DKL - Earnings call transcript Q2 2019 | Delek Logistics Partners, LP

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Operator

Good day. My name is Jay and I will be your conference operator for today. At this time, I would like to welcome everyone to Delek’s 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

my Johnson. turn yours. Sir, now to program Mr. Keith the pleasure is today’s to over It floor is

Keith Johnson

Jay. webcast would joining I quarter Good thank results. Thanks for everyone XXXX like financial us discuss to to this DKL's second on morning.

and of of on Chairman Investor well other call members Relations, management General today's CFO; team. Ginzburg, me be Uzi as Assaf Joining our Blake our Yemin, will Partners' CEO; Fernandez, SVP as

Statements as this Federal conference call Forward-Looking defined may As term a under that contain Securities reminder, is Laws.

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

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

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

section to non-GAAP addition results. Accepted Accounting which posted measures, which certain with in our press reporting Investors found financial the Generally of financial Relations In we website. on of release, report is are the results accordance Principles, these reconciliation comparable GAAP to in review the encouraged non-GAAP to the financial measures can Investor be

and will will a remarks. offer today's strategic call, begin Uzi then On review few results financial will a Blake Assi with closing overview

Assi. to call I will that, With the over turn

Assaf Ginzburg

Thank you.

May from Paline our Our contribution Pipeline. Red second and quarter competed from from in our benefited River results improved performance acquisition

of to $XX.X the the second million XXXX, XXXX. of DCF was in million in Our compared approximately second quarter $XX.X quarter

period. was second similar year the compared the to Our year EBITDA prior X.XX period. the of for XXXX, coverage was X.XX million, to $XX which times times in quarter prior DCF is

to a on be XXth XXXX distribution is and consecutive units quarter our quarter performance, first per XX, our than will quarter XXXX second Based the second XX, on unit. distribution is June increased $X.XX increases, ended our This paid for is partner and from August per distribution our quarterly per XX.X% we limited our This X.X% distribution unit. higher increase quarterly XXXX XXXX.

June of of facility. $XXX DKL credit our capacity million XXXX As XX, had million approximately $XXX available on

total and million currently approximately the times leverage Our is debt $XXX credit X.X our within the under ratio total times facility. X.XX was allowable

will turn Now, call Blake to results. the I discuss over the to

Blake Fernandez

Assi. Thanks,

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

our throughput I our want on on second reduced to refinery do turnaround Dorado lower related quarter was assets performance the $XXX,XXX XXXX by which to of El year-over-year basis. a approximately the note, with in

second margin XXXX offset segment, quarter rates due from $XX.X El improved million of the Dorado. reduced attributable lower to compared Pipeline, of million, In Oil $XX.X and the by the second Lion Pipeline throughput Pipelines This partially Transportation was primarily at to contribution operating in System Paline of our was which XXXX. increase quarter the was performance to

rate due period second outside expired the of the in primarily to XXXX. $XX.X February benefited prior at Pipeline Operating increased the tariff from $X.X end expenses of a after and from employee to Paline year services The million higher expenses. incentive the quarter in million

lower Texas second of decrease gross due of which period. lower quarter by in The was to This $XX operating Wholesale Marketing was margin contribution decrease year, and a offset year the expenses. the was segment, million West in $XX.X Terminalling prior margin this partially million

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

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

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

During the second was of quarter XXXX, U.S. approximately reimbursed Delek by XXX,XXX

expenditures $X.X quarter total second the were of million. In capital XXXX,

expenditure which and discretionary by For full-years capital gross our XXXX, $X.X million, of maintenance million reimbursement of capital U.S. Delek $X forecast is of includes $XXX,XXX before

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

With will the to I his comments. for turn closing Uzi call that, over

Uzi Yemin

high-end welcome half well of performing is provided two Thanks, with expect our first increased the asset of DKL, immediate next the The Blake the contributions team. of and to the months at year. Red forecast. and River running upon in in The of to transaction contribution the quarter is an completion we and expansion ownership

in portfolio, potentially being. down allows our the the DK drop for River provides the This from Red it to be time growth. With in next deferred step

deleveraging the Our coverage. and sheet our for is our growth using cash balance focus organic flow supporting opportunities,

IDRs. will grow, As option DKL we continues to evaluate the simplify to

per distribution to limited of XX% distribution least growth support of maintaining while partner With coverage. continued XXXX, at appropriate unit DKL, growth annual this should annual

questions? that, With call for could the you Jay, open please

Operator

Suisse. Instructions] question line of comes of Certainly Spiro from Credit the first Dounis sir. [Operator Our

Your line is open.

Spiro Dounis

down assessing good Uzi, Hey, maybe differing in off we just gentlemen. on comments last if morning, IDRs. those drop around start there potentially

to guidance we the of was but to half shouldn't into comments, both of But updated events. the read in the too much something like fair? around sounds now. been that provided expecting your those specifically the maybe Is half don't really And year in in second second want think here it year. has expect maybe be I earlier that

Assaf Ginzburg

achieve with done Right saw, as results Assaf. enable completing us Red a have would next report This the and for this the to question. coverage. year which very is River you transaction, job Good thank high now we and year very and morning, good very you for good a

At this is simplification. and IDR that point, the the potentially the actually the same drop coverage negatives down thing - with doing

So leverage, decided project to IDR address want today. discussing this then the we while investing is do what we and the overtime, point. at one it of but assess point at coverage to we basically definitely creates build to need in that are to reduce that we simplification, lot do EBITDA, a And will

