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PBF Logistics LP (PBFX) Q3 2019 Earnings Call Transcript

By Motley Fool Transcribers - Oct 31, 2019 at 5:02PM

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

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PBF Logistics LP (PBFX 0.67%)
Q3 2019 Earnings Call
Oct 31, 2019, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Welcome to the PBF Logistics Third 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 -- Head of Investor Relations

Thank you. Katherine, Good morning. Happy Halloween 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'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 the statements in the press release and online This conference call that state the partnerships or management's expectations or predictions of the future. Our 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 using 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.

I'll now turn the call over to Matt Lucey.

Matthew C. Lucey -- Director

Thank you. Colin, Good morning everyone and thanks for joining the call. We enjoyed a strong quarter driven by solid operations execution of organic projects and positive market conditions. On the East Coast we experienced increased volumes in a number of our locations as a result of the shutdown of the PES refinery. We are continuing to see increased local demand for space in Philadelphia region terminals and storage assets as well as higher throughput at our marketing racks. We announced earlier today the start of the Maersk processing arrangement our East Coast storage assets. We are processing Maersk-provided feedstock today. In addition to the incremental revenue for the partnership the start of the processing agreement represents a tangible signal that market participants are preparing for IMO 2020.

We announced earlier today the start of the merest processing arrangement or east coast storage assets. We are processing marriage provided feedstock today and addition to the incremental revenue for the partnership. The start of the processing agreement represents a tangible signal that market participants are preparing for IMO 2020 are strategically located coastal storage assets and rain terminals are seeing increased customer interest as other market participants prepared to meet the demands of the IMO fuel specification change on January 1 2020. We are pleased to announce our 20th consecutive distribution increase to $0.52 per unit for the current quarter. Our 2019 EBITDA guidance of approximately $195 million reflects the expected contributions from the Torrance Valley pipeline and ratable project contributions as those assets have come online. In 2020 our expected annual EBITDA increase is to approximately $210 million to $220 million. This figure incorporates the pro rata contributions of all our ongoing organic projects as they come online and also the contributions of our completed acquisitions and the ongoing Maersk processing agreement.

With that I'll turn it over to Erik with some more detail.

C. Erik Young -- Senior Vice President and Chief Financial Officer

Thank you. Matt. This morning we reported third quarter net income attributable to the limited partners of $31 million. Adjusted partnership EBITDA was $55.5 million excluding $2 million of transaction costs associated with the Torrance Valley Pipeline acquisition environmental remediation costs associated with our East Coast terminals and noncash unit-based compensation. During the quarter we spent approximately $3 million in maintenance capex and roughly $5 million on growth projects. Our total capex for 2019 is expected to be approximately $30 million to $35 million. Our third quarter coverage was 1.2x and we maintain our long-term outlook for targeted coverage of 1.15x and expect to meet and exceed this as contributions from recent acquisitions and investments in our organic projects provide incremental DCF over the next 12 to 15 months. We ended the quarter with roughly $265 million in liquidity including $53 million of cash and approximately $212 million of availability under our revolving credit facility. Net debt to annualized adjusted EBITDA was 3.4x. Included in our cash balance was roughly $32 million borrowed from our revolver which was used on the 1st of October to make the final payment for the East Coast storage assets acquired from Crown Point International a year ago.

Operator we've concluded our opening remarks and now we will open the call for questions.

Questions and Answers:


[Operator Instructions] And your first question today comes from Ryan Levine with Citi. Please go ahead.

Ryan Levine -- Citi -- Analyst

Morning. Can you speak to where you see the biggest opportunities for organic growth capex today and how that's evolved over the last few months as we move into the new year?

C. Erik Young -- Senior Vice President and Chief Financial Officer

Yes. I think the vast bulk of our organic capex was really associated with the projects that we announced during the second quarter of 2018. That was all very much forward-looking so we were essentially investing in the business over the past 12 to 15 months. And we are now starting to see really the harvesting of that free cash flow as those assets are coming online. So I think as we go forward right our capex is going to continue to kind of be in the very low maintenance capex range that we've provided for the year. We don't see material increases on top of that. And we are going to continue to try to identify potential organic projects in connection with our existing assets but also trying to leverage the parent's refining footprint and then still obviously looking at third-party acquisition opportunities. But we really don't have a lot to talk about on that front today.

Ryan Levine -- Citi -- Analyst

Okay. And then on the call this morning there was some comments around evaluating plans going forward. Can you elaborate as to what those comments were referencing?

Matthew C. Lucey -- Director

It was simply addressing a question that our competitors have done some -- made strategic decisions that we certainly have not. We always look at the market and we've been disappointed in the unit performance of the MLP. But markets go up markets go down and the MLP has absolutely provided attributes and benefits to our structure. That being said we continually look at the best use and the best structure on a going-forward basis. So it was brought up in the other call as a question certainly not something that we are -- was initiated by us.

C. Erik Young -- Senior Vice President and Chief Financial Officer

I think we are continuing to focus right? It's only been less than a year since we did our IDR restructuring. We obviously announced the Torrance Valley Pipeline drop in the second quarter. Our view right now is to continue to operate the assets well which we feel like we've done. And we've quadrupled the size of this business in a little over five years. And so I think from our perspective we are going to continue to try to hit singles and doubles here and -- as we go forward. To Matt's point we have to respond to what the market is telling us and our comments this morning were purely in response to a question from another analyst.

Ryan Levine -- Citi -- Analyst

Okay. I appreciate that. And then I guess one to follow-up. Is the C corp conversion something that is a potential outcome? Or do you still have the view that MLP as the preferred security?

Matthew C. Lucey -- Director

I think from our perspective the status quo is where we are. Depending on the size of your company and the direction you're going at you can look at a whole host of different things whether it's a C corp whether it's an Up-C whether it's a take private. And we -- like I said earlier we continuously evaluate all of our alternatives and the status quo is where we are. And that's our path. So there's nothing new in the comment and it's simply how we run our business.

Ryan Levine -- Citi -- Analyst

Appreciate it. Thank you.


This concludes the question-and-answer session. I would now like to turn the call over to Matt Lucey for closing remarks.

Matthew C. Lucey -- Director

Well as always we appreciate your participation in the call and we look forward to continued success going forward. Appreciate it. Have a good day.


[Operator Closing Remarks]

Duration: 10 minutes

Call participants:

Colin Murray -- Head of Investor Relations

Matthew C. Lucey -- Director

C. Erik Young -- Senior Vice President and Chief Financial Officer

Ryan Levine -- Citi -- Analyst

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Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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