News Column

Delek Logistics Partners, LP Reports Second Quarter 2014 Results

August 5, 2014

  • EBITDA increased 86% year-over-year to $27.9 million
  • Declared distribution per limited partner unit increased 20.3% year-over-year

    BRENTWOOD, Tenn.--(BUSINESS WIRE)-- Delek Logistics Partners, LP (NYSE: DKL) (“Delek Logistics”) today announced its financial results for the second quarter 2014. For the three months ended June 30, 2014, Delek Logistics reported net income attributable to all partners of $21.8 million, or $0.87 per diluted limited partner unit. This compares to net income attributable to all partners of $11.8 million, or $0.47 per diluted limited partner unit in the second quarter 2013. Distributable cash flow was $24.0 million in the second quarter 2014, compared to $12.8 million in the prior-year period. The increase in year-over-year performance in the second quarter 2014 was attributable to several acquisitions that were completed during the last year, as well as higher margins in the west Texas wholesale business.

    Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics’ general partner, remarked: “Our operations performed very well during the second quarter as they benefited from a favorable wholesale market in west Texas and increased volumes in our Lion Pipeline System. These factors, in addition to the acquisitions completed over the past year were the primary drivers of an increase of 88 percent in our distributable cash flow compared to the second quarter 2013. Our performance so far in 2014 allows us to declare an increase in the second quarter distribution of 20.3 percent per limited partner unit on a year-over-year basis. Our distributable cash flow coverage ratio was 2.0 times for the second quarter which gives us the financial flexibility to drive continued growth in both our operations and distributions going forward.”

    Distribution and Liquidity Update

    On July 28, 2014, Delek Logistics declared a quarterly cash distribution for the second quarter of approximately $11.9 million, or $0.475 per limited partner unit. This distribution which is payable on August 14, 2014, equates to $1.90 per limited partner unit on an annualized basis. This represents an 11.8 percent increase from the first quarter 2014 distribution of $0.425 per limited partner unit, or $1.70 per limited partner unit on an annualized basis, and a 20.3 percent increase over Delek Logistics’ second quarter 2013 distribution of $0.395 per limited partner unit, or $1.58 per limited partner unit annualized. This increase in distribution will result in incentive distribution rights payments to the general partner of Delek Logistics for the first time.

    As of June 30, 2014, Delek Logistics had a cash balance of $2.4 million and total debt was $239.0 million. Availability under the $400.0 million credit facility was $147.5 million.

    Financial Results

    In addition to a higher gross margin per barrel in the west Texas wholesale business on a year-over-year basis, results in the second quarter 2014 benefited from several acquisitions that were completed during the past year. Additional information regarding the acquisitions is discussed in the segment review. For accounting purposes, the expenses from operations prior to the Tyler and El Dorado tank farm and product terminal acquisitions in July 2013 and February 2014, respectively, 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 was $236.3 million and contribution margin was $30.2 million, which compares to revenue of $230.1 million and a contribution margin of $16.1 million in the second quarter 2013. Total operating expenses were $9.5 million compared to $6.1 million in the second quarter 2013. General and administrative expenses were $2.2 million for the second quarter 2014, compared to $1.1 million in the prior-year period. The year-over-year increase in both operating and general and administrative expenses was primarily due to costs resulting from acquisitions. For the second quarter 2014, earnings before interest, taxes, depreciation and amortization, (“EBITDA”) was $27.9 million, which is an increase from $15.0 million in the prior year period.

    Wholesale Marketing and Terminalling Segment

    Contribution margin for the Wholesale Marketing and Terminalling segment was $16.0 million in the second quarter 2014, compared to $7.2 million in the second quarter 2013. The combination of very strong performance in the west Texas wholesale business, which had an increase in contribution margin of $6.5 million on a year-over-year basis, and acquisitions completed over the past year, were the primary factors in the year-over-year increase.

    In west Texas, throughput was 17,451 barrels per day compared to 19,082 barrels per day in the second quarter 2013. However, the wholesale gross margin per barrel in west Texas was $6.52 and included approximately $1.1 million, or $0.68 per barrel from renewable identification numbers (RINs) generated in the quarter. During the second quarter 2013, the wholesale gross margin per barrel was $2.20 and included $2.1 million from RINs, or $1.23 per barrel. This increase in gross margin per barrel was primarily due to a favorable supply/demand balance in the area due to downtime at refineries in the region during the second quarter 2014.

