Delek Logistics(US:DKL)2021-02-24 15:00Financial Data and Key Metrics Changes - Distributable cash flow (DCF) for Q4 2020 was approximately $56 million, up from $33 million in Q4 2019, representing a significant increase [6] - Net income attributable to all partners increased approximately 88% year-over-year [6] - EBITDA for Q4 2020 was $64 million, a 48% increase compared to the prior year [6] - DCF coverage ratio improved to 1.41 in Q4 2020 from 1.08 in the prior year [6] - Quarterly distribution increased to $0.91 per limited partner unit, marking a 0.6% increase from Q3 2020 and a 2.8% increase from Q4 2019 [7] Business Line Data and Key Metrics Changes - In the Pipelines and Transportation segment, contribution margin rose to $44 million in Q4 2020 from $25 million in Q4 2019, driven by recent asset dropdowns [9] - Operating expenses in the Pipelines and Transportation segment decreased by $10 million year-over-year [9] - In the Wholesale Marketing and Terminalling segment, contribution margin was $18 million in Q4 2020, slightly up from $17 million in the prior year [9] - Equity income from crude oil joint ventures was approximately $6 million, compared to $5 million in the prior year [10] Market Data and Key Metrics Changes - The company had approximately $103 million of available capacity on its $850 million credit facility as of December 31, 2020 [7] - Total debt was approximately $1 billion, with a total leverage ratio of 3.75 times, within the allowable limit of 5.5 times under the credit facility [7] Company Strategy and Development Direction - The company aims for a 5% distribution growth for 2021, supported by strong operational performance and organic projects expected to materialize in Q2 [12][17] - The Wink to Webster Pipeline is set to fully operate in Q4 2021, which may enhance the company's position [18] - The company is undergoing an internal review to identify assets that could strengthen its market position [17][18] Management's Comments on Operating Environment and Future Outlook - Management highlighted a stellar year despite macro headwinds, with significant increases in net income and EBITDA [12] - The company exceeded year-end distribution coverage and leverage ratio targets earlier than expected, providing flexibility for 2021 [12] - Management expressed confidence in achieving the targeted distribution growth without compromising coverage or leverage ratios due to organic growth projects [18] Other Important Information - The company went the entire year without a recordable incident, reflecting positively on employee performance and safety [12] Q&A Session Summary Question: Inquiry about West Texas margins and RINs prices - Management noted that hedging losses impacted Q4 margins despite strong RIN prices, and they expect RIN prices to remain strong into Q1 [14][15] Question: Discussion on growth drivers for EBITDA - Management indicated several organic projects are planned for Q2, which are expected to support EBITDA growth and distribution targets [16][17]