DKL - Earnings call transcript Q2 2018 | Delek Logistics Partners, LP

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Operator

Good morning. My name is Nora, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. you. Thank Instructions] [Operator you your Johnson, may Keith conference. begin Speaker

Keith Johnson

I’d thank webcast everyone you, results. discuss Nora. joining to morning. Good financial XXXX this Thank for like us second quarter DKL’s to on

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

laws. As is defined term a as statements that this reminder, federal conference securities forward-looking call may contain under

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

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

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

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

Kevin Kremke

position. performance supported second We Keith. our by quarter Thanks, Permian a strong Basin had

prior increase Big the year the and ratio. the from coverage increase compared The margin on our XXXX results year-over-year acquired second X, in record to the to enabled Paline assets our the West leverage Pipeline, gross Our and performance quarter logistics March Texas improvement the ratio improved effective lower period. XXXX, benefit DCF us Spring both drove

Our in year second approximately million million $XX.X the distributable was second in of last the quarter year. cash $XX this to quarter flow compared

This coverage ratio to the our this prior first the quarter, the June million quarterly second to million Based year distribution limited compared is in $X.XX our from per DCF of to Our increase for August period. for XX, year. the our $XXX performance, ended XXXX we an $XXX was EBITDA XX X.X% X.XXx $XX.X increase capacity unit distribution August At on quarter is as $XX.X increase X.XXx million XXXX and This a had our XX. partner DKL distribution be paid unit per facility. increased credit million in quarter to quarter record is distribution which increased to X, is unit. X.X% first on XXnd quarter on of higher our per of available June consecutive unit. of from second our than quarterly is approximately holders and

first quarter Our reduction and leverage total year. credit X.Xx sequential in debt also of on our X.Xx X.Xx well this allowable a basis of the is facility, under was the approximately within million as total a currently from ratio $XXX

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

million In of acquisition segment Marketing second an compared in due our the was $X.X million and Pipelines which to due second from second in quarter quarter of to quarter Big Wholesale an primarily to $X.X year expenses acquisition. in in Pipeline. Paline in margin the $XX.X acquisition this period, $XX.X our in our and million million million $X gross and year increased to This increase due was Operating performance to from the year, $XX.X segment, Texas the period, quarter the $XX.X from increase the Terminalling period. quarter margin. Next, Operating the increase XXXX expenses primarily contribution I’ll This prior Spring operating review in was the the of Big second West was million the to improve million was contribution prior in the In margin XXXX improvement segments. Spring XXXX. primarily million Transportation attributable from the acquisition. and $X the increased second prior to year the primarily

quarter of was last second was of $X.XX in in XXXX day in year. per year West per barrels in barrel $X.XX wholesale prior the day margin compared XX,XXX to the barrel per West period. to Throughput barrels Our compared the per XX,XXX gross Texas quarter second Texas

We Basin to Permian the increased. Texas see in West have as margins drilling has the third continued quarter strong activity in into

over During July, per averaged volumes XX,XXX the just gross $X margin West and day. per averaged in approximately barrels barrel Texas

our in prior of second million this of crude approximately the compared spending joint income year, maintenance. this $X.X of Capital from was were expenditures the equity and of million venture During $X.X period. million $X discretionary in quarter included pipelines of year quarter our oil and the income million $X.X million year to second $X.X approximately

Delek was During reimbursed $XXX,XXX second US. the quarter approximately by

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

maintenance to We expect $X.X be in capital approximately XXXX. reimbursed million of the

between holders receiving transaction. After agreement Logistics affiliate interest XX-XX agreement. federal LP the terms and efforts a Plains agreement terminal on purchase this announced As LP. the I of a Midstream of Energy XXXX. to of formation August to move was the to in DKGP uncertainty the and regulatory membership Green you of On the recall an it affiliate America delays forward terminated an felt America to the update that Partners Terminal DKGP an approval acquire of interest in both wanted from to Midstream approval Delek obtain regulatory venture, was Partners, the unit DKGP in according partners give LLC February of their joint membership X, you purchase interest assets outcome. may not with signed given

While this focused call Basin comments. the are was grow platform. to continuing turn his on not With desired Permian Uzi to closing outcome over that, for we I'll our