Spiro Dounis

I it. clear. Got appreciate the That there. is color

and DKL for read Second potential thinking the one eventually. Wink just to throughs about Webster around

more are achieving later the in on that. And then how a ahead a of secondly, on an uplift mentioned. potential sort of on, guys drop that Just you on expect Is we color around the XX% that gathering should levered pipeline? return, upstream XX% basis, provide any just now bit think system can you was that maybe LTV the down little asset of are I you

Uzi Yemin

them. These are great questions and all we can on be of clear

DK First increase DKL Obviously dedicated substantial of Company reported as amount the EBITDA. has. acreage to the that today, that continues from amounts of comes

system. have As for is barrels the barrels of coming because these refining more to the we than barrels to need us are are more matures system outside there and push a system, system, there more and

unleveraged. a We the feel project. undisclosed be decide EBITDA our Webster clearer. to we join is that five in for XX% our is That times The leverage. said will mentioned made are even We always good seven XX% when to the well decision threshold. we to targeting Wink the they this themselves that DK very above Also, that to we another numbers And this project. are partner there partnership is disclose

good feel about we situation. So that

DK all itself that through arm. into or this means will look find XX% is eventually mentioned the at or XX% logistics that least other the leveraging our project into will we and either finance

So we about good EBITDA million feel by $XXX to the XXXX. our ability get to million really to $XXX

Spiro Dounis

color. helpful Great. That congrats. and Blake is Thanks everyone a really

Uzi Yemin

Thanks.

Operator

Thank you.

the from Justin Jenkins of of comes question Raymond next James. Our line

Your line is open.

Justin Jenkins

Good if maybe from everyone. organic can to is on seems I to that topic Thanks. here that growth. the of further expanded? and and that expand Paline can potential some on like emphasis for of Uzi, are growth Pipeline Red guess we River be get you the It related going expansion. But morning the here

Uzi Yemin

great a is that Absolutely, question.

but a coming barrel spoke Longview. and evaluating We Longview down finding into more are long with River time. for that, the Red We about themselves still

project One organic Paline of come the we reasons can is say to from the that our ourselves growth expansion.

months are it announced doing engineering, still look in Company. return if in the We around couple Longview general. and Paline surprised our for particular about next but the like be very And of something in good a also we don't

Justin Jenkins

terms of before follow-up term you coverage longer out kind Uzi to on Got you is targets leverage. ratio looking of put concerns? are and Actually the question start some leverage in that of target it. us here and there you for the in IDRs of the address or can more is any there terms numbers for what Thanks,

Assaf Ginzburg

Sure.

leverage So are around perspective, we what acquisition, to a with are great ready said a we comfortable for form a is little exactly And Red up four. And we leverage did always we this bit. the River. always

leveraged we X.XX to times. know, up you As

With end quickly This us will that be this enable eventually the would the that full. pipeline and of being to below very said, go after construction times. X.XX think we

fair make make perspective, would between you is sure DKL. And all DK coverage know, a simplification the as and everybody. IDR for this negotiation to to want On be decision the the we that

need to would a continue to the get simplification order that that, times to us and In preserve will coverage IDR to really allow we probably X.X to our quickly coverage. do do of and

basically year over is our this a goal next the get half. So to and

Justin Jenkins

it. Thanks Got everyone.

Assaf Ginzburg

Welcome.

Operator

question Fargo. Ned Our of comes from the line Wells Baramov Instructions] next [Operator of

Ned Baramov

Good A the morning. I question. if on may. Thanks for Paline follow-up taking

expansion of match planned Red expansion to in the River? the service the will So timed of be

Uzi Yemin

is project maybe quarters. time to over the two do next quarters, four The three the Paline to

evaluate it just we match, come to like before need to numbers announce and project. we we the So assets with would may generally that

if be if We speak all the we and - same everything come be will it engineering as are would doing time. to I at wouldn't surprised together the

Ned Baramov

Texas what of question these of per maintain in another to ability the margins the And quarter with discussed going $X.XX margins, range could strong normalized to the on level in I higher we versus think about $X.XX there DKL’s in West you. then Got have seems maybe was terms it talk past the you forward? barrel, $X.XX,

Uzi Yemin

way the they the the shipping because in $X.XX is, was today are, $X.XX. just card I $X.XXX is from to Well thing goals, on with don't Magellan much ever value the

is without that. on terminalling like this So anything

the that So if floor you $X. is or just $X.XX take

see Now, the we strong, tremendous is market amount obviously of drilling. very a

think So, I we Blake in July saw $X.XX. mentioned that

So - - year, unless drilling We rest fall off good the should see the continue we something cliff. margins. for to of the will

Ned Baramov

Thanks helpful. that is is That had. all I

Uzi Yemin

Thanks Ned.

Operator

time. question There may this are further proceed. Presenters, at no [Operator you Instructions]

Uzi Yemin

Jay. Thanks, like Well, to around everybody the thank I would table.

trust Obviously, great the this thank Company for they make investors put to I like in a to thank table all addition the I Have of talk would it the to will and I would mainly are they us. years, the great team. these I like of welcome and team Specifically, around what great to Board the to work each thank would the is. we of Company for one again, Directors Blake, you Management like putting employees in to who my future. this would colleagues for like hard the to day, you the together.

Operator

again you call. conference joining concludes This today's for today. Thank us

may Have day. great a You now disconnect.

Delek Logistics Partners (DKL) 5 Aug 192019 Q2 Earnings call transcript