Arc Logistics Partners' (ARCX) CEO Vince Cubbage on Q2 2016 Results - Earnings Call Transcript

| About: Arc Logistics (ARCX)

Arc Logistics Partners LP (NYSE:ARCX)

Q2 2016 Results Earnings Conference Call

August 04, 2016, 05:00 PM ET

Executives

Steven Schnitzer - SVP, General Counsel and Secretary

Vince Cubbage - CEO and Chairman

Bradley Oswald - SVP, CFO and Treasurer

John Blanchard - SVP and President, Arc Terminals

Analysts

Tristan Richardson - SunTrust

Ryan Levine - Citigroup

Poe Fratt - D.A. Davison

Michael Gyure - Janney Montgomery Scott

Operator

Good day ladies and gentlemen and welcome to the Arc Logistics Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I would now like to introduce your host for today's conference, Mr. Steven Schnitzer, the Partnership's General Counsel. Sir, you may begin.

Steven Schnitzer

Thank you, [Indiscernible] and welcome everyone. After the market close today, Arc Logistics Partners released earnings for the second quarter of 2016. This evening we will be discussing these results and will open the call to questions after our remarks.

Before I turn the call over to Vince, I would like to remind you that we may make statements during today's call about our current views or expectations concerning the future performance of Arc Logistics that constitute forward-looking statements within the meaning of federal securities laws.

No assurance can be given, however, that these events will occur. Many factors could cause results to differ from management's expectations and actual results may differ materially from those projected in any forward-looking statements.

In addition, such results are subject to risk factors including those described in our annual report filed on Form 10-K and other reports filed with the SEC. Please note that we undertake no obligation to update or revise any forward-looking statements made during our call.

In addition, information we discuss on today's call is only current as of today, August 4, 2016 and any time-sensitive information we discuss may not be current or accurate as of a future date.

Finally, during our call today, we'll be discussing Arc Logistics' adjusted EBITDA and distributable cash flow which are non-GAAP financial measures. A reconciliation of adjusted EBITDA and distributable cash flow to the most directly comparable GAAP measure is included in the press release that we issued today, which has been furnished to the SEC on Form 8-K and posted on Arc Logistics' website.

I would like to now turn the call over to Vince Cubbage, our Chief Executive Officer. Vince?

Vince Cubbage

Thanks, Steven, and good evening everyone. Thank you all for joining us to discuss Arc Logistics Partners second quarter 2016 results. As usual, John Blanchard, President of Arc Terminals; and Bradley Oswald, the Partnership's Chief Financial Officer will join Steve and me on this call today.

Arc Logistics Partners is pleased to report another successful quarter. During the second quarter of 2016, our Partnership experienced record throughput volume of 162,500 barrels per day, a year-over-year increase of 154%.

Our second quarter revenue was $26.2 million and our adjusted EBITDA was $14.5 million, equaling year-over-year increases of 37% and 36% respectively. These significant increases were driven by the Partnership's completion of the Pawnee Terminal construction, the acquisition of the four Pennsylvania Terminals, the full quarter contribution from our Joliet Terminal and the addition of several new contracts entered into in the second half of 2015 and the first half of 2016.

The Partnership's second quarter 2016 percentage of take-or-pay revenue was 84%, in line with our second quarter 2015 metric. As we mentioned in the first quarter, our light product terminals are well-positioned to take advantage of the summer driving demand for transportation fuel in the markets we serve.

As a result, we saw meaningful year-over-year growth in our refined product network volumes, including our legacy volumes and quarter-over-quarter growth in our newly acquired Pennsylvania Terminals.

This positive effect is evident across our operating and financial results and we believe our assets will continue to have incremental growth volumes, in part due to our independent business strategy.

Our heavy products terminals delivered stable results despite the volatile commodity prices for the products they handle. While our customers match the commodity risk itself, we continue to identify and develop ways in which our logistics assets can better support our customers who are principally focused on the storage, throughput, and marketing of asphalt, fuel oil, and other similar products.

Our Gulf Coast and West Coast terminals are experiencing solid demand and generally our available storage is fully contracted based on tanks in service. As a result, we're now negotiating with customers to bring additional tanks back into service and add incremental throughput and handling capabilities to our terminals.

For instance, in the second quarter of 2016, we commenced the installation of infrastructure for two tanks supported by a new multiyear contract at our Blakeley Terminal.

Our terminals that principally have crude oil continue to service customers under long-term take-or-pay contracts. While the take-or-pay contract terms solidly benefit us in these markets, we are proactively working with our customers to increase their optionality and improve their efficiencies around our terminal assets.

For example, we recently amended our agreement with ExxonMobil in Joliet to increase the product slate that can be brought through the terminal and among other things reduced restrictions around scheduling and nomination of volumes.

This was accomplished with no change to the take-or-pay contract minimums or expected quarterly cash flow of the terminal. And this win-win negotiation style is central to Arc's business model and we expect it to continue to expand our relationship with ExxonMobil in Joliet, as well as in other terminals across our network.

Regarding our Gulf LNG investment, we continue to monitor the E&I arbitration process. A three member arbitration panel has been selected and hearings have been scheduled for January 2017.

As we've mentioned, defense for the E&I arbitration is being led by our partner and the operator of the facility. And we continue to believe the claim is without merit. Our financials reflected to require contract payments continued to be made under the associated terminal contracts.

As we look to the future, we're pleased with the growth we're experiencing and how that has positively impacted our financials. Last quarter, we mentioned we were actively evaluating commercial opportunities, leased available storage capacity to new and existing customers in the Gulf Coast, such that the infrastructure project that is underway at the Blakeley Terminal as I discussed a few minutes ago.

