PR Newswire | Aug 3, 2021 04:16PM EDT

08/03 15:15 CDT

Delek Logistics Partners, LP Reports Second Quarter 2021 Results- Reported second quarter net income attributable to all partners of $43.2 million- EBITDA of $66.8 million represented an increase of 3% y/y- Second quarter distributable cash flow coverage ratio of 1.32x and total leverage ratio of approximately 3.6x- Declared second quarter distribution of $0.940 per limited partner unit; reflects 4.4% increase y/y- On-track to deliver 5% distribution growth in 2021 versus 2020 distributions- Completed $400 million senior notes offering; creating flexibility and extending maturities BRENTWOOD, Tenn., Aug. 3, 2021

BRENTWOOD, Tenn., Aug. 3, 2021 /PRNewswire/ --Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") today announced its financial results for the second quarter 2021. For the three months ended June 30, 2021, Delek Logistics reported net income attributable to all partners of $43.2 million, or $1.00 per diluted common limited partner unit. This compares to net income attributable to all partners of $44.4 million, or $1.18 per diluted common limited partner unit, in the second quarter 2020. Net cash from operating activities was $85.8 million in the second quarter 2021 compared to $37.5 million in the second quarter 2020. Distributable cash flow was $53.8 million in the second quarter 2021, compared to $57.0 million in the second quarter 2020.

For the second quarter 2021, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $66.8 million compared to $64.8 million in the second quarter 2020.

Uzi Yemin, Chairman, President and Chief Executive Officer of Delek Logistics' general partner, remarked: "Second quarter results improved sequentially based on the absence of Winter Storm Uri impacts and Paline pipeline maintenance both of which had unfavorable impacts on the first quarter results. Major planned turnaround activity for the year at Delek US is now complete, paving the way for strong utilization of DKL owned infrastructure."

Mr. Yemin continued, "Distribution growth in the quarter was 4.4% on a year-over-year basis and we remain committed to 5% distribution growth on a full-year basis. Our leverage and coverage ratios remain healthy providing flexibility to capitalize on growth opportunities. During the quarter, we successfully raised $400 million through a senior notes offering. This offering increases balance sheet flexibility and extends our debt maturities. DKL continues to perform well operationally and is well positioned for the future."

Distribution and Liquidity

On July 26, 2021, Delek Logistics declared a quarterly cash distribution of $0.94 per common limited partner unit for the second quarter 2021, which equates to $3.76 per common limited partner unit on an annualized basis. This distribution will be paid on August 11, 2021 to unitholders of record on August 5, 2021. This represents a 2.2% increase from the first quarter 2021 distribution of $0.92 per common limited partner unit, or $3.68 per common limited partner unit on an annualized basis, and a 4.4% increase over Delek Logistics' second quarter 2020 distribution of $0.90 per common limited partner unit, or $3.60 per common limited partner unit annualized. For the second quarter 2021, the total cash distribution declared to all partners was approximately $40.8 million, resulting in a distributable cash flow coverage ratio of 1.32x.

As of June 30, 2021, Delek Logistics had total debt of approximately $928.7 million and cash of $2.2 million. Additional borrowing capacity, subject to certain covenants, under the $850.0 million credit facility was $561.2 million, which was enhanced by the recent notes offering. The total leverage ratio was within the requirements of the maximum allowable leverage ratio under the credit facility.

Financial Results

Contribution margin in the second quarter 2021 was $64.3 million compared to $61.3 million in the second quarter 2020. Higher refinery utilization, increased demand, contribution from the trucking asset dropdown and a lack of pipeline maintenance resulted in improved year-over-year performance in our assets.

Pipelines and Transportation Segment

Contribution margin in the second quarter 2021 was $45.2 million compared to $42.5 million in the second quarter 2020. This increase was primarily attributable to the higher utilization at the refineries, drop-down of the trucking assets (dropped on May 1st, 2020) and improved Paline pipeline performance.

Wholesale Marketing and Terminalling Segment

During the second quarter 2021, contribution margin was $19.1 million compared to $18.8 million in the second quarter 2020. This increase was primarily due to improved volumes and a higher gross margin in our West Texas wholesale business.

