Delek Logistics Partners, LP Reports First Quarter 2022 Results
-
Reported first quarter net income attributable to all partners of
$39.5 million -
EBITDA of
$66.0 million represented an increase of 12% y/y - First quarter distributable cash flow coverage ratio of 1.21x and total leverage ratio of approximately 3.3x
-
Declared first quarter distribution of
$0.98 per limited partner unit; reflects 6.5% increase y/y - Planned acquisition of 3Bear builds size and scale, offers geographic and product mix diversity and increases 3rd party revenue
- Permian Gathering business witnessing strong producer activity
-
Delivered 37 consecutive quarters of distribution growth with recent quarterly increase to
$0.98 /unit -
DKL volumes expected to benefit from a lack of major planned turnaround activity in
system in 2022Delek US
For the first quarter 2022, earnings before interest, taxes, depreciation and amortization ("EBITDA") was
Distribution and Liquidity
On
As of
Financial Results
Contribution margin in the first quarter 2022 was
Pipelines and Transportation Segment
Contribution margin in the first quarter 2022 was
1 |
Wholesale Marketing and Terminalling Segment
During the first quarter 2022, contribution margin was
Investments in Pipeline Joint Ventures Segment
During the first quarter 2022, income from equity method investments was
First Quarter 2022 Results | Conference Call Information
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About
Safe Harbor Provisions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are "forward-looking statements," as that term is defined under the federal securities laws. These statements contain words such as "possible," "believe," "should," "could," "would," "predict," "plan," "estimate," "intend," "may," "anticipate," "will," "if," "expect" or similar expressions, as well as statements in the future tense, and can be impacted by numerous factors, including the fact that a substantial majority of
Non-GAAP Disclosures:
Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with
- Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.
- Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash.
Delek Logistics believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash. - EBITDA and distributable cash flow are non GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
-
Delek Logistics' operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods; - the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;
-
Delek Logistics' ability to incur and service debt and fund capital expenditures; and - the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
2 |
Delek Logistics believes that the presentation of EBITDA, distributable cash flow and distributable cash flow coverage ratio provide useful information to investors in assessing its financial condition, its results of operations and the cash flow its business is generating. EBITDA, distributable cash flow and distributable cash flow coverage ratio should not be considered in isolation or as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with
Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net income and net cash provided by operating activities. These measures should not be considered substitutes for their most directly comparable
3 |
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Condensed Consolidated Balance Sheets (Unaudited) |
||||
(In thousands, except unit and per unit data) |
||||
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ 2,726 |
|
$ 4,292 |
Accounts receivable |
|
20,350 |
|
15,384 |
Inventory |
|
1,779 |
|
2,406 |
Other current assets |
|
1,466 |
|
951 |
Total current assets |
|
26,321 |
|
23,033 |
Property, plant and equipment: |
|
|
|
|
Property, plant and equipment |
|
724,921 |
|
715,870 |
Less: accumulated depreciation |
|
(276,587) |
|
(266,482) |
Property, plant and equipment, net |
|
448,334 |
|
449,388 |
Equity method investments |
|
249,893 |
|
250,030 |
Operating lease right-of-use assets |
