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Delek Logistics Partners, LP Reports First Quarter 2019 Results

  • Declared first quarter distribution of $0.82 per limited partner unit; increased by 9.3% percent year-over-year
  • Reported first quarter net income attributable to all partners of $19.7 million; EBITDA increased 13.5% year-over-year
  • First quarter net cash from operations was $26.2 million
  • Distributable cash flow coverage ratio of 1.06x for the first quarter 2019
  • Balance sheet positioned to support future growth

BRENTWOOD, Tenn., May 06, 2019 (GLOBE NEWSWIRE) -- Delek Logistics Partners, LP (DKL) ("Delek Logistics") today announced its financial results for the first quarter 2019. For the three months ended March 31, 2019, Delek Logistics reported net income attributable to all partners of $19.7 million, or $0.51 per diluted common limited partner unit. This compares to net income attributable to all partners of $20.0 million, or $0.59 per diluted common limited partner unit, in the first quarter 2018. Net cash from operating activities was $26.2 million in the first quarter 2019 compared to $23.7 million in the prior year period. Distributable cash flow was $29.0 million in the first quarter 2019, compared to $28.0 million in the prior-year period. Reconciliation of cash from operating activities as reported under U.S. GAAP to distributable cash flow is included in the financial tables attached to this release.

For the first quarter 2019, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $39.4 million compared to $34.7 million in the prior-year period. This increase was primarily due to the contribution from the Big Spring logistics assets acquired from Delek US Holdings, Inc. (“Delek US”) effective March 1, 2018 (the "Big Spring acquisition"). On a year over year basis, lower throughputs primarily at assets supporting Delek US' El Dorado, Arkansas refinery reduced gross margin by approximately $1.2 million. Reconciliation of net income attributable to all partners as reported under U.S. GAAP to EBITDA is included in the financial tables attached to this release.

Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics' general partner, remarked: "Our EBITDA increased by 13.5 percent on a year over year basis and we ended the quarter with $389 million of availability on our credit facility. This financial flexibility should support our growth efforts as we evaluate the potential drop down of the Krotz Springs logistics assets and explore third party opportunities.  Also, Delek US is pursuing midstream initiatives which should increase potential drop down inventory that can provide future growth. The increase in crude oil prices has continued to support demand in our west Texas operations and the wider Brent-WTI differential is supporting volumes on our Paline Pipeline. In addition, the incentive tariff of $0.75 per barrel on Paline expired at the end of February and the FERC tariff of $1.57 per barrel is in place, which should add approximately $0.9 million per month of EBITDA.  We were pleased to announce the 9.3% year-over-year increase in our first quarter distribution, and we remain committed to grow our distribution per limited partner unit by at least 10% annually through 2019."

Distribution and Liquidity

On April 26, 2019, Delek Logistics declared a quarterly cash distribution of $0.82 per common limited partner unit for the first quarter, which equates to $3.28 per common limited partner unit on an annualized basis. This distribution is to be paid on May 14, 2019 to unitholders of record on May 7, 2019. This represents a 1.2 percent increase from the fourth quarter 2018 distribution of $0.81 per common limited partner unit, or $3.24 per common limited partner unit on an annualized basis, and a 9.3 percent increase over Delek Logistics’ first quarter 2018 distribution of $0.75 per common limited partner unit, or $3.00 per common limited partner unit annualized. For the first quarter 2019, the total cash distribution declared to all partners, including incentive distribution rights (IDRs), was approximately $27.4 million. Based on the distribution for the first quarter 2019, the distributable cash flow coverage ratio for the first quarter was 1.06x.

As of March 31, 2019, Delek Logistics had total debt of approximately $705.2 million and cash of $5.4 million. Additional borrowing capacity, subject to certain covenants, under the $850.0 million credit facility was $388.8 million. The total leverage ratio, calculated in accordance with the credit facility, for the first quarter 2019 was approximately 4.2x, which is within the current requirements of the maximum allowable leverage ratio of 5.25x.

Financial Results

Revenue for the first quarter 2019 was $152.5 million compared to $167.9 million in the prior-year period. The decrease in revenue is primarily due to lower prices in the west Texas wholesale business, partially offset by the Big Spring acquisition that was effective March 1, 2018. Total operating expenses were $16.1 million in the first quarter 2019, compared to $12.6 million in the first quarter 2018. This increase was primarily due to the contribution from the acquired Big Spring assets and outside services.  Total segment contribution margin was $40.2 million in the first quarter 2019 compared to $36.3 million in the first quarter 2018. General and administrative expenses were $4.5 million for the first quarter 2019, compared to $3.0 million in the prior-year period. This increase was partially due to employee expenses.

