Q4 2019 Earnings Call
[music].
Ladies and gentlemen.
Thank you for sudden buying and welcome to the Delek logistics fourth quarter earnings Conference call.
This time, all participants' lines are in a decent only modeled.
After the speakers presentation, there will be a question and answer session.
I see passenger indiscretion, you'll need to press star one on your telephone.
Please be advised that today's conference is being recorded.
If you acquire any further sees thing please press star zero.
I would now like I had to conference over to your speaker today, He could Blake Fernandez thinking did go ahead Sir.
Thank you and good morning, I would like thank everyone for joining us on this webcast to discuss Delek logistics partners fourth quarter 2019 financial results. Joining me on today's call will be using you mean, our general partners Chairman and CEO.
I'll be ginsburg, CFO as well as other members of our management team as a reminder, this conference call may contain forward looking statements as that term as defined under federal Securities laws for this purpose any statements made during this call that are not statements of historical facts may be deemed to be forward looking statements without limiting before going to words believes and.
Dissipate plans expects and similar expressions are intended to identify forward looking statements.
You are cautioned that these statements may be affected by important factors set forth in our filings with the FCC at our latest earnings release.
As a result actual operations results may differ materially from the results discussed in forward looking statements. We undertake no obligation to publicly update any forward looking statements, whether as a result to new information future events or otherwise.
In addition to reporting financial results in accordance with generally accepted accounting principles are gap. We report certain non-GAAP financial results investors are encouraged to review the reconciliation of these non-GAAP financial measures to comparable GAAP result, which can be found in the press release, which is posted on the Investor Relations section of our website on todays call.
Laci will begin with financial overview, then I will review results then newsy will offer a few closing strategic remark with that I will turn the call over to Odyssey.
With me.
Our fourth quarter performance of year Rebased benefited from improved result, bailing pipeline.
East, Texas marketing and our gathering is.
I do see if was approximately $33 million.
2018.
Compared to $27.6 million into fourth quarter 2018.
Our DCF coverage ratio was 1.3 times for the fourth quarter 2018, compared to 1.4 times in the prior year period.
EBITDA was $43 million, which represented 6.1% increase over prior year period.
Excluding $7.1 million speedily. This could you be the increased 23.5% over pie.
Based on our performance and outlook, we increased our quarterly distribution to 88.5 cents per limited partner units for the fourth quarter ended December 31st 2019.
This distribution was paid on February 12, 2020.
Present, the 1% in group from the third quarter 2018.
This is our 28 consecutive quarterly increase and it's a 9.3% higher than our fourth quarter 22 distribution.
At December 31st winning team Decatur proximity to $62 million available capacity on our $850 million credit facility.
Our total debt was approximately $833 million in total leverage ratio.
The 5.25 times currently logo under our credit facility and decreased 4.6 times in the prior quarter.
No I will turn the call over to me to discuss the results.
Thanks, offering for the fourth quarter 2019, Delek logistics reported net income attributable to all partners of 21.6 million, which compares to 21.3 million in the prior year period Limited partners interest in net income in the fourth quarter was $12.8 million or 52 cents per unit compared to $14.2 million were 58 cents per unit in the prior.
Here.
And our pipelines and transportation segment, the fourth quarter 2019 contribution margin was 25.2 million compared to 26.3 million in the fourth quarter 2018. This decrease was primarily attributable to fill related costs.
Excluding those costs contribution margin would have increased year over year due to strong performance from our gathering assets. The pay lot pipeline also benefited from higher tariff after the incentive rate expired at the end of February 2019, and subsequently reset to a higher tariff in July 2019.
Operating expenses increased to 18.7 million in the fourth quarter 2019 from 10.9 in the prior year period, primarily due to the aforementioned spilled related costs. We expect operating expenses in the first quarter 2020 to return to more normalized levels and our wholesale marketing and Terminalling segment. The contribution margin was 70.
10.3 million in fourth quarter, this year, which was a decrease from 18.8 million in the prior year. This decrease was due to a lower gross margin at our West Texas operations operating expenses of 3.6 million were lower than the prior year period.
Our west, Texas wholesale gross margin was $3.12 per barrel in the fourth quarter of 2019 compared to $4 in 660 cents per barrel and the fourth quarter of last year throughput in West, Texas was 9972 barrels per day.
Compared to 12900 barrels per day in the prior year period during the fourth quarter 2019, our equity income from joint venture crude oil pipelines with approximately 5 million compared to net income of 1.5 million in the prior year period.
