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EBITDA of $93.2 million
BRENTWOOD, Tenn., May 8, 2023 /PRNewswire/ -- Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") today announced its financial results for the first quarter 2023, with reported net income attributable to all partners of $37.4 million, or $0.86 per diluted common limited partner unit. This compares to net income attributable to all partners of $39.5 million, or $0.91 per diluted common limited partner unit, in the first quarter 2022. Net cash provided in operating activities was $29.2 million in the first quarter 2023 compared to net cash provided by operating activities of $47.9 million in the first quarter 2022. Distributable cash flow was $61.8 million in the first quarter 2023, compared to $51.7 million in the first quarter 2022.
For the first quarter 2023, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $93.2 million compared to $66.0 million in the first quarter 2022.
"Delek Logistics Partners started 2023 with another record quarter," said Avigal Soreq, President of Delek Logistics' general partner. "Delek Logistics continues to deliver solid operating performance, generating strong cash flow, and progressing growth initiatives. Year over year, we have more than doubled the volume in the Midland Gathering and advanced on new connections in the Delaware and Midland gathering systems. We see great opportunities in these basins and are well positioned to participate."
"In April, the Board approved the 41st consecutive increase in the quarterly distribution to $1.025 per unit. This reflects our strong commitment to unitholders and the strength and stability of the underlying asset base of Delek Logistics," Mr. Soreq concluded.
Distribution and Liquidity
On April 28, 2023, Delek Logistics declared a quarterly cash distribution of $1.025 per common limited partner unit for the first quarter 2023, which equates to $4.10 per common limited partner unit on an annualized basis. This distribution will be paid on May 15, 2023 to unitholders of record on May 8, 2023. This represents a 0.5% increase from the fourth quarter 2022 distribution of $1.020 per common limited partner unit, or $4.080 per common limited partner unit on an annualized basis, and a 4.6% increase over Delek Logistics' first quarter 2022 distribution of $0.980 per common limited partner unit, or $3.92 per common limited partner unit annualized. For the first quarter 2023, the total cash distribution declared to all partners was approximately $44.7 million, resulting in a distributable cash flow coverage ratio of 1.38x.
As of March 31, 2023, Delek Logistics had total debt of approximately $1.71 billion and cash of $11.0 million. Additional borrowing capacity, subject to certain covenants, under the $900.0 million revolving credit facility was $129.4 million. The total leverage ratio as of March 31, 2023 of approximately 4.78x was within the requirements of the maximum allowable leverage ratio under the credit facility.
Consolidated Operating Results
First quarter 2023 EBITDA of $93.2 million benefited from increased contribution from the Delek Permian Gathering system, Delaware Gathering (formerly 3 Bear) acquisition, and continued strong throughput on joint venture pipelines as compared to EBITDA of $66.0 million in the first quarter 2022. Net income attributable to all partners for the first quarter 2023 of $37.4 million reflected a decrease of $2.1 million compared to the first quarter 2022.
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Gathering and Processing Segment
EBITDA in the first quarter 2023 was $55.4 million compared with $32.1 million in the first quarter 2022. The increase was primarily driven from strong contributions from the Midland Gathering System, as well as the Delaware Gathering Assets.
Wholesale Marketing and Terminalling Segment
EBITDA in the first quarter 2023 was $22.0 million, approximately in line with first quarter 2022 EBITDA of $20.7 million.
Storage and Transportation Segment
EBITDA in the first quarter 2023 was $13.4 million compared with $11.1 million in the first quarter 2022. The increase was primarily due to higher utilization and fees.
Investments in Pipeline Joint Ventures Segment
During the first quarter 2023, income from equity method investments was $6.3 million compared to $7.0 million in the first quarter 2022, primarily driven by decreased volumes at the Red River joint venture primarily driven by the Tyler refinery turnaround.
Corporate
EBITDA in the first quarter 2023 was a loss of $4.0 million compared to a loss of $4.9 million in the first quarter 2022.
First Quarter 2023 Results | Conference Call Information
Delek Logistics will hold a conference call to discuss its first quarter 2023 results on Monday, May 8, 2023 at 11:30 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.
