Delek Logistics Partners, L.p. · NYSE:DKL
Delek Logistics Partners, L.p — Investor Presentation (May 2020)
40 slides from Delek Logistics Partners, L.p's investor presentation, May 21, 2020
Slide 1: Investor Presentation May 2020
Investor Presentation May 2020
Slide 2: Disclaimers
Disclaimers Forward Looking Statements: Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; and collectively with Delek US, “we” or “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL”, respectively. These slides
Slide 3: Investment Overview
Investment Overview • Current Distribution: $0.89/LP unit qtr.; $3.56/LP unit annualized (1) Overview (NYSE: DKL) • Visibility for distribution coverage in the range of 1.4x to 1.5x and a leverage ratio below 4.0x by the end of 2020 • Net Income of $27.8 million, Net cash from operating activities $
Slide 4: Delek US – A Growth Oriented, Financially Strong Partner
Delek US – A Growth Oriented, Financially Strong Partner • 302,000 bpd of refining capacity in Texas, Arkansas, Louisiana Operational Strength • Access to crude / product terminals, pipeline and storage assets Financial Strength • At Mar. 31, 2020 Delek US had a $1.3 billion debt position excluding
Slide 5: Delek US - Distinguishing Characteristics
Delek US - Distinguishing Characteristics 1) Source: Platts and NYMEX as of May 5, 2020 5
Slide 6: DKL Relative to Peer Group
DKL Relative to Peer Group Where We Are and Where We Are Going 1Q20 Distribution Coverage Yr/Yr Distribution Growth Visibility for distribution coverage in the range of 1.4x to 1.5x 8.5% by the end of 2020 6.2% 3.6% 2.2% 1.7% DKL MPLX PSXP MMP EPD PBFX HEP PAA 2.16x 2.00x 1.67x 1.52x 1.40x 1.26x 1.1
Slide 7: Delek Logistics Partners, LP Overview
Delek Logistics Partners, LP Overview
Slide 8: Logistics Assets Positioned to Benefit from Permian Basin Activity
Logistics Assets Positioned to Benefit from Permian Basin Activity Growing logistics assets support crude sourcing and product marketing for customers Pipelines/Transportation Segment • ~805 miles (1) of crude and product transportation pipelines, including the 195 mile crude oil pipeline from Longv
Slide 9: Delek Permian Gathering East System
Delek Permian Gathering East System Equipment DPG East System Lease Automatic Custody 45 Installations Transfer Units (LACTS) Pipeline 60 miles Tanks (bbl) 2 (50M, 300M) 9
Slide 10: Delek Permian Gathering West System
Delek Permian Gathering West System DPG West System Equipment Lease Automatic Custody 6 Transfer Units (LACTS) Installations Pipeline 70 miles Tanks (bbl) 1 (50M) 10
Slide 11: Multi-Year Contracts with Firm Commitments / MVCs
Multi-Year Contracts with Firm Commitments / MVCs (1) Duration of Contracts as of 1Q20 & Pro-Forma Drops Contract Highlights • The Lion Pipeline System and SALA Gathering System are < 1 Year < 1 Year 20% 18% 26% supported by a long-term contract that includes three take- 1 to 3 Years 1 to 3 Years 31
Slide 12: Financial Flexibility and Growing Distributable Cash Flow
Financial Flexibility and Growing Distributable Cash Flow Solid Net Income and EBITDA performance (1) $190.0 $178.9 $188.3 $140.0 $164.0 $90.0 $115.0 $104.9 $97.3 $90.2 $96.8 $ in millions $ in $40.0 $62.8 $69.4 -$10.0 2016 2017 2018 2019 2020 LTM (3) Net Income EBITDA DCF supports distribution grow
Slide 13: Increased Distribution with Conservative Coverage and Leverage
Increased Distribution with Conservative Coverage and Leverage Distribution per unit has increased twenty-nine consecutive times since the IPO $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 $0.570 $0.590 $0.610 $0.630 $0.655 $0.680 $0.690 $0.705 $0.715 $0.725 $0.750 $0.770 $0.
