Q1 2022 PBF Logistics LP Earnings Call

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Good day, everyone and welcome to the PBF Logistics LP first quarter 2022 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. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded it is now my pleasure to turn the floor over.

Colin Murray Vice President of Investor Relations, Sir you may begin.

Thank you Maria good morning, and welcome to today's call with me today are Matt Lucey, and Erik Young from our management team and several other members of the Partnership's senior management, if you'd like a copy of our earnings release or 10-Q filing they are 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 partnership's 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 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 I'll now turn the call over to Matt Lucey.

Thanks, Colin PBF logistics operated well in the first quarter, our operations continued to be driven by the reliability of our assets.

Our safety oriented workforce.

In addition to our strong relationship with our sponsor and high percentage of contracted volumes. These.

These are the foundations that provide for our consistent financial performance.

We expect partnership full year 2022 revenue to be approximately $320 million to $340 million.

As mentioned on previous calls the 2022 partnership revenues reflect the lower minimum volume commitments for.

For the East Coast rail facilities, which took effect as of January one.

Yes.

Revenues in this range are expected to generate EBITDA of approximately $200 million to $210 million.

The partnership's consistent revenues and cash generation provide strong distribution coverage and the ability to continue reducing our net debt.

We will remain focused on our balance sheet.

In doing so we maintain flexibility and increase our ability to potentially grow the partnership in the future.

Today, we announced a distribution of <unk> 30 per unit.

We will continue to review our distribution policy going forward with respect to the company performance market conditions and the alternate use of funds with that I'll turn it over to Eric.

Thank you Matt Good morning, everyone and thank you for joining us on today's call.

We reported first quarter net income attributable to the limited partners of $36 3 million.

Adjusted partnership EBITDA was $56 6 million, which.

Which includes approximately $700000 of noncash unit based compensation and environmental remediation costs associated with the east coast terminals.

During the first quarter, we spent approximately one 4 million and total capex, including roughly 1 million for maintenance.

For the full year 2022, we currently expect capital expenditures to be approximately $14 million, including 12 million for maintenance and $2 million of regulatory spend.

We ended the quarter with roughly $475 million in liquidity after repaying an additional $25 million in debt during the first quarter.

Our liquidity consists of a cash balance.

$53 million and roughly $422 million of availability under our revolving credit facility.

Net debt to annualized adjusted EBITDA was two four times, we expect to continue using excess cash to improve leverage ratios and shrinking the balance sheet.

Consistent with our commentary on the PBF energy earnings call. This morning, our near term efforts are focused on a successful refinancing and credit extension of the revolver and unsecured notes due 2023.

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

In a moment, we will open the call to questions. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your hands.

That's before pressing the star keys.

One moment, please while we poll for questions.

Our first question comes from Spiro <unk> with Credit Suisse. Please proceed with your question.

Thanks, operator, good morning, guys.

First question two part question just on capital allocation and leverage I guess, if you think about the current pace of deleveraging you guys just took down another $25 million.

Pace continues it looks like the curve the credit facility will basically be repaid in about three quarters. So I'm. Just curious is that maybe when you start looking at alternative uses of cash and potentially recommencing distribution growth second part of this question you mentioned that 2023 nodes.

Does it sound like you're waiting until may to refinance those goods. So maybe just help us think about the timing and how you're thinking about getting that done.

I'll take the first one and Eric can take this cycle, which is obviously we're in the midst of.

Historically disruption disruptive times in the world and to predict what what what the world's going to look like in a year.

Is not.

Not selling in our purview at the moment, we're focused on what we're doing today and today, we're continue to pay that and once we get to that point, where all the revolver debt will be repaid we can evaluate other opportunities but.

Good operations and focusing on paying down debt is where our focus is today.

On the revolver. The concept that we started to employ a few years ago was to provide as much flexibility as possible in terms of what what may come at us in the future.

And as we sit here today, we are trying to balance what the appropriate level of floating rate along with fixed rate debt at the same time matching up tenure with contract life.

And ultimately the overall mix between revolving debt that can be borrowed.

Borrowed to pay down.

Versus term debt ultimately as you know in an unsecured structure assume some type of no call provision.

We believe there are multiple ways to finance PBF logistics first priority quite frankly is to focus on the PBF energy ABS.

ABL getting that done there is a lot of <unk>.

<unk> crossover between the two facilities. So our view has been lets get.

Priority number one done on the large ABL and then we will be able to transition and use that positive momentum with a successful refinancing effort on PBF logistics.

Got it helpful color <unk>.

One just moving to inflation I'm curious how you guys are thinking about the impact of any inflation or even supply chain issues on the system I imagine you've got escalators in your contracts to help pass that on but just curious if youre seeing any impact yet.

Certainly seeing some impact, but yes, the way our contracts were constructed it did have the concept of escalators built in so I think partnership is.

Pretty well insulated inflation.

This is not equal across the board so youre seeing it is stronger in certain areas and unless and others.

We've been working certainly with that we will continue to work with our largest customer being PBF to make sure that we've got a relationship that works on both sides.

But it's been manageable for PD effects as a perspective.

Great last one for me I.

I guess last where we left off on the Chalmette renewable diesel facility. It sounds like it was possible for you all to participate there but of course limited by the unqualified income, giving you an MLP I guess, just curious anything too new to report on that front and how youre thinking about PBF <unk> participation in that project.

Yes.

There are certain the optionality around the as you said the portion that we don't have any.

Non qualified income today.

Today, I don't know what the prospects of the law being changed our and that can obviously shift things in a dramatic way, but yeah.

Nothing has changed in that regard for evaluating the project nothing to report here.

Got it very helpful. That's all I had today guys. Thank you.

Thanks.

We have reached the end of the question and answer session and I will now turn the call over to Matt Lucey for closing remarks.

Appreciate everyone's participation today and look forward to speaking with you next quarter have a great day.

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

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