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Good day, and welcome to the Delek Logistics Third Quarter 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded.
At this time, I would like to turn the conference over to Blake Fernandez, Senior Vice President of Investor Relations. Please go ahead.
Good morning. I would like to thank everyone for joining us on this webcast to discuss Delek Logistics Partners' third quarter 2020 financial results. Joining me on today's call will be Uzi Yemin, our General Partners Chairman and CEO; and Reuven 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 the earnings release has been reviewed and we are covering less segment and market information that is incorporated into the third quarter press release.
On today's call, Reuven will begin with 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 third quarter performance on a year-over-year basis benefited from relatively stable baseline business operations, contribution from the recent asset drop downs along with business initiatives and asset optimization. Our distributable cash flow was approximately $59 million in the third quarter 2020 compared to $34 million in the third quarter of 2019.
Net income attributable to all partners increased approximately 52% over the prior year period. Our DCF coverage ratio was 1.5 times for the third quarter 2020 compared to 1.1 times in the prior year period. EBITDA was $68 million, which represents 32% increase over prior year period.
Based on our performance and outlook, we increased our quarterly distribution to $0.905 per a limited partner unit for the quarter ended September 30, 2020. This distribution will be paid on November 12, 2020, and represents a 0.6% increase from second quarter of 2020. This is our 30th consecutive quarterly increase and is 2.8% higher than our third quarter 2019 distribution.
At September 30, 2020, DKL has approximately $89 million of available capacity on our $850 million credit facility. Our total debt was approximately $1 billion and total leverage ratio was 3.9 times which is within the 5.5 times currently allowable under our credit facility.
Finally, during the quarter, we announced the elimination of the incentive distribution rights and conversion of the 2% General Partner interest held by our sponsor DK into a non-economic interest in exchange for 14 million newly issued DKL units and $45 million in cash. Now we'll turn the call over to Blake to discuss the results.
Thanks, Reuven. In our pipelines and transportation segment, the third quarter 2020 contribution margin was $46 million compared to $27 million in the third quarter of 2019. This increase was primarily attributable to the recent asset drop downs, including the big spring gathering in trucking assets.
Additionally, operating expenses decreased to $11 million in the third quarter of 2020 from $13 million in the prior year period. In our wholesale marketing and terminalling segment, contribution margin was $21 million in the third quarter of this year, compared to $19 million in the prior year. Operating Expenses came in $2 million lower than the same period of 2019.
During the third quarter, equity income from our crude oil joint venture was approximately $5 million compared to income of $8 million in the prior year period. Capital expenditures were approximately $3.2 million in the third quarter, which consisted of $3.1 million in discretionary spending and $100,000 from sustaining maintenance. For full-year 2020, our total gross capital expenditure forecast is $21 million, which includes $16.5 million of discretionary and $4.5 million of maintenance capital.
With that, I will turn the call over to Uzi for his closing remarks.
Thank you, Blake, and good morning, everybody. DKL continue to deliver consistent operational performance despite a difficult macro environment for energy. We announced a 30 consecutive increase in the quarterly distribution and remain on track to deliver 5% distribution growth this year, while achieving our year-end guidance level for both distribution coverage and leverage ratio.
The Red River pipeline expansion came online during the quarter, and we continue to develop internal business initiatives and cost optimization that should drive longer term value for shareholders.
Additionally, the simplification of the ideas lowered our cost of capital and better positions us to pursue growth opportunities. Lastly, I will encourage you to review our new debt sustainability report published in September, which includes DKL.
With that, operator, can you please open the call for questions?
We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Spiro Dounis with Credit Suisse. Please go ahead, sir.
Hey, good morning, guys. I'd like to start out with West Texas marketing margins. It came back pretty aggressively this quarter, I think highest since we've seen since about 3Q last year. Can you just walk through some of the driving factors behind why it came back so much beyond first quarter levels, and then how sustainable do you think that is going forward?
