8-K
Delek Logistics Partners, LP (DKL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 7, 2022
Date of Report (Date of earliest event reported)
DELEK LOGISTICS PARTNERS, LP
(Exact name of registrant as specified in its charter)
| Delaware | 001-35721 | 45-5379027 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |
| 7102 Commerce Way | Brentwood | Tennessee | 37027 |
| (Address of Principal Executive) | (Zip Code) |
(615) 771-6701
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Units Representing Limited Partner Interests | DKL | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition
On November 7, 2022, Delek Logistics Partners, LP (the “Partnership”) announced its financial results for the quarter ended September 30, 2022. The full text of the press release is furnished as Exhibit 99.1 hereto.
The information in the attached Exhibit is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” on Form 8-K. The information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| 99.1 | Press Release of Delek Logistics Partners issued on November 7, 2022. |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 7, 2022 | DELEK LOGISTICS PARTNERS, LP |
|---|---|
| By: Delek Logistics GP, LLC | |
| its General Partner | |
| /s/ Reuven Spiegel | |
| Name: Reuven Spiegel | |
| Title: Executive Vice President and Chief Financial Officer<br><br>(Principal Financial Officer) |
Document
Exhibit 99.1
Delek Logistics Partners, LP Reports Third Quarter 2022 Results
•Reported third quarter net income attributable to all partners of $44.7 million
•Record EBITDA of $89.0 million including approximately $4.2 million of adverse acquisition related expenses
•Third quarter adjusted distributable cash flow coverage ratio of 1.62x; Total leverage ratio is 4.35x
•Achieved target to double Delek Permian Gathering volumes from 4Q21 to 3Q22 exit rate
•Amended credit agreement increases liquidity and improves debt maturity profile
•Delivered 39 consecutive quarters of distribution growth with recent increase to $0.99/unit; reflects 4.2% increase y/y
BRENTWOOD, Tenn., November 7, 2022 -- Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") today announced its financial results for the third quarter 2022, with reported net income attributable to all partners of $44.7 million, or $1.03 per diluted common limited partner unit. This compares to net income attributable to all partners of $43.6 million, or $1.00 per diluted common limited partner unit, in the third quarter 2021. Net cash from operating activities was $164.4 million in the third quarter 2022 compared to $74.8 million in the third quarter 2021. Distributable cash flow, as adjusted(1) was $69.9 million in the third quarter 2022, compared to $55.5 million in the third quarter 2021.
For the third quarter 2022, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $89.0 million (including $4.2 million of adverse transaction costs associated with 3 Bear Delaware - NM, LLC) compared to $69.9 million in the third quarter 2021.
Avigal Soreq, President of Delek Logistics' general partner, stated, "The integration of the 3 Bear asset acquisition is beginning to contribute to companywide performance. These assets provide diversification and additional growth opportunities within the portfolio. The legacy Delek Permian Gathering system delivered on our previous guidance to double volumes from the fourth quarter of last year to the third quarter exit rate of this year. Strong refinery utilization rates at Delek US Holdings continue to benefit the surrounding DKL midstream footprint."
Mr. Soreq continued, “In October, DKL amended the Credit Agreement thereby increasing liquidity and improving the maturity profile of the Company. Finally, the Board approved the 39th consecutive increase in the quarterly distribution to $0.99 per unit. This reflects a strong commitment to returning cash to unitholders and demonstrates the strength and stability of the underlying asset base."
Distribution and Liquidity
On October 25, 2022, Delek Logistics declared a quarterly cash distribution of $0.99 per common limited partner unit for the third quarter 2022, which equates to $3.96 per common limited partner unit on an annualized basis. This distribution will be paid on November 10, 2022 to unitholders of record on November 4, 2022. This represents a 0.5% increase from the second quarter 2022 distribution of 0.985 per common limited partner unit, or $3.94 per common limited partner unit on an annualized basis, and a 4.2% increase over Delek Logistics’ third quarter 2021 distribution of 0.95 per common limited partner unit, or $3.80 per common limited partner unit annualized. For the third quarter 2022, the total cash distribution declared to all partners was approximately $43.1 million, resulting in a distributable cash flow coverage ratio, as adjusted(1) of 1.62x.
