DKL - Earnings call transcript Q4 2017 | Delek Logistics Partners, LP

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Operator

Good morning. My name is Jessa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners Fourth Quarter and Full year 2017 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. begin may you Johnson, your conference. Keith

Keith Johnson

XXXX Jessa. everyone for you, Delek Partners full Good webcast morning. thank to Logistics year and quarter like would fourth results. joining discuss I to Thank financial us this on

Uzi Joining Partner's our CFO; well Chairman will of members Kremke, General as Kevin Yemin, other me CEO; our call on as today's be and management team.

under conference call as is defined statements may that forward-looking this Federal contain reminder, Laws. a As Securities term

not foregoing, are of made forward-looking expects during believes, intended this may forward-looking are this deemed historical anticipates, to expressions For any be statements. that fact purpose, statements statements. call Without the plans, statements to be identify similar limiting and the words

in our with and cautioned in latest Commission Securities that our filings and statements Exchange are release. affected these forth by earnings be the You set may important factors

As from actual new undertake any materially result as results results statements. may obligation a discussed forward-looking to a differ We operations or otherwise. forward-looking update future events publicly whether no the result, or statements, information, in of

financial overview that press With Kevin. to the and GAAP remarks. financial our the will Uzi release reporting we be financial GAAP, Generally to in Accounting a website. reconciliation with Accepted will results closing section with turn review Investors these Investor accordance strategic comparable Relations can encouraged in or the begin of non-GAAP Yemin posted on call to financial the On to a certain Principles are which results, non-GAAP of report which addition results. measures is found Kevin In today's call, I'll few over offer

Kevin Kremke

Thanks Keith.

performance line. price on fourth in operations as our from margin Paline improved XXXX volumes XXXX. our had quarter fourth the support year-over-year a Texas and to from Pipeline market continued crude Basin continued Permian performance and to that of the West benefit and in oil operating increase quarter We crude of strong of differentials during related differentials oil Our

was XXXX. $XX.X in fourth the quarter flow of XXXX, $XX.X was approximately cash compared the this quarter third million X.XX for the year. And ratio of Our distributable quarter million to coverage fourth of in the times

coverage million compared for prior was the increased quarter year fourth million XX.X to to EBITDA X.XX ratio Our $XX.X in DCF period. the of times XXXX.

$XXX year XXXX, prior XX.X was compared our to full XX.X For million, EBITDA million year was in in compared million, The the XXXX. million to XX DCF period.

This on of is third DCF holders per higher than February XXth for partner distribution For ratio a unit. quarterly limited X.X% was on February of times. per record as our performance, per increase of X our ended to unit. XXXX, coverage distribution X.XX XXXX the to XXXX This Based unit our and we unit XX increase paid its increased distribution $X.XXX was XX, XXXX. quarter the December our quarterly and quarter consecutive is distribution X.X% fourth quarter from our

facility. we increase million $X.XX on had of in XXXX, a credit per unit, $X.XX At DKL limited distributions partner of is declared approximately declared unit our $XXX over For the XXXX. XX, $XXX capacity per available million December which XX.X%

an well Big total recently the $XXX.X into X was joint times million. debt our X.X be of currently and announced times the $XXX ratio and venture under estimated Taking drop consideration credit is within Our the million facility. our would leverage availability down, proposed total allowable the Spring

or partners million to year $X.XX prior $X.XX was Delek period. in compares XX.X Limited million, the XXXX, XX.X Logistics of net to XX.X which limited prior For in income reported the fourth all partner's net $XX.X or in to year the period. million diluted compared income comment partner per attributable interest quarter unit, of million