Slide 14: DKL Asset & Joint Venture Detail
DKL Asset & Joint Venture Detail
Slide 15: Joint Venture Pipeline Projects
Joint Venture Pipeline Projects Create platforms for future growth; Ability to leverage Permian position RIO Pipeline (Delaware Basin) • MPLX (67%)/ Delek Logistics (33%) • Cost: $119 million • Capacity: 80,000 Bbl/d • Length: 109 miles • Completed: September 2016 • Benefiting from increased drillin
Slide 16: Midstream: Big Spring Gathering System
Midstream: Big Spring Gathering System Gathering Helps Control Crude Oil Quality and Cost into Refineries Getting closer to wellhead allows us to control crude quality and cost Big Spring Gathering System . Provides improvement in refining performance and cost structure Drop down to DKL complete
Slide 17: Midstream: Red River Pipeline Joint Venture
Midstream: Red River Pipeline Joint Venture Red River Pipeline JV DKL purchased 33% interest in May 2019 Planned expansion from 150 kbpd to 235 kbpd . Approx. $128.0 million initial investment; Financed with revolver Expected completion in second half of 2020 . DKL will contribute $20.0 millio
Slide 18: Asset Overview: Paline Pipeline
Asset Overview: Paline Pipeline Provides access to Gulf Coast and ability to take advantage of crude differentials • Approximately 195 mile 42 kbpd crude oil pipeline – Longview, TX south to Beaumont, TX • Allows shippers ability ship Midland or Cushing crude barrels to the Gulf Coast • Increased de
Slide 19: West Texas Wholesale Business
West Texas Wholesale Business Benefiting from Permian Basin crude oil drilling activity West Texas Wholesale and Marketing Gross Margin(1) • Operates in an area around the Permian Basin; Complementary to Delek US refining/retail in region ($ in millions) • Purchases refined products from Delek US &
Slide 20: Asset Overview: El Dorado Assets and Gathering Assets
Asset Overview: El Dorado Assets and Gathering Assets El Dorado Assets (1) El Dorado Assets 70,000 • Provides non-gathered crude oil to Delek US’ 60,000 El Dorado refinery and connects to Enterprise 50,000 TE Products Pipeline to move finished 40,000 products. 30,000 • Crude and light product throug
Slide 21: Asset Overview: Terminalling
Asset Overview: Terminalling Terminal Count Terminalling Assets (1) 12 • Refined products terminalling services for Delek US and/or third parties • Comprised of terminals located in: 9 • Memphis and Nashville, TN; 6 • Big Spring (asphalt and light products), Tyler, Big Sandy (1) and Mt. Pleasant, TX
Slide 22: Going Forward: Growing Midstream Assets
Going Forward: Growing Midstream Assets
Slide 23: Delek US: Wink to Webster
Delek US: Wink to Webster Wink to Webster Pipeline JV 650-mile 36-inch diameter crude oil pipeline Wink to Webster Pipeline LLC – Exxon, Plains, MPLX, Delek US, Rattler Midstream, Lotus Midstream Delek US’ Investment Total system expected completion 2021 . Delek US has 15% ownership interest
Slide 24: Midstream: Utilizing Free Cash Flow & Strong Balance Sheet to Fund Growth
Midstream:Midstream: UtilizingUtilizing Free Free Cash Cash Flow Flow & Strong & Strong Balance Balance Sheet to Sheet Fund toGrowth Fund Growth Supports goal to generate approximately $370 million to $395 million of annualized midstream adjusted EBITDA by ’23 Supports goal to generate approximately
Slide 25: Several Visible Pathways for Growth
Several Visible Pathways for Growth Focused around developing Permian platform; Growing logistics asset base at sponsor Ability to Leverage Relationship with Delek US • Permian-based refining system with 207,000 bpd of Permian crude access (1) Midstream • Constructing Big Spring Gathering System in
Slide 26: Current Valuation Below Peer EV-to-EBITDA
Current Valuation Below Peer EV-to-EBITDA DKL’s financial flexibility and growth initiatives of strong sponsor DK positions it for growth EV/EBITDA 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x DKL HEP MPLX PBFX PSXP PAA NS MMP ET EPD 2020 2021 20 Avg 21 Avg (1) Based on Factset as of May 14, 2020. 26