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:
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:
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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Delek Logistics Partners, LP | |||
Consolidated Balance Sheets (Unaudited) | |||
(In thousands, except unit and per unit data) | |||
March 31, 2023 | December 31, 2022 | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 10,964 | $ 7,970 | |
Accounts receivable | 60,536 | 53,314 | |
Inventory | 2,656 | 1,483 | |
Other current assets | 2,772 | 2,463 | |
Total current assets | 76,928 | 65,230 | |
Property, plant and equipment: | |||
Property, plant and equipment | 1,273,942 | 1,240,684 | |
Less: accumulated depreciation | (332,814) | (316,680) | |
Property, plant and equipment, net | 941,128 | 924,004 | |
Equity method investments | 243,273 | 257,022 | |
Customer relationship intangible, net | 194,914 | 199,440 | |
Marketing contract intangible, net | 107,563 | 109,366 | |
Rights-of-way, net | 56,397 | 55,990 | |
Goodwill | 27,051 | 27,051 | |
Operating lease right-of-use assets | 24,882 | 24,788 | |
Other non-current assets | 19,481 | 16,408 | |
Total assets | $ 1,691,617 | $ 1,679,299 | |
LIABILITIES AND DEFICIT | |||
Current liabilities: | |||
Accounts payable | $ 23,097 | $ 57,403 | |
Accounts payable to related parties | 4,477 | 6,055 | |
Current portion of long-term debt | 15,000 | 15,000 | |
Interest payable | 16,552 | 5,308 | |
Excise and other taxes payable | 4,349 | 8,230 | |
Current portion of operating lease liabilities | 8,132 | 8,020 | |
Accrued expenses and other current liabilities | 6,367 | 6,202 | |
Total current liabilities | 77,974 | 106,218 | |
Non-current liabilities: | |||
Long-term debt, net of current portion | 1,693,200 | 1,646,567 | |
Operating lease liabilities, net of current portion | 12,175 | 12,114 | |
Asset retirement obligations | 9,509 | 9,333 | |
Other non-current liabilities | 16,181 | 15,767 | |
Total non-current liabilities | 1,731,065 | 1,683,781 | |
Total liabilities | 1,809,039 | 1,789,999 | |
Equity (Deficit): | |||
Common unitholders - public; 9,263,842 units issued and outstanding at March 31, 2023 (9,257,305 at | 170,522 | 172,119 | |
Common unitholders - Delek Holdings; 34,311,278 units issued and outstanding at March 31, 2023 | (287,944) | (282,819) | |
Total deficit | (117,422) | (110,700) | |
Total liabilities and deficit | $ 1,691,617 | $ 1,679,299 |
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Delek Logistics Partners, LP | |||
Consolidated Statement of Income and Comprehensive Income (Unaudited) | |||
(In thousands, except unit and per unit data) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
Net revenues: | |||
Affiliate | $ 124,999 | $ 123,754 | |
Third-party | 118,526 | 82,827 | |
Net revenues | 243,525 | 206,581 | |
Cost of sales: | |||
Cost of materials and other - affiliate | 91,071 | 105,885 | |
Cost of materials and other - third party | 35,025 | 20,309 | |
Operating expenses (excluding depreciation and amortization presented below) | 24,215 | 17,543 | |
Depreciation and amortization | 19,764 | 9,861 | |
Total cost of sales | 170,075 | 153,598 | |
Operating expenses related to wholesale business (excluding depreciation and amortization presented below) | 525 | 564 | |
General and administrative expenses | 7,510 | 5,095 | |
Depreciation and amortization | 1,341 | 474 | |
Loss on disposal of assets | 142 | 12 | |
Total operating costs and expenses | 179,593 | 159,743 | |
Operating income | 63,932 | 46,838 | |
Interest expense, net | 32,581 | 14,250 | |
Income from equity method investments | (6,316) | (7,026) | |
Other income, net | (2) | (1) | |
Total non-operating expenses, net | 26,263 | 7,223 | |