quarter the the to of prior the the the million partly of was marketing expenses. to was Pipeline prior This Segment, margin margin services, the was quarter from capacity increase Marketing FERC-regulated due costs in compared Operating fixed Paline employee fourth Pipeline our lower our margin million fourth compared primarily this offset was outside tariff to period. and due employee a increase XX.X for primarily prior of period improvements quarter of with fourth through the pipeline In Pipeline year gross pipeline third-parties per Terminalling increase million in by the the in was east volume outside Operating there Texas expenses agreement. This the primarily XXXX a of and to shippers the the year, established primarily and XXXX review will to year on Pipelines XX,XXX $XX.X XXXX, which near quarter XXXX. segments. million X.X year fourth and In as gathering potential increased system. fee. our the XXXX Wholesale from SALA to from contribution Paline day was year Lion was in barrels segment, on million, I Next, to quarter Texas in $X.X to monthly improved $XX X.X in the The quarter variable in the services and contracted contribution and fourth when System, due an was capacity of operating to $X.X a in million XX.X increased million west attributable prior Transportation of performance fourth period, period, the in million expenses. expenses

day barrels margins XX,XXX approximately Our first averaged barrels to gross West to west of the in the fourth $X.XX XX,XXX year. during and the strong margin in year. $X.XX barrel to quarter Throughput per margin $X.XX in see Texas compared in continued January into prior gross fourth from XXXX, Texas and the barrel day. averaged Texas the barrels in We've volumes to Texas wholesale day quarter per compared prior West per quarter west per in barrel the XX,XXX approximately per per was increased

year in included a discretionary of of of distribution approximately the was to million XXXX period. $X.X. joint spending loss fourth were pipelines of million the the equity approximately income compared and prior approximately X.X XXXX, received During $X.X $X.X venture a quarter quarter million our We in Capital expenditures the X.X in million of of of XXXX, these from maintenance. fourth quarter fourth and $XXX,XXX

fourth quarter million reimbursed $X.X the approximately US. During Delek was by

forecast $XX.X capital total XXXX, includes million XX.X by million, gross which Delek maintenance For of reimbursement is CapEx of before X.X our discretionary US. and million

I'll maintenance CapEx to We expect the call gross of comments. approximately Uzi the With $X.X XXXX, over for turn million total his in XXXX. $XX.X reimbursed to In CapEx that was million. closing be

Uzi Yemin

of the Kevin. We you, record quarter Thank XXXX. fourth quarter of EBITDA during achieved a

quarter. of have quarters, Over the operations $XX our last per three million generated approximately EBITDA

to from Spring. the Big that very Partners great of with fits Green are to volumes as extension The Partners to Pipeline, venture and with support the the Paline areas were partner opportunity These foot an with close to a Spring acquire and our to X. to the in refinery oil recently continued to project near with is the pipeline of to allow the logistics on Delek shipment from to geographic down announced familiar down future, in joint build per expected the capacity expected day on day The of consist this this March drop of joint us strategy, be our with is Paline a we storage is in support the assets XX,XXX logistics terminals. plan that in assets increased drop print. In venture March. a differentials assets XX,XXX Big will Crude pipeline quarter. the completed March growth in work capacity to level during of order effective date from assets Our increase early Green fourth Plains it US tanks from barrels Plains

Logistics new with at Big and EBITDA projects for and is $XXX from revolver. Spring. be on would agreement approximately price assets million. into borrowings In addition, between The The annual a Delek will approximately paid hand on be Delek million these and marketing cash is our entered purchase $XX.X for Delek expected

and venture, distribution would and limited drop the you growth of that the continue continue questions? distribution to XX% our Big least coverage. Jessa, good call unit on per please maintaining should to open holders creating With support partner for XXXX, proposed long-term We believe focus while for joint annual Spring our through unit initiative growth down that, at value

Operator

[Operator of ahead. from Jenkins Justin James. Please comes Raymond question first go line Your from the Instructions]

Justin Jenkins

Great, start maybe Congrats could if morning on Uzi if both on raise or guys. level leverage today, other I good you'd all expect I and of drop could thanks, alternative? in you guess the the maybe Kevin, overtime here, be any remind down and profile announcements what venture some the here financing. your joint us to of may terms comfort is the equity KGP the

Kevin Kremke

do we fund comfortable. of XXX% the down We've to increase revolver. Yes, profile And, expect today joint see thanks under capacity is Justin. we of to both leverage the the the the plenty venture. and DKL to under plan got as more revolver than Obviously drop leverage these would new

So markets our DKL equity do we choppy up equity, term given little the times back as all the we'll today around don't answer it MLP And any have bringing take X we intent to are down revolver. equity, capacity overtime. leverage to sufficient question know of public the a plans any on with near to and under

