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Good morning. We would like to welcome everyone to the Delek Logistics’ First Quarter Earnings Call.
I would now like to turn the call over to Mr. Keith Johnson. Please go ahead.
Thank you, Charlie. Good morning. I would like to thank everyone for joining us on this webcast to discuss DKL's first quarter 2019 results. Joining me on today's call will be Uzi Yemin, our General Partners' Chairman and CEO; Assaf Ginzburg, CFO; Danny Norris, CAO; as well as other members of our management team.
As a reminder, this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words believe, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release.
As a result, actual operations or results may differ materially from results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
In addition to reporting financial results in accordance with Generally Accepted Accounting Principles, or GAAP, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP measures, which can be found in the press release, which is posted on the Investor Relations section of our website.
On today's call, Assi will begin with a financial overview and Danny will review results then Uzi will offer a few closing strategic remarks.
With that, I'll turn the call over to Assi.
Thanks, Keith. Our first quarter performance benefited from Big Spring logistics assets acquired effective March 1, 2018, which drove the first quarter 2019 improvement compared to prior year period. Our DCF was approximately $29 million in the first quarter 2019, compared to $28 million in the first quarter 2018. Our DCF coverage ratio was 1.06x for the first quarter 2019, compared to 1.16 in the prior year period. EBITDA increased by 13.5% to $39.4 million, compared to $34.7 million in the prior year period.
Based on our performance, we increased our quarterly distribution to $0.82 per limited partner unit for the first quarter ended March 31, 2019. This distribution will be paid on May 14 and is a 1.2% increase from our fourth quarter 2018 distribution per unit. This is our 25th consecutive quarterly increase and is a 9.3% higher than our first quarter 2018 distribution per unit.
At March 31, 2019, DKL had approximately $389 million of available capacity on our $850 million credit facility. Our total debt was approximately $705 million and total leverage ratio of 4.2x is well within the 5.25x currently allowable under our credit facility.
Now, I will turn the call over to Danny to discuss the results.
Thanks, Assi. For the first quarter of 2019, Delek Logistics reported net income attributable to all partners of $19.7 million, which compares to $20 million in the prior year period. Limited partners' interest in net income was $12.4 million or $0.51 per unit, compared to $14.4 million or $0.59 per unit in the prior year period.
I do want to note that lower throughput on our assets which was primarily related to the turnaround at Delek U.S.'s El Dorado refinery reduced our performance in the first quarter of 2019 by approximately $1.2 million on a year-over-year basis.
In our Pipelines and Transportation segment, the first quarter 2019 contribution margin was $24.2 million compared to $19.7 million in the first quarter of last year. This increase was primarily attributable to the Big Springs acquisition, which was partially offset by lower throughput in the Lion oil Pipeline System due to reduced operating rates at Delek U.S.'s El Dorado refinery. Operating expenses increased to $10.8 million in the first quarter of this year from $9.6 million in the prior year period, primarily due to the Big Spring acquisition.
In our Wholesale Marketing and Terminalling segment, the contribution margin was $15.9 million in the first quarter of this year, which was a decrease from $16.7 million in the prior year period. This decrease was due to lower West Texas gross margin, partially offset by benefit from the Big Spring acquisition. Operating expenses increased to $5.2 million in the first quarter of 2019 from $3 million in the prior year period, primarily due to the acquisition.
Our West Texas wholesale gross margin was $3.56 per barrel in the first quarter of this year compared to $5.16 per barrel in the first quarter of the prior year. Throughput in West Texas was 13,314 barrels per day compared to 15,942 barrels per day in the prior year. During April, the gross margin in West Texas averaged approximately $5.40 per barrel and volumes averaged approximately 11,400 barrels per day.
During the first quarter of 2019, our equity income from our joint venture crude oil pipelines was approximately $2 million compared to income of $900,000 in the prior year period. Capital expenditure were approximately $900,000 in the first quarter of 2019, and included $400,000 of discretionary spending and $500,000 of maintenance.