Income before income tax expense | 37,669 | 39,615 | |
Income tax expense | 302 | 101 | |
Net income attributable to partners | $ 37,367 | $ 39,514 | |
Comprehensive income attributable to partners | $ 37,367 | $ 39,514 | |
Net income per limited partner unit: | |||
Basic | $ 0.86 | $ 0.91 | |
Diluted | $ 0.86 | $ 0.91 | |
Weighted average limited partner units outstanding: | |||
Basic | 43,569,963 | 43,471,536 | |
Diluted | 43,585,297 | 43,481,572 | |
Cash distribution per common limited partner unit | $ 1.025 | $ 0.980 |
Delek Logistics Partners, LP | |||
Condensed Consolidated Statements of Cash Flows (In thousands) | Three Months Ended March 31, | ||
(Unaudited) | 2023 | 2022 | |
Cash flows from operating activities | |||
Net cash provided by operating activities | $ 29,190 | $ 47,920 | |
Cash flows from investing activities | |||
Net cash used in investing activities | (26,979) | (12,476) | |
Cash flows from financing activities | |||
Net cash provided by (used in) financing activities | 783 | (37,010) | |
Net increase (decrease) in cash and cash equivalents | 2,994 | (1,566) | |
Cash and cash equivalents at the beginning of the period | 7,970 | 4,292 | |
Cash and cash equivalents at the end of the period | $ 10,964 | $ 2,726 |
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Delek Logistics Partners, LP | |||
Reconciliation of Amounts Reported Under U.S. GAAP | |||
(In thousands) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
Reconciliation of Net Income to EBITDA: | |||
Net income | $ 37,367 | $ 39,514 | |
Add: | |||
Income tax expense | 302 | 101 | |
Depreciation and amortization | 21,105 | 10,335 | |
Amortization of marketing contract intangible asset | 1,803 | 1,803 | |
Interest expense, net | 32,581 | 14,250 | |
EBITDA | $ 93,158 | $ 66,003 | |
Reconciliation of net cash from operating activities to distributable cash flow: | |||
Net cash provided by operating activities | $ 29,190 | $ 47,920 | |
Changes in assets and liabilities | 37,670 | 6,012 | |
Non-cash lease expense | (2,200) | (1,798) | |
Distributions from equity method investments in investing activities | 1,440 | 550 | |
Regulatory capital expenditures not distributable | (4,246) | (807) | |
Reimbursement from (refund to) Delek for capital expenditures | 337 | (15) | |
Accretion of asset retirement obligations | (176) | (124) | |
Deferred income taxes | (111) | — | |
Loss on disposal of assets | (142) | (12) | |
Distributable Cash Flow | $ 61,762 | $ 51,726 |
Delek Logistics Partners, LP | |||
Distributable Coverage Ratio Calculation | |||
(In thousands) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
Distributions to partners of Delek Logistics, LP | $ 44,664 | $ 42,604 | |
Distributable cash flow | $ 61,762 | $ 51,726 | |
Distributable cash flow coverage ratio (1) | 1.38x | 1.21x |
(1) | Distributable cash flow coverage ratio is calculated by dividing distributable cash flow by distributions to be paid in each respective period. |
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Delek Logistics Partners, LP | ||||||||||||
Segment Data (Unaudited) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||
Gathering and | Wholesale | Storage and | Investments in | Corporate and | Consolidated | |||||||
Net revenues: | ||||||||||||
Affiliate (1) | $ 52,761 | $ 33,751 | $ 38,487 | $ — | $ — | $ 124,999 | ||||||
Third party | 39,671 | 78,558 | 297 | — | — | 118,526 | ||||||
Total revenue | $ 92,432 | $ 112,309 | $ 38,784 | $ — | $ — | $ 243,525 | ||||||
Segment EBITDA | $ 55,445 | $ 21,954 | $ 13,422 | $ 6,316 | $ (3,979) | $ 93,158 | ||||||
Depreciation and amortization | 16,447 | 1,689 | 2,102 | — | 867 | 21,105 | ||||||
Amortization of customer contract intangible | — | 1,803 | — | — | — | 1,803 | ||||||