As of September 30, 2022, Delek Logistics had total debt of approximately $1.45 billion and cash of $14.9 million. Additional borrowing capacity, subject to certain covenants, under the $1.0 billion credit facility was $193.1 million. The total leverage ratio as of September 30, 2022 of approximately 4.35x was well within the requirements of the maximum allowable leverage ratio under the credit facility.
On October 13, 2022, Delek Logistics entered into a fourth amended and restated senior secured revolving credit agreement with Fifth Third, National Association as administrative agent and a syndicate of lenders (the “Amended and Restated Delek Logistics Credit Facility”). The Amended and Restated Delek Logistics Credit Facility, among other things, (i) increased total aggregate commitments to $1.2 billion, comprised of (A) senior secured revolving commitments of $900.0 million in aggregate with an extended maturity date of October 13, 2027, and (B) a new senior secured term loan facility for a term loan in the original principal amount of $300.0 million which was drawn in full on October 13, 2022, with a maturity date of October 13, 2024.
Consolidated Operating Results
Contribution margin in the third quarter 2022 increased to $90.4 million compared to $66.9 million in the third quarter 2021, primarily as a result of an increase in refinery utilization rates at Delek US and incremental contribution margin attributable to the acquisition of 3 Bear Delaware - NM, LLC (the "3 Bear Acquisition") that closed on June 1, 2022. Third quarter 2022 EBITDA of $89.0 million benefited from the increased contribution margin as well as continued strong throughput on joint venture pipelines, offset by $4.2 million of transaction costs associated with the 3 Bear Acquisition, as compared to EBITDA of $69.9 million in the third quarter 2021. Net income attributable to all partners for the third quarter 2022 of $44.7 million reflected an increase of $1.1 million compared to the third quarter 2021, due primarily to an increase of $23.5 million in contribution margin, partially offset by incremental costs related to 3 Bear.
(1) Represents distributable cash flows adjusted to exclude transaction costs associated with the 3 Bear Acquisition. See further discussion of this measure in the discussion of Non-GAAP Disclosures.
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Pipelines and Transportation Segment
Contribution margin in the third quarter 2022 was $54.0 million compared to $47.4 million in the third quarter 2021. The increase was primarily driven from strong refinery utilization rates at Delek US and annual tariff escalations on our pipelines.
Wholesale Marketing and Terminalling Segment
During the third quarter 2022, contribution margin was $18.3 million compared to $19.6 million in the third quarter 2021. The decrease was primarily driven by lower margins resulting from higher operating costs.
3 Bear Operations Segment
During the third quarter 2022, incremental contribution margin of $22.8 million favorably impacted our results. Contribution margin in the 3 Bear Operations Segment is largely driven by production volumes and gathering activities during the quarter. These are a function of both producer activities as well as the Company's capacity, subject to the dedicated acreage agreements and the portions of acreage which have been developed, the extent to which connection points and interconnects have been brought on-line, and the extent to which maintenance or other planned or unplanned operational disruptions may occur.
Investments in Pipeline Joint Ventures Segment
During the third quarter 2022, income from equity method investments was $8.6 million compared to $7.3 million in the third quarter 2021, primarily driven by increased volumes at both Caddo and Red River joint ventures.
Third Quarter 2022 Results | Conference Call Information
Delek Logistics will hold a conference call to discuss its third quarter 2022 results on Monday, November 7, 2022 at 8:30 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekLogistics.com. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. An archived version of the replay will also be available at www.DelekLogistics.com for 90 days.
Investors may also wish to listen to Delek US Holdings, Inc.'s (NYSE: DK) ("Delek US") third quarter 2022 earnings conference call on Monday, November 7, 2022 at 9:30 a.m. Central Time and review Delek US’ earnings press release. Market trends and information disclosed by Delek US may be relevant to Delek Logistics, as it is a consolidated subsidiary of Delek US. Investors can find information related to Delek US and the timing of its earnings release online by going to www.DelekUS.com.
About Delek Logistics Partners, LP
Delek Logistics is a midstream energy master limited partnership headquartered in Brentwood, Tennessee. Through its owned assets and joint ventures located primarily in and around the Permian Basin, the Delaware Basin and other select areas in the Gulf Coast region. Delek Logistics provides gathering, pipeline and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing and terminalling services primarily for intermediate and refined product customers, and water disposal and recycling services. Delek US owns the general partner interest as well as a majority limited partner interest in Delek Logistics, and is also a significant customer.
