Q4 2020 PBF Logistics LP Earnings Call

Welcome to the PBF logistics fourth quarter 2020 earnings conference call and webcast. At this time all participants have been placed in a listen only mode and the floor will be opened for your questions. Following management's prepared remarks, if anyone should require operator assistance. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded its now my pleasure to turn the floor over to Colin Murray Investor Relations. Please go ahead Sir.

Thank you Melissa good morning, and welcome to today's call with me today are Matt Lucey, Our executive Vice President Erik Young our CFO and several other members of the Partnership's senior management team.

You'd like a copy of our earnings release. It is available on our website before we began and I would like to direct your attention to the forward looking statements disclaimer contained in today's press release and summary, it outlines that statements and the press release and on this conference call that state, the partnership's or management's expectations or predictions of the future are forward looking statement.

It's intended 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 SEC.

As noted in our press release, we'll 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 GAAP figure. Please refer to the supplemental tables provided in today's press release and.

And I'll turn the call over to Matt Lucey, Thanks, Colin and good morning, everyone.

And even with 2020 now behind us the pandemic.

Near term challenges, even as we see signs of improvement in terms of progress of vaccine Rollouts and the prospect of eventually being able to return to a more normal daily routine.

Despite the challenges PBF logistics continues to operate well as can be seen and the consistency of our earnings in 'twenty and 'twenty.

Our assets operated well and we were able to reduce operating and capital expenses.

We have seen and overall modest decline and throughput levels, but much less than what we like.

Much less and what can be seen and a drop in demand and nationally for the products, we move store and deliver.

One of the highlights of the year was the processing and agreement at our East coast storage assets with Maersk.

We were able to support marriage for the duration of the one year agreement. However, as a result of the pandemic.

<unk> did not extend the agreement beyond its initial term which ended in the fourth quarter.

That being said Maersk remains a valued customer.

And we continue to provide processing services.

On a spot basis.

Last October our sponsor and partner PBF energy announced the strategic restructuring of its east coast refining system.

Whereby the pause bro refinery idled several several major processing years and.

And expected output from a refinery will decrease.

For 'twenty, one and the impact of this configuration change is expected to equate to less than 1%.

A partnership EBITDA.

Going forward with changes I just mentioned, we expect partnership revenues for 'twenty, one to be and the 330.

To $350 million range.

What 'twenty, one EBITDA and the 210 to 220 million range.

This will allow the partnership to maintain healthy distribution coverage and continue generating ample cash flow to delever the business.

Debt pay down and strengthening liquidity are the priorities.

Today, we maintain our distribution of 30 cents per unit and we.

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

Alternate use of funds.

I'll now turn it back over to Eric.

Thank you Matt Good morning, everyone and thank you for joining us on today's call. We reported fourth quarter net income attributable to the limited partners of $31 million adjusted partnership EBITDA was 58, and a half million, which includes roughly $3 million of transaction related expenses non cash unit based comp and.

And our remediation costs associated with the east coast terminals during.

During the quarter, we spent roughly $1 1 million and maintenance capex and incurred $2 7 million and total capex.

Our 2020 total Capex was $12 3 million.

For 2021, we currently expect capex to be and to be approximately $15 million.

We ended the quarter with approximately $331 million and liquidity, including a cash balance of $36 million.

And approximately $295 million of availability under our revolving credit facility during the quarter, we repaid roughly $13 million on our revolver.

Net debt to annualized adjusted EBITDA was two nine times.

We expect to continue using excess cash to improve leverage ratios and strengthen our balance sheet.

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

Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue.

You mean from start to if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Our first question comes from the line of.

We're doing this with credit Suisse. Please proceed with your question.

Hey, good morning, guys. Thanks for taking the question wanted to start off with just options around breaking through the remaining challenging environment here as we get sort of get back to normal and Matt I know in the past you talked about are saying all options are more or less on the table as you think about different options between PBF and PBF X and so curious as to.

Has gone on and the vaccine is out and things have maybe improved narrowly can you narrow the bans on what some of the options are and perhaps exclude some of the some of the things you were thinking about in the past.

No.

And not necessarily I I would describe it clearly and the eye of the storm.

We did not make and he's a.

And the decisions that alter the course of the company.

And I absolutely believe we're now in a position where every day the world will get a bit healthier than it was the day before.

And as a result, our there'll be sort of daily improvements to our industry.

And as we look forward, we'll continue to you know our view will continue to evolve based on the market outlook and the way the market.

<unk> us and so I do think there'll be opportunities for interest and capital projects at PBF ex us.

But in regards to strategic alternatives, we haven't eliminated anything.

The the whiteboard.

As as it remains as it was and we'll continue to you know, but nothing is static. So we will continue to react to what the market is and we're in unprecedented times.

So we look forward to like I said, seeing and hopefully watching the world get better and will continue to evolve and our thinking in regards to strategic moves from PBF X.

Got it got it okay I appreciate that and.

Second one and you know it wasn't able to listen to the PBF call, but I understand that the chalmette refinery.

You mentioned a potential candidate for renewable diesel conversion I believe you've got a pretty sizable crude storage contract. There are still a few years left on it can you walk through any potential impact of P. B and FX and if that were to convert to renewable diesel.

Well just to be clear so everyone listening to this call. It wasn't it wasn't converting the refinery to renewable diesel project Theres, a standalone renewable diesel.

Prospective project at Chalmette that would not impact certainly it won't impact the crude contract between PBF for PBF acts it wouldn't impact any of the refining operations. So you know if if he then extend the question is okay, well we will not.

In fact, PBF and P b FX contracts or base refining operations.

Is there a pathway for PBF acts to participate and the trends up a project and some way.

And the answer to that is it's possible that we're still in the early stages of development.

But it's certainly possible and P. B F L X.

Once you get into that arena, you have to be careful about what's qualified income and whats nonqualified income, but PBF has a clean slate and regards to nonqualified income.

With our nonqualified income at zero. So we have some flexibility if we if we want to use PBF X, but it's way too early and that process.

Process too.

To be talking about that at this point.

Got it thanks for the clarification, Matt and be well guys.

Take care.

Yes.

Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Lacey for any final comments.

Well I appreciate it and as I as I just mentioned, we look forward to the world getting a healthier every single day and and by extension that will certainly extend to our industry and we look for and that speaks to you next quarter. Thank you very much.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.