Slide 27: Majority of assets support Primarily traditional, stable Delek US’ strategically MLP assets with limited
Majority of assets support Primarily traditional, stable Delek US’ strategically MLP assets with limited located inland refining commodity price exposure system Balance sheet positioned Inflation-indexed fees for to grow with strong most contracts sponsor DK Majority of all margin Agreements with De
Slide 28: Appendix
Appendix
Slide 29: Summary of Certain Contracts
Summary of Certain Contracts(8) ` Termination Provision Minimum Tariff / Fee Refinery Initial / Maximum Term (1) Service Q120 Throughput (bpd)(2) Commitment (bpd) Current Tariff / Fee Index (10) Shutdown Force Majeure DKL Permian Gathering 99,287 120,000 $0.70 CPI-U Ten Years Crude Gathering > 120,0
Slide 30: Summary of Certain Contracts Footnotes
Summary of Certain Contracts Footnotes (1) Maximum term assumes an extension of the commercial agreement pursuant to the terms thereof. Please note some terms began as early as Nov. 7, 2012. (2) Represents average daily throughput for the period indicated. (3) Excludes volumes gathered on the SALA G
Slide 31: Third Amended and Restated Omnibus Agreement, as amended
Third Amended and Restated Omnibus Agreement, as amended Key Provisions • Delek US will indemnify Delek Logistics for certain liabilities, including environmental and other liabilities, relating to contributed assets. • Delek US has a ROFR if Delek Logistics sells any assets that serves Delek US' re
Slide 32: Summary Organizational Structure
Summary Organizational Structure Delek US Holdings, Inc. Delek Logistics GP, LLC Public Unitholders NYSE: DK 94.6% (the General Partner) ownership interest (1) 61.4% interest Limited partner-common 2.0% interest 36.6% interest General partner interest Limited partner-common Incentive distribution ri
Slide 33: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution (dollars in millions, except coverage) 2013 (2) 1Q14 (2) 2Q14(2) 3Q14(2) 4Q14(2) 2014 (2) 1Q15(2) 2Q15 3Q15 4Q15 2015 (2)(3) 1Q16 2Q16 3Q16 4Q16 2016 (3) Reconciliation of Distributable Cash Flow to net cash from operating activities Net cash pr
Slide 34: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 2013(1) 1Q14(1) 2Q14 3Q14 4Q14 2014 (1) 1Q15(2) 2Q15 3Q15 4Q15 2015(2) 1Q16 2Q16 3Q16 4Q16 2016 Net Revenue $907.4 $203.5 $236.3 $228.0 $173.3 $841.2 $143.5 $172.1 $165.1 $108.9 $589.7 $104.1 $111.9 $107.5 $124.7 $448.1 Cost of Sales (811.4) (
Slide 35: Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA
Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA Krotz Springs Logistics Drop Down Reconciliation of Forecasted Annualized Net Income to Forecast Incremental EBITDA ($ in millions) Forecasted Range Forecasted Incremental Net Income$ 2.9 $ 3.3 Add Forecasted Incremental Amounts for:
Slide 36: Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA
Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Paline Pipeline Tariff Increase ($ in millions) Annual Monthly Forecasted Incremental Net Income$ 10.8 $ 0.9 Add Forecasted Increme
Slide 37: Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA
Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA Delek Logistics Partners, LPReconciliation of Forecasted Incremental U.S. GAAP Net Income (Loss) to Forecasted Incremental Adjusted EBITDA for the Red River Pipeline Joint Venture ($ in millions) Pre-Expansion Range Post-Expansion Ra
Slide 38: Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA
Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA 38
Slide 39: Non-GAAP Reconciliations of Trucking Forecasted EBITDA
Non-GAAP Reconciliations of Trucking Forecasted EBITDA 39
Slide 40: Investor Relations Contacts
Investor Relations Contacts: Blake Fernandez, SVP IR/Market Intelligence 615-224-1312
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