© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day, and welcome to the Delek Logistics' First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]
I would now like to turn the conference over to Blake Fernandez. Please, go ahead.
Good morning. I would like to thank everyone for joining us on this webcast to discuss Delek Logistics Partners' First Quarter 2021 Financial Results. Joining me on today's call will be Uzi Yemin, our General Partners Chairman and CEO; and Rueven Spiegel, CFO; 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. 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 results which can be found in the press release, which is posted on the investor relations section of our website.
Our prepared remarks are being made assuming that the earnings release has been reviewed and we are covering less segment and market information than is incorporated into the first quarter press release. On today's call, Reuven will begin with a financial overview. I will review results, and Uzi will offer a few closing strategic remarks.
With that, I'll turn the call over to Reuven.
Thank you, Blake. Our first quarter performance on a year-over-year basis benefited from the contribution of asset drop downs that occurred in 2020. That said, winter storm Uri has a negative impact on results in the first quarter, in addition to maintenance at the Paline pipeline. We expect these factors to normalize into the second quarter.
Our distributable cash flow was approximately $53 million in the first quarter of 2021, compared to $36 million in the first quarter of 2020. Net income attributable to all partners increased approximately 30% over the prior year period. Our DCF coverage ratio was 1.31 in the first quarter of 2021, compared to 1.15 in the prior period. EBITDA was $59 million, which represents a 21% increase over the prior year period.
We increased our quarterly distribution to $0.92 per limited partner unit for the quarter ended March 31, 2021. This distribution is to be paid on May 14, 2021 and represents a 1.1% increase from the fourth quarter 2020. This is our 32nd consecutive quarterly increase and is still 3.4% higher than our first quarter 2020 distribution.
On March 31, DKL had approximately $113 million of available capacity on our 850 credit facility. Our total debt was approximately $1 billion and the total leverage ratio is 3.7x, which is within the 5.25x currently allowable under our credit facility.
Now I will turn the call over to the Blake to discuss the results.
Thanks, Reuven. In our Pipelines and Transportation segment, the first quarter 2021 contribution margin was $42 million, compared to $30 million in the first quarter of 2020. This increase was primarily attributable to the asset drop downs, including the big spring gathering system dropped on March 31, 2020 and trucking asset dropped on May 1, 2020.
In our Wholesale Marketing and Terminalling segment, the contribution margin was $16 million in the first quarter of this year, compared to $17 million in the prior year. During the first quarter of 2021, equity income from our crude oil pipeline joint ventures was approximately $4 million compared to income of $6 million in the prior year period. Capital expenditures were approximately $7.8 million in the first quarter of 2021, which consisted of $7.3 million in discretionary spending and $0.5 million dollars for sustaining payments.
For full year 2021, our total gross capital expenditure forecast is $28 million, which includes $14.7 million of discretionary and $13.1 million of maintenance capital.
With that I'll turn the call over to Uzi for closing comments.
Thank you, Blake, and good morning, everybody. First quarter results were resilient considering the winter storm impact along the Gulf Coast in pipeline maintenance. We're expecting the improvement into the second quarter and throughout the year as energy demand improves with the vaccination uptake and [indiscernible].
Our long history of distribution growth continues and we remain committed to delivering another 5% increase in 2021. Our distribution coverage and leverage ratios remain healthy and create flexibility. Finally, we are pleased to announce an exclusive agreement with Baker Hughes, utilizing technology to meet IMO product spec toward blending capabilities. This offers a low capital high return opportunity that could be scalable if successful.
With that, Operator, can you please open the call for questions?
Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Spiro Dounis with Credit Suisse. Please, go ahead.
Hey. Good morning, everybody. Uzi, I wanted to ask you about the outlook for the rest of the year. It sounds like things are getting back to normal, which is good to hear. So far our first part of this year, fairly quiet for detail, especially when you look back at last year and all the activity dropped downs you all were doing. So, obviously some of this is market and storm-related and turnaround-related. But forward to the rest of the year, should we expect in uptick in activity from you all? And what form does that take? I know drop downs are on the table at one point. Where do those stand? How do you see yourself hitting those growth goals? I think you're still committed to that 5% distribution growth level.
Hey, Spiro, good morning. Well, there are several initiatives that are coming to fruition over the next few months -- actually Q2. First of all, the expansion of the Red River pipeline to where with the planes will come into effect over the next or during a little bit next quarter. Second, the Paline pipeline, we have an agreement that is coming to an effect early May to start shipping more on Paline. And third, with the Baker Hughes agreement on the blending side together with DK, which is just the start of something that can be very meaningful and not capital-intense. So these are the three organic growth projects that give us the confidence to continue to say our coverage and leverage ratios will stay very healthy. On the M&A side, obviously, we need to be very nimble. We are waiting on the sideline to see if something comes to fruition. But leverage comes down toward the 3.5 mark. It's now 3.7 and the coverage will get healthier during the year because of these organic growth projects. Odely, I don't know if you want to add anything?
