Q3 2022 Delek Logistics Partners LP Earnings Call

On today's call will begin with comments from our goal Rubin will then provide financial overview Todd will review results and then we will have a Q&A session with that I'll turn the call over to alcohol.

Thanks Blake.

<unk> had a record EBITDA this quarter.

We continue to build momentum on several fronts.

Our legacy Permian gathering business met our previously stated targets, which was to double volume between Q4 of 2021 to September of 2022.

This remains a growth engine for our company.

I want to give you an update on our <unk> acquisition.

We are pleased with the progress of the integration the assets are performing in line with our initial expectations and we're excited about additional growth opportunities.

The geographic and product line diversity provided from the acquisition should serve us well into the future tactically and strategically.

Actually our business is benefiting from a strong refinery utilization rates at Delek U S level.

From a macro perspective, the energy industry has recovered from the pandemic and we're optimistic on the outlook for the midstream business I look forward to updating you next quarter with that I will turn the call over to <unk>.

Okay.

Thank you Abigail.

Our distributable cash flow as adjusted for three bear transaction close was approximately $70 million in the third quarter compared to $56 million in the first quarter of 'twenty one hour.

Our DCF coverage ratio as adjusted for transaction cost improved to $1 six two times for the third quarter.

EBITDA was $89 million, which includes $4 2 million of transaction cost associated with the <unk> acquisition.

Our board approved an increase in the quarterly distribution to <unk> 99 per limited partner unit for the quarter ended September 30.

This distribution will be paid on November 10th to unitholders of record on November 4th and this represents 39 consecutive quarters of distribution increases and we remain on track to deliver on our 5% increase year over year.

At September 30th detail had a $193 million of available capacity on the $1 billion credit facility. Our total debt was $1 45 billion.

In October <unk> extended its credit facility to $1 2 billion, including senior secured revolving commitments of $900 million with a maturity date in October 27, and a new secured term loan of $300 million with a maturity date in October 24.

Now I will turn the call over to Todd to discuss the results.

Thanks, Ruben <unk> operating segment and a contribution margin of $18 1 million in the third quarter moving forward. We plan to combine results from our legacy Delek Permian gathering system with the three bear assets to better reflect overall gathering and processing performance for the company.

And our pipelines and transportation segment, the third quarter of 'twenty to contribution margin was $54 million compared to $47 4 million.

In the third quarter of 'twenty one.

The increase was attributable to strong refinery utilization rates at the Delek us refineries and annual tariff escalations on our pipelines.

In our wholesale marketing and Terminalling segment. The contribution margin was $18 3 million in the third quarter compared to $19 6 million in the third quarter of 'twenty. One the decrease was primarily driven by higher operating cost, resulting in lower margins.

During the third quarter of 2022 equity income from our crude oil pipeline <unk> was approximately $8 6 million.

Compared to $7 3 million in the prior year period. This increase was mainly driven by strong volumes at both Caddo and Red River Joint ventures.

Moving to capital expenditures, we spent approximately $32 2 million in the third quarter of 2002, which consisted of $31 $3 million of growth spending and $900000 for sustaining maintenance.

The outlook for 2022 includes total gross capital expenditures of $116 9 million, including a $110 5 million of growth and $6 4 million of maintenance capital.

This includes spending associated with the three bear assets.

I would point out that the company's growth capital is predominantly focused on expanding the gathering and processing businesses.

Operator can you please open the call for questions.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

If youre using a speakerphone please pick up your handset before pressing the keys.

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

At this time, we will pause momentarily to assemble our roster.

And our first question here will come from Michael Cusumano with Pickering Energy Partners. Please go ahead.

Hey, good morning, everyone and congrats on achieving the Permian growth targets.

Hey come on that front can you can you update us on the trajectory from here going forward.

Yes. Michael This is this is tod at this point, we are not ready to disclose any incremental hard numbers, but suffice it to say that we continue to see active and robust growth in both the preexisting delek Permian gathering footprint.

As well as in the <unk> footprint.

And in particular inside the three bear footprint, we see a strong growth profile across all three business lines, the natural gas the water and the oil.

So I think thats kind of where we'd leave it today.

Just to build on Todd commented Southern Gov, I think that in our area on the <unk>, we've seen a very nice increase of fleets.

Carlos alluded to what we're going to see.

During 2020, so we're very optimistic about our acreage in.

Yes.

Got it okay, that's very helpful.

And then if I can follow up on the <unk> side.

We saw pretty strong quarter to quarter sequential volume growth.

I'm wondering if are we ahead of schedule on the ramp up there or is that.

Decent growth trajectory until you get to your <unk>.

I guess like what you underwrote the acquisition.

Hey, Michael It's Blake, Yes, we are very encouraged so far the integration is going really well as.

As you know when we kind of put the original acquisition targets out there they were fairly robust and at this point.

We feel very comfortable that we're on target and in line with our expectations. So we're not changing anything but the communication is that we're very pleased with the progress so far.

Great. That's all for me I appreciate the help guys.

Thanks, Michael Thanks, Michael.

Again, if you have a question you May press star is they want to join the queue.

No further questions. We will conclude our question and answer session I would now like to turn the conference back over to <unk> for any closing remarks.

I want to thank the.

The management team.

I'm very proud of the <unk> performance with a record quarter.

I want to thank.

The investor.

With us.

For the long tail and most and foremost to our employees that are doing day to day and night to make this company is good.

Thank you so much and we'll talk again next quarter.

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