    The Tyler, Texas terminal purchased in July 2013, the North Little Rock, Arkansas terminal purchased in October 2013 and the El Dorado, Arkansas terminal purchased in February 2014, also contributed to this increase in contribution margin from the second quarter 2013. Terminalling throughput volume of 98,962 barrels per day during the quarter increased on a year-over-year basis from 13,961 barrels per day in the second quarter 2013. During the second quarter 2014, volume under the east Texas marketing agreement with Delek US was 61,231 barrels per day compared to 64,973 barrels per day during the second quarter 2013.

    Pipelines and Transportation Segment

    The Pipeline and Transportation segment’s contribution margin of $14.2 million improved from $8.9 million in the second quarter 2013. This increase is primarily attributed to storage fees associated with the Tyler tank farm purchased in July 2013 and the El Dorado tank farm purchased in February 2014. Also, volumes on the Lion Pipeline System were higher on a year-over-year basis as Delek US’ El Dorado refinery increased throughput following the turnaround that it completed during the first quarter 2014. Crude oil (non-gathered) transported on the Lion Pipeline system increased to 59,038 barrels per day in the second quarter 2014 from 49,270 barrels per day in the prior year period. Refined product volume on this system experienced a similar increase.

    Second Quarter 2014 Results | Conference Call Information

    Delek Logistics will hold a conference call to discuss its second quarter 2014 results on August 6, 2014 at 9:00 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 10, 2014 by dialing (855) 859-2056, passcode 73527504. 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 2014 earnings conference call on August 7, 2014 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 relating to the age of our assets and operational hazards of our assets including, without limitation, 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 and six months ended June 30, 2014 and 2013. On July 26, 2013, Delek Logistics acquired from Delek US substantially all of the active storage tanks and the product terminal at Delek US’ Tyler, Texas refinery (the “Tyler Assets”). On February 10, 2014, Delek Logistics acquired substantially all of the active storage tanks and product terminal located at Delek US’ El Dorado refinery (the “El Dorado Assets”). Both the Tyler Assets and El Dorado 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 the Tyler Assets and El Dorado Assets. For all periods presented through July 26, 2013, the date of the Tyler Asset acquisition, and February 10, 2014, the acquisition date of the El Dorado Assets, the retrospective adjustments were made to the financial statements. The historical results of the Tyler and El Dorado assets, prior to each acquisition date, are referred to as the “Predecessors.”

    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 Logistics Partners, LP
    Reconciliation of Amounts Reported Under U.S. GAAP
     
       

    Three Months Ended

    June 30,

       

    Six Months Ended

    June 30,

    ($ in thousands) 2014     2013(2)

    2014(1)

       

    2013(2)

    Reconciliation of EBITDA to net income:
    Net income $ 21,754 $ 6,573 $ 35,483 $ 13,844
    Add:
    Income taxes 281 118 428 240
    Depreciation and amortization 3,532 3,284 7,009 6,825
    Interest expense, net 2,342   752   4,325   1,569  
    EBITDA $ 27,909   $ 10,727   $ 47,245   $ 22,478  
     
    Reconciliation of EBITDA to net cash provided by (used in) operating activities:
    Net cash provided by (used in) operating activities $ 31,211 $ 14,234 $ 44,800 $ 12,214
    Amortization of unfavorable contract liability to revenue 667 667 1,334 1,334
    Amortization of deferred financing costs (317 ) (186 ) (634 ) (374 )
    Accretion of asset retirement obligations (89 ) (88 ) (209 ) (149 )
    Deferred taxes (57 ) 16 (52 ) 17
    Loss on asset disposals (74 ) (74 )
    Unit-based compensation expense (63 ) (112 ) (121 ) (112 )
    Changes in assets and liabilities (5,992 ) (4,674 ) (2,552 ) 7,739
    Income taxes 281 118 428 240
    Interest expense, net 2,342   752   4,325   1,569  
    EBITDA $ 27,909   $ 10,727   $ 47,245   $ 22,478  
     
    Reconciliation of distributable cash flow to EBITDA:
    EBITDA $ 27,909 $ 10,727 $ 47,245 $ 22,478
    Less: Cash interest expense, net 2,025 566 3,691 1,195
    Less: Maintenance and Regulatory capital expenditures 814 2,595 1,597 5,244
    Less: Capital improvement expenditures 154 829 336 1,895
    Add: Reimbursement from Delek for capital expenditures 153 463
    Less: Income tax expense 281 118 428 240
    Add: Non-cash unit-based compensation expense 63 112 121 112
    Less: Amortization of deferred revenue 77 77
    Less: Amortization of unfavorable contract liability 667   667   1,334   1,334  
    Distributable cash flow $ 24,031   $ 6,140   $ 39,980   $ 13,068  
     

    (1) The information presented includes the results of operations of the El Dorado Predecessors. Prior to the El Dorado acquisition on February 10, 2014, the El Dorado Predecessors did not record revenues for intercompany terminalling and storage services.