Capital expenditures were approximately 4 million in the fourth quarter of 19, including 335000 of discretionary spending and 3.6 million of sustaining maintenance and fourth quarter of 2018 total capital expenditures were 4.1 million.
For for for full year 2019, our total gross capital expenditures were 10 million for full year 2020, our total gross capital expenditure forecast is 22.7 million, which includes 4.8 million of discretionary and $17.9 million of maintenance capital with that I'll turn the call over to for his closing comments. Thank you Blake.
Good morning, everybody.
Last year, we enjoyed strong performance, our dedicated which underpin distribution growth of over 10% for the entire year.
The gathering assets performed well and the pipeline into our for patient segment had a solid contribution despite remediation work in expenses.
Moving into 2020, we expect increased cash flow generation in the second half of the year from the Red River Park on expenditure.
Additionally, we are looking are.
Separate buying the capital structure and preparing to balance sheet for potential asset dropdown opportunities from our Fox a decade.
With an outlook for continued growth we expect.
A 5% increase so in our LP distribution in 2020, while maintaining appropriate distribution coverage and flexibility finally.
Have you probably read.
Oxy, giving our CFO decided to move back with his family too as well actually move back to his family and is well after 15 years being with our company.
And I'd like to pick you up which can be here to thank you for you a great friend cheap grid with distribution.
To our company and.
Just say, the fact that delta Qs or dk liquid and B, what they are without asking.
Of involvement in thank you and good luck oxy with Dot I'd like to open the call for questions.
As a reminder, its asked a question you will need to press Star then the number one and the telephone keypad to withdraw your question press the pound key again in order to ask a question you've only to pad Thai then the number one and the telephone keypad.
Plus for just a moment to compiled the Kevin you roster.
Oh no.
No question at this time discontinued for centers.
Yes.
I'd like to thank everybody around the table here for their contribution I'd like to think.
Our employees for another wonderful year.
Well.
EBITDA growth.
Was enormous that was a year that we introduced more and more.
I would call its lines of business in two decade, and we are on our way to the target of 300.
Due to $390 million EBITDA out would like to thank God investors for your their trust in us.
And our board of directors haven't I've, they will talk to us.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.
[music].
[music].
[music].
Ladies and gentlemen.
Thank you for standing by and welcome to the Delek Logistics fourth quarter earnings Conference call.
This time, all participants' lines are in listen only mode.
After the speakers presentation, there will be a question and answer session.
I forgot to enjoy this session you'll need to press star one on your telephone.
The advice for todays conference is being recorded.
If you're in <unk> and you for those Houston, Please press Star zero.
I would now like I had the conference over to your speaker today.
He could Blake Fernandez. Thank you didn't go ahead Sir.
Thank you and good morning, I would like to thank everyone for joining us on this webcast to discuss Delek logistics partners fourth quarter 2019 financial result.
Joining me on today's call will be using you mean, our general partners, Chairman and CEO and altogether <unk> CFO as well as other members of our management team. As a reminder, this conference call may contain forward looking statement at that time as defined under federal Securities laws for this purpose any statements made during this call that an up statements of historical fact.
May be deemed to be forward looking statements without limiting we're going to words believes anticipates plans expects and similar expressions are intended to identify forward looking statements you.
You are cautioned that these statements may be affected by important factors set forth in our filings with the FCC and our latest earnings release.
That's a result actual operations results may differ materially from the results discuss and forward looking statement. We undertake no obligation to publicly update any forward looking statement, whether as a result, the new information future events or otherwise.
In addition to reporting financial results in accordance with generally accepted accounting principles are gap.
We report certain non-GAAP financial result, investors are encouraged to review the reconciliation of these non-GAAP financial measures to comparable GAAP result, which can be found in the press release, which is posted on the Investor Relations section of our website on todays call Laci will begin with financial overview. Then I will review results. Then it was he will offer a few.
Clothing strategic remark with that I'll turn the call over to Aussie.
Thanks, Mike.
Our fourth quarter performance on a yearly basis benefited from improved result, Balan pipeline.
East, Texas marketing and our gathering is.
Oh this year was approximately $33 million into Fourq 2018.
Compared to $27.6 million in the fourth quarter 22.
Our DCF coverage ratio was 1.0 wait time for the fourth quarter 2018, compared to 1.4 times in the prior year period.
You'd be dealt with $43 million, which represented 6.1% in quick although probably okay.