During the first quarter of 2019, approximately $800,000 was reimbursed by Delek U.S. In the first quarter of 2018, total capital expenditures were $2.2 million. For the full-year 2019, our total gross capital expenditure forecast is $12.2 million, which includes $400,000 of discretionary and $11.8 million of maintenance capital before reimbursement by Delek U.S. We expect approximately $2.3 million of the maintenance capital expenditures to be reimbursed in 2019.
With that, I will turn the call over to Uzi for his closing comments.
Thank you, Danny and good morning. We increased our EBITDA year-over-year in the first quarter and have generated an LTM EBITDA of approximately $169 million. Our operations continue to benefit from the Permian Basin. Our West Texas wholesale business is benefiting as crude oil prices have recovered through the first quarter of 2019.
The crude oil differentials in the market support demand for the Paline Pipeline. In addition, this pipeline will benefit from a higher tariff after the incentive rate expired at the end of February. This increased tariff should add approximately $900,000, a month of EBITDA.
We believe that our financial flexibility should allow us to use debt to fund the next step in our growth plan. We are exploring opportunities to grow through organic and third-party options. In addition, partnering with Delek U.S. may offer additional growth as we continue to develop midstream assets. This includes the Big Spring gathering system in the Permian Basin that is being developed, and a potential long-haul pipeline investment.
Also, we continue to evaluate the potential drop-down of the Krotz Springs logistics assets from Delek U.S. These assets have the ability to generate $30 million to $34 million of annual EBITDA. With this strategy, we believe that we should be able to create long-term value for our unitholders. This should continue to support our annual distribution growth per limited partner unit of at least 10% through 2019, while maintaining appropriate annual distribution coverage.
With that, Charlie, could you please open the call for questions?
Sure. No problem, sir. [Operator Instructions] Your first question comes from the line of Justin Jenkins with Raymond James. Your line is now open.
Great, thanks. Good morning, everyone. Uzi, I want to start with the Paline Pipeline. It seems like a lot of good things going on with that pipe in 2019. Can you remind us what the growth plan is here related to that? Are we at max capacity for that system?
Paline is running very close to capacity for a while now, depending on terminalling on the other side of it. But I think – I'm going by memory, we ramped 36,000, 37,000 barrels in the first quarter and we shouldn't expect materially change the capacity at 40,000. We do look at other opportunities to expand the Paline Pipeline, but for now the $900,000 that we mentioned is directly dropped to the bottom line.
Okay, thanks for that. And I guess follow-up questions on the growth strategy. You mentioned a number of items here. And seemingly, the Krotz Springs drop-down is the most visible. But can you give us a better sense of maybe the debate points for pursuing organic growth or third-party M&A versus drop-down growth in 2019 here?
Well, let's talk about the two aspects here. The first one is organic. The gathering system that is being built under the Delek U.S. umbrella is maturing quicker than we thought. And there maybe an opportunity to look at that in the next year or two as we increase the number of dedicated acreage and the number of producers that we use. That's on one side.
Also obviously the long-haul idea may come into play over the next couple of years as we look at other announced pipelines. So these are the two areas that we look materially on organic side.
On the acquisition side, we feel that there are a couple of opportunities. We maintain our commitment not to pay more than 6x to 8x EBITDA for any assets day one. Let's be clear, we don't want to pay 12x or 14x, and also, we want to create some synergies. So that may come into play for the next few months.
Perfect. Thanks, Uzi. I'll leave it there.
Thank you.
[Operator Instructions] We have no further question at this time. I will now turn the call back to the management for closing remarks.
Thank you, Charlie. I'd like to thank my colleagues around the table for another great quarter. I'd like to thank you, our analysts and investors, for your trust in our Company. I'd like to thank the Board of Directors that continue to believe in us. But mainly, I'd like to thank employees – all the employees that make this Company the great company it is. Thank you. We'll talk to you soon.
Ladies and gentlemen, this concludes our conference for today. Thank you for participating. You may now disconnect.