Pipelines and Transportation Segment

Contribution margin in the first quarter 2019 was $24.2 million compared to $19.7 million in the first quarter 2018. This increase was primarily due to the contribution from the Big Spring acquisition, partially offset by lower performance from the Lion Oil Pipeline system due to lower throughput at Delek US' El Dorado, Arkansas refinery. Operating expenses were $10.8 million in the first quarter 2019 compared to $9.6 million in the prior-year period, primarily due to the Big Spring acquisition.

Wholesale Marketing and Terminalling Segment

During the first quarter 2019, contribution margin was $15.9 million, compared to $16.7 million in the first quarter 2018. This decrease was primarily due to a lower gross margin in west Texas, which was partially offset by the contribution from the Big Spring acquisition.  Operating expenses increased to $5.2 million in the first quarter 2019, compared to $3.0 million in the prior-year period primarily due to the Big Spring acquisition.

In the west Texas wholesale business, average throughput in the first quarter 2019 was 13,314 barrels per day compared to 15,942 barrels per day in the first quarter 2018. The west Texas gross margin per barrel decreased year-over-year to $3.56 per barrel and included approximately $0.3 million, or $0.27 per barrel, from renewable identification numbers (RINs) generated in the quarter.  During the first quarter 2018, the west Texas gross margin per barrel was $5.16 per barrel and included $1.2 million from RINs, or $0.81 per barrel.

Average terminalling throughput volume of 152,469 barrels per day during the first quarter 2019 increased on a year-over-year basis from 143,476 barrels per day in the first quarter 2018 primarily due to the Big Spring acquisition.  During the first quarter 2019, average volume under the East Texas marketing agreement with Delek US was 68,577 barrels per day compared to 73,244 barrels per day during the first quarter 2018.

First Quarter 2019 Results | Conference Call Information

Delek Logistics will hold a conference call to discuss its first quarter 2019 results on Monday, May 6, 2019 at 7:30 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekLogistics.com. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. For those who cannot listen to the live broadcast, a telephonic replay will be available through August 6, 2019 by dialing (855) 859-2056, passcode 3455428. An archived version of the replay will also be available at www.DelekLogistics.com for 90 days.

Investors may also wish to listen to Delek US’ (DK) first quarter 2019 earnings conference call on Monday, May 6, 2019 at 8:30 a.m. Central Time and review Delek US’ earnings press release. Market trends and information disclosed by Delek US may be relevant to Delek Logistics, as it is a consolidated subsidiary of Delek US. Investors can find information related to Delek US and the timing of its earnings release online by going to www.DelekUS.com.

About Delek Logistics Partners, LP

Delek Logistics Partners, LP, headquartered in Brentwood, Tennessee, was formed by Delek US Holdings, Inc. (DK) to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.

Safe Harbor Provisions Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. These statements contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if,”  “expect” or similar expressions, as well as statements in the future tense, and can be impacted by numerous factors, including the fact that a substantial majority of Delek Logistics' contribution margin is derived from Delek US, thereby subjecting us to Delek US' business risks; risks relating to the securities markets generally; risks and costs relating to the age and operational hazards of our assets including, without limitation, costs, penalties, regulatory or legal actions and other effects related to releases, spills and other hazards inherent in transporting and storing crude oil and intermediate and finished petroleum products; the impact of adverse market conditions affecting the utilization of Delek Logistics' assets and business performance, including margins generated by its wholesale fuel business; an inability of Delek US to grow as expected as it relates to our potential future growth opportunities, including dropdowns, and other potential benefits; the results of our investments in joint ventures; adverse changes in laws including with respect to tax and regulatory matters; and other risks as disclosed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports and filings with the United States Securities and Exchange Commission. Forward looking statements include, but are not limited to, statements regarding future growth at Delek Logistics; distributions and the amounts and timing thereof; potential dropdown inventory, including the Krotz Springs logistics assets; ability to create long-term value for our unit holders; financial flexibility and borrowing capacity; and distribution growth of 10% or at all. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved.  Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.  Delek Logistics undertakes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof, except as required by applicable law or regulation

Non-GAAP Disclosures:

Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.

  • Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash.  Delek Logistics believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.

EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:     

  • Delek Logistics' operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;

  • the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;

  • Delek Logistics' ability to incur and service debt and fund capital expenditures; and

  • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Delek Logistics believes that the presentation of EBITDA, distributable cash flow and distributable cash flow coverage ratio provide useful information to investors in assessing its financial condition, its results of operations and the cash flow its business is generating. EBITDA, distributable cash flow and distributable cash flow coverage ratio should not be considered in isolation or as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net income and net cash provided by operating activities. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in its industry, Delek Logistics' definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility.  See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.


 
Delek Logistics Partners, LP
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except unit and per unit data) 
  March 31,   December 31,
  2019   2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 5,356     $ 4,522  
Accounts receivable 21,538     21,586  
Inventory 6,669     5,491  
Other current assets 629     969  
Total current assets 34,192     32,568  
Property, plant and equipment:      
Property, plant and equipment 453,591     452,746  
Less: accumulated depreciation (146,712 )   (140,184 )
Property, plant and equipment, net 306,879     312,562  
Equity method investments 107,830     104,770  
Operating lease right-of-use assets 19,186      
Goodwill 12,203     12,203  
Marketing Contract Intangible, net 136,407     138,210  
Other non-current assets 23,511     24,280  
Total assets $ 640,208     $ 624,593  
       
LIABILITIES AND DEFICIT      
Current liabilities:      
Accounts payable $ 5,511     $ 14,226  
Accounts payable to related parties 10,522     7,833  
Excise and other taxes payable 4,496     4,069  
Pipeline release liabilities 3,293     4,419  
Current portion of operating lease liabilities 4,258      
Accrued expenses and other current liabilities 10,940     5,958  
Total current liabilities 39,020     36,505  
Non-current liabilities:      
Long-term debt 705,175     700,430  
Asset retirement obligations 5,290     5,191  
Operating lease liabilities, net of current portion 14,928      
Other non-current liabilities 17,700     17,290  
Total non-current liabilities 743,093     722,911  
Deficit:      
Common unitholders - public;  9,113,359 units issued and outstanding at March 31, 2019 (9,109,807 at December 31, 2018) 168,389     171,023  
Common unitholders - Delek Holdings; 15,294,046 units issued and outstanding at March 31, 2019 (15,294,046 at December 31, 2018) (303,902 )   (299,360 )
General partner - 498,110 units issued and outstanding at March 31, 2019 (498,038 at December 31, 2018) (6,392 )   (6,486 )
Total deficit (141,905 )   (134,823 )
Total liabilities and deficit $ 640,208     $ 624,593  
 


 
Delek Logistics Partners, LP
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except unit and per unit data)
  Three Months Ended March 31,
  2019   2018 (1)
Net revenues:      
Affiliate $ 62,965     $ 61,644  
Third-party 89,518     106,277  
Net revenues 152,483     167,921  
Operating costs and expenses:      
Cost of materials and other 96,265     119,032  
Operating expenses (excluding depreciation and amortization presented below) 15,307     11,898  
Depreciation and amortization 6,124     5,464  
Total cost of sales 117,696     136,394  
Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 751     679  
General and administrative expenses 4,473     2,975  
Depreciation and amortization 450     536  
Loss on asset disposals 2     60  
Total operating costs and expenses 123,372     140,644  
Operating income 29,111     27,277  
Interest expense, net 11,301     8,062  
(Income) loss from equity method investments (1,951 )   (858 )
Income before income tax expense 19,761     20,073  
Income tax expense 65     78  
Net income attributable to partners $ 19,696     $ 19,995  
Comprehensive income attributable to partners $ 19,696     $ 19,995  
       
Less: General partner's interest in net income, including incentive distribution rights 7,270     5,630  
Limited partners' interest in net income $ 12,426     $ 14,365  
       
Net income per limited partner unit:      
Common units - (basic) $ 0.51     $ 0.59  
Common units - (diluted) $ 0.51     $ 0.59  
       
Weighted average limited partner units outstanding:      
Common units - basic 24,407,168     24,382,633  
Common units - diluted 24,416,058     24,393,746  
       
Cash distribution per limited partner unit $ 0.820     $ 0.750  
 
(1)  Certain changes to presentation of the prior period statements of income have been made in order to conform to the current period presentation, primarily relating to the addition of a subtotal entitled 'cost of sales' which includes all costs directly attributable to the generation of the related revenue, as defined by GAAP, and the retitling of what was previously referred to as 'cost of goods sold' to 'cost of materials and other'. Operating expenses and depreciation and amortization related to the wholesale business and the retail business are excluded from cost of sales because they primarily relate to costs associated with selling the products.
 