     

    (2) The information presented includes the results of operations of the Tyler and El Dorado Predecessors. Prior to the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Reconciliation of Amounts Reported Under U.S. GAAP
     
    ($ in thousands)    

    Delek Logistics

    Partners, LP

       

    El Dorado Terminal

    and Tank Assets(1)

    1/1/2014-2/10/2014

       

    Six Months Ended

    June 30, 2014

    El Dorado Predecessor
    Reconciliation of EBITDA to net income:
    Net income (loss) $ 36,426 $ (943 ) $ 35,483
    Add:
    Income taxes 428 428
    Depreciation and amortization 6,895 114 7,009
    Interest expense, net 4,325     4,325  
    EBITDA $ 48,074   $ (829 ) $ 47,245  
     
    Reconciliation of EBITDA to net cash from operating activities:
    Net cash provided by (used in) operating activities $ 45,629 $ (829 ) $ 44,800
    Amortization of unfavorable contract liability to revenue 1,334 1,334
    Amortization of debt issuance costs (634 ) (634 )
    Accretion of asset retirement obligations (215 ) 6 (209 )
    Deferred taxes (52 ) (52 )
    Loss on asset disposals (74 ) (74 )
    Unit-based compensation expense (121 ) (121 )
    Changes in assets and liabilities (2,546 ) (6 ) (2,552 )
    Income taxes 428 428
    Interest expense, net 4,325     4,325  
    EBITDA $ 48,074   $ (829 ) $ 47,245  
     
    Reconciliation of distributable cash flow to EBITDA:
    EBITDA $ 48,074 $ (829 ) $ 47,245
    Less: Cash interest expense, net 3,691 3,691
    Less: Maintenance and Regulatory capital expenditures 1,513 84 1,597
    Less: Capital improvement expenditures 243 93 336
    Add: Reimbursement from Delek for capital expenditures
    Less: Income tax expense 428 428
    Add: Non-cash unit-based compensation expense 121 121
    Less: Amortization of deferred revenue
    Less: Amortization of unfavorable contract liability 1,334     1,334  
    Distributable cash flow $ 40,986   $ (1,006 ) $ 39,980  
     

    (1) The information presented is for the six months ended June 30, 2014, disaggregated to present the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP

    Reconciliation of Amounts Reported Under U.S. GAAP

     
       

    Delek

    Logistics

    Partners, LP

       

    Tyler Terminal

    and Tank

    Assets(1)

       

    El Dorado

    Terminal and

    Tank Assets(1)

       

    Three Months

    Ended June 30,

    2013

    ($ in thousands) Tyler Predecessor

    El Dorado

    Predecessor

    Reconciliation of EBITDA to net income:
    Net income (loss) $ 11,756 $ (2,859 ) $ (2,324 ) $ 6,573
    Add:
    Income taxes 118 118
    Depreciation and amortization 2,372 614 298 3,284
    Interest expense, net 752       752  
    EBITDA $ 14,998   $ (2,245 ) $ (2,026 ) $ 10,727  
     
    Reconciliation of EBITDA to net cash from operating activities:
    Net cash provided by (used in) operating activities $ 18,653 $ (2,225 ) $ (2,194 ) $ 14,234
    Amortization of unfavorable contract liability to revenue 667 667
    Amortization of deferred financing costs (186 ) (186 )
    Accretion of asset retirement obligations (63 ) (23 ) (2 ) (88 )
    Deferred taxes 16 16
    Loss on asset disposals
    Unit-based compensation expense (112 ) (112 )
    Changes in assets and liabilities (4,847 ) 3 170 (4,674 )
    Income taxes 118 118
    Interest expense, net 752       752  
    EBITDA $ 14,998   $ (2,245 ) $ (2,026 ) $ 10,727  
     
    Reconciliation of distributable cash flow to EBITDA:
    EBITDA $ 14,998 $ (2,245 ) $ (2,026 ) $ 10,727
    Less: Cash interest expense, net 566 566
    Less: Maintenance and Regulatory capital expenditures 859 1,403 333 2,595
    Less: Capital improvement expenditures 194 487 148 829
    Add: Reimbursement from Delek for capital expenditures 153 153
    Less: Income tax expense 118 118
    Add: Non-cash unit-based compensation expense 112 112
    Less: Amortization of deferred revenue 77 77
    Less: Amortization of unfavorable contract liability 667         667  
    Distributable cash flow $ 12,782   $ (4,135 )   $ (2,507 ) $ 6,140  
     

    (1) The information presented is for the three months ended June 30, 2013, disaggregated to present the results of operations of the Tyler and El Dorado Predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Reconciliation of Amounts Reported Under U.S. GAAP
     