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 Delek Logistics' contribution margin is derived from Delek US, thereby subjecting us to Delek US' business risks; risks relating to the securities markets generally; risks and costs relating to the age and operational hazards of our assets including, without limitation, costs, penalties, regulatory or legal actions and other effects related to releases, spills and other hazards inherent in transporting and storing crude oil and intermediate and finished petroleum products; the impact of adverse market conditions affecting the utilization of Delek Logistics' assets and business performance, including margins generated by its wholesale fuel business; risks and uncertainties related to the integration of the 3 Bear business following the recent acquisition; risks and uncertainties related to the Covid-19 pandemic; uncertainties regarding future decisions by OPEC regarding production and pricing disputes between OPEC members and Russia; an inability of Delek US to grow as expected as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits; scheduled turnaround activity; the results of our investments in joint ventures; adverse changes in laws including with respect to tax and regulatory matters; and other risks as disclosed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports and filings with the United States Securities and Exchange Commission. Forward-looking statements include, but are not limited to, statements regarding future growth at Delek Logistics; distributions and the amounts and timing thereof; potential dropdown inventory; projected benefits of the 3 Bear acquisition; expected earnings or returns from joint ventures or other acquisitions; expansion projects; ability to create long-term value for our unit holders; financial flexibility and borrowing capacity; and distribution growth of 5% or at all. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek Logistics undertakes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof, except as required by applicable law or regulation
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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 U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:
•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.
•Distributable cash flow, as adjusted for transaction costs, or Distributable cash flow, as adjusted(FN)) - distributable cash flow adjusted to exclude significant, infrequently occurring transaction costs.
Our EBITDA and distributable cash flow measures 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 on a current and on-going basis;
•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.
We believe that the presentation of EBITDA and distributable cash flow measures provide information useful to investors in assessing our financial condition and results of operations and assists in evaluating our ongoing operating performance for current and comparative periods. EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow 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. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in our industry, our definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility. For a reconciliation of EBITDA and distributable cash flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please refer to "Results of Operations" below. See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.
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| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||||||
| (In thousands, except unit and per unit data) | ||||||||||||||
| September 30, 2022 | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 14,945 | $ | 4,292 | ||||||||||
| Accounts receivable | 53,351 | 15,384 | ||||||||||||
| Inventory | 2,490 | 2,406 | ||||||||||||
| Other current assets | 2,424 | 951 | ||||||||||||
| Total current assets | 73,210 | 23,033 | ||||||||||||
| Property, plant and equipment: | ||||||||||||||
| Property, plant and equipment | 1,178,334 | 715,870 | ||||||||||||
| Less: accumulated depreciation | (302,734) | (266,482) | ||||||||||||
| Property, plant and equipment, net | 875,600 | 449,388 | ||||||||||||
| Equity method investments | 248,005 | 250,030 | ||||||||||||
| Customer relationship intangible, net | 203,966 | — | ||||||||||||