Uzi Yemin

morning. Kevin, Thank good you, and

platform build Our is results DKL. for Permian our strategy to Basin widening

We for crude. for are price at advantage Paline crude. benefiting a through our barrels our West refinery of US Permian approximately purchases system operations Delek the to XXX,XXX of Texas marketing crude by provides Also Permian the markets differentials take the Pipeline route shippers supporting in that oil per day and

the Logistics annual $XX.X assets the of Spring and Pipeline, to on of XXXX initiatives the our $XXX quarter completed record expansion we quarter of first basis. the an the acquisition With platform. in through in further million second Basin and quarterly Paline enhanced would of million approximately of XXXX, led have which equate EBITDA a This the Big to Prmian

to aggressively By support are they continue partnering as oil leverage to US, increase the options Delek they our crude to sponsor growing of Permian exploring amount further this opportunities with We the crude position. we're are gathering. evaluating that

per combining partnering should long-term for With that to Delek we the call maintaining Krotz $XX US US of third-party potential approximately questions? Springs continue you with refinery to of at partner Delek growth through create coverage. XX% to with our dropdown can XXXX, while ability open distribution able acquisitions, initiatives be holders. has annual options These should sufficient future Nora, for value will unit distribution EBITDA. In support our are be million the and logistics generate unit organic By at annual with assets we limited its least we growth that, believe the project that potential addition,

Operator

We of from first Instructions] Justin our have from the question [Operator line Raymond Jenkins James.

open is line sir. Your

Justin Jenkins

comments, an incrementally in expect can the you starting the guess we types cemented terms the projects before are maybe at share anything on you there? in just but I timeframe side, Uzi, should of you to announcement? growth see Or this looking your of

Uzi Yemin

are everywhere. I obviously, gathering we need And are, to at DKL area. you the wholesale and actually, the growing. yesterday production been our growth in see is with for Basin crude Well, the the the both And the status for marketing logistics have in need of and the the also Permian growth Midland backbone

with I that discussed the organic area. a we is will surprise in So initiatives few that other be next come like and wouldn’t of things in different months third-party, like combination the something

Justin Jenkins

last on maybe yearend the leverage and now I’m leverage And from to the its balance Kevin? quarter sheet in without curious terminal the by joint venture. return continue work X/XXth little way picked should further from down expect down a to we if

Kevin Kremke

That’s goal. our Absolutely.

don't upcoming work when said, up had then and quarter. we an healthy the in to we the it expect down. leverage bad goes we material change quarters. As the the EBITDA acquisition, We We in make

will continue work to the down. leverage up its So

Justin Jenkins

big has IDR here? the I if to of me, to thoughts trend recently. from And on Any relates structure Simplification then last a structure and DKL. relationship one just that could, the been GPLP

Kevin Kremke

Absolutely. It's heavy minds. on our

are wouldn’t to over We upcoming into will But quarters. eventually because next have expect as looking that. this in will to room we the I XX grow see months the still we the you simplify happen structure.

Operator

from one Baramov of Wells have We Ned Instructions] [Operator Fargo.

is Your sir. open line

Ned Baramov

the the are pursue Plains? termination AMID, initiatives with JV So given Green the of there could with any other purchase that agreement

Uzi Yemin

coming partners, ethanol that GPP, are at that Not at with we any to Rock and terminal. vis-a-vis this terminal think to this North we in wonderful have the or point. the point, Obviously mind nothing GPRE Little get is they but

Ned Baramov

full first owning the line quarter Logistics Big are and assets. these say in operating tracking of your is Spring assets that this then And it. from contributions original Would plan? Got the you with

Kevin Kremke

are they pretty And much line. Absolutely. in

on will that improve to dropdown, we DKL the is in line. continues there that in next that -- -- Krotz be refinery time Springs their we we -- expected that's as call regard to have the another improve performance then far but to We mentioned the mention so continue step

Ned Baramov

Pipeline? one about you then me. maybe more further Could talk the Paline the And expansion for of potential

Kevin Kremke

are Yes, that’s looking we opportunity that another at.

we know, to depends on the third-parties that XX,XXX. you said up. is of appetite sign we've It expanded to As that

potential looking we the are that. being with is the that. next, of a months will in-house is in in at We the done probably and process you on results few notify And There shippers. next that

Ned Baramov

maybe question on West Texas. one And just last

marked a quarter year-over-year this record somewhat but think down per on sequentially. a were margin barrel, volumes and I basis

So I the Permian the think strong. in noted you remain activity

help were volumes you why understand can kind maybe of me down? So

Uzi Yemin

of couple Well, reasons.

all in the know, second, by in First are we And less of pipeline. capacity we merger constrained refinery Big refinery Spring -- other quarter. ran tad of the as all Big a just this Spring

give So us, whatever sell. they we

benefiting we at not is the that’s this that supply that’s can existing area But it's more reason point. the sell this much and DKL from high in margins. So the is

Operator

at [Operator Instructions] There no this are presenters. proceed further time. Please questions

Uzi Yemin

efforts. table friend is. Thank I’d supporting employees like executives here I’d what in for you, I’d of thank their of but company. believing our I’d for thank great making and like to thank us, like you, thank the this the my Nora. the for supporting to around company like company it Board mostly investors the or the for Directors to

talk will Bye. in future. Thank you. you to the We

Operator

This conference today’s concludes call.

may disconnect. You now all

Delek Logistics Partners (DKL) 8 Aug 182018 Q2 Earnings call transcript