|
19,135 |
|
20,933 |
|
|
12,203 |
|
12,203 |
Marketing contract intangible, net |
|
114,774 |
|
116,577 |
Rights-of-way |
|
39,705 |
|
37,280 |
Other non-current assets |
|
24,901 |
|
25,627 |
Total assets |
|
$ 935,266 |
|
$ 935,071 |
|
|
|
|
|
LIABILITIES AND DEFICIT |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ 12,627 |
|
$ 8,160 |
Accounts payable to related parties |
|
50,282 |
|
64,423 |
Interest payable |
|
16,317 |
|
5,024 |
Excise and other taxes payable |
|
4,023 |
|
5,280 |
Current portion of operating lease liabilities |
|
6,688 |
|
6,811 |
Accrued expenses and other current liabilities |
|
6,327 |
|
7,117 |
Total current liabilities |
|
96,264 |
|
96,815 |
Non-current liabilities: |
|
|
|
|
Long-term debt |
|
905,536 |
|
898,970 |
Asset retirement obligations |
|
6,600 |
|
6,476 |
Operating lease liabilities, net of current portion |
|
12,401 |
|
14,071 |
Other non-current liabilities |
|
20,987 |
|
22,731 |
Total non-current liabilities |
|
945,524 |
|
942,248 |
Total liabilities |
|
1,041,788 |
|
1,039,063 |
Equity (Deficit): |
|
|
|
|
Common unitholders - public; 9,162,504 units issued and outstanding at |
|
170,696 |
|
166,067 |
Common unitholders - |
|
(277,218) |
|
(270,059) |
Total deficit |
|
(106,522) |
|
(103,992) |
Total liabilities and deficit |
|
$ 935,266 |
|
$ 935,071 |
4 |
|
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Condensed Consolidated Statements of Income (Unaudited) |
|||
(In thousands, except unit and per unit data) |
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Net revenues: |
|
|
|
Affiliate |
$ 123,754 |
|
$ 96,194 |
Third-party |
82,827 |
|
56,719 |
Net revenues |
206,581 |
|
152,913 |
Cost of sales: |
|
|
|
Cost of materials and other |
126,194 |
|
81,171 |
Operating expenses (excluding depreciation and amortization presented below) |
17,543 |
|
14,250 |
Depreciation and amortization |
9,861 |
|
10,247 |
Total cost of sales |
153,598 |
|
105,668 |
Operating expenses related to wholesale business (excluding depreciation and amortization presented below) |
564 |
|
561 |
General and administrative expenses |
5,095 |
|
4,105 |
Depreciation and amortization |
474 |
|
492 |
Other operating expense (income), net |
12 |
|
(83) |
Total operating costs and expenses |
159,743 |
|
110,743 |
Operating income |
46,838 |
|
42,170 |
Interest expense, net |
14,250 |
|
9,737 |
Income from equity method investments |
(7,026) |
|
(4,049) |
Other (income) expense, net |
(1) |
|
31 |
Total non-operating expenses, net |
7,223 |
|
5,719 |
Income before income tax expense |
39,615 |
|
36,451 |
Income tax expense |
101 |
|
184 |
Net income attributable to partners |
$ 39,514 |
|
$ 36,267 |
Comprehensive income attributable to partners |
$ 39,514 |
|
$ 36,267 |
|
|
|
|
Net income per limited partner unit: |
|
|
|
Common units - basic |
$ 0.91 |
|
$ 0.83 |
Common units - diluted |
$ 0.91 |
|
$ 0.83 |
|
|
|
|
Weighted average limited partner units outstanding: |
|
|
|
Common units - basic |
43,471,536 |
|
43,443,336 |
Common units - diluted |
43,481,572 |
|
43,449,059 |
|
|
|
|
Cash distribution per limited partner unit |
$ 0.98 |
|
$ 0.92 |
5 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
||||
|
|
Three Months Ended |
||
|
|
2022 |
|
2021 |
Cash flows from operating activities |
|
|
|
|
Net income |
|
$ 39,514 |
|
$ 36,267 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
10,335 |
|
10,739 |
Non-cash lease expense |
|
1,798 |
|
2,018 |
Amortization of customer contract intangible assets |
|
1,803 |
|
1,803 |
Amortization of deferred revenue |
|
(444) |
|
(538) |
Amortization of deferred financing costs and debt discount |
|
847 |
|
625 |
Income from equity method investments |
|
(7,026) |
|
(4,049) |
Dividends from equity method investments |
|
6,613 |
|
3,730 |
Other non-cash adjustments |
|
492 |
|
274 |
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(4,966) |
|
3,354 |
Inventories and other current assets |
|
112 |
|
1,020 |
Accounts payable and other current liabilities |
