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PBF Logistics LP (PBFX) Q2 2019 Earnings Call Transcript

By Motley Fool Transcribers - Aug 5, 2019 at 7:50AM

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PBFX earnings call for the period ending June 30, 2019.

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PBF Logistics LP  (PBFX 3.55%)
Q2 2019 Earnings Call
Aug. 01, 2019, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Welcome to the PBF Logistics Second Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]

It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

Colin Murray -- Investor Relations

Thank you, Bree. Good morning and welcome to today's call. With me today are Matt Lucey, Executive Vice President; Erik Young, our CFO; and several other members of the partnership's senior management team. If you would like a copy of our earnings release, it is available on our website.

Before we begin, I would 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 partnership's or management's expectations or predictions 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 will be [Technical Issues] use certain non-GAAP 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.

Now I will turn the call over to Matt Lucey.

Matthew C. Lucey -- Executive Vice President and Director

Thank you, Colin. Good morning, everyone, and thank you for joining us. On May 31, we completed our previously announced $200 million drop-down acquisition of the remaining 50% interest of the Torrance Valley Pipeline Company. This transaction is strategically important for PBF Logistics as we consolidate ownership of a major asset within the partnership and then secure the partnership's near-term growth requirements. The transaction was primarily financed with a highly successful capital raise, and I want to highlight this point: we do not see the need to raise additional equity to fund partnership growth through 2020. The drop-down, along with our ongoing projects, deliver our targeted growth for 2019.

We are pleased to announce our 19th consecutive distribution increase to $0.515. Our organic projects announced a year ago are currently being executed, with a significant portion of those assets generating free cash flow today. Our revised 2019 EBITDA guidance of approximately $195 million incorporates the expected contributions from the Torrance Valley Pipeline. In 2020, our expected annual EBITDA increases to approximately $210 million to $220 million, which includes a full-year of 100% ownership of the Torrance Valley Pipeline, and $15 million for the East Coast Storage Assets operations, plus incremental contributions from the Maersk processing arrangement and other projects as they come online.

As we announced earlier today, the Maersk processing agreement is set to commence in October, which is two-months earlier than originally intended. We expect the early start of -- to the arrangement will result in an incremental $1 million to $1.5 million of EBITDA for the partnership in '19.

While the processing agreement was already anticipated, the early start can be one, the initial signals from the market participants that preparations for IMO 2020 are indeed under way. Beyond processing IMO-compliant fuels for Maersk, we expect our strategically located coastal storage assets and marine terminals will see increased customer interest as other market participants implement their plans in advance of the January 1, 2020, IMO marine fuel specification change.

Lastly, with the PES refinery outage on the East Coast, we are seeing increased local demand for space at our Philadelphia regional terminals and storage assets. It's still early in terms of quantifying the potential longer-term benefits of the increased throughput at these assets, but we are seeing an increase as market participants adjust to new project flows in the region.

With that, I'll turn it over to Erik.

Erik Young -- Senior Vice President and Chief Financial Officer

Thank you, Matt. This morning, we reported second quarter net income attributable to the limited partners of $22.2 million. Adjusted partnership EBITDA was $48.3 million, excluding $5.8 million of transaction costs associated with the Torrance Valley Pipeline acquisition, environmental remediation costs associated with our East Coast Terminals and non-cash unit-based compensation.

During the quarter, we spent approximately $640,000 in maintenance CapEx and approximately $3.2 million on the growth projects Matt mentioned a moment ago. Our total CapEx for 2019 is expected to be approximately $30 million to $35 million. Excluding one-time expenses, our second quarter coverage was 1.13 times. We maintain our long-term outlook for targeted coverage of 1.15 times and expect to meet and exceed this as contributions from both recent acquisitions and investments in organic projects provide incremental DCF over the next 12 to 18 months.

We ended the quarter with over $265 million in liquidity, including $20 million of cash and roughly $245 million of availability under our revolving credit facility. Net debt-to-annualized adjusted EBITDA was 3.9 times.

Operator, we've concluded our opening remarks, and we'll open the call for questions.

Questions and Answers:


[Operator Instructions] At this time there are no questions. I will now turn the call back to Matt Lucey for closing comments.

Matthew C. Lucey -- Executive Vice President and Director

We greatly appreciate you listening today's call, and we look forward to speaking here again next quarter. Thanks much.


[Operator Closing Remarks]

Duration: 7 minutes

Call participants:

Colin Murray -- Investor Relations

Matthew C. Lucey -- Executive Vice President and Director

Erik Young -- Senior Vice President and Chief Financial Officer

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