Q4 2019 Earnings Call

Welcome to the PBF logistics fourth quarter and full year 2019 earnings conference call and webcast.

This time, all participants have been placed in listen only mode and the floor will be opened for your questions. Following management's prepared remarks, you may registered to ask a question that anytime by pressing star and one on your Touchtone phone.

It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir you may begin.

Thank you Barry Good morning, 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 feels like a copy of earnings releases are available on our website.

Before we begin I would 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 Securities Law.

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

I'll now turn the call over to Matt Lucey. Thank you John Good morning, everyone.

We finished 2019 with a strong quarter driven by solid operations.

Execution over <unk> organic projects and contributions from the processing agreement or east coast storage assets, which began in October.

Our other east coast assets continued to see increased local demand.

And incrementally higher volumes as a result of the shutdown of the P.S. refinery.

2019 was a productive year for PBF logistics.

Our adjusted EBITDA of just over $200 million.

The guidance for the year it was driven by solid performance across our entire asset base.

Solid execution from our employees.

Early in the year in response to the changing markets.

We eliminated the partnership's IDR structure at an LP unit holder friendly multiple of was an 11 times.

In April.

We increased the partnership's ownership of the tourist God pipeline to 100% through a successful dropdown transaction.

It was facilitated through through a widely supported and public equity offering.

Drop down transactions and equity offerings were fairly rare occurrence is an MLP space last year and PBF axis success. These transactions.

It was made possible by the strong support of our sponsor.

And our investors.

We remain committed to delivering growth through the continued execution of our ongoing and identified in house projects.

Development of strategic partnerships.

And successful execution of third party acquisitions.

Today, we're pleased to announce a quarterly distribution of 52 cents per unit.

In January we announced our guidance for 2020 and despite the challenging macro environment, we expect the partnership to deliver approximately $225 million an EBITDA for the year.

This figure incorporates the pro ready contributions of our ongoing organic projects.

They come online.

And also the contributions of our completed acquisitions and ongoing Maersk processing agreement.

With that I'll turn it over there.

Thank you Matt. This morning, we reported fourth quarter net income attributable to the limited partners 29.8 million.

Adjusted partnership EBITDA was 54.2 million, which excludes approximately two point threemillion of transaction related expenses environmental remediation costs associated with our east coast terminals and noncash unit based compensation.

During the quarter, we spent approximately 2.8 million on maintenance Capex and approximately 5.9 million on growth projects.

Our total Capex for 2019 was roughly 32 million inline with our guidance.

Our fourth quarter adjusted coverage was 1.2 times.

We ended the quarter with just under $250 million in liquidity, including $35 million of cash and approximately 212 million of availability under our revolving credit facility.

Net debt to annualized adjusted EBITDA was 3.5 times.

Since our IPO in 2014, our distribution growth policy has been linked to our growth strategy.

As the MLP market has evolved over the last few years. We've responded with a more measured approach the LP unit distributions, while continuing to grow our business.

Since we last revised our distribution policy in early 2018, we have delivered 50% EBITDA growth primarily through successful third party acquisitions and continued development.

Organic projects.

The prospects for the growth of our business are a strong today as they as ever as they have ever been.

And we are committed to delivering that growth through the ongoing execution of our proven strategy.

As of the fourth quarter of 2019, we intend to hold our distribution steady at 52 cents per unit per quarter.

This distribution policy will continue to reward our unit holders, while providing the partnership with additional financial resources to build coverage fund growth and strengthen our balance sheet.

We believe that this approach will benefit both the partnership and unit holders in the long run.

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

At this time, if he would like to ask a question. Please press star and one on your Touchtone phone you can or move yourself from the question Q by pressing the pound key again, that's star in one.

We'll take our first question from Spiro Dounis with credit Suisse.

Please go ahead.

Hey, guys is Chad Brian on for Spiro, you know looking at growth with PBS closing the Martinez acquisition could you provide a little more detail and growth opportunities. You have there are there any organic projects I could develop or is it primarily focused on the drop of the existing assets.

Martinez is a a large.

Complex refinery with all the.

Standard you know assets that come with that and so I think you to answer. Your question is yes, there are assets that could be dropped down and there certainly will be projects as you get into any business opportunities present themselves and so yes, there will be projects, a that will come and investment opportunities for.

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To participate and and no activity that Martinez.

We haven't quantified that necessarily and a lot of organic projects quite frankly will develop over time.

Okay great.

And then just on you mentioned the P.S. shut down in the benefits you saw there I'm free or Philadelphia terminals in storage assets is that are there any sort of additional opportunities or that we should be thinking about or is it was that kind of the ratable sort of a level of impact, but we saw there.

It's probably the ratable impact look I think the the whole Delaware basin.

We'll shift around in and for those of saying it it would appear that the.

Bankruptcy Court is ruled in so P.S. refinery.

Does not appear like they'll be coming back and so I do think it's our new normal markets will evolve a bit but you know we we benefited from increased throughput through our journalism.

And the Philadelphia region, I think they'll continue.

Okay understood. That's all had thanks for the time guys.

Thanks.

And again that is star and wanted to ask a question.

Well take our next question from Brian Levine with Citi.

Go ahead.

Good morning.

Can you provide an update in terms of a equity issuance appetite in there and how that may or may not be part of your strategy as you evaluate different anchorman, all organic or or third party transactions.

I think our message right is consistent with what we laid out really after doing our equity transaction in the spring of 2019 that we do not anticipate any requirement for equity during the course of this fiscal year 2020 to be able to fund our internal projects now if a potential third.

Party opportunity comes around we would need to evaluate size and scale and and the potential requirement for any equity going forward, but I think we've demonstrated that for good transactions, we feel fairly confident that we can access the market, it's probably just a bit more nuance than it was four or five years ago in terms of approach.

Strategy and execution of that equity issuance, but near term. Our view is let's let's continue to kind of build coverage keeps the cash on the balance sheet, we would be using that incremental cash to basically continue to fund our internal projects.

Okay.

And speaking to some of those internal projects. The there hasn't been any kind of new developments. It. So far this year curious if you're.

Well, if there's any commercial projects that are eating out more time, we're gaining more traction and I specifically in new Jersey are you seeing more challenges in some of the commercial opportunities that may present, that's out there.

I'm not sure what you're referring to it and challenges in New Jersey per se, but no I don't I don't have you any changes or projects I think develop over time, they're progressing we're pleased with a number of projects we're working on.

So no no change.

Okay.

Okay. Thank you.

And there are no further questions at this time, so I'll turn it back to Matt Lucey for any closing remarks.

The greatly appreciate your time this morning, and look forward to communicating with you next quarter. Thanks have a great day.

This does conclude today's program. Thank you for your participation you may now disconnect can have a wonderful day.

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