       

    Delek

    Logistics

    Partners, LP

       

    Tyler Terminal

    and Tank

    Assets(1)

       

    El Dorado

    Terminal and

    Tank Assets(1)

       

    Six Months

    Ended June 30,

    2013

    ($ in thousands) Tyler Predecessor

    El Dorado

    Predecessor

    Reconciliation of EBITDA to net income:
    Net income (loss) $ 23,960 $ (5,694 ) $ (4,422 ) $ 13,844
    Add:
    Income taxes 240 240
    Depreciation and amortization 4,724 1,506 595 6,825
    Interest expense, net 1,569       1,569  
    EBITDA $ 30,493   $ (4,188 ) $ (3,827 ) $ 22,478  
     
    Reconciliation of EBITDA to net cash from operating activities:
    Net cash provided by (used in) operating activities $ 20,633 $ (4,148 ) $ (4,271 ) $ 12,214
    Amortization of unfavorable contract liability to revenue 1,334 1,334
    Amortization of deferred financing costs (374 ) (374 )
    Accretion of asset retirement obligations (98 ) (47 ) (4 ) (149 )
    Deferred taxes 17 17
    Loss on asset disposals
    Unit-based compensation expense (112 ) (112 )
    Changes in assets and liabilities 7,284 7 448 7,739
    Income taxes 240 240
    Interest expense, net 1,569         1,569  
    EBITDA $ 30,493   $ (4,188 )   $ (3,827 ) $ 22,478  
     
    Reconciliation of distributable cash flow to EBITDA:
    EBITDA $ 30,493 $ (4,188 ) $ (3,827 ) $ 22,478
    Less: Cash interest expense, net 1,195 1,195
    Less: Maintenance and Regulatory capital expenditures 1,792 2,905 547 5,244
    Less: Capital improvement expenditures 537 1,066 292 1,895
    Add: Reimbursement from Delek for capital expenditures 463 463
    Less: Income tax expense 240 240
    Add: Non-cash unit-based compensation expense 112 112
    Less: Amortization of deferred revenue 77 77
    Less: Amortization of unfavorable contract liability 1,334         1,334  
    Distributable cash flow $ 25,893   $ (8,159 )   $ (4,666 ) $ 13,068  
     

    (1) The information presented is for the six months ended June 30, 2013, disaggregated to present the results of operations of the Tyler and El Dorado Predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Condensed Consolidated Balance Sheets (Unaudited)
     
        June 30,     December 31,
    2014

    2013(1)

     
    (In thousands)
    ASSETS
    Current assets:
    Cash and cash equivalents $ 2,417 $ 924
    Accounts receivable 37,951 28,976
    Inventory 24,833 17,512
    Deferred tax assets 12 12
    Other current assets 799   341  
    Total current assets 66,012   47,765  
    Property, plant and equipment:
    Property, plant and equipment 266,436 265,388
    Less: accumulated depreciation (45,843 ) (39,566 )
    Property, plant and equipment, net 220,593   225,822  
    Goodwill 11,654 10,454
    Intangible assets, net 11,843 12,258
    Other non-current assets 4,337   5,045  
    Total assets $ 314,439   $ 301,344  
     
    LIABILITIES AND EQUITY
    Current liabilities:
    Accounts payable $ 39,731 $ 26,045
    Accounts payable to related parties 2,596 1,513
    Fuel and other taxes payable 6,733 5,700
    Accrued expenses and other current liabilities 9,270   6,451  
    Total current liabilities 58,330   39,709  
    Non-current liabilities:
    Revolving credit facility 239,000 164,800
    Asset retirement obligations 3,202 3,087
    Deferred tax liabilities 376 324
    Other non-current liabilities 5,593   6,222  
    Total non-current liabilities 248,171   174,433  
    Equity:
    Predecessor division equity 25,161
    Common unitholders - public; 9,384,589 units issued and outstanding at June 30, 2014 (9,353,240 at December 31, 2013) 190,122 183,839
    Common unitholders - Delek; 2,799,258 units issued and outstanding at June 30, 2014 (2,799,258 at December 31, 2013) (243,378 ) (176,680 )
    Subordinated unitholders - Delek; 11,999,258 units issued and outstanding at June 30, 2014 (11,999,258 at December 31, 2013) 67,409 59,386
    General partner - Delek; 493,533 units issued and outstanding at June 30, 2014 (492,893 at December 31, 2013) (6,215 ) (4,504 )
    Total equity 7,938   87,202  
    Total liabilities and equity $ 314,439   $ 301,344  
     

    (1) Includes the historical balances of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets.

