Delek Logistics(US:DKL)2019-11-07 22:35Financial Performance - Net revenues for the three months ended September 30, 2019, were $137,556,000, a decrease of 16% from $164,110,000 for the same period in 2018[14] - Operating income for the three months ended September 30, 2019, was $34,729,000, up from $32,624,000 in the prior year, indicating an increase of about 6.4%[14] - Net income attributable to partners for the three months ended September 30, 2019, was $30,530,000, compared to $23,326,000 in the same period last year, marking an increase of about 31%[14] - Net income attributable to partners for the nine months ended September 30, 2019, was $75,112,000, an increase of 9.5% compared to $68,903,000 for the same period in 2018[21] - Net income for the three months ended September 30, 2019, was $14,342 million, representing a 64.5% increase from $8,709 million in the prior year[96] - Net income attributable to partners for the three months ended September 30, 2019, was $30.530 million, compared to $23.326 million for the same period in 2018, reflecting a year-over-year increase of 31.6%[86] Assets and Liabilities - Total assets increased to $767,807,000 as of September 30, 2019, compared to $624,593,000 at December 31, 2018, representing a growth of approximately 23%[10] - Long-term debt rose to $840,765,000 as of September 30, 2019, compared to $700,430,000 at December 31, 2018, reflecting an increase of approximately 20%[10] - Total current liabilities decreased to $32,341,000 as of September 30, 2019, down from $36,505,000 at December 31, 2018, a reduction of approximately 11.9%[10] - The equity method investments increased significantly to $246,998,000 as of September 30, 2019, from $104,770,000 at December 31, 2018, representing a growth of approximately 135%[10] - Current assets increased to $11,618 million as of September 30, 2019, from $6,594 million as of December 31, 2018, reflecting a significant growth[94] Cash Distributions - Cash distributions per limited partner unit increased to $0.880 for the three months ended September 30, 2019, compared to $0.790 for the same period in 2018[14] - The total cash distributions for the three months ended September 30, 2019, were $30.379 million, compared to $25.960 million for the same period in 2018, representing an increase of 5.419 million[90] - Quarterly cash distributions in August 2019 totaled $28.9 million, an increase from $25.0 million in August 2018, representing a year-over-year growth of 11.6%[52] - Cash distributions for the nine months ended September 30, 2019, totaled $83,271,000, compared to $71,845,000 for the same period in 2018, reflecting a 15.9% increase[21] - The Partnership's cash distribution rate is set at $0.88 per unit for Q3 2019, equating to an annualized rate of $3.52 per unit[177] Revenue and Expenses - Total revenue for the three months ended September 30, 2019, was $137.6 million, with lease revenue from affiliates contributing $60.1 million[55] - Revenues for the three months ended September 30, 2019, were $66.6 million, compared to $63.8 million for the same period in 2018, reflecting a year-over-year increase of 4.3%[51] - The Partnership's operating and maintenance expenses for the three months ended September 30, 2019, were $18.3 million, compared to $10.3 million in the same period of 2018, reflecting an increase of 77.5%[51] - General and administrative expenses for the three months ended September 30, 2019, were $4.3 million, significantly higher than $0.8 million in the same period of 2018[51] - Total operating costs and expenses for the three months ended September 30, 2019, were $102.8 million, a decrease of approximately 21.7% from $131.5 million in the same period of 2018[206] Investments and Acquisitions - The company contributed $124.7 million to Red River for a 33% membership interest, with an additional $3.5 million for an expansion project expected to complete in the first half of 2020[94] - The company incurred equity method investment contributions of $137,361,000 during the nine months ended September 30, 2019, compared to $172,000 in the same period of 2018[21] - The total purchase price for the Big Spring Logistic Assets Acquisition was $170.8 million, financed through borrowings under the Partnership's revolving credit facility[36] - A contract intangible asset related to the Marketing Contract Intangible Acquisition was recorded at $144.2 million, amortized over a twenty-year period[39] Debt and Financing - The DKL Credit Facility was increased from $700 million to $850 million, with an accordion feature allowing for an increase to $1 billion[70] - As of September 30, 2019, the outstanding borrowings under the DKL Credit Facility amounted to $596.3 million, with unused credit commitments of $253.7 million[73] - The weighted average interest rate for borrowings under the DKL Credit Facility was approximately 4.9% as of September 30, 2019[72] - The Partnership issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025, with an effective interest rate of approximately 7.2% as of September 30, 2019[80] Regulatory and Environmental Matters - The company expects maintenance and remediation efforts for the Sulphur Springs Release to cost between $4.0 million and $6.0 million[121] - The company anticipates that continuing capital investments will be required to comply with evolving environmental and safety regulations[114] - The company experienced five crude oil releases in 2019 and six in 2018, with remediation efforts at various stages of completion[118] - The company expects regulatory closure for some release sites by the end of 2019, with a few remaining sites expected to close in 2020[118] Market and Operational Insights - The Partnership's operations are significantly influenced by crude oil prices, which affect drilling activity and capital spending in the midstream energy sector[178] - A substantial majority of the Partnership's revenue is derived from long-term commercial agreements with Delek Holdings, which include minimum volume commitments[163] - The Partnership's revenue generation is closely tied to the volumes of crude oil and refined products handled, influenced by supply and demand dynamics[170] - The Partnership manages operating and maintenance expenses to maximize profitability, which include costs associated with terminals and pipelines[173]