Delek logistics partners, lp reports second quarter 2015 results
Brentwood, tenn.--(business wire)--delek logistics partners, lp (nyse: dkl) ("delek logistics") today announced its financial results for the second quarter 2015. for the three months ended june 30, 2015, delek logistics reported net income attributable to all partners of $18.3 million, or $0.70 per diluted limited partner unit. this compares to net income attributable to all partners of $21.8 million, or $0.87 per diluted limited partner unit in the second quarter 2014. distributable cash flow was $20.9 million in the second quarter 2015, compared to $24.0 million in the prior-year period. on a year-over-year basis, improved performance related to acquisitions and the paline pipeline was more than offset by a lower gross margin in the west texas wholesale operations. in the second quarter 2015, the pipeline and transportation segment, which consists of primarily stable fee-based business, accounted for approximately 72 percent of the contribution margin. this is an improvement compared to the second quarter 2014 when the pipeline and transportation segment accounted for 45 percent of contribution margin. uzi yemin, chairman and chief executive officer of delek logistics' general partner, remarked: “our second quarter 2015 performance benefited from our growth over the past year. the combination of acquisitions, including assets purchased from delek us in march 2015, increased contribution from the paline pipeline, and higher volumes in our east texas assets has increased the portion of our business that is fee based. while we did experience a year-over-year decline in our west texas wholesale gross margin, the increased size of our business partially offset that effect on our performance." yemin concluded, "we remain focused on future growth opportunities as work progresses on our pipeline development projects through two joint ventures with unaffiliated third parties that are expected to be completed in mid-2016. in addition, third-party acquisitions continue to be explored, and the recent change in market conditions and commodity prices are beginning to create a more attractive environment. we continue to evaluate opportunities to partner with delek us to provide additional growth, which may be enhanced through delek us' recent investment in alon usa. we ended the quarter with a strong financial position that supports our ability to execute our growth strategies and expect to continue to increase our annual distributions by at least 15 percent going forward." distribution and liquidity on july 27, 2015, delek logistics declared a quarterly cash distribution for the second quarter of $0.55 per limited partner unit, which equates to $2.20 per limited partner unit on an annualized basis. this distribution is payable on august 14, 2015 to unitholders who are of record on august 6, 2015. this represents a 3.8 percent increase from the first quarter 2015 distribution of $0.53 per limited partner unit, or $2.12 per limited partner unit on an annualized basis, and a 15.8 percent increase over delek logistics’ second quarter 2014 distribution of $0.475 per limited partner unit, or $1.90 per limited partner unit annualized. for the second quarter 2015, the total cash distribution declared to all partners was $14.4 million and the distributable cash flow coverage ratio was 1.5 times. as of june 30, 2015, delek logistics had total debt of $316.9 million. availability under the $700.0 million credit facility was $377.6 million. financial results results in the second quarter 2015 compared to the prior year period benefited from the acquisition of the tyler crude oil storage tank and el dorado rail offloading facility, which were acquired on march 31, 2015. for accounting purposes, the expenses from operations prior to the acquisition of the tyler crude oil storage tank and el dorado rail offloading facility are attributed to their respective predecessor periods. for purposes of comparison, results discussed in the text of this press release exclude predecessor costs during the respective periods. however, these costs are shown in the financial statements and a reconciliation is provided in the tables attached to this release. revenue for the second quarter 2015 was $172.1 million and contribution margin was $28.8 million, which compares to revenue of $236.3 million and a contribution margin of $30.2 million in the second quarter 2014. total operating expenses were $10.8 million compared to $9.5 million in the second quarter 2014, with the increase primarily due to higher maintenance expense. general and administrative expenses were $3.0 million for the second quarter 2015 compared to $2.2 million in the prior-year period, which was primarily due to higher expenses related to assets acquired over the past year. for the second quarter 2015, ebitda was $25.7 million compared to $27.9 million in the prior year period. pipelines and transportation segment the pipeline and transportation segment's second quarter 2015 contribution margin of $20.9 million improved from $13.8 million in the second quarter 2014. this increase can be attributed to fees associated with the el dorado rail offloading racks and tyler crude oil storage tank purchased on march 31, 2015. in addition, a higher contribution from the paline pipeline due to the new agreements that became effective on january 1, 2015 improved segment performance on a year-over-year basis. under the new paline pipeline agreements, two different third parties each pay a fixed monthly fee allowing them to use their respective capacities on this pipeline, which account for a combined 35,000 barrels per day. the initial term of these agreements is for 18 months beginning january 1, 2015. as a result, the effective incremental revenue per barrel was increased by approximately $1.00 compared to 2014. wholesale marketing and terminalling segment contribution margin for the wholesale marketing and terminalling segment was $8.0 million in the second quarter 2015, compared to $16.4 million in the second quarter 2014. this change on a year-over-year basis was due to a lower gross margin per barrel in the west texas wholesale business. in the west texas wholesale business, throughput was 17,490 barrels per day compared to 17,451 barrels per day in the second quarter 2014. the wholesale gross margin per barrel in west texas decreased to $1.31 and included approximately $1.7 million, or $1.06 per barrel from renewable identification numbers (rins) generated in the quarter. during the second quarter 2014, the wholesale gross margin per barrel was $6.52 and included $1.1 million from rins, or $0.68 per barrel. on a year-over-year basis, declining crude oil prices have reduced drilling activity in west texas, lowering demand in the area and creating a more challenging market, which resulted in a lower gross margin per barrel. in the second quarter 2015, a decline in the market price for ethanol relative to fixed price contracts that were in place reduced the gross margin by approximately $0.8 million in the period. in the second quarter 2014, downtime at refineries in the region created a favorable supply/demand environment, which improved the gross margin per barrel. both terminalling and the east texas marketing throughputs benefited from higher volume at delek us' tyler, texas refinery following the completion of a 15,000 barrel per day expansion project in march 2015. terminalling throughput volume of 113,578 barrels per day during the quarter increased on a year-over-year basis from 98,962 barrels per day in the second quarter 2014 primarily due to higher throughput at the tyler, texas terminal. during the second quarter 2015, volume under the east texas marketing agreement with delek us was 66,860 barrels per day compared to 61,231 barrels per day during the second quarter 2014. project development update in march 2015, delek logistics announced that, through wholly owned subsidiaries, it had entered into two joint ventures (caddo pipeline and rio pipeline) that will construct logistics assets that are expected to serve unaffiliated third parties and subsidiaries of delek us. delek logistics’ total projected investment for the two joint ventures is approximately $91.0 million and will be financed through a combination of cash from operations and borrowings under its revolving credit facility. through june 30, 2015, approximately $18.5 million has been invested in these projects. both of these projects are expected to be constructed by mid-2016. second quarter 2015 results | conference call information delek logistics will hold a conference call to discuss its second quarter 2015 results on august 4, 2015 at 7:00 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. for those who cannot listen to the live broadcast, a telephonic replay will be available through november 4, 2015 by dialing (855) 859-2056, passcode 69595329. 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’ (nyse: dk) second quarter 2015 earnings conference call on august 4, 2015 at 11:30 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 partners, lp, headquartered in brentwood, tennessee, was formed by delek us holdings, inc. (nyse: dk) to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. safe harbor provisions regarding forward-looking statements this press release contains “forward-looking” statements within the meaning of 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 holdings, thereby subjecting us to delek us holdings' 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 affects 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 business of delek logistics; 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. there can be no assurance that actual results will not differ from those expected by management or described in forward-looking statements of delek logistics. delek logistics undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which delek logistics becomes aware of, after the date hereof. factors affecting comparability: the following tables present financial and operational information for the three months and six months ended june 30, 2015 and 2014. on february 10, 2014, delek logistics acquired substantially all of the active storage tanks and product terminal located adjacent to delek us' el dorado refinery (the "el dorado assets"). on march 31, 2015 delek logistics acquired the tyler crude oil storage tank and the el dorado rail offloading facility (the "logistics assets") from delek us. these assets were accounted for as transfers between entities under common control. accordingly, the accompanying financial statements of the partnership have been retrospectively adjusted to include the historical results of these assets. for all periods presented through february 10, 2014, the acquisition date of the el dorado assets, and march 31, 2015, the acquisition date of the logistics assets, the retrospective adjustments were made to the financial statements. the historical results of the el dorado assets and logistics assets, prior to the acquisition dates, are referred to as the "el dorado asset predecessor" and "logistics assets predecessor" in the respective periods. non-gaap disclosures: ebitda and distributable cash flow are non-u.s. gaap supplemental financial measures that management and external users of our combined 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 delek logistics' 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. delek logistics believes that the presentation of ebitda and distributable cash flow provide useful information to investors in assessing its financial condition, its results of operations and cash flow its business is generating. ebitda and distributable cash flow should not be considered as alternatives to net income, operating income, cash from operations 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 its industry, delek logistics' definitions of ebitda and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility. please see the tables below 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. delek logisticspartners, lp logistics assets (1) six monthsended june 30, 2015 logistics assetspredecessor deleklogisticspartners, lp logisticsassets (1) three monthsendedjune 30, 2014 logistics assetspredecessor deleklogisticspartners, lp logisticsassets (1) el doradoterminal andtank assets (2) six monthsended june 30, 2014 logistics assetspredecessor el doradopredecessor 2,541 2,829 3,069 1,899 three months endedjune 30, six months endedjune 30, delek logisticspartners, lp el dorado railoffloadingracks (1) tyler crudeoil storagetank (1) six monthsendedjune 30, 2015 el dorado assetspredecessor tyler assetspredecessor deleklogisticspartners,lp el doradorailoffloadingracks (1) tyler crudeoil storagetank (1) three monthsendedjune 30, 2014 el dorado assetspredecessor tyler assetspredecessor deleklogisticspartners, lp el doradorailoffloadingracks (1) tylercrude oilstoragetank (1) el doradoterminaland tankassets (2) six monthsendedjune 30, 2014 el dorado assetspredecessor tylerpredecessor el doradopredecessor — — six months endedjune 30, pipelines &transportation wholesale marketing& terminalling pipelines &transportation wholesale marketing& terminalling delek logisticspartners, lp predecessor -logistics assets three monthsended june 30,2014 delek logistics partners, lp predecessor -logistics assets three monthsended june 30,2014 pipelines &transportation wholesale marketing& terminalling pipelines &transportation wholesale marketing& terminalling delek logisticspartners, lp predecessor -logistics assets six monthsended june 30,2015 delek logisticspartners, lp predecessor -logistics assets six monthsended june 30,2015 delek logisticspartners, lp predecessor -logistics assets predecessor -el doradostorage tankassets six monthsended june 30,2014 delek logisticspartners, lp predecessor -logistics assets predecessor - el doradoterminal assets six monthsended june 30,2014 three months endedjune 30, six months endedjune 30, deleklogisticspartners, lp predecessor -logistics assets six monthsended june 30, 2015