Spiro, good morning. This is Uzi. And I'm sure Avigal will put more color into it, if needed. You probably remember that the West Texas market thrive when RINs actually go up. As we have the space and that market is a market where we select to get with the RINs. So I don't know how sustainable it is in terms of the RINs, but as long as the RINs stay elevated, we should benefit from that. I think Avigal, do you want to add anything?
Thank you for the question really.
Yeah, no, no. Okay, perfect, that makes sense. Second question, just thinking about your growth longer term, obviously, pretty stuff here for refining in general and DKL has been kind of a standout amongst a lot of the challenges. Just curious how you're thinking about your goal to get to $400 million of EBITDA over the next two to three years, just given all those challenges more broadly? And thinking about, specifically around Krotz Springs and, the over $100 million in maturing opportunities that brings you to that - that EBITDA goal. Are those opportunities still there? Have they been pushed to the right, how are you thinking about that trajectory here?
That's a great question, because we are, we're asking ourselves the same question and I think we have a good answer. So first of all, the big portion of the logistics to over the next two or three years is W2W. As you know, W2W, the first portion has started. And we already not through DKL but through DK, we see the benefit of some of the commercial agreements we have with producers around that, that will show up at DK with the magnitude of around $25 million to $30 million. It's not at DKL just yet. But W2W is coming to fruition and that's a big portion. The second portion is called Krotz Springs refinery.
We do have, we're looking at another project at Krotz Springs. We're looking into some activities that evolve tankage and other products, which we're not - we're not ready to announce just yet. But that may offset a big portion of what we were thinking in the drop down of Krotz Springs if the market doesn't come back. If the market comes back, and then we are at $400 million or $375 million to $400 million that we mentioned, probably sooner than the two, three years that you mentioned, I hope that helps.
Yeah, no, no, that was a great color exactly what I was looking for. So I appreciate it. That's it for me, guys. Thanks.
Thank you.
Next question comes from Ned Baramov with Wells Fargo. Please proceed.
Hey, good morning. Thanks for taking the question. Could you share your latest thoughts on the MLP strategy? You have previously talked about a potential roll up as one alternative, and you have also considered monetization of DKL units by the sponsor, specifically, the units received as part of the IDR transaction. As of today, are you leaning more towards one of these two strategies, given the current environment?
Good morning, Ned. These are macro questions that I'm sure every company ask themselves the same question. So let's go - let's take it one by one. I think you had two or three questions in the - in your comments. So the first one, the MLP market, is, as you know, because you cover it much more than I do, has its own challenges, regardless of the macro environment as a result of the pandemic. But as you know, if there is a change in the tax code and taxes go up, then MLP - MLPs may come back in favor. So that's one comment.
The second one, rolling it out for selling units. DK selling units, obviously, it's not a DKL decision, it's a DK decision. DK is very comfortable with its cash position and I don't see any reason why we should sell units just because the units are $30. Because we will - we are - we do get - DK is getting 12% return which is more - more or less, what DK wants to get. Rolling it up, we made a strategic decision two, three years ago, before all this started that MLP or logistics assets would be a priority for our company. I'm sure you remember that. But only a year ago, there were doubts that we can get to $200 million EBITDA. And here we are with almost $280 million on an annual basis and growing because of all the projects that we had.
So strategies don't change over margin. So we think that we should continue to grow DKL. In the in the current environment, we should continue to look at other ideas. Obviously, cost of capital has changed, which to our and honestly to our benefit, because we performed a little better than others. So I don't see us rolling it up, at this point. I hope I answered all the aspects of your question.
Yes, you did. Thanks for the color. That's all I had today.
Thanks, Ned.
Thanks, Ned.
[Operator Instructions] At this time, there are no further questions in the queue. And this concludes our question-and-answer session.
At this time, I would like to turn the conference back over to Uzi Yemin for any closing remarks.
Well, thank you. Thanks again, I'd like to thank my friends around the table. I'd like to thank my colleagues. It's another great work for DKL, the strategy actually works. And obviously it couldn't happen without our great employees and the support of the unit holders and our - our Board of Directors.
We're very proud of what we achieved in this tough environment. Have a great day. We'll talk to you soon. Thank you.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.