Excluding $7.1 million speedily critical it'd be the increased 23.5% over pie.
Based on all performance and outlook, we increased our quarterly distribution to 88.5 cents per limited partner unit for the fourth quarter ended December 31st one acting.
This distribution was paid on February 12, 2020.
Good day, 1% in group from the third quarter two anything.
This is about 28 consecutive quarterly increase and it's a 9.3% higher than a fourth quarter 2018 distribution.
At December 31st one of the 18, DKL proximity to $62 million available capacity on our $850 million credit facility.
Our total debt was approximately $833 million built a leverage ratio.
The 5.25 times currently logo under our credit facility and it decreased 4.6 dodging the product or.
No I wouldn't look over to really put its got the result.
Thanks topic for the fourth quarter 2019, Delek logistics reported net income attributable to all partners of 21.6 million, which compares to 21.3 million in the prior year period limited partners interest in that income in the fourth quarter was 12.8 million or 52 cents per unit compared to 14.2 million or 58 cents per unit prior.
Year.
And our pipelines and transportation segment, the fourth quarter 2019 contribution margin was 25.2 million compared to 26.3 million in the fourth quarter 2018. This decrease was primarily attributable to still related costs.
Excluding those costs contribution margin would've increased year over year due to strong performance from our gathering assets. The pay lot pipeline also benefited from a higher tariff after the incentive rate expired at the end of February 2019, and subsequently reset to a higher tariff in July 2019.
Operating expenses increased to 18.7 million in the fourth quarter of 2019 from 10.9 in the prior year period, primarily due to the aforementioned spilt related costs, we expect operating expenses in the first quarter 2020 to return to more normalized level.
Our wholesale marketing and Terminalling segment contribution margin was 17.3 million in fourth quarter. This year.
Which was a decrease from 18.8 million in the prior year. This decrease was due to a lower gross margin at our West Texas operations operating expenses of 3.6 million were lower than the prior year period.
Texas wholesale gross margin with $3.12 per barrel in the fourth quarter of 2019 compared to $4 in 660 cents per barrel and the fourth quarter of last year throughput in West, Texas with 9972 barrels per day compared to 12900 barrels per day in the prior year period during the fourth quarter 2019.
Our equity income from joint venture crude oil pipelines with approximately 5 million compared to net income of 1.5 million in the prior year period.
Capital expenditures were approximately 4 million in the fourth quarter of 19, including 335000 of discretionary spending and 3.6 million of sustaining maintenance and fourth quarter of 2018 total capital expenditures were 4.1 million.
For for for full year 2019, our total gross capital expenditures were 10 million for full year 2020, our total growth capital expenditure forecast is 22.7 million, which includes 4.8 million of discretionary and 17.9 million of maintenance capital with that I will turn the call over to for his closing comments. Thank you Rick.
Good morning, everybody.
Last year, we enjoyed strong performer thought Decatur, which underpins distribution growth of over 10% for the entire year.
The gathering also performed well and the pipeline network, what Vishal segment had a solid contribution despite remediation work inexpensive.
Moving into 2020, we expect increased cash flow generation in the second half of the year from the Red River Park on expenditure.
Additionally, we're looking at our.
Separate buying the capital structure and preparing the balance sheet for potential asset dropdown opportunities for our Barkat decay.
Well the outlook for continued growth we expect.
At 5% increase in our LP distribution at 2020, while maintaining appropriate distribution coverage and flexibility finally.
Have you probably read.
Oxy, given our CFO has decided to move back with his family to actually moved back to his family and it right after 15 years being without company.
And I'd like to thank you if we can be here. Thank you for you a great friendship grid distribution.
Through our company and just say, the fact that Delek us or dk it wouldn't be what they are without off.
Involve additive. Thank you and good luck oxy with dot I'd like to open the call for questions.
As a reminder, asked a question you will need to press Star then the number one and the telephone keypad to withdraw your question press the pound key again in order to ask a question you've only depressed by the number one on the telephone keypad little possibly just a moment to compile the Kevin a roster.
Oh no.
No question at this time discontinued presenters.
Yes.
I'd like to thank everybody around the table here for their contribution I'd like to think of.
Our employees for another wonderful year.
Well EBITDA growth with enormous stuck with a year that we introduced more and more.
Now.
I would call it lines of business in two decade, and we are on our way to the target of three I'm $50 million to $390 million EBITDA outlook would like to think invested for your their truck and off.
Bob.
And our direct having five day, we'll talk to us.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.