Q2 2022 Delek Logistics Partners LP Earnings Call

Business cycles elevated global commodity prices and geopolitical unrest underscored the benefits and reliance upon traditional energy assets, including midstream midstream infrastructure.

<unk> is well positioned to benefit from increasing activity in the Permian basin and the <unk> assets offer additional growth opportunities, both geographically and in new product lines.

The significant increase in third party revenue from the production hubs propels detail towards more of a true standalone entity.

This should help distinguish detail from other sponsor based mlps and attract capital with the diminishing number of MLP investment options.

The company is positioned well and this is an opportune time to hand, the range to our new president of the Gulf story.

Thank you Zee and it's great to be back eidetic.

Unit total unitholder returns have been a critical part of the detailed slowly since going public.

We increased the quarterly distribution 38 times in a row.

We remain on track to deliver a 5% increase year over here.

On an annualized basis.

This puts our dividend yield around 7%.

On June 1st we closed the <unk> acquisition.

I would like to welcome the <unk> team to the <unk> family.

This is an exciting addition to our portfolio that adds in case third party revenue expanded product mix into natural gas and water and widened our footprint into the Delaware basin.

On our legacy Permian gathering system, we continue to see a strong demand from producer and expect ongoing volume increases.

The outlook remains solid.

And we are focused on operating the asset safely and reliably while integrating the new three bear assets.

I am looking forward to working closely with our team to continue to produce positive results for our unit holders and maximize the value of the company.

Finally.

I would like to thank <unk> for many years of leadership and Mentorship.

With that I will turn the call over to ward.

Thank you all to grow our distributable cash flow as adjusted for three bear transaction costs was approximately $56 million in the second quarter of 2022 debt compared to $54 million in the second quarter of 'twenty one.

Our DCF coverage ratio is adjusted for transaction cost was one three times for the second quarter compared to 132 times for the prior year period.

EBITDA was $65 million, which includes $6 2 million of transaction costs associated with the <unk> acquisition.

Our board approved an increase in the quarterly distribution to <unk> $98 five per limited partner unit for the quarter ended June 30th this distribution will be paid on August 11th to unitholders of record as of August four 2022, and we remain on track to deliver our 5% target year over year.

At June 30 is 22 detail had a $190 million available capacity on our $1 billion credit facility. Our total debt was $1 5 billion and the total leverage ratio was approximately four seven times, which is well within the five five times currently allowable under our credit facility. Please.

Please note that the balance sheet reflects the <unk> acquisition, which closed on June one. This resulted in an increase in the leverage ratio, we should expect to reduce overtime now I will turn the call over to Blake to discuss the results. Thanks, Ruben and our pipelines and transportation segment, the second quarter 'twenty to contribution margin was $48 four.

Compared to $45 2 million in the second quarter of last year. The increase was primarily attributable to strong refinery utilization rates at Delek U S.

In our wholesale marketing and Terminalling segment contribution margin was $16 million in the second quarter of this year compared to $19 million in the second quarter of last year.

The decrease was primarily driven from lower margins in the West, Texas wholesale business during the second quarter of 'twenty to equity income from our crude oil joint venture pipelines was approximately $7 1 million compared to $6 6 million in the prior year. This.

This increase was mainly driven by strong volumes at both Caddo and Red River Joint ventures, moving to capital expenditures, we spent around $26 7 million in the second quarter of this year, which consisted of $26 3 million of gross spending and 400000 for sustaining maintenance.

The outlook for 'twenty. Two includes total gross capital expenditures of $116 million, including $108 million of growth in the $8 million of maintenance capital. This reflects the early closing of the three bear acquisition and additional growth opportunities in the legacy Permian gathering business based on strong producer demand. We now expect to double D. PG volumes from the fourth quarter.

21 levels by the end of the third quarter of 2002 with that operator can you. Please open the call for questions.

Thanks, Keith we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone floor. If you like using a speakerphone. Please pick up your handset if any.

Dan Your question has been addressed and you would like to withdraw your question. Please press Star then two.

This time, we will talk.

And I think Debbie <unk> option.

Our first question comes from Michael Gucci Mono with Pickering.

<unk> Energy partners. Please go ahead.

Hey, good morning, everyone.

I would just add one question on the the doubling the Permian gathering volumes.

Yes.

Quarter to quarter. It looks like volumes were a little flat I was hoping you could talk through what that ramp looks like and maybe some of the drivers driving the big.

Hockey stick, if you will going into next quarter.

Sure. This is a daily I think what you need to look at it both to what we see both on the pipeline and also on the trucking.

And this is also what we.

Look on both on Q4 and also what we expect it to have in Q3. So if we're combining both the pipeline.

Production along with also the trucking production this is where we're getting into that those label.

Okay got it that's helpful. Thank you.

Thanks, Michael.

Please ask your questions at this time. This concludes our question and answer session I would like to turn the conference back over to Ed again, sorry for any closing remarks.

Thank you so I would like to thank Dane vessels.

Starting in August and joining the call.

To the management team on the turbine at work very hard on this quarter.

The board.

The big support of the board and mostly our employees. Thank you so much and we'll talk next quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

With respect.

With.

With regard.