     
     
    Delek Logistics Partners, LP
    Condensed Consolidated Statements of Income (Unaudited)
     

     

       

    Three Months Ended

    June 30,

       

    Six Months Ended

    June 30,

    2014     2013(2)

    2014(1)

       

    2013(2)

     
    (In thousands, except unit and per unit data)
    Net sales $ 236,343 $ 230,142 $ 439,870 $ 441,036
    Operating costs and expenses:
    Cost of goods sold 196,574 207,966 368,783 395,826
    Operating expenses 9,544 9,928 18,863 19,009
    General and administrative expenses 2,242 1,521 4,905 3,723
    Depreciation and amortization 3,532 3,284 7,009 6,825
    Loss on asset disposals 74     74    
    Total operating costs and expenses 211,966   222,699   399,634   425,383  
    Operating income 24,377 7,443 40,236 15,653
    Interest expense, net 2,342   752   4,325   1,569  
    Net income before income tax expense 22,035 6,691 35,911 14,084
    Income tax expense 281   118   428   240  
    Net income $ 21,754 $ 6,573 $ 35,483 $ 13,844
    Less: Loss attributable to Predecessors   (5,183 ) (943 ) (10,116 )
    Net income attributable to partners 21,754   11,756   36,426   23,960  
    Comprehensive income attributable to partners $ 21,754   $ 11,756   $ 36,426   $ 23,960  
     

    Less: General partner’s interest in net income, including incentive distribution rights

    (620 ) (234 ) (914 ) (478 )

    Limited partners’ interest in net income

    $ 21,134   $ 11,522   $ 35,512   $ 23,482  
     
    Net income per limited partner unit:
    Common units - (basic) $ 0.88 $ 0.48 $ 1.47 $ 0.98
    Common units - (diluted) $ 0.87 $ 0.47 $ 1.46 $ 0.97
    Subordinated units - Delek (basic and diluted) $ 0.87 $ 0.48 $ 1.47 $ 0.98
     
    Weighted average limited partner units outstanding:
    Common units - basic 12,159,732 12,006,843 12,156,135 12,003,071
    Common units - diluted 12,291,273 12,159,084 12,281,598 12,128,764
    Subordinated units - Delek (basic and diluted) 11,999,258 11,999,258 11,999,258 11,999,258
     
    Cash distribution per limited partner unit $ 0.475 $ 0.395 $ 0.900 $ 0.780
     

    (1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, our Predecessors did not record revenues for intercompany terminalling and storage services.

     

    (2) The information presented includes the results of operations of the Tyler and El Dorado predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013, and El Dorado acquisitions on February 10, 2014, the Predecessor did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Consolidated Statements of Income (Unaudited)
    Reconciliation of Partnership to Predecessor
               

    Delek Logistics

    Partners, LP

    El Dorado Terminal

    and Tank Assets(1)

    1/1/2014-2/10/2014

    Six Months Ended

    June 30, 2014

    El Dorado Predecessor
    (In thousands, except unit and per unit data)
    Net Sales $ 439,870 $ $ 439,870
    Operating costs and expenses:
    Cost of goods sold 368,783 368,783
    Operating expenses 18,080 783 18,863
    General and administrative expenses 4,859 46 4,905
    Depreciation and amortization 6,895 114 7,009
    Loss on asset disposals 74   74  
    Total operating costs and expenses 398,691 943   399,634  
    Operating income (loss) 41,179 (943 ) 40,236
    Interest expense, net 4,325   4,325  
    Net income (loss) before income tax expense 36,854 (943 ) 35,911
    Income tax expense 428   428  
    Net income (loss) $ 36,426 $ (943 ) $ 35,483
    Less: Loss attributable to Predecessors (943 ) (943 )
    Net income attributable to partners $ 36,426 $   $ 36,426  
     

    (1) The information presented is a summary of our results of operations for the six months ended June 30, 2014, disaggregated to present the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Consolidated Statements of Income (Unaudited)
    Reconciliation of Partnership to Predecessor
                   

    Delek

    Logistics

    Partners, LP

    Tyler Terminal

    and Tank

    Assets(1)

    El Dorado

    Terminal and

    Tank Assets(1)

