Q2 2020 PBF Logistics LP Earnings Call

Be advised today's program maybe recorded it is now my pleasure to turn the floor over to Cowen marry up Investor Relations. Sir you may begin.

Thank you earn 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.

Do you like a copy of earnings release. It 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 non this conference call that state the partnerships or management's expectations or predictions of the future are forward looking statements intend to.

To be covered by the safe Harbor provisions under Federal Securities 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 to operating performance and financial results for reconciliations of non-GAAP measures the 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. Thanks Collyn.

Good morning, everyone and thank you for joining us on todays call.

Despite the challenges presented by the panned out like PBF logistics operated well during the second quarter.

We were impacted by the market turmoil as we saw total revenues come down primarily due to lower throughputs at our terminals and pipelines as demand declined.

This was partially offset by increased increases at our storage segment.

Overall revenues were down less than 5% due in large part to our strong sponsor relationship and contract structure that provide support for 90% of our base business.

Our EBITDA and distributable cash flow were up versus last quarter as a result of lower costs.

We reduced our corporate overhead and operating expenses came down due to lower throughput and savings.

We've also reduced capital expenditures, and we are targeting $8 million to $10 million and savings.

For total Twain, 24, cats, and capex of approximately $20 million.

Going forward results should continue to be stabilize we expect to see comparable consistency or revenue stream.

Durable cost increases and potentially an incremental benefit as demand recovers.

Today, we declared a distribution of 30 cents per year that.

We will continue to review our distribution policy going forward with respect to company performance market conditions.

An alternate.

Alternate use of funds.

I'll now turn it over there.

Thank you Matt Good morning, everyone and thank you for joining us on todays call.

We reported second quarter net income attributable to the limited partners of 37.5 million.

Adjusted partnership EBITDA was 60 million, which includes approximately 1.1 million of noncash unit based compensation transaction related expenses and residual environmental remediation costs.

Our earnings were up quarter over quarter and year over year, which is a reflection of the stability of our revenues and overall growth of our business through acquisitions and continuing development of all of our organic growth projects.

During the quarter, we spent approximately 1.8 million in capex, including 1.1 million in maintenance capital.

We ended the quarter with approximately 268.7 million in liquidity, including 21.6 million of cash and approximately 247 million of availability under our revolving credit facility.

During the quarter, we repaid approximately 135 million on our revolving credit facility.

Net debt to annualized adjusted EBITDA was 3.1 times.

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

[noise] in a moment, we'll open the call for questions.

Oh two registered to ask a question. Please press the Star then one on your Touchtone phone now.

You may withdraw your question anytime by pressing the pound.

Again it is star then one to ask a question today.

Your first question comes from Spiro Dounis with credit Suisse. Your line is open.

Hey, guys. This is Chad on for spirit.

Starting off I, just wanted to get a little more color on the priority debt pay down is there specific leverage target in mind before you start to get more aggressive on M&A.

I don't necessarily think there's a specific leveraged target I just think in conjunction with.

The reset essentially of the distribution that occurred during the first quarter combined with the fact that now you know, we're gonna be averaging well north of two times coverage I as opposed to just having the cash sitting on the balance sheet, earning you know a diminished diminimus amount of interest I think our plan at this point as they continue to.

And to use that to de lever that being said.

We're continuously opportunistically looking at different types of acquisitions as well as organic projects. It just feels like the pandemic has pushed a lot of the timeline on multiple potential opportunities out there right. So there is not a dedicated leverage target that we're trying to get to just overall trying to de lever the bid.

Yes, as we go we felt like this was that the most strategic and probably prudent move for us given the uncertain times that we're in today.

Okay understood.

Switching gears a bit with sort of all the factors going into this quarter from a utilization storage standpoint.

Just wanted to get your thoughts and what's the earning power if refineries are running.

Well I think the way the company is structured.

You're protected with a strong contracts on the downside what goes with that is there's not tremendous upside.

Because many of the contracts as you increase above your Nbcs your rate on that particular asset the declines so to speak. So we've had at you know.

[noise] run run rates that are very high in the past need.

Scene, where we've operated but there's a the whole structure of the company was was was built around sort of collared.

The.

Returns.

Okay, then stable more so.

Oh, sorry.

Stable ones.

Yeah.

Understood.

Thanks for the time does.

Once again it is star then one to ask a question today.

We will take our next question from line or excuse me Ryan Levine with Citi. Your line is open.

Good morning.

Uh huh.

Wanted to follow up on your comments around reviewing the distribution policy going forward should we look for every quarter or there be considerations about any material change there and to the extent that the share price murder in either direction would that be.

The driver or any change their capital allocation.

Okay.

I think everything is connected and we'll react to the market were and are.

Yesterday when times are and.

To the degree that will normalize is demand comes back and that extends to the ER MLP securities.

Directionally to PBFX War, we are constantly a will continuously reevaluate where the company stands.

At the moment.

Focusing on de levering.

And to the extent, we need to reevaluate that we certainly well I'm. So there's no magic other than a continuously react to the market that's in front of us.

Okay, and then to the comment around pushing some of the capex to their right can you be a little more specific as to what are the drivers and some of the cat capex deferments or they specifically related to cultivate related delays or or is there any.

Other car you're going to share [noise].

Yeah, I would say just a in reaction to the market. We are in managing our expenses in capital as as most officially as we can and a turbulent time like.

That we've experienced the most prudent thing to do is to reduce your expenses in your capital to the grass extent possible because if nothing else.

You're going to hope for the best prepare for the worst <unk> and that's certainly what we're trying to do.

Okay and then last question. So you know why the that <unk>, how do you away potential share buybacks.

And two other capital allocation decisions is that something that's on the table or is.

Focused on core defining the balance sheet and the near term.

I would say, it's it's on the table, we evaluate everything and we.

We look at continuously.

Okay. That's all right. Thank you.

And there are no additional questions at this time I'd like to turn the call back over to Matt Lucey for any closing remarks.

I appreciate everyone's are listening today and I hope you have a nice save a rest of the day weekend and look for speaks to the next quarter.

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

[music].