| Marketing contract intangible, net | 111,169 | 116,577 | ||||||||||||
| Rights-of-way | 55,230 | 37,280 | ||||||||||||
| Goodwill | 26,609 | 12,203 | ||||||||||||
| Operating lease right-of-use assets | 24,329 | 20,933 | ||||||||||||
| Other non-current assets | 20,122 | 25,627 | ||||||||||||
| Total assets | $ | 1,638,240 | $ | 935,071 | ||||||||||
| LIABILITIES AND DEFICIT | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 53,053 | $ | 8,160 | ||||||||||
| Accounts payable to related parties | 173,170 | 64,423 | ||||||||||||
| Interest payable | 18,012 | 5,024 | ||||||||||||
| Excise and other taxes payable | 6,759 | 5,280 | ||||||||||||
| Current portion of operating lease liabilities | 7,775 | 6,811 | ||||||||||||
| Accrued expenses and other current liabilities | 7,189 | 7,117 | ||||||||||||
| Total current liabilities | 265,958 | 96,815 | ||||||||||||
| Non-current liabilities: | ||||||||||||||
| Long-term debt | 1,448,772 | 898,970 | ||||||||||||
| Asset retirement obligations | 9,152 | 6,476 | ||||||||||||
| Operating lease liabilities, net of current portion | 11,798 | 14,071 | ||||||||||||
| Other non-current liabilities | 16,817 | 22,731 | ||||||||||||
| Total non-current liabilities | 1,486,539 | 942,248 | ||||||||||||
| Total liabilities | 1,752,497 | 1,039,063 | ||||||||||||
| Equity (Deficit): | ||||||||||||||
| Common unitholders - public; 9,180,901 units issued and outstanding at September 30, 2022 (8,774,053 at December 31, 2021) | 168,911 | 166,067 | ||||||||||||
| Common unitholders - Delek Holdings; 34,311,278 units issued and outstanding at September 30, 2022 (34,696,800 at December 31, 2021) | (283,168) | (270,059) | ||||||||||||
| Total deficit | (114,257) | (103,992) | ||||||||||||
| Total liabilities and deficit | $ | 1,638,240 | $ | 935,071 | 4 | |||||||||
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| Condensed Consolidated Statements of Income (Unaudited) | ||||||||||||||
| (In thousands, except unit and per unit data) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net revenues: | ||||||||||||||
| Affiliate | $ | 127,150 | $ | 123,519 | $ | 375,270 | $ | 308,435 | ||||||
| Third-party | 166,875 | 66,108 | 392,086 | 202,583 | ||||||||||
| Net revenues | 294,025 | 189,627 | 767,356 | 511,018 | ||||||||||
| Cost of sales: | ||||||||||||||
| Cost of materials and other | 177,740 | 105,129 | 480,295 | 274,995 | ||||||||||
| Operating expenses (excluding depreciation and amortization presented below) | 25,065 | 17,073 | 62,892 | 46,286 | ||||||||||
| Depreciation and amortization | 19,067 | 9,666 | 41,876 | 29,393 | ||||||||||
| Total cost of sales | 221,872 | 131,868 | 585,063 | 350,674 | ||||||||||
| Operating expenses related to wholesale business (excluding depreciation and amortization presented below) | 836 | 515 | 2,105 | 1,741 | ||||||||||
| General and administrative expenses | 11,959 | 5,898 | 30,826 | 15,933 | ||||||||||
| Depreciation and amortization | 473 | 490 | 1,421 | 1,469 | ||||||||||
| Other operating (income) expense, net | (132) | 273 | (120) | 54 | ||||||||||
| Total operating costs and expenses | 235,008 | 139,044 | 619,295 | 369,871 | ||||||||||
| Operating income | 59,017 | 50,583 | 148,061 | 141,147 | ||||||||||
| Interest expense, net | 22,559 | 14,529 | 53,621 | 35,924 | ||||||||||
| Income from equity method investments | (8,567) | (7,261) | (22,666) | (17,952) | ||||||||||
| Other income, net | (36) | (115) | (39) | (118) | ||||||||||
| Total non-operating expenses, net | 13,956 | 7,153 | 30,916 | 17,854 | ||||||||||
| Income before income tax expense (benefit) | 45,061 | 43,430 | 117,145 | 123,293 | ||||||||||
| Income tax expense (benefit) | 387 | (194) | 793 | 156 | ||||||||||
| Net income attributable to partners | $ | 44,674 | $ | 43,624 | $ | 116,352 | $ | 123,137 | ||||||
| Comprehensive income attributable to partners | $ | 44,674 | $ | 43,624 | $ | 116,352 | $ | 123,137 | ||||||
| Net income per limited partner unit: | ||||||||||||||
| Basic | $ | 1.03 | $ | 1.00 | $ | 2.68 | $ | 2.83 | ||||||
| Diluted | $ | 1.03 | $ | 1.00 | $ | 2.67 | $ | 2.83 | ||||||
| Weighted average limited partner units outstanding: | ||||||||||||||
| Basic | 43,485,779 | 43,454,535 | 43,477,801 | 43,447,739 | ||||||||||
| Diluted | 43,515,960 | 43,468,289 | 43,499,837 | 43,457,857 | ||||||||||