Justin Jenkins

unlock the any Big does come appreciate and existing down, any thinking on Spring that the Kevin that color drop I opportunities opportunities base, across for with building other thinking Perfect, that you? then organic of asset

Uzi Yemin

is around continue with Spring foot to DK, our are surprised done Big behind the area. great; That gather don't of be expanding to in location on be would as assets build would things Permian the there partnership that looking that. if we but that continue to we come logistics know we carefully our in area and and Obviously, more very print be in the

Justin Jenkins

last one Uzi, I that and on for may thanks Perfect, could expansion. be Paline if

to longer the I volume Any XX,XXX the day. it talked of in plan? a even on up or past that more number progress term we've barrels is higher a bringing a about than think that

Uzi Yemin

project. term, more longer year it's but the two It's not

if it about have are asset that surprised, continues We that, thinking months this over decision announce looking we we couple don't of months, that at be again, full. next on because a the be we to XX made are

Justin Jenkins

it there. leave Thanks I'll Perfect, guys.

Operator

Instructions] Ned question Your from Wells Baramov [Operator of go the next line from Please comes ahead. Fargo.

Ned Baramov

Good morning.

Uzi Yemin

Good morning, Ned.

Ned Baramov

drop assets, I think party. QX, that question plans original the third the Asphalt of a to scheduled for was quick went that obviously So, down your for on

what plan that in happened about can the internally talk maybe drove you since change the original just announcement? So

Uzi Yemin

question. all California for core That's is Ned, not said us. we along that market a a great

I two At that feel the sell the that them don't picked party And as assets. we having Big EBITDA, because the same are we will fits we terminals at and partnership third good third our with work more opportunity the It fits to with that this - our a higher Spring profile are with in EBITDA. because also great are assets didn't in of areas got to have better much area. losing our it partnership that that we down we assets these in. area. we in they operation they when So, than party came that much drop time And GPRE, think Asphalt feel do any together

Ned Baramov

Got transaction. can And then logistics moving is is it, any wells that then salt EBITDA marketing by DK the on the units of not as Big taking maybe why strength you well? assets, quantify Spring this to reason just any that's and generated within there in

Uzi Yemin

now. enough for revolver to marketing that we we DK will and challenging necessary units the just breakdown to I'll say we at time, the all our take the of in the come then know have don't assets. as as market And on path want actually it unit that will doesn't me. We holders, yield to market front same believe capacity growth the our wasn't because allow reason is - drop dilute MLP is have don't the the down then that great we show down. I

Ned Baramov

I the of one, levels. couple if may, a so increase. your number I a then there was was QX to wondering in and it, relative what significant Got items increase inventory drove historical in just housekeeping

Uzi Yemin

Assaf, you take to that? want

Assaf Ginzburg

are third noble [ph], from it ended from agreement related party Vital of now and fact the our we now or was some in directly inventory bringing to and think with with we that Delek to our I terminal. our

Ned Baramov

it. got Okay,

Uzi Yemin

Expect to overtime. normalize this

Ned Baramov

progress on Okay you the million then program at understood, XX provide on and can if just DK? the buyback update an

Uzi Yemin

obviously is to to the we DKL DK We didn't - did want the to we even this DKL increase bigger initiatives and level flow reasons not our strategic both of of vehicle. quarter, buy one want units decrease more is from and one that the

So we didn't makes buy think it to units. sense

Ned Baramov

makes that thank it, sense. I Got had That's all today, you.

Uzi Yemin

Ned. you, Thank

Operator

over back this the call are There time. further no I'll questions to turn management. at

Uzi Yemin

deliver thank Jessa investors thank to analysts, I'd I the holders, like that our for table, like I'd year thank employees mostly unit many great company colleagues aspects. it us. around this with first what trust Well, growth who morning. to to I'd would you like the make many, thank in helping but my like - this to the us and is thank this the wonderful

be will XXXX and have a that hope similar a Thank Let's year. great day. you

Operator

concludes today's call. conference This

You may disconnect. Thank you. now

Delek Logistics Partners (DKL) 27 Feb 182017 Q4 Earnings call transcript