Q3 2019 Earnings Call

That's during your conference today, Please press Star zero.

Welcome to the PBF logistics third quarter 2019 earnings conference call and webcast. At this time, all participants have been plates and they listen only mode and the Florida will be opened for your questions. Following management's prepared remarks, you may have registered to ask a question that anytime by pressing the star and one.

On your Touchtone phone. Please note. This call may be recorded it is now my pleasure to turn the floor over to call in Maria of Investor Relations. Sir you may begin.

Thank you Catherine.

Good morning, Happy Halloween and welcome to today's call with me today, or Matt Lucey Executive Vice President Erik Young our CFO and several other members of the partnership Senior management team. He had like a copy of our earnings release is available on our website.

Before we begin I'd like to direct your attention to the forward looking statements disclaimer contained in today's press release in summary, it outlines that statements in the press release and on this conference call that state the partnerships or management's expectations or predictions of the future are forward looking statements intended to be covered by the safe Harbor provisions under federal security.

These laws there are many factors that could cause actual results to differ from our expectations, including those we've described in our filings with the FCC.

As noted in our press release will be using certain non-GAAP measures, while describing the partnership's operating performance and financial results for reconciliations of non-GAAP measures to the appropriate gaps figure. Please refer to supplemental tables provided in today's press release.

Now turning the call over to Matt Lucey like you go and good morning, everyone. Thanks for joining the call.

We enjoyed a strong quarter driven by solid operations execution of organic projects and positive market conditions.

On the East Coast, we experience increased volumes a number of our locations as a result, the shutdown of the P.S. refinery.

We are continuing to see increased local demand for space, Our Philadelphia reason terminal and storage assets as.

As well as higher throughput or marketing rock.

We announced earlier today the start of the Maersk processing arrangement, our east coast storage assets.

We are processing Maersk provided feedstock today.

In addition to the incremental revenue for the partnership.

The start of the processing agreement represents a tangible signal.

That market participants are preparing for IMO 2020.

Our strategically located coastal storage assets and marine terminals are seeing increased customer interest.

Other market participants prepare to meet the demands.

I am appeal specification change on January 120 Twond.

We're pleased to announce our twentyth consecutive distribution increase the 52 cents per year.

The current quarter.

Our 2019 EBITDA guidance of approximately $195 million reflects the expecting contributions from the doors Valley pipeline and ratable project contributions as those assets have come online.

And 2020 or expected annual EBITDA increases to approximately $210 million to $220 million.

This figure incorporates the pro rata contributions of all are ongoing organic projects as they come online and also the contributions of our completed acquisitions and the ongoing Maersk processing agreement.

With that I'll turn it over to Eric with some more detail. Thank you. Matt. This morning, we reported third quarter net income attributable to the limited partners of $31 million.

Adjusted partnership EBITDA was 55, and a half million, excluding $2 million of transaction cost associated with the Torrance Valley pipeline acquisition.

Environmental remediation costs associated with our east coast terminals and noncash unit based compensation.

During the quarter, we spent approximately $3 million and maintenance capex and roughly 5 million on growth projects.

Our total Capex for 2019 is expected to be approximately $30 million to $35 million.

Our third quarter coverage was 1.2 times and we maintain our long term outlook for targeted coverage of 1.15 times and expect to meet and exceed this that's contributions from recent acquisitions and investments in our organic projects provide incremental DCF over the next 12 to 15 months.

We ended the quarter with roughly 265 million in liquidity, including 53 million of cash and approximately 212 million of availability under our revolving credit facility.

Net debt to annualized adjusted EBITDA was 3.4 times.

Included in our cash balance was roughly 32 million borrowed from our revolver, which was used on the first of October to make the final payment for the east coast storage assets acquired from Crownpoint International a year ago.

Operator, we have concluded our opening remarks and now we'll open the call for questions.

In a moment, we will open the call two questions. If he would like to ask a question. Please press the star and one on your Touchtone phone.

Withdraw your question that anytime by pressing the pound key once again to ask a question. Please press the star and one on your Touchtone phone and your first question today comes from Ryan Levine with Citi. Please go ahead.

Good morning.

Can you speak to where where you see the biggest opportunities for organic growth capex today, and how that's evolved over the last few months as me.

Moving to the year.

Yeah, I think the the vast bulk of our organic capex was really associated with the projects that we announced during the second quarter of 2018.

It was all very much forward looking so we were essentially investing in the business over the past 12 to 15 months and we're now starting to see really the harvesting of that free cash flow as those assets are coming online. So I think as we go forward right to our Capex is going to continue to kind of be in the very low maintenance capex range that we.

Provided for the year, we don't see material increases on top of that and we're going to continue to try to identify potential organic projects.

In conjunction in connection with our existing assets, but also trying to leverage the parents refining footprint and then still obviously looking at third party acquisition opportunities, but we really don't have a lots to talk about on that front today.

Okay, and then on the call. This morning, there was a some comments around it.

Operating plans going forward can you elaborate as to why.

Those comments were referencing.

It was simply addressing the question that our competitors have done so.

You know made strategic decisions that we certainly have not we always look at the market and.

We've been disappointed in the <unk> the unit performance of the LLP, but markets go up markets go down.

And and the MLP has absolutely provided a attributes and benefits.

To our structure.

That being said.

Well, we continually look at you know the best use a in the best structure.

On a going forward basis so.

Our our it was brought up in the other call is a question certainly not something that we're we're yeah was initiated by us.

I think we're continuing to focus right, it's only been less than a year. Since we did our IDR restructuring, we obviously announced the Torrance Valley pipeline drop in the second quarter. Our view right now is to continue to operate the out that's well, which we feel like we've done and you know weve quadrupled the size of this business and a little over five years and so I think.

Active we're going to continue to to try to hit singles and doubles here and you know as we go forward to Matt's point, we have to respond to what the market is telling us and our comments. This morning more purely in response to question from another analyst.

Okay appreciate that and I guess, one to follow up. It is is a C corps conversion something that is a potential outcome or or do you still have.

W. them up he as the preferred security.

I think from our perspective.

The status quo is where we are depending on the size your company and the direction here going out you can look at a whole host of.

Different things, whether it's a C corp, whether it's an up say, whether it's it take private and we like I said earlier, we continuously evaluate all of our alternative and the status quo is where we are in and you know.

<unk> you know that's the that's our path. So there's nothing there is nothing new on the comment.

And it's it's simply how we run our business.

I appreciate it thank you.

This concludes the question and answer session I would now like to turn the call over to Matt Lucey for closing remarks.

Well a as always we appreciate your participation the call and we look forward to continued success going forward. Appreciate every day.

This does conclude today's program. Thank you for your participation you may disconnect at anytime.