| Cash distribution per common limited partner unit | $ | 0.990 | $ | 0.950 | $ | 2.955 | $ | 3.800 | Delek Logistics Partners, LP | |||||
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| Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | Nine Months Ended September 30, | |||||||||||||
| 2022 | 2021 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net cash provided by operating activities | $ | 297,482 | $ | 222,276 | ||||||||||
| Cash flows from investing activities | ||||||||||||||
| Net cash used in investing activities | (705,087) | (7,971) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Net cash provided by (used) in financing activities | 418,258 | (213,684) | ||||||||||||
| Net increase in cash and cash equivalents | 10,653 | 621 | ||||||||||||
| Cash and cash equivalents at the beginning of the period | 4,292 | 4,243 | ||||||||||||
| Cash and cash equivalents at the end of the period | $ | 14,945 | $ | 4,864 | 5 | |||||||||
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| Reconciliation of Amounts Reported Under U.S. GAAP | ||||||||||||||
| (In thousands) | ||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Reconciliation of Net Income to EBITDA: | ||||||||||||||
| Net income | $ | 44,674 | $ | 43,624 | $ | 116,352 | $ | 123,137 | ||||||
| Add: | ||||||||||||||
| Income tax expense (benefit) | 387 | (194) | 793 | 156 | ||||||||||
| Depreciation and amortization | 19,540 | 10,156 | 43,297 | 30,862 | ||||||||||
| Amortization of marketing contract intangible asset | 1,802 | 1,802 | 5,408 | 5,408 | ||||||||||
| Interest expense, net | 22,559 | 14,529 | 53,621 | 35,924 | ||||||||||
| EBITDA | $ | 88,962 | $ | 69,917 | $ | 219,471 | $ | 195,487 | ||||||
| Reconciliation of net cash from operating activities to distributable cash flow: | ||||||||||||||
| Net cash provided by operating activities | $ | 164,425 | $ | 74,752 | $ | 297,482 | $ | 222,276 | ||||||
| Changes in assets and liabilities | (94,450) | (16,256) | (115,358) | (56,898) | ||||||||||
| Non-cash lease expense | (2,100) | (2,460) | (13,584) | (6,967) | ||||||||||
| Distributions from equity method investments in investing activities | — | 845 | 1,737 | 6,245 | ||||||||||
| Maintenance and regulatory capital expenditures not distributable | (2,143) | (850) | (3,183) | (3,712) | ||||||||||
| Reimbursement from Delek for capital expenditures | 19 | 11 | 5 | 1,588 | ||||||||||
| Accretion of asset retirement obligations | (168) | (116) | (415) | (346) | ||||||||||
| Deferred income taxes | (76) | (138) | (76) | (203) | ||||||||||
| Gain (loss) on sale of assets | 132 | (273) | 120 | (54) | ||||||||||
| Distributable Cash Flow | $ | 65,639 | $ | 55,515 | $ | 166,728 | $ | 161,929 | ||||||
| Transaction costs | 4,211 | — | 10,604 | |||||||||||
| Distributable Cash Flow, as adjusted (1) | $ | 69,850 | $ | 55,515 | $ | 177,332 | $ | 161,929 |
(1) Distributable cash flow adjusted to exclude transaction costs associated with the 3 Bear Acquisition.
| Delek Logistics Partners, LP | ||||||||
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| Distributable Coverage Ratio Calculation | ||||||||
| (In thousands) | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
| Distributions to partners of Delek Logistics, LP | 2022 | 2021 | 2022 | 2021 | ||||
| Limited partners' distribution on common units | $ | 43,057 | $ | 41,286 | $ | 128,493 | $ | 122,100 |
| General partner's distributions | — | — | — | — | ||||
| General partner's incentive distribution rights | — | — | — | — | ||||
| Total distributions to be paid | $ | 43,057 | $ | 41,286 | $ | 128,493 | $ | 122,100 |
| Distributable cash flow | $ | 65,639 | $ | 55,515 | $ | 166,728 | $ | 161,929 |
| Distributable cash flow coverage ratio (1) | 1.52x | 1.34x | 1.30x | 1.33x | ||||
| Distributable cash flow, as adjusted (2) | 69,850 | 55,515 | 177,332 | 161,929 | ||||
| Distributable cash flow coverage ratio, as adjusted (3) | 1.62x | 1.34x | 1.38x | 1.33x |
(1) Distributable cash flow coverage ratio is calculated by dividing distributable cash flow by distributions to be paid in each respective period.
(2) Distributable cash flow adjusted to exclude transaction costs associated with the 3 Bear Acquisition.
(3) Distributable cash flow coverage ratio, as adjusted is calculated by dividing distributable cash flow, as adjusted for transaction costs by distributions to be paid in each respective period.