    Three Months

    Ended June 30,

    2013

    Tyler Predecessor

    El Dorado

    Predecessor

    (In thousands, except unit and per unit data)
    Net Sales $ 230,142 $ $ $ 230,142
    Operating costs and expenses:
    Cost of goods sold 207,966 207,966
    Operating expenses 6,067 2,022 1,839 9,928
    General and administrative expenses 1,111 223 187 1,521
    Depreciation and amortization 2,372 614   298   3,284  
    Total operating costs and expenses 217,516 2,859   2,324   222,699  
    Operating income (loss) 12,626 (2,859 ) (2,324 ) 7,443
    Interest expense, net 752     752  
    Net income (loss) before income tax expense 11,874 (2,859 ) (2,324 ) 6,691
    Income tax expense 118     118  
    Net income (loss) $ 11,756 $ (2,859 ) $ (2,324 ) $ 6,573
    Less: Loss attributable to Predecessors (2,859 ) (2,324 ) (5,183 )
    Net income attributable to partners $ 11,756 $   $   $ 11,756  
     

    (1) The information presented is a summary of our results of operations for the three months ended June 30, 2013, disaggregated to present the results of operations of the Tyler Predecessor and the El Dorado Predecessor (the “Predecessors”). Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Consolidated Statements of Income (Unaudited)
    Reconciliation of Partnership to Predecessor
                   

    Delek

    Logistics

    Partners, LP

    Tyler Terminal

    and Tank

    Assets(1)

    El Dorado

    Terminal and

    Tank Assets(1)

    Six Months

    Ended June 30,

    2013

    Tyler Predecessor

    El Dorado

    Predecessor

    (In thousands, except unit and per unit data)
    Net Sales $ 441,036 $ $ $ 441,036
    Operating costs and expenses:
    Cost of goods sold 395,826 395,826
    Operating expenses 11,929 3,672 3,408 19,009
    General and administrative expenses 2,788 516 419 3,723
    Depreciation and amortization 4,724 1,506   595   6,825  
    Total operating costs and expenses 415,267 5,694   4,422   425,383  
    Operating income (loss) 25,769 (5,694 ) (4,422 ) 15,653
    Interest expense, net 1,569     1,569  
    Other expenses
    Net income (loss) before income tax expense 24,200 (5,694 ) (4,422 ) 14,084
    Income tax expense 240     240  
    Net income (loss) $ 23,960 $ (5,694 ) $ (4,422 ) $ 13,844
    Less: Loss attributable to Predecessors (5,694 ) (4,422 ) (10,116 )
    Net income attributable to partners $ 23,960 $   $   $ 23,960  
     

    (1) The information presented is a summary of our results of operations for the six months ended June 30, 2013, disaggregated to present the results of operations of the Tyler Predecessor and the El Dorado Predecessor (the “Predecessors”). Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

     
     
    Delek Logistics Partners, LP
    Condensed Consolidated Statements of Cash Flows (Unaudited)
    (In thousands)
           

    Six Months Ended

    June 30,

    2014(1)

    2013(2)

     
    Cash Flow Data
    Net cash provided by operating activities $ 44,800 $ 12,214
    Net cash used in investing activities (1,933 ) (7,139 )
    Net cash (used in) financing activities (41,374 ) (1,224 )
    Net increase in cash and cash equivalents $ 1,493   $ 3,851  
     

    (1) Includes the historical cash flows of the El Dorado Terminal and Tank Assets.

     

    (2) Adjusted to include the historical cash flows of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets.

     
     
    Delek Logistics Partners, LP
    Segment Data (unaudited)
    (In thousands)
     
        Three Months Ended June 30, 2014

    Pipelines &

    Transportation

       

    Wholesale Marketing

    & Terminalling

        Consolidated
    Net sales $ 23,066 $ 213,277 $ 236,343
    Operating costs and expenses:
    Cost of goods sold 1,130 195,444 196,574
    Operating expenses 7,745 1,799 9,544
    Segment contribution margin $ 14,191 $ 16,034 30,225
    General and administrative expense 2,242
    Depreciation and amortization 3,532
    Loss (gain) on disposal of assets 74
    Operating income $ 24,377
    Total Assets $ 222,115 $ 92,324 $ 314,439
     
    Capital spending
    Regulatory and Maintenance capital spending $ 205 $ 610 $ 815
    Discretionary capital spending 7 146 153
    Total capital spending $ 212 $ 756 $ 968
     
     
     

    Three Months Ended June 30, 2013(1)

    Pipelines &

    Transportation

    Wholesale Marketing

    & Terminalling

    Consolidated
    Net sales $ 13,667 $ 216,475 $ 230,142
    Operating costs and expenses:
    Cost of goods sold 207,966 207,966
    Operating expenses 8,064 1,864 9,928
    Segment contribution margin $ 5,603 $ 6,645 12,248
    General and administrative expense 1,521
    Depreciation and amortization 3,284
    Loss (gain) on disposal of assets
    Operating income $ 7,443
    Total assets $ 217,181 $ 106,475 $ 323,656
     
    Capital spending
    Regulatory and Maintenance capital spending $ 1,721 $ 876 $ 2,597
    Discretionary capital spending 821 7 828
    Total capital spending (2) $ 2,542 $ 883 $ 3,425
     

    (1) The information presented includes the results of operations of our Predecessors. Prior to the Tyler acquisition and the El Dorado acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

     

    (2) Capital spending includes expenditures of $2.4 million incurred in connection with the assets acquired in the Tyler and El Dorado acquisition.

