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spk01: Good morning and welcome to the DELWIC Logistics second quarter 2021 conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw from the question queue, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Blake Fernandez, SVP of Investor Relations. Please go ahead.
spk02: Good morning. I would like to thank everyone for joining us on this webcast to discuss Delic Logistics Partners' second quarter 2021 financial results. Joining me on today's call will be Uzi Yameen, our General Partners Chairman and CEO, and Ruben Spiegel, CFO, as well as the other members of the 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 on Financial results in accordance with generally accepted accounting principles are 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 2Q press release. On today's call, Ruben will begin with a financial overview. I will review results, and Uzi will offer a few closing strategic remarks. With that, I will turn the call over to Ruben.
spk03: Thank you, Blake. Our distributable cash flow was approximately $54 million in the second quarter of 2021, compared to $57 million in the second quarter of 2020. Our DCF coverage ratio was 1.32 for the second quarter, compared to 1.58 in the prior year period. EBITDA was 67 million, which represents 3% increase over the prior year period. We increased our quarterly distribution to 94 cents per limited partner unit for the quarter ended June 30th. This distribution is to be paid on August 11, 21 and represents a 2.2% increase from the first quarter of 2021 and 4.4% increase from the second quarter of 2020. At June 30th, DKL had approximately $561 million of available capacity on our $850 million credit facility. Our total debt was approximately $929 million, and the total leverage ratio is 3.6 times, which is within the 5.25 times currently allowable under our credit facility. Now I will turn the call over to Blake to discuss the results.
spk02: Thanks, Ruben. In our pipelines and transportation segment, the second quarter contribution margin was $45 million compared to $43 million in the second quarter of last year. This increase was primarily attributable to the drop down of the trucking assets dropped on May 1st, 2020 in pay line pipeline performance. In our wholesale marketing and terminaling segment, the contribution margin was $19 million in the second quarter of this year compared to $19 million in the second quarter of last year. During the second quarter of 2021, equity income from our crude oil joint venture pipelines was approximately $7 million, which was flat with the prior year period. Capital expenditures were approximately $2.6 million in the second quarter, which consisted of $1.5 million of discretionary spending and $1.1 million of sustaining maintenance. For full year 21, our total gross capital expenditure forecast is $29 million, which includes $18.4 million of discretionary and $11.1 million of maintenance capital. With that, I will turn the call over to Uzi for his closing comments.
spk04: Thank you, Blake, and good morning, everybody. We witnessed a strong sequential increase in performance in the second quarter based on the lack of winter weather impacts. Lower turnaround activity and no maintenance of the payline pipeline that occurred in the first quarter. We successfully raised $400 million of debt to a senior note offering creating flexibility and extending our maturities. We continue our long history of distribution growth with a 33rd consecutive increase, and we remain committed to delivering a 5% increase on a full-year basis. Our distribution coverage and leverage ratios remain healthy, and our sponsor, Delacruz, has no major maintenance plan for the rest of the year. With that, operator, can you please open the call for questions?
spk01: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star, then 2. The first question comes from Spiro Dunas of Credit Suisse. Please go ahead.
spk00: Hey, morning, guys. Uzi, first one for you. What's your thoughts on the macro set up here into the back half of the year? Seems like a lot of green shoots out there in energy, of course, with the exception of the Delta variant driving some lockdowns overseas. You know, I didn't believe you before that. You've always been kind of a bit cautious on demand and the rebound there in 2021. I think you saw more of a 2022 story. So it's curious, is that more or less materializing, kind of like how you expected? Really, just any thoughts on the setup from GMP and downstream in the second half would be great.
spk04: Yeah. Good morning, Spiro. Thanks again for your interest. You asked several questions. Let me try to answer each one of them, and if I did a poor job, just push back and ask for more info. Vis-a-vis the demand situation, I have not changed my mind. We have not changed our mind. And we think that the demand situation will get back to normalcy only in 2022. I don't know that the Delta variant is a big factor here. I don't know. It may be. But at this point, I see it being contained for the time being. I think that Israel is already giving a third vaccine. We'll see how it works. So I think the rebound, the big rebound, is being expected toward the end of this year, 21 and 22. I do think that 22 will be, as we said in the past, a very, very strong year, probably the strongest we've seen, just because of the fact that people will get tired after being at home for, almost two years i think employers uh ceos are anxious to see uh their employees back to the office and i do believe that that would happen so um the demand situation uh it's getting there you know we see the the demand uh where what five to seven percent below below uh 2019 um i think we will get back to normalcy uh toward the end of this year and early next year uh You're asking about the activities in the energy sector. We also, the acquisition of, or the merger of HFC and Sinclair. I think that there will be more and more merger and acquisitions. Energy sector is ripe for changes. I must say that everybody talks about energy transformation. I think that we are a little bit too fast to come to conclusions that fossil fuels is out of the picture. I think we have many years ahead of us, obviously with the changing market, carbon capture, as well as ESG. But I still drove my car here to the office this morning, and I don't think that will change over the next five years. Lastly, you asked about our situation. We haven't changed our mind much. We still have the organic growth that we mentioned, the slurry project, the Red River that came to fruition, the pay line situation that is getting better, obviously, West Texas with the rains. And toward the end of next year, 2022, we need to look carefully at dropping down winter Webster. I hope I answered every question that you had.
spk00: Yeah, no, no, you nailed it. Appreciate it. It's a great color. So your last comments there do tie into my next question, which is on these growth projects. I think you said that you'd want to complete a lot of the organic growth that you've got going on out there just before dropping down growth springs. Sounds like Wink to Webster, to your point, is kind of a next year event. But just curious where we're at in terms of timing between completing some of these growth projects organically and before moving on to Cross Springs?
spk04: Well, Cross Springs is a different thing. We'll discuss it later on today. But with the Supreme Court decision of SREs, Cross is at the top of the list, if you will, even with the administration, to be granted the exemption. we granted the exemption of a quote, then quote is certainly very good refinery. And then we should consider carefully the dropping down the assets of quotes. And of course, then I mentioned the winter Webster and other maybe organic or inorganic projects as we as we look forward to an improving market. Perfect. That's all I have today, guys. Thank you. Thank you, Spiel.
spk01: Again, if you have a question, please press star then 1. There are no other questions at this time. This concludes our question and answer session. I would like to turn the conference back over to Uzi Yamin for closing remarks.
spk04: Yeah, thank you. I'd like to thank everybody around the table for being such great colleagues. I'd like to thank you investors for your trust in us. You continue to show that you believe in our company. And I'd like to thank you for that. I'd like to thank... board of directors our board of directors for supporting what management wants to do but mainly I'd like to thank each one of this of each one of the this company employees each one of them makes this company the great company it is and we couldn't do it without you have a great morning we'll talk soon thank you guys the conference has now concluded thank you for attending today's presentation you may now
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