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| Delek Logistics Partners, LP | ||||||||
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| Segment Data (unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| (In thousands) | 2022 | 2021 | 2022 | 2021 | ||||
| Pipelines and Transportation | ||||||||
| Net revenues: | ||||||||
| Affiliate | $ | 79,395 | $ | 70,879 | $ | 225,711 | $ | 199,591 |
| Third party | 5,883 | 5,323 | 15,978 | 12,021 | ||||
| Total pipelines and transportation | 85,278 | 76,202 | 241,689 | 211,612 | ||||
| Cost of materials and other | 20,004 | 15,170 | 58,272 | 42,595 | ||||
| Operating expenses (excluding depreciation and amortization presented below) | 11,292 | 13,680 | 37,789 | 34,710 | ||||
| Segment contribution margin | $ | 53,982 | $ | 47,352 | $ | 145,628 | $ | 134,307 |
| Depreciation and amortization | $ | 7,847 | $ | 8,056 | $ | 23,668 | $ | 24,918 |
| Capital spending | $ | 21,151 | $ | 2,570 | $ | 50,793 | $ | 9,946 |
| Wholesale Marketing and Terminalling | ||||||||
| Net revenues: | ||||||||
| Affiliates (1) | $ | 45,162 | $ | 52,640 | $ | 144,004 | $ | 108,844 |
| Third party | 102,703 | 60,785 | 300,177 | 190,562 | ||||
| Total wholesale marketing and terminalling | 147,865 | 113,425 | 444,181 | 299,406 | ||||
| Cost of materials and other | 122,614 | 89,959 | 373,126 | 232,400 | ||||
| Operating expenses (excluding depreciation and amortization presented below) | 6,952 | 3,908 | 17,397 | 13,317 | ||||
| Segment contribution margin | $ | 18,299 | $ | 19,558 | $ | 53,658 | $ | 53,689 |
| Depreciation and amortization | $ | 2,640 | $ | 2,100 | $ | 7,641 | $ | 5,944 |
| Capital spending | $ | 278 | $ | 1,566 | $ | 1,337 | $ | 4,580 |
| 3 Bear Operations | ||||||||
| Net revenues: | ||||||||
| Affiliate | $ | 2,593 | $ | — | $ | 5,555 | $ | — |
| Third party | 58,289 | — | 75,931 | — | ||||
| Total 3 Bear | 60,882 | — | 81,486 | — | ||||
| Cost of materials and other | 35,122 | — | 48,897 | — | ||||
| Operating expenses (excluding depreciation and amortization presented below) | 7,657 | — | 9,811 | — | ||||
| Segment contribution margin | $ | 18,103 | $ | — | $ | 22,778 | $ | — |
| Depreciation and amortization | $ | 9,053 | $ | — | $ | 11,988 | $ | — |
| Capital spending | $ | 10,531 | $ | — | $ | 15,642 | $ | — |
| Investments in Pipeline Joint Ventures | ||||||||
| Income from equity method investments | $ | 8,567 | $ | 7,261 | $ | 22,666 | $ | 17,952 |
| Equity method investments contributions | $ | — | $ | — | $ | — | $ | (1,393) |
| Consolidated | ||||||||
| Net revenues: | ||||||||
| Affiliates | $ | 127,150 | $ | 123,519 | $ | 375,270 | $ | 308,435 |
| Third party | 166,875 | 66,108 | 392,086 | 202,583 | ||||
| Total consolidated | 294,025 | 189,627 | 767,356 | 511,018 | ||||
| Cost of materials and other | 177,740 | 105,129 | 480,295 | 274,995 | ||||
| Operating expenses (excluding depreciation and amortization presented below) | 25,901 | 17,588 | 64,997 | 48,027 | ||||
| Contribution margin | 90,384 | 66,910 | 222,064 | 187,996 | ||||
| General and administrative expenses | 11,959 | 5,898 | 30,826 | 15,933 | ||||
| Depreciation and amortization | 19,540 | 10,156 | 43,297 | 30,862 | ||||
| Other operating (income) expense, net | (132) | 273 | (120) | 54 | ||||
| Operating income | $ | 59,017 | $ | 50,583 | $ | 148,061 | $ | 141,147 |
| Capital spending | $ | 31,960 | $ | 4,136 | $ | 67,772 | $ | 14,526 |
(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the Marketing Contract Intangible Acquisition.