     
     
    Delek Logistics Partners, LP
    Segment Data (Unaudited)
    (In thousands)
     
        Three Months Ended June 30, 2013
    Pipelines & Transportation

    Delek Logistics

    Partners, LP

       

    Predecessor -

    Tyler Storage

    Tank Assets

       

    Predecessor -

    El Dorado Storage

    Tank Assets

       

    Three Months

    Ended June 30,

    2013

    Net Sales $ 13,667 $ $ $ 13,667
    Operating costs and expenses:
    Cost of goods sold
    Operating expenses 4,727 1,710   1,627   8,064
    Segment contribution margin $ 8,940 $ (1,710 ) $ (1,627 ) $ 5,603
     
    Total capital spending $ 365 $ 1,882   $ 295   $ 2,542
     
     
     
    Three Months Ended June 30, 2013
    Wholesale Marketing & Terminalling

    Delek Logistics

    Partners, LP

    Predecessor -

    Tyler Terminal

    Assets

    Predecessor -

    El Dorado

    Terminal Assets

    Three Months

    Ended June 30,

    2013

    Net Sales $ 216,475 $ $ $ 216,475
    Operating costs and expenses:
    Cost of goods sold 207,966 207,966
    Operating expenses 1,340 312   212   1,864
    Segment contribution margin $ 7,169 $ (312 ) $ (212 ) $ 6,645
     
    Total capital spending $ 688 $ 9   $ 186   $ 883
     
     
    Delek Logistics Partners, LP
    Segment Data (unaudited)
    (In thousands)
     
       

    Six Months Ended June 30, 2014(1)

    Pipelines &

    Transportation

       

    Wholesale Marketing

    & Terminalling

        Consolidated
    Net sales $ 43,334 $ 396,536 $ 439,870
    Operating costs and expenses:
    Cost of goods sold 2,256 366,527 368,783
    Operating expenses 14,744 4,119 18,863
    Segment contribution margin $ 26,334 $ 25,890 52,224
    General and administrative expense 4,905
    Depreciation and amortization 7,009
    Loss (gain) on disposal of assets 74
    Operating income $ 40,236
     
    Capital spending
    Regulatory and Maintenance capital spending $ 972 $ 625 $ 1,597
    Discretionary capital spending 177 159 336
    Total capital spending (2) $ 1,149 $ 784 $ 1,933
     

    (1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the El Dorado acquisition, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

     

    (2) Capital spending includes expenditures of $0.2 million incurred in connection with the assets acquired in the El Dorado acquisition.

     
       

    Six Months Ended June 30, 2013(1)

    Pipelines &

    Transportation

       

    Wholesale Marketing

    & Terminalling

        Consolidated
    Net sales $ 27,204 $ 413,832 $ 441,036
    Operating costs and expenses:
    Cost of goods sold 395,826 395,826
    Operating expenses 15,478 3,531 19,009
    Segment contribution margin $ 11,726 $ 14,475 26,201
    General and administrative expense 3,723
    Depreciation and amortization 6,825
    Loss (gain) on disposal of assets
    Operating income $ 15,653
     
    Capital spending
    Regulatory and Maintenance capital spending $ 4,202 $ 1,042 $ 5,244
    Discretionary capital spending 1,856 39 1,895
    Total capital spending (2) $ 6,058 $ 1,081 $ 7,139
     

    (1)The information presented includes the results of operations of our Predecessors. Prior to the Tyler acquisition and the El Dorado acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

     

    (2) Capital spending includes expenditures of $4.8 million incurred in connection with the assets acquired in the Tyler and El Dorado acquisition.