Interest expense, net | — | — | — | — | 32,581 | 32,581 | ||||||
Income tax expense | 302 | |||||||||||
Net income | $ 37,367 | |||||||||||
Capital spending | $ 32,789 | $ 3,116 | $ 196 | $ — | $ — | $ 36,101 |
Three Months Ended March 31, 2022 | ||||||||||||
Gathering and | Wholesale | Storage and | Investments in | Corporate and | Consolidated | |||||||
Net revenues: | ||||||||||||
Affiliate (1) | $ 40,334 | $ 52,731 | $ 30,689 | $ — | $ — | $ 123,754 | ||||||
Third party | 1,710 | 78,045 | 3,072 | — | — | 82,827 | ||||||
Total revenue | $ 42,044 | $ 130,776 | $ 33,761 | $ — | $ — | $ 206,581 | ||||||
Segment EBITDA | $ 32,081 | — | $ 20,734 | — | $ 11,108 | — | $ 7,026 | — | $ (4,946) | $ 66,003 | ||
Depreciation and amortization | 5,841 | 1,378 | 2,096 | — | 1,020 | 10,335 | ||||||
Amortization of customer contract intangible | — | 1,803 | — | — | — | 1,803 | ||||||
Interest expense, net | — | — | — | — | 14,250 | 14,250 | ||||||
Income tax expense | 101 | |||||||||||
Net income | $ 39,514 | |||||||||||
Capital spending | $ 8,855 | $ 231 | $ — | $ — | $ — | $ 9,086 |
(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 | |||
(In thousands) | |||
Three Months Ended March 31, | |||
Gathering and Processing | 2023 | 2022 | |
Regulatory capital spending | $ — | $ 1,961 | |
Sustaining capital spending | — | 25 | |
Growth capital spending | 32,789 | 6,869 | |
Segment capital spending | $ 32,789 | $ 8,855 | |
Wholesale Marketing and Terminalling | |||
Regulatory capital spending | 61 | 82 | |
Sustaining capital spending | 2,931 | 4 | |
Growth capital spending | 124 | 145 | |
Segment capital spending | $ 3,116 | $ 231 | |
Storage and Transportation | |||
Regulatory capital spending | $ 24 | $ — | |
Sustaining capital spending | 172 | — | |
Growth capital spending | $ — | $ — | |
Segment capital spending | $ 196 | $ — | |
Consolidated | |||
Regulatory capital spending | $ 85 | $ 2,043 | |
Sustaining capital spending | 3,103 | 29 | |
Growth capital spending | 32,913 | 7,014 | |
Total capital spending | $ 36,101 | $ 9,086 |
Delek Logistics Partners, LP | |||
Segment Operating Data (Unaudited) | |||
Three Months Ended March 31, | |||
2023 | 2022 | ||
Gathering and Processing Segment: | |||
Throughputs (average bpd) | |||
El Dorado Assets: | |||
Crude pipelines (non-gathered) | 63,528 | 72,872 | |
Refined products pipelines to Enterprise Systems | 55,003 | 59,522 | |
El Dorado Gathering System | 13,872 | 16,156 | |
East Texas Crude Logistics System | 10,508 | 16,056 | |
Midland Gathering System (1): | 222,112 | 100,325 | |
Plains Connection System | 240,597 | 162,007 | |
Delaware Gathering Assets(2): | |||
Natural Gas Gathering and Processing (Mcfd(3)) | 74,716 | n/a | |
Crude Oil Gathering (average bpd) | 103,725 | n/a | |
Water Disposal and Recycling (average bpd) | 88,182 | n/a | |
Wholesale Marketing and Terminalling Segment: | |||
East Texas - Tyler Refinery sales volumes (average bpd) (4) | 34,816 | 70,578 | |
Big Spring marketing throughputs (average bpd) | 78,380 | 75,549 | |
West Texas marketing throughputs (average bpd) | 8,696 | 9,913 | |
West Texas gross margin per barrel | $ 2.58 | $ 3.04 | |
Terminalling throughputs (average bpd) (5) | 93,305 | 137,622 |
(1) | Formerly known as the Permian Gathering Assets. Excludes volumes that are being temporarily transported via trucks while connectors are under construction. |
(2) | Delaware Gathering assets were acquired on Jun 1, 2022. |
(3) | Mcfd - average thousand cubic feet per day. |
(4) | Excludes jet fuel and petroleum coke. |
(5) | 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. |
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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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SOURCE Delek Logistics