Delek Logistics(US:DKL)2022-11-07 15:03Financial Data and Key Metrics Changes - The company reported record EBITDA of $89 million for Q3 2022, which includes $4.2 million of transaction costs related to the 3 Bear acquisition [7][11] - Distributable cash flow (DCF) adjusted for 3 Bear transaction costs was approximately $70 million, up from $56 million in Q3 2021, with a DCF coverage ratio of 1.62 times [10] - The quarterly distribution was increased to $0.99 per limited partner unit, marking the 39th consecutive quarter of distribution increases [11] Business Line Data and Key Metrics Changes - The 3 Bear operating segment contributed a margin of $18.1 million in Q3 2022 [13] - The Pipelines and Transportation segment saw a contribution margin of $54 million, an increase from $47.4 million in Q3 2021, attributed to strong refinery utilization rates and annual tariff escalations [14] - The Wholesale Marketing and Terminalling segment's contribution margin decreased to $18.3 million from $19.6 million in Q3 2021, primarily due to higher operating costs [15] - Equity income from crude oil pipeline joint ventures was approximately $8.6 million, up from $7.3 million in the prior year period, driven by strong volumes [16] Market Data and Key Metrics Changes - The company noted strong refinery utilization rates at the Delek U.S. level, contributing positively to business performance [9] Company Strategy and Development Direction - The company is focused on expanding its Gathering and Processing businesses, with growth capital predominantly directed towards these areas [17] - The integration of the 3 Bear acquisition is progressing well, with assets performing in line with initial expectations and additional growth opportunities anticipated [8][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the recovery of the energy industry post-pandemic and the outlook for the Midstream business [9] - There is a positive growth trajectory expected in both the legacy Delek Permian Gathering footprint and the 3 Bear footprint, with a strong growth profile across all business lines [20][21] Other Important Information - The company had $193 million of available capacity under a $1 billion credit facility, with total debt at $1.45 billion [12] - Capital expenditures for Q3 2022 were approximately $32.2 million, with a total outlook for 2022 including $116.9 million in gross capital expenditures [17] Q&A Session Summary Question: Can you update us on the trajectory from here going forward? - Management indicated robust growth in both the pre-existing Delek Permian Gathering footprint and the 3 Bear footprint, with strong growth across all business lines [20] Question: Are we ahead of schedule on the ramp-up for the 3 Bear assets? - Management confirmed that integration has gone well and they are on target with expectations, expressing satisfaction with the progress [22]