No, I think you hit all those marks.
Yes.
Okay, great. And then on Baker Hughes and then once again just focusing on the detail part of it. I guess you helped frame out in terms of timing and when we start to see cash flows there, you mentioned it being kind of a small CapEx number. Any sense you can give us around that front? Is this for DKL going to be a very much fee-based enterprise? Or how should we think about this structure?
Yes, it's a fee-base for details. The money is coming in as we speak. More and more bells [ph] -- we're not ready to discuss the amount of bells, but I will do it over the next couple of quarters. But as we have more and more bells coming in, the fees will continue to grow. It already started the beginning of the year and now it's getting stronger for the second quarter and third quarter will be even stronger. We're very optimistic that the 5% will be met easily like in the past without any drop down. Probably we'll do over the next quarter or two, will give projected cash flow from that project as we get more and more of that blending and treatment capabilities placed.
Okay. We'll wait and see on that one. Last one for me just on West Texas marketing margins. Very strong again. It looks similar to Q3 last year. And so, I'm sure RINs and RINs' prices had a lot to do with that, but just curious if there's anything else you would call out there on that number? Really just trying to get a sense that if RINs stay up at these levels, or does West Texas margin sustainable around these levels for the rest of the year?
Hey, Spiro. It's Odely. As you mentioned, as we also mentioned before, the Q4 was more from the hedging loss but really what we're seeing right now in Q1 is really from a RINs contribution and also flat on hedging, along with a good production and throughput around 10,000 in just margin becoming better than what we've seen in Q4. So, it's primarily coming from the RINs, better utilization now with the West Texas also.
All right. It's all I had. Thank you, gentlemen. Be well.
The next question comes from Ned Baramov with Wells Fargo. Please, go ahead.
Hey, good morning. Thanks for taking the question. With the Krotz refinery back online, could you maybe review what's the approximate EBITDA generated by the midstream assets being in around this facility? And also has there been a change in how you think about the potential drop down of these assets [ph]?
Good morning, Ned. This is Uzi. Thanks for taking the time to ask the question. The courts facility is now free cash flow from a DK standpoint. What we're doing over there as I mentioned, and we mentioned, Baker Hughes agreement, that Baker Hughes agreement will enhance the profitability of Krotz and other places. We are waiting to see how much this is going to contribute, but it's in the millions. So, it's not a small amount. And then we see how the market shakes up to see if we're doing the drop downs or stay away from the drop down for the time being. The total EBITDA from that drop down is $30 million. As I mentioned earlier we still have three organic projects that are coming to fruition that will add money and will make the EBITDA even stronger in the near future. But then we need to think about the next steps of detail growth. As we said, our goal was to be 73.95 [ph]. I think we are getting very close to achieving that during [indiscernible]. And the crossing, now we need to think about the next leg.
Okay. And then maybe one more on Paline. What is the what is the latest on this? In the past you had talked about further capacity increases. Are there any discussions on this front?
We have an agreement with a shipper that is starting May 1. We'll see how this goes. That ship is a new shipper. They didn't ship before, so we'll see how this goes. And if there's more demand, then there's no reason to believe that we won't expand that with a minimum capital CapEx.
Okay, got it. And maybe one more, if I may.
Please.
Could you maybe talk about some of the projects included in your growth CapEx budget for 2021?
Can you repeat the question?
Could you review some of the expansion projects included in your CapEx budget for 2021?
Sure. This is Odely, Ned. Specifically around the discretionary as we gave the forecast is from really on the project that what we mentioned both on the Jefferson completion of the Jefferson Connection and on Paline, along with our project around Baker Hughes opportunity and also in DPG. So, all those are primarily the items associated with the business development forecast.
That's perfect. Thank you. That's all I had.
Thank you, Ned.
[Operator Instructions] Looks like we have no further questions. So, this concludes our question-and-answer session. I would now like to turn the conference back over to Management for any closing remarks.
Yes, I'd like to thank everybody that listened to the call this morning. I'd like to thank the management on the table end in general for another good quarter despite the winter storm Uri. I'd like to thank the unit holders, investors for their trust in us. But mainly, I'd like to thank each one of the employees of this great company that make it what it is. Have a great day. We'll talk to you next time.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.