309,678
Wholesale Marketing and Terminalling
Net sales:
Affiliate
$
12,156
$
10,558
$
22,275
$
23,012
Third party
84,390
69,285
175,067
128,104
Total wholesale marketing and terminalling
96,546
79,843
197,342
151,116
Operating costs and expenses:
Cost of goods sold
80,636
68,287
168,821
130,264
Operating expenses
2,033
1,831
4,236
4,555
Segment contribution margin
$
13,877
$
9,725
$
24,285
$
16,297
Total Assets
$
76,751
$
72,093
Consolidated
Net sales:
Affiliate
$
39,824
$
36,694
$
76,443
$
75,454
Third party
86,945
75,159
179,799
140,455
Total consolidated
126,769
111,853
256,242
215,909
Operating costs and expenses:
Cost of goods sold
85,039
73,101
177,629
139,854
Operating expenses
9,966
8,730
20,324
19,194
Contribution margin
31,764
30,022
58,289
56,861
General and administrative expenses
2,656
2,698
5,504
5,611
Depreciation and amortization
5,742
4,812
10,935
9,808
(Gain) loss on asset disposals
(5
)
--
7
(44
)
Operating income
$
23,371
$
22,512
$
41,843
$
41,486
Total Assets
$
415,532
$
381,771
Delek Logistics Partners, LP
Segment Capital Spending
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
Pipelines and Transportation
2017
2016
2017
2016
Maintenance capital spending
$
1,355
$
714
$
3,043
$
1,225
Discretionary capital spending
305
4
754
199
Segment capital spending
$
1,660
$
718
$
3,797
$
1,424
Wholesale Marketing and Terminalling
Maintenance capital spending
$
214
$
56
$
417
$
72
Discretionary capital spending
245
74
696
436
Segment capital spending
$
459
$
130
$
1,113
$
508
Consolidated
Maintenance capital spending
$
1,569
$
770
$
3,460
$
1,297
Discretionary capital spending
550
78
1,450
635
Total capital spending
$
2,119
$
848
$
4,910
$
1,932
Delek Logistics Partners, LP
Segment Data (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2017
2016
2017
2016
Pipelines and Transportation Segment:
Throughputs (average bpd)
Lion Pipeline System:
Crude pipelines (non-gathered)
59,953
56,302
59,351
56,322
Refined products pipelines
49,820
53,670
50,583
53,725
SALA Gathering System
15,957
18,288
16,242
18,645
East Texas Crude Logistics System
13,591
12,909
14,876
11,127
El Dorado Rail Offloading Rack
--
--
--
--
Wholesale Marketing and Terminalling Segment:
East Texas - Tyler Refinery sales volumes (average bpd)
77,878
70,188
70,677
68,301
West Texas marketing throughputs (average bpd)
13,422
12,594
13,942
13,482
West Texas marketing margin per barrel
$
4.26
$
2.13
$
3.44
$
1.00
Terminalling throughputs (average bpd)
128,111
126,476
122,026
122,645
U.S. Investor / Media Relations Contact:
Keith Johnson
Vice President of Investor Relations
615-435-1366

https://resource.globenewswire.com/Resource/Download/8f513fdf-9575-4943-a3aa-998053df5fb2?size=1

<img src="http://www.globenewswire.com/newsroom/ti?ndecode=MTUwIzY5MjIwMTY=" alt="" width="1" height="1"/>