1

Second Quarter 2021 Results | Conference Call Information

Delek Logistics will hold a conference call to discuss its second quarter 2021 results on Wednesday, August 4, 2021 at 7:30 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. 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 2021 earnings conference call on Wednesday, August 4, 2021 at 8:30 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 that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are "forward-looking statements," as that term is defined under 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, thereby subjecting us to Delek US' 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 effects 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 utilization of Delek Logistics' assets and business performance, including margins generated by its wholesale fuel business; the impact of the COVID-19 outbreak on the demand for crude oil, refined products and transportation and storage services; uncertainties regarding future decisions by OPEC regarding production and pricing disputes between OPEC members and Russia; an inability of Delek US to grow as expected as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits; the results of our investments in joint ventures; 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. Forward-looking statements include, but are not limited to, statements regarding future growth at Delek Logistics; distributions and the amounts and timing thereof; potential dropdown inventory; expected earnings or returns from joint ventures or other acquisitions; expansion projects; ability to create long-term value for our unit holders; financial flexibility and borrowing capacity; and distribution growth of 5% or at all. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek Logistics undertakes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof, except as required by applicable law or regulation

Non-GAAP Disclosures:

Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

* Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income. * Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash. Delek Logistics believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.

EBITDA and distributable cash flow are non GAAP supplemental financial measures that management and external users of our condensed consolidated 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 our 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.

2

Delek Logistics believes that the presentation of EBITDA, distributable cash flow and distributable cash flow coverage ratio provide useful information to investors in assessing its financial condition, its results of operations and the cash flow its business is generating. EBITDA, distributable cash flow and distributable cash flow coverage ratio should not be considered in isolation or as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP.

Non-GAAP measures 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. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. 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. See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.

3

Delek Logistics Partners, LP

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except unit and per unit data)

June 30, 2021December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents $2,173 $ 4,243

Accounts receivable 18,065 15,676

Accounts receivable from related parties - 5,932

Inventory 1,988 3,127

Other current assets 900 331

Total current assets 23,126 29,309

Property, plant and equipment:

Property, plant and equipment 701,823 692,282

Less: accumulated depreciation (247,072) (227,470)

Property, plant and equipment, net 454,751 464,812

Equity method investments 252,048 253,675

Operating lease right-of-use assets 25,051 24,199

Goodwill 12,203 12,203

Marketing contract intangible, net 120,182 123,788

Rights-of-way 36,991 36,316

Other non-current assets 11,124 12,115

Total assets $935,476 $ 956,417



LIABILITIES AND DEFICIT

Current liabilities:

Accounts payable $4,836 $ 6,659

Accounts payable to related parties 36,847 -

Interest payable 5,441 2,452

Excise and other taxes payable 4,560 4,969

Current portion of operating lease liabilities 8,014 8,691

Accrued expenses and other current liabilities 7,829 5,529

Total current liabilities 67,527 28,300

Non-current liabilities:

Long-term debt 928,728 992,291

Asset retirement obligations 6,245 6,015

Operating lease liabilities, net of current portion 16,976 15,418

Other non-current liabilities 23,847 22,694

Total non-current liabilities 975,796 1,036,418

Total liabilities 1,043,323 1,064,718

Equity (Deficit):

Common unitholders - public; 8,707,565 units issued and outstanding at June 30, 2021 (8,697,468 at December 164,678 164,614 31, 2020)

Common unitholders - Delek Holdings; 34,745,868 units issued and outstanding at June 30, 2021 (34,745,868 at (272,525) (272,915) December 31, 2020)

Total deficit (107,847) (108,301)

Total liabilities and deficit $935,476 $ 956,417

4

Delek Logistics Partners, LP

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except unit and per unit data)

Three Months Ended June 30,Six Months Ended June 30,

2021 2020 2021 2020

Net revenues:

Affiliate $ 88,722 $ 87,629$ 184,916 $ 194,328

Third-party 79,756 30,008 136,475 86,710

Net revenues 168,478 117,637 321,391 281,038

Cost of sales:

Cost of materials and other 88,695 43,892 169,866 145,185

Operating expenses (excluding depreciation and amortization presented below) 14,876 11,623 28,371 25,577

Depreciation and amortization 9,480 8,223 19,727 14,026

Total cost of sales 113,051 63,738 217,964 184,788

Operating expenses related to wholesale business (excluding depreciation and 605 826 1,166 1,616 amortization presented below)

General and administrative expenses 6,077 4,721 10,937 10,851

Depreciation and amortization 487 471 979 967

Other operating income, net (136) - (219) (107)

Total operating costs and expenses 120,084 69,756 230,827 198,115

Operating income 48,394 47,881 90,564 82,923

Interest expense, net 11,658 10,670 21,395 22,494

Income from equity method investments (6,642) (6,462) (10,691) (12,015)

Other expense, net (34) (2) (3) (2)

Total non-operating expenses, net 4,982 4,206 10,701 10,477

Income before income tax expense (benefit) 43,412 43,675 79,863 72,446

Income tax expense (benefit) 166 (740) 350 235

Net income attributable to partners $ 43,246 $ 44,415$ 79,513 $ 72,211

Comprehensive income attributable to partners $ 43,246 $ 44,415$ 79,513 $ 72,211



Less: General partner's interest in net income, including incentive - 9,647 - 18,724 distribution rights

Limited partners' interest in net income $ 43,246 $ 34,768$ 79,513 $ 53,487



Net income per limited partner unit:

Common units - basic $ 1.00 $ 1.18 $ 1.83 $ 1.98

Common units - diluted $ 1.00 $ 1.18 $ 1.83 $ 1.98



Weighted average limited partner units outstanding:

Common units - basic 43,445,222 29,427,29843,444,284 26,953,934

Common units - diluted 43,460,366 29,430,55543,453,806 26,956,523



Cash distribution per limited partner unit $ 0.940 $ 0.900 $ 1.860 $ 1.790

5

Delek Logistics Partners, LP

Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)

Six Months Ended June 30,

2021 2020

Cash flows from operating activities

Net income $ 79,513 $72,211

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 20,706 14,993

Non-cash lease expense 4,507 640

Amortization of customer contract intangible assets 3,606 3,605

Amortization of deferred revenue (911) (945)

Amortization of deferred financing costs and debt discount 1,325 1,172

Income from equity method investments (10,691) (12,015)

Dividends from equity method investments 8,311 12,500

Other non-cash adjustments 453 1,218

Changes in assets and liabilities:

Accounts receivable (2,389) (2,703)

Inventories and other current assets 524 12,182

Accounts payable and other current liabilities 295 (11,890)

Accounts receivable/payable to related parties 39,756 (17,653)

Non-current assets and liabilities, net 2,519 (934)

Changes in assets and liabilities 40,705 (20,998)

Net cash provided by operating activities 147,524 72,381

Cash flows from investing activities

Asset acquisitions from Delek Holdings, net of assumed liabilities - (100,527)

Purchases of property, plant and equipment (8,762) (4,997)

Proceeds from sales of property, plant and equipment 219 107

Purchases of intangible assets (675) -

Distributions from equity method investments 5,400 1,690

Equity method investment contributions (1,393) (10,515)

Net cash used in investing activities (5,211) (114,242)

Cash flows from financing activities

Proceeds from issuance of additional units to maintain 2% General Partner - 10 interest

Distributions to general partner - (18,156)

Distributions to common unitholders - public (15,916) (15,835)

Distributions to common unitholders - Delek Holdings (63,585) (27,549)

Distributions to Delek Holdings unitholders and general partner related to - (47,558) Trucking Assets Acquisition

Proceeds from revolving credit facility 148,300 413,000

Payments on revolving credit facility (606,100) (251,400)

Proceeds from issuance of senior notes 400,000 -

Deferred financing costs paid in connection with debt issuances (6,326) -

Payments on finance lease (756) -

Net cash (used in) provided by financing activities (144,383) 52,512

Net (decrease) increase in cash and cash equivalents (2,070) 10,651

Cash and cash equivalents at the beginning of the period 4,243 5,545

Cash and cash equivalents at the end of the period $ 2,173 $16,196

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest $ 17,081 $21,298

Non-cash investing activities:

Increase (decrease) in accrued capital expenditures $ 1,557 $(1,317)

Equity issuance to Delek Holdings unitholders in connection with Big Spring $ - $109,514 Gathering Assets Acquisition

Non-cash financing activities:

Non-cash lease liability arising from obtaining right of use assets during the $ 5,572 $15,779 period

6

Delek Logistics Partners, LP

Reconciliation of Amounts Reported Under U.S. GAAP

(In thousands)

Three Months Ended June 30,Six Months Ended June 30,

2021 2020 2021 2020

Reconciliation of Net Income to EBITDA:

Net income $ 43,246 $44,415 $ 79,513 $ 72,211

Add:

Income tax expense 166 (740) 350 235

Depreciation and amortization 9,967 8,694 20,706 14,993

Amortization of customer contract intangible assets 1,803 1,803 3,606 3,605

Interest expense, net 11,658 10,670 21,395 22,494

EBITDA $ 66,840 $64,842 $ 125,570 $ 113,538



Reconciliation of net cash from operating activities to distributable cash flow:

Net cash provided by operating activities $ 85,792 $37,545 $ 147,524 $ 72,381

Changes in assets and liabilities (29,842) 19,344 (40,705) 20,998

Non-cash lease expense (2,489) (366) (4,507) (640)

Distributions from equity method investments in investing activities 1,476 1,580 5,400 1,690

Maintenance and regulatory capital expenditures (1,133) (98) (2,862) (726)

Reimbursement from Delek Holdings for capital expenditures 4 16 1,577 55

Accretion of asset retirement obligations (115) (107) (230) (214)

Deferred income taxes - (943) (65) (943)

Other operating income, net 136 - 219 107

Distributable Cash Flow $ 53,829 $56,971 $ 106,351 $ 92,708







Delek Logistics Partners, LP

Distributable Coverage Ratio Calculation

(In thousands)

Three Months Ended June 30,Six Months Ended June 30,

Distributions to partners of Delek Logistics, LP 2021 2020 2021 2020

Limited partners' distribution on common units $ 40,846 $26,490 $ 80,814 $ 48,229

General partner's distributions - 542 - 986

General partner's incentive distribution rights - 8,937 - 17,632

Total distributions to be paid ^(1) $ 40,846 $35,969 $ 80,814 $ 66,847



Distributable cash flow $ 53,829 $56,971 $ 106,351 $ 92,708

Distributable cash flow coverage ratio ^(2) 1.32x 1.58x 1.32x 1.39x

The distributions for the three and six months ended June 30, 2020 reflect the impact of the distribution waiver that waived all of the distributions for the first quarter of 2020 on the 5.0 million Additional Units, related to the Big Spring Gathering Assets transaction, with respect to base(1) distributions and the IDRs. In addition, the distributions for the three months ended March 31, 2020 reflect the waiver of distributions in respect of the IDRs associated with the Additional Units for at least two years. Subsequently, the IDRs were eliminated in the Restructuring Transaction on August 13, 2020.

Distributable cash flow coverage ratio is calculated by dividing(2) distributable cash flow by distributions to be paid in each respective period.

7

Delek Logistics Partners, LP

Segment Data (unaudited)

(In thousands)

Three Months Ended June 30,Six Months Ended June 30,

2021 2020 2021 2020

Pipelines and Transportation

Net revenues:

Affiliate $ 65,664 $61,394 $ 128,712 $ 99,897

Third party 4,771 2,032 6,698 11,496

Total pipelines and transportation 70,435 63,426 135,410 111,393

Cost of sales:

Cost of materials and other 14,346 11,182 27,425 17,280

Operating expenses (excluding depreciation and amortization) 10,858 9,731 21,030 21,187

Segment contribution margin $ 45,231 $42,513 $ 86,955 $ 72,926

Capital spending $ 1,531 $417 $ 7,376 $ 863



Wholesale Marketing and Terminalling

Net revenues:

Affiliates ^(1) $ 23,058 $26,235 $ 56,204 $ 94,431

Third party 74,985 27,976 129,777 75,214

Total wholesale marketing and terminalling 98,043 54,211 185,981 169,645

Cost of sales:

Cost of materials and other 74,349 32,710 142,441 127,905

Operating expenses (excluding depreciation and amortization) 4,623 2,718 8,507 6,006

Segment contribution margin $ 19,071 $18,783 $ 35,033 $ 35,734

Capital spending $ 1,060 $235 $ 3,014 $ 2,818



Consolidated

Net revenues:

Affiliates $ 88,722 $87,629 $ 184,916 $ 194,328

Third party 79,756 30,008 136,475 86,710

Total consolidated 168,478 117,637 321,391 281,038

Cost of sales:

Cost of materials and other 88,695 43,892 169,866 145,185

Operating expenses (excluding depreciation and amortization presented below)15,481 12,449 29,537 27,193

Contribution margin 64,302 61,296 121,988 108,660

General and administrative expenses 6,077 4,721 10,937 10,851

Depreciation and amortization 9,967 8,694 20,706 14,993

Other operating income, net (136) - (219) (107)

Operating income $ 48,394 $47,881 $ 90,564 $ 82,923

Capital spending $ 2,591 $652 $ 10,390 $ 3,681

Affiliate revenue for the wholesale marketing and terminalling segment is(1) presented net of amortization expense pertaining to the marketing contract intangible we acquired in connection with the Big Spring acquisition.

8

Delek Logistics Partners, LP

Segment Capital Spending

(In thousands)

Three Months Ended June 30,Six Months Ended June 30,

Pipelines and Transportation 2021 2020 2021 2020

Maintenance capital spending $449 $119 $ 926 $430

Discretionary capital spending 1,082 298 6,450 433

Segment capital spending $1,531 $417 7,376 863

Wholesale Marketing and Terminalling

Maintenance capital spending $681 $232 720 1,362

Discretionary capital spending 379 3 2,294 1,456

Segment capital spending $1,060 $235 3,014 2,818

Consolidated

Maintenance capital spending $1,130 $351 1,646 1,792

Discretionary capital spending 1,461 301 8,744 1,889

Total capital spending $2,591 $652 $ 10,390 $3,681







Delek Logistics Partners, LP

Segment Data (Unaudited)

Three Months Ended June 30,Six Months Ended June 30,

2021 2020 2021 2020

Pipelines and Transportation Segment:

Throughputs (average bpd)

El Dorado Assets:

Crude pipelines (non-gathered) 53,316 79,066 48,743 75,995

Refined products pipelines to Enterprise Systems 39,193 56,093 32,806 55,110

El Dorado Gathering System 17,430 9,447 14,670 13,449

East Texas Crude Logistics System 27,497 10,275 26,790 12,224

Big Spring Gathering System 79,589 105,16276,672 105,162

Plains Connection System 122,529 - 115,484 -



Wholesale Marketing and Terminalling Segment:

East Texas - Tyler Refinery sales volumes (average bpd) ^(1)74,565 65,028 73,271 68,839

Big Spring marketing throughputs (average bpd) 75,136 76,004 74,038 71,195

West Texas marketing throughputs (average bpd) 9,395 9,143 9,765 12,612

West Texas gross margin per barrel $4.24 $0.64 $ 3.81 $1.96

Terminalling throughputs (average bpd) ^(2) 139,987 138,593142,250 136,961



(1) Excludes jet fuel and petroleum coke.

Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy(2) and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.

Information about Delek Logistics Partners, LP can be found on its website (www.deleklogistics.com), investor relations webpage (ir.deleklogistics.com), news webpage (www.deleklogistics.com/news) and its Twitter account (@DelekLogistics).

9

View original content to download multimedia: https://www.prnewswire.com/news-releases/delek-logistics-partners-lp-reports-second-quarter-2021-results-301347513.html

SOURCE Delek Logistics