|
14,157 |
|
(390) |
Accounts receivable/payable to related parties |
|
(14,141) |
|
7,359 |
Non-current assets and liabilities, net |
|
(1,174) |
|
(480) |
Changes in assets and liabilities |
|
(6,012) |
|
10,863 |
Net cash provided by operating activities |
|
47,920 |
|
61,732 |
Cash flows from investing activities |
|
|
|
|
Purchases of property, plant and equipment |
|
(10,613) |
|
(6,119) |
Proceeds from sales of property, plant and equipment |
|
12 |
|
83 |
Purchases of intangible assets |
|
(2,425) |
|
(474) |
Distributions from equity method investments |
|
550 |
|
3,924 |
Equity method investment contributions |
|
— |
|
(1,379) |
Net cash used in investing activities |
|
(12,476) |
|
(3,965) |
Cash flows from financing activities |
|
|
|
|
Distributions to common unitholders - public |
|
(8,570) |
|
(7,914) |
Distributions to common unitholders - |
|
(33,830) |
|
(31,619) |
Proceeds from revolving credit facility |
|
113,600 |
|
77,500 |
Payments on revolving credit facility |
|
(107,500) |
|
(86,600) |
Payments on finance lease |
|
(710) |
|
— |
Net cash used in financing activities |
|
(37,010) |
|
(48,633) |
Net (decrease) increase in cash and cash equivalents |
|
(1,566) |
|
9,134 |
Cash and cash equivalents at the beginning of the period |
|
4,292 |
|
4,243 |
Cash and cash equivalents at the end of the period |
|
$ 2,726 |
|
$ 13,377 |
Supplemental disclosures of cash flow information: |
|
|
|
|
Cash paid during the period for: |
|
|
|
|
Interest |
|
$ 2,110 |
|
$ 4,937 |
Non-cash investing activities: |
|
|
|
|
Increase in accrued capital expenditures in accounts payable/receivable related parties |
|
$ — |
|
$ 3,119 |
Decrease in accrued capital expenditures and other |
|
$ (1,527) |
|
$ (1,439) |
Non-cash financing activities: |
|
|
|
|
Non-cash lease liability arising from obtaining right of use assets during the period |
|
$ — |
|
$ 2,623 |
6 |
|
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Reconciliation of Amounts Reported Under |
|||
(In thousands) |
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Reconciliation of Net Income to EBITDA: |
|
|
|
Net income |
$ 39,514 |
|
$ 36,267 |
Add: |
|
|
|
Income tax expense |
101 |
|
184 |
Depreciation and amortization |
10,335 |
|
10,739 |
Amortization of customer contract intangible assets |
1,803 |
|
1,803 |
Interest expense, net |
14,250 |
|
9,737 |
EBITDA |
$ 66,003 |
|
$ 58,730 |
|
|
|
|
Reconciliation of net cash from operating activities to distributable cash flow: |
|
|
|
Net cash provided by operating activities |
$ 47,920 |
|
$ 61,732 |
Changes in assets and liabilities |
6,012 |
|
(10,863) |
Non-cash lease expense |
(1,798) |
|
(2,018) |
Distributions from equity method investments in investing activities |
550 |
|
3,924 |
Maintenance and regulatory capital expenditures |
(807) |
|
(515) |
(Refund to) reimbursement from |
(15) |
|
359 |
Accretion of asset retirement obligations |
(124) |
|
(115) |
Deferred income taxes |
— |
|
(65) |
Other operating (expense) income, net |
(12) |
|
83 |
Distributable Cash Flow |
$ 51,726 |
|
$ 52,522 |
|
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Distributable Coverage Ratio Calculation |
|||
(In thousands) |
|||
|
Three Months Ended |
||
Distributions to partners of |
2022 |
|
2021 |
Total distributions to be paid |
$ 42,604 |
|
$ 39,968 |
|
|
|
|
Distributable cash flow |
$ 51,726 |
|
$ 52,522 |
Distributable cash flow coverage ratio (1) |
1.21x |
|
1.31x |
|
|
(1) |
Distributable cash flow coverage ratio is calculated by dividing distributable cash flow by distributions to be paid in each respective period. |
7 |
|
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Segment Data (unaudited) |
|||
(In thousands) |
|||
|
Three Months Ended |
||
|
2022 |
|
2021 |
Pipelines and Transportation |
|
|
|
Net revenues: |
|
|
|
Affiliate |
$ 71,023 |
|
$ 63,048 |
Third party |
4,782 |
|
1,927 |
Total pipelines and transportation |
75,805 |
|
64,975 |
Cost of sales: |
|
|
|
