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PBF Logistics LP Common Units representing limited partner interests
Q1 2021 Earnings Conference Call
4/29/2021
spk00: Good day, everyone, and welcome to the PBF Logistics LP First Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode, and the floor will open for your questions following management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.
spk02: Thank you, LaTanya. Good morning and welcome to today's call. With me today are Matt Lucey, Executive Vice President, Eric Young, our CFO, and several other members of the Partnership Senior Management Team. If you'd like a copy of our earnings release, it is available on our website. Before we begin, I'd like to direct your attention to the forward-looking statements disclaimer contained in today's press release. In summary, it outlines that statements in the press release and on this conference call that state the partnerships or management's expectations of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we've described in our filings with the SEC. As noted in our press release, we'll be using certain non-gap measures while describing the partnership's operating performance and financial results. For reconciliations of non-GAAP measures to the appropriate GAAP figure, please refer to the supplemental tables provided in today's press release. I'll now turn the call over to Matt.
spk03: Thank you, Colin. Good morning, everyone, and thank you for joining us on today's call. PBF Logistics operated well during the first quarter. The partnership's consistent results through 2020 and now through the first quarter of 2021 continue to reflect the underlying strength of our business and relationship with our sponsor. We continue to expect partnership revenues for 2021 to be in the $330 to $350 million range, with 2021 EBITDA in the $210 to $220 million range. Throughput levels have increased modestly in our terminals relative to last quarter, and we see this as a positive sign relative to overall demand and for a potential increase in third-party business. Our consistent revenues and cash generations continue to allow the partnership to maintain healthy distribution coverage and reduce net debt. Maintaining financial flexibility, debt pay down, and strengthening liquidity are the priorities. Today, we maintained our distributions of 30 cents per unit. We will continue to review our distribution policy going forward with respect to the company's performance, market conditions, and alternate use of funds. With that, I'll turn it over to Eric for some financial highlights.
spk01: Thank you, Matt. Good morning, everyone. Thank you for joining us on today's call. We reported first quarter net income attributable to the limited partners of $37.2 million. Adjusted Partnership EBITDA was $59 million, which includes approximately $1 million of non-cash, unit-based compensation, and environmental remediation costs associated with the East Coast terminals. During the quarter, we spent roughly $1.3 million in total CapEx, including $400,000 for maintenance. For 2021, we currently expect capital expenditures to be roughly $15 million, inclusive of approximately $2 million for multiple small strategic projects. We ended the quarter with approximately $355 million in liquidity, including a cash balance of $44 million and approximately $311 million of availability under our revolving credit facility. Net debt to annualized adjusted EBITDA was 2.8 times. We expect to continue using excess cash to improve leverage ratios and strengthen the balance sheet. Operator, we've concluded our opening remarks, and now we'll open the call for questions.
spk00: Thank you. In a moment, we will open the call to questions. The company requests that all callers limit each turn to one question and one follow-up. You may rejoin the queue with additional questions. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Spiro Dunas with Credit Suisse. Please proceed.
spk04: Hi, this is Chad on Prospero. Just starting off, I believe the high end of your four-year EBITDA guidance implies roughly a 9% decline from the first quarter. On the PPF call, it sounds like you're planning several turnarounds in the second half of the year. Is that the driver of that implied decline, and what's the impact from those turnarounds to PPFX?
spk01: There really shouldn't be much impact. from turnarounds on a go-forward basis. I think Matt's comments around the stable nature of cash flows, we did have, there's probably about a million dollars running through the P&L, maybe a little bit more than that, that basically relates to some product sales that we had. There's not much cost against that. So I think that will ultimately go away. And quite frankly, I think we're probably somewhat conservative in terms of the full year estimates, but These are consistent with what we've laid out for our board of directors, what our 2021 budget ultimately relies on, and that's kind of where we're benchmarking ourselves against at this point. We've clearly, there will be some times where certain volume metrics will be higher than those MVCs and we'll be able to generate some incremental profitability, but the key message is really that the MVC nature of those contracts provides an ultimate floor in terms of the MVC side of things is really driving our full year guidance.
spk04: Okay, thanks for that. That's helpful. And just a second one, with the potential for the Shellmet renewable diesel project at PVF, could you just sort of go through what your opportunity set is for PVFX and renewables?
spk03: I would answer it this way. certainly there's been no decisions been made, but just to give you, I guess, what would be three facts. Nothing revolving around a renewable diesel project would be qualified income. To maintain your tax status as a pass-through MLP, you are allowed up to 10% of of non-qualified income. You can't go over 10%. And currently, PBFX has zero dollars that are non-qualified income. So there's certainly some flexibility within PBFX, but there's nothing decided or that we can talk about at the moment. Okay, I understand. Thanks for that.
spk04: Thanks for the time, guys. That's all I had. Thank you.
spk00: Thank you. There are no further questions in queue at this time. I would like to turn the call back over to Matt Lucey for closing comments.
spk03: Thank you, everyone. I appreciate your attendance today and look forward to speaking to you again next quarter. Have a great day.
spk00: This concludes today's teleconference. You may disconnect your lines this time, and thank you for your participation.
Disclaimer