     
     
    Delek Logistics Partners, LP
    Segment Data (Unaudited)
    (In thousands)
     
        Six Months Ended June 30, 2014
    Pipelines & Transportation

    Delek Logistics

    Partners, LP

       

    Predecessor - El Dorado

    Storage Tank Assets

    1/1/2014 - 2/10/2014

       

    Six Months Ended

    June 30, 2014

    Net Sales $ 43,334 $ $ 43,334
    Operating costs and expenses:
    Cost of goods sold 2,256 2,256
    Operating expenses 14,063 681   14,744
    Segment contribution margin $ 27,015 $ (681 ) $ 26,334
     
    Total capital spending $ 936 $ 213   $ 1,149
     
     
     
    Six Months Ended June 30, 2014
    Wholesale Marketing & Terminalling

    Delek Logistics

    Partners, LP

    Predecessor - El Dorado

    Terminal Assets

    1/1/2014 - 2/10/2014

    Six Months Ended

    June 30, 2014

    Net Sales $ 396,536 $ $ 396,536
    Operating costs and expenses:
    Cost of goods sold 366,527 366,527
    Operating expenses 4,017 102   4,119
    Segment contribution margin $ 25,992 $ (102 ) $ 25,890
     
    Total capital spending $ 820 $ (36 ) $ 784
     
     
    Delek Logistics Partners, LP
    Segment Data (Unaudited)
    (In thousands)
     
        Six Months Ended June 30, 2013
    Pipelines & Transportation

    Delek Logistics

    Partners, LP

       

    Predecessor -

    Tyler Storage

    Tank Assets

       

    Predecessor -

    El Dorado Storage

    Tank Assets

       

    Six Months Ended

    June 30, 2013

    Net Sales $ 27,204 $ $ $ 27,204
    Operating costs and expenses:
    Cost of goods sold
    Operating expenses 9,348 3,185   2,945   15,478
    Segment contribution margin $ 17,856 $ (3,185 ) $ (2,945 ) $ 11,726
     
    Total capital spending $ 1,493 $ 3,955   $ 610   $ 6,058
     
     
     
    Six Months Ended June 30, 2013
    Wholesale Marketing & Terminalling

    Delek Logistics

    Partners, LP

    Predecessor -

    Tyler Terminal

    Assets

    Predecessor -

    El Dorado

    Terminal Assets

    Six Months Ended

    June 30, 2013

    Net Sales $ 413,832 $ $ $ 413,832
    Operating costs and expenses:
    Cost of goods sold 395,826 395,826
    Operating expenses 2,581 487   463   3,531
    Segment contribution margin $ 15,425 $ (487 ) $ (463 ) $ 14,475
     
    Total capital spending $ 836 $ 16   $ 229   $ 1,081
     
     
    Delek Logistics Partners, LP
    Segment Data (Unaudited)
           
       

    Three Months Ended

    June 30,

    Six Months Ended

    June 30,

    Throughputs (average bpd) 2014     2013

    2014(1)

    2013
     
    Pipelines and Transportation Segment:
    Lion Pipeline System:
    Crude pipelines (non-gathered) 59,038 49,270 41,936 47,155
    Refined products pipelines to Enterprise Systems 59,888 47,315 45,908 45,348
    SALA Gathering System 21,300 22,661 22,201 22,396
    East Texas Crude Logistics System 3,223 11,468 7,105 31,198
     
    Wholesale Marketing and Terminalling Segment:
    East Texas - Tyler Refinery sales volumes (average bpd) 61,231 64,973 61,828 59,062
    West Texas marketing throughputs (average bpd) 17,451 19,082 16,729 17,820
    West Texas marketing margin per barrel $ 6.52 $ 2.20 $ 5.06 $ 2.82
    Terminalling throughputs (average bpd) 98,962 13,961 94,468 13,898
     

    (1) The information presented includes the results of operations of the El Dorado Predecessor.

     
     
    Delek Logistics Partners, LP
    Segment Data (Unaudited)
     
       

    Delek Logistics

    Partners, LP

       

    El Dorado Terminal

    and Tank Assets(1)

    1/1/14-2/10/2014

       

    Six Months Ended

    June 30, 2014

    Throughputs (average bpd) El Dorado Predecessor
    Pipelines and Transportation Segment:
    Lion Pipeline System:
    Crude pipelines (non-gathered) 41,936 41,936
    Refined products pipelines to Enterprise Systems 45,908 45,908
    SALA Gathering System 22,201 22,201
    East Texas Crude Logistics System 7,105 7,105
     
    Wholesale Marketing and Terminalling Segment:
    East Texas - Tyler Refinery sales volumes (average bpd) 61,828 61,828
    West Texas marketing throughputs (average bpd) 16,729 16,729
    West Texas marketing margin per barrel $ 5.06 $ $ 5.06
    Terminalling throughputs (average bpd) 92,815 7,298 94,468
     

    (1) The information presented includes the results of operations for the six months ended June 30, 2014, disaggregated to present the results of the El Dorado Terminal and tank Assets through February 10, 2014.

     





    Delek Logistics Partners, LP

    Keith Johnson, 615-435-1366

    Vice President of Investor Relations

    or

    Alpha IR Group

    Chris Hodges, 312-445-2870

    Founder & CEO

    Source: Delek Logistics Partners, LP


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