Cost of materials and other |
19,602 |
|
13,079 |
Operating expenses (excluding depreciation and amortization) |
12,958 |
|
10,172 |
Segment contribution margin |
$ 43,245 |
|
$ 41,724 |
Capital spending (1) |
$ 8,149 |
|
$ 5,845 |
|
|
|
|
Wholesale Marketing and Terminalling |
|
|
|
Net revenues: |
|
|
|
Affiliates (2) |
$ 52,731 |
|
$ 33,146 |
Third party |
78,045 |
|
54,792 |
Total wholesale marketing and terminalling |
130,776 |
|
87,938 |
Cost of sales: |
|
|
|
Cost of materials and other |
106,592 |
|
68,092 |
Operating expenses (excluding depreciation and amortization) |
5,149 |
|
4,639 |
Segment contribution margin |
$ 19,035 |
|
$ 15,207 |
Capital spending (1) |
$ 937 |
|
$ 1,954 |
|
|
|
|
Investments in |
|
|
|
Income from equity method investments |
$ (7,026) |
|
$ (4,049) |
Equity method investments contributions |
$ — |
|
$ (1,379) |
|
|
|
|
Consolidated |
|
|
|
Net revenues: |
|
|
|
Affiliates |
$ 123,754 |
|
$ 96,194 |
Third party |
82,827 |
|
56,719 |
Total consolidated |
206,581 |
|
152,913 |
Cost of sales: |
|
|
|
Cost of materials and other |
126,194 |
|
81,171 |
Operating expenses (excluding depreciation and amortization presented below) |
18,107 |
|
14,811 |
Contribution margin |
62,280 |
|
56,931 |
General and administrative expenses |
5,095 |
|
4,105 |
Depreciation and amortization |
10,335 |
|
10,739 |
Other operating expense (income), net |
12 |
|
(83) |
Operating income |
46,838 |
|
42,170 |
Interest expense, net |
14,250 |
|
9,737 |
Income from equity method investments |
(7,026) |
|
(4,049) |
Other (income) expense, net |
(1) |
|
31 |
Total non-operating expenses, net |
7,223 |
|
5,719 |
Income before income tax expense |
39,615 |
|
36,451 |
Income tax expense |
101 |
|
184 |
Net income attributable to partners |
$ 39,514 |
|
$ 36,267 |
Capital spending (1) |
$ 9,086 |
|
$ 7,799 |
|
|
(1) |
There were no capital contributions to equity method investments for the three months ended |
(2) |
Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition. |
8 |
|
|||
Segment Capital Spending (1) |
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(In thousands) |
|||
|
Three Months Ended |
||
Pipelines and Transportation |
2022 |
|
2021 |
Maintenance capital spending |
$ 1,280 |
|
$ 477 |
Discretionary capital spending |
6,869 |
|
5,368 |
Segment capital spending |
8,149 |
|
5,845 |
Wholesale Marketing and Terminalling |
|
|
|
Maintenance capital spending |
792 |
|
39 |
Discretionary capital spending |
145 |
|
1,915 |
Segment capital spending |
937 |
|
1,954 |
Consolidated |
|
|
|
Maintenance capital spending |
2,072 |
|
516 |
Discretionary capital spending |
7,014 |
|
7,283 |
Total capital spending |
$ 9,086 |
|
$ 7,799 |
|
|
(1) |
Capital spending excludes the capital contributions to our equity method investments. There were no equity method investments capital contributions for the three months ended |
|
|
|
|
Segment Data (Unaudited) |
|
|
|
|
Three Months Ended |
||
|
2022 |
|
2021 |
Pipelines and Transportation Segment: |
|
|
|
Throughputs (average bpd) |
|
|
|
El Dorado Assets: |
|
|
|
Crude pipelines (non-gathered) |
72,872 |
|
44,118 |
Refined products pipelines to Enterprise Systems |
59,522 |
|
26,349 |
El Dorado Gathering System |
16,156 |
|
11,880 |
East Texas Crude Logistics System |
16,056 |
|
26,075 |
Permian Gathering System (1) |
100,325 |
|
73,724 |
Plains Connection System |
162,007 |
|
108,361 |
Trucking Assets |
9,306 |
|
10,187 |
|
|
|
|
Wholesale Marketing and Terminalling Segment: |
|
|
|
|
70,578 |
|
71,963 |
|
75,549 |
|
72,927 |
|
9,913 |
|
10,138 |
|
$ 3.04 |
|
$ 3.42 |
Terminalling throughputs (average bpd) (3) |
137,622 |
|
144,539 |
|
|
(1) |
Formerly known as the Big Spring Gathering System. Excludes volumes that are being temporarily transported via trucks while connectors are under construction. |
|
|
(2) |
Excludes jet fuel and petroleum coke. |
|
|
(3) |
Consists of terminalling throughputs at our |
Information about
9 |
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