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| Delek Logistics Partners, LP | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Segment Capital Spending (1) | ||||||||
| (In thousands) | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
| Pipelines and Transportation | 2022 | 2021 | 2022 | 2021 | ||||
| Maintenance capital spending | $ | 720 | $ | 215 | $ | 2,316 | $ | 1,141 |
| Discretionary capital spending | 20,431 | 2,355 | 48,477 | 8,805 | ||||
| Segment capital spending | $ | 21,151 | $ | 2,570 | 50,793 | 9,946 | ||
| Wholesale Marketing and Terminalling | ||||||||
| Maintenance capital spending | $ | — | $ | 674 | 907 | 1,394 | ||
| Discretionary capital spending | 278 | 892 | 430 | 3,186 | ||||
| Segment capital spending | $ | 278 | $ | 1,566 | 1,337 | 4,580 | ||
| 3 Bear Operations | ||||||||
| Maintenance capital spending | $ | 169 | $ | — | $ | 753 | $ | — |
| Discretionary capital spending | 10,362 | — | 14,889 | — | ||||
| Segment capital spending | $ | 10,531 | $ | — | $ | 15,642 | $ | — |
| Consolidated | ||||||||
| Maintenance capital spending | $ | 889 | $ | 889 | $ | 3,976 | $ | 2,535 |
| Discretionary capital spending | 31,071 | 3,247 | 63,796 | 11,991 | ||||
| Total capital spending | $ | 31,960 | $ | 4,136 | $ | 67,772 | $ | 14,526 |
(1) There were no capital contributions to equity method investments for the nine months ended September 30, 2022.
| Delek Logistics Partners, LP | ||||||||
|---|---|---|---|---|---|---|---|---|
| Segment Data (Unaudited) | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Pipelines and Transportation Segment: | ||||||||
| Throughputs (average bpd) | ||||||||
| El Dorado Assets: | ||||||||
| Crude pipelines (non-gathered) | 87,653 | 81,929 | 81,795 | 60,344 | ||||
| Refined products pipelines to Enterprise Systems | 65,761 | 62,263 | 63,391 | 42,733 | ||||
| El Dorado Gathering System | 14,354 | 14,086 | 16,150 | 14,056 | ||||
| East Texas Crude Logistics System | 23,960 | 18,644 | 20,015 | 24,045 | ||||
| Permian Gathering System (1) | 121,304 | 84,325 | 107,699 | 79,251 | ||||
| Plains Connection System | 184,254 | 131,571 | 166,864 | 120,905 | ||||
| Trucking Assets | 15,763 | 11,450 | 13,606 | 10,655 | ||||
| Wholesale Marketing and Terminalling Segment: | ||||||||
| East Texas - Tyler Refinery sales volumes (average bpd) (2) | 65,396 | 71,847 | 66,473 | 72,791 | ||||
| Big Spring marketing throughputs (average bpd) | 74,238 | 81,880 | 76,135 | 76,680 | ||||
| West Texas marketing throughputs (average bpd) | 10,082 | 10,560 | 10,023 | 10,033 | ||||
| West Texas gross margin per barrel | $ | 4.23 | $ | 3.33 | $ | 3.84 | $ | 3.64 |
| Terminalling throughputs (average bpd) (3) | 142,003 | 144,355 | 138,558 | 142,959 |
(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 Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.
| 8 | ||
|---|---|---|
| 3 Bear Operations Segment: | Three Months Ended September 30, 2022 | Period from June 1 through September 30, 2022 |
| --- | --- | --- |
| Natural Gas Gathering and Processing (Mcfd(1)) | 64,429 | 115,721 |
| Crude Oil Gathering (bpd(2)) | 86,483 | 164,891 |
| Water Disposal and Recycling (bpd(2)) | 69,411 | 125,127 |
(1) Mcfd - average thousand cubic feet per day.
(2) bpd - average barrels per day.
Investor/Media Relations Contacts:
Blake Fernandez, Senior Vice President of Investor Relations and Market Intelligence, 615-224-1312
Media/Public Affairs Contact:
Michael P. Ralsky, Vice President - Public Affairs & ESG, 615-435-1407
Information about Delek Logistics Partners, LP can be found on its website (www.deleklogistics.com), investor relations webpage (ir.deleklogistics.com), news webpage (www.deleklogistics.com/news) and its Twitter account (@DelekLogistics).
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