       
Delek Logistics Partners, LP      
Condensed Consolidated Statements of Cash Flows (Unaudited)      
(In thousands)      
  Three Months Ended March 31,
  2019   2018
Cash flows from operating activities      
Net income $ 19,696     $ 19,995  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 6,574     6,000  
Non-cash lease expense 1,016      
Amortization of customer contract intangible assets 1,803     601  
Amortization of deferred revenue (402 )   (350 )
Amortization of deferred financing costs and debt discount 905     656  
Accretion of asset retirement obligations 99     78  
Income from equity method investments (1,951 )   (858 )
Dividends from equity method investments 1,488     1,033  
Loss on asset disposals 2     60  
Unit-based compensation expense 144     147  
Changes in assets and liabilities:      
Accounts receivable 48     (2,352 )
Inventories and other current assets (838 )   7,977  
Accounts payable and other current liabilities (5,177 )   7,091  
Accounts receivable/payable to related parties 2,689     (15,790 )
Non-current assets and liabilities, net 109     (632 )
Net cash provided by operating activities 26,205     23,656  
Cash flows from investing activities      
Asset acquisitions, net of assumed asset retirement obligation liabilities     (72,376 )
Purchases of property, plant and equipment (1,181 )   (3,253 )
Proceeds from sales of property, plant and equipment 12     91  
Purchases of intangible assets     (144,219 )
Distributions from equity method investments 804     660  
Equity method investment contributions (3,401 )    
Net cash (used in) provided by financing activities (3,766 )   (219,097 )
Cash flows from financing activities      
Proceeds from issuance of additional units to maintain 2% General Partner interest 2     13  
Distributions to general partner (7,179 )   (5,100 )
Distributions to common unitholders - public (7,352 )   (6,590 )
Distributions to common unitholders - Delek Holdings (12,388 )   (11,088 )
Distributions to Delek Holdings unitholders and general partner related to Big Spring Logistic Assets Acquisition
    (98,798 )
Proceeds from revolving credit facility 119,000     409,200  
Payments of revolving credit facility (114,500 )   (94,400 )
Reimbursement of capital expenditures by Delek Holdings 812     2,316  
Net cash (used in) provided by financing activities (21,605 )   195,553  
Net increase in cash and cash equivalents 834     112  
Cash and cash equivalents at the beginning of the period 4,522     4,675  
Cash and cash equivalents at the end of the period $ 5,356     $ 4,787  
Supplemental disclosures of cash flow information:      
Cash paid during the period for:      
Interest $ 5,997     $ 3,009  
Income taxes $ 58     $  
Non-cash investing activities:      
Decrease in accrued capital expenditures $ (276 )   $ (1,004 )
Non-cash financing activities:      
Non-cash lease liability arising from recognition of  right of use assets upon adoption of ASU 2016-02 $ 20,202     $  
 


 
Delek Logistics Partners, LP
Reconciliation of  Amounts Reported Under U.S. GAAP
(In thousands)
  Three Months Ended March 31,
  2019   2018
Reconciliation of net income to EBITDA:      
Net income $ 19,696     $ 19,995  
Add:      
Income tax expense 65     78  
Depreciation and amortization 6,574     6,000  
Amortization of customer contract intangible assets 1,803     601  
Interest expense, net 11,301     8,062  
EBITDA $ 39,439     $ 34,736  
       
Reconciliation of net cash from operating activities to distributable cash flow:      
Net cash provided by operating activities $ 26,205     $ 23,656  
Changes in assets and liabilities 3,169     3,706  
Non-cash lease expense (1,016 )   $  
Distributions from equity method investments in investing activities 804     660  
Maintenance and regulatory capital expenditures (818 )   (324 )
Reimbursement from Delek Holdings for capital expenditures 714     391  
Accretion of asset retirement obligations (99 )   (78 )
Loss on asset disposals (2 )   (60 )
Distributable Cash Flow $ 28,957     $ 27,951  


Delek Logistics Partners, LP
Distributable Coverage Ratio Calculation
 (In thousands)
  Three Months Ended March 31,
Distributions to partners of Delek Logistics, LP 2019   2018
Limited partners' distribution on common units $ 20,014     $ 18,287  
General partner's distributions 408     373  
General partner's incentive distribution rights 7,016     5,337  
Total distributions to be paid $ 27,438     $ 23,997  
       
Distributable cash flow $ 28,957     $ 27,951  
Distributable cash flow coverage ratio (1) 1.06x   1.16x
 
(1) Distributable cash flow coverage ratio is calculated by dividing distributable cash flow by distributions to be paid in each respective period.
 
 
Delek Logistics Partners, LP
Segment Data (unaudited)
 (In thousands)

 
  Three Months Ended March 31,
  2019   2018
Pipelines and Transportation      
Net revenues:      
Affiliate $ 36,659     $ 29,462  
Third party 3,974     4,251  
Total pipelines and transportation 40,633     33,713  
Cost of sales:      
Cost of materials and other 5,567     4,441  
Operating expenses (excluding depreciation and amortization) 10,834     9,622  
Segment contribution margin $ 24,232     $ 19,650  
Total Assets $ 401,833     $ 417,781  
Wholesale Marketing and Terminalling      
Net revenues:      
Affiliates (1) $ 26,306     $ 32,182  
Third party 85,544     102,026  
Total wholesale marketing and terminalling 111,850     134,208  
Cost of sales:      
Cost of materials and other 90,698     114,591  
Operating expenses (excluding depreciation and amortization) 5,224     2,955  
Segment contribution margin $ 15,928     $ 16,662  
Total Assets $ 238,375     $ 248,165  
Consolidated      
Net revenues:      
Affiliates $ 62,965     $ 61,644  
Third party 89,518     106,277  
Total consolidated 152,483     167,921  
Cost of sales:      
Cost of materials and other 96,265     119,032  
Operating expenses (excluding depreciation and amortization presented below) 16,058     12,577  
Contribution margin 40,160     36,312  
General and administrative expenses 4,473     2,975  
Depreciation and amortization 6,574     6,000  
Loss (gain) on asset disposals 2     60  
Operating income $ 29,111     $ 27,277  
Total Assets $ 640,208     $ 665,946  
 
(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible we acquired in connection with the Big Spring acquisition.
 
 
Delek Logistics Partners, LP
Segment Capital Spending
 (In thousands)
  Three Months Ended March 31,
Pipelines and Transportation 2019   2018
Maintenance capital spending $ 410     $ 517  
Discretionary capital spending 14     891  
Segment capital spending $ 424     $ 1,408  
Wholesale Marketing and Terminalling      
Maintenance capital spending $ 107     $ 202  
Discretionary capital spending 373     587  
Segment capital spending $ 480     $ 789  
Consolidated      
Maintenance capital spending $ 517     $ 719  
Discretionary capital spending 387     1,478  
Total capital spending $ 904     $ 2,197  


Delek Logistics Partners, LP
Segment Data (Unaudited)
  Three Months Ended March 31,
  2019   2018
Pipelines and Transportation Segment:      
Throughputs (average bpd)      
Lion Pipeline System:      
  Crude pipelines (non-gathered) 28,683     54,728  
  Refined products pipelines to Enterprise Systems 23,092     49,754  
SALA Gathering System 16,998     16,672  
East Texas Crude Logistics System 18,113     18,062  
       
Wholesale Marketing and Terminalling Segment:      
East Texas - Tyler Refinery sales volumes (average bpd) (1) 68,577     73,244  
Big Spring marketing throughputs (average bpd) (2)

87,741     75,139  
West Texas marketing throughputs (average bpd) 13,314     15,942  
West Texas gross margin per barrel $ 3.56     $ 5.16  
Terminalling throughputs (average bpd) (3) 152,469     143,476  
 
(1) Excludes jet fuel and petroleum coke.
 
(2) Throughputs for the three months ended March 31, 2018 are for the 31 days we marketed certain finished products produced at or sold from the Big Spring Refinery following the execution of the Big Spring Marketing Agreement, effective March 31, 2018.
 
(3) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, our El Dorado and North Little Rock, Arkansas and our Memphis and Nashville, Tennessee terminals. Throughputs for the Big Spring terminal for three months ended March 31, 2018 are for the 31 days we operated the terminal following its acquisition effective March 1, 2018.  Barrels per day are calculated for only the days we operated each terminal. Total throughput for the three months ended March 31, 2018 was 11.3 million barrels, which averaged 125,639 bpd for the period.
 
     
  Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Paline Pipeline Tariff Increase  
           
  ($ in millions) Annual Monthly    
           
  Forecasted Incremental Net Income $ 10.8   $ 0.9      
  Add Forecasted Incremental Amounts for:        
  Interest Expense, net        
  Depreciation and amortization        
  Forecasted Incremental EBITDA $ 10.8   $ 0.9      
           
           

Investor / Media Relations Contact:
Keith Johnson
Vice President of Investor Relations                       
615-435-1366

Media/Public Affairs Contact:
Michael P. Ralsky
Vice President - Government Affairs, Public Affairs & Communications
615-435-1407