In addition to adding incremental tankage, we're completing a number of internal growth and asset integrity projects across the business. A few of these examples include, first, we're nearly complete with the construction of our third 100,000-barrel tank at Pawnee associated with the -- especially with the expectations increased revenue growth.

We already have projects underway at our newly acquired Pennsylvania Terminals where the experienced operating team that came with those four terminals has embraced the combinations and has been working effectively to plan and prioritize the asset monetization work that we believe will lead to the addition of new customers and incremental throughput volumes. And we're completing an engineering study to build out the marine infrastructure at Joliet Terminal to develop new business opportunities.

Finally, we continue to work on a number of specific strategic acquisition opportunities that are attractive additions to our terminal network. While, of course, we can't comment specifically on any of these projects and there's no certainty that any particular acquisition will be completed, our business development effort is spending considerable time and effort on a number of attractive acquisition candidates and we continue to work diligently on growing Arc's terminal portfolio.

And with that, I'll turn the call over to Bradley Oswald, our CFO. Brad?

Bradley Oswald

Thank you. Thanks Vince. Good evening everyone. Today we reported financial results for the second quarter ended 2016. Our adjusted EBITDA increased 36% to $14.5 million in the second quarter of 2016 as compared to $10.6 million for the same period of 2015.

The increase in second quarter was a result of the contribution from our recently acquired terminals in Colorado and Pennsylvania, a full quarter of operations at the Joliet Terminal, and increased throughput in our Brooklyn, Baltimore and Toledo Terminals, offset by the non-renewal of short-term agreements.

For the second quarter, we generated net income of $6.3 million as compared to $2.8 million for the same period of 2015. In addition to [Indiscernible], which resulted in increase to adjusted EBITDA, net income was impacted by an increase in interest expense, depreciation, and amortization expense attributable to the acquisition of the Pawnee and Pennsylvania Terminals and a full quarter of operations at Joliet.

During the quarter, we spent approximately $2.3 million by mean of capital expenditures. As discussed in prior quarters, the increase from the second quarter of 2015 was driven by the Partnership's strategic decision last year to accelerate future maintenance projects, including two dredging projects in the Gulf Coast and the rehabilitation of our existing marine infrastructure in Chickasaw, Alabama.

The Partnership is accelerating its tank inspection and repair program in certain terminaling markets to take advantage of new commercial opportunities and in addition, Partnership spent approximately $4.9 million on growth capital projects which John Blanchard will discuss in more detail shortly.

Distributable cash flow for the quarter ended June 30, 2016 increased 16% to $10.1 million versus $8.7 million for 2015. This number includes the $2.6 million distribution from the Partnership's ownership interest in Gulf LNG.

On July 28, 2016, we declared a quarterly cash distribution of $0.44 per unit or $1.76 per unit on an annualized basis. Quarterly distribution represents a 3.5% increase from the second quarter distribution of 2015. The distribution will be paid on August 12, 2016, to unitholders of record on August 8, 2016.

The Partnership is proud of its continued financial and operational success this quarter remains focused on executing its 2016 business plan.

I will now turn the call over to John Blanchard for a business and market update. John?

John Blanchard

Thanks Brad. Good evening, everyone. I'd like to start by letting everyone know that during the second quarter, we received for the second year in a row the Safety Excellence Award from the International Liquid Terminals Association for our safety performance in 2015.

We're proud of these achievements and we'll continue to make safety the highest priority of our operations. After health and safety, our primary focus for the quarter was on asset integration, new and existing customer growth, and capital investment in our assets. The integration of the Joliet, Pawnee and Pennsylvania Terminals continues to be successful as we invest in these assets, train personnel, and gain efficiencies in operations.

With respect to customer growth, our total throughput increased from approximately 64,000 barrels a day in Q2 2015 to approximately 162,000 barrels a day in Q2 2016, representing an increase in volume of over 150%.

Although much of the increase was attributable to volumes from the newly acquired Joliet, Pawnee and Pennsylvania Terminals, we did see an increase in utilization and many of our legacy light and heavy product terminals as well.

As we discussed last quarter, we were able to execute new customer contracts and amendments that resulted in increased storage and throughput in our terminals and the increase we witnessed this quarter was also partially related to the activity from agreements we executed in late 2015 and Q1 2016.

We were also successful in adding new contracts and amendments to our terminaling network in Q2 2016. The contracts range from short-term new agreement to five year extensions of existing agreements.

As has been previously discussed, we believe that customers extending short-term contracts to long-term contract is a reflection of our high level of customer service and exemplify their business strategy of supporting customer growth through third-party terminal assets.

In order to continue to support our growth, we have concentrated our efforts on completing several projects at our terminals. Many of these include small projects made to assist new and existing customers to optimize the utilization of our assets, including changing product tankage, retrofitting tankage and piping, and increasing loading or unloading rates.

In several instances, projects were also completed to increase the efficiencies of our assets and/or lower our operating costs or energy consumption which is an ongoing focus for our management team.

I would also like to provide an update on some of the larger projects that we have identified on the last few calls and update the progress we have made. Our Chickasaw dock project continues to advance and has been a key aspect of some of our new customer agreements we have executed for this asset as it allows for a much higher utilization of our dock and has reduced vessel wait times. We remain on target to have this project primarily completed by Q3 2016.

Another sizable project that has been progressing is the construction of the Pawnee Terminal. We are on schedule to complete the installation of the third 100,000 barrel tank in third quarter 2016 with the installation of the four 1,000 barrel a day tanks being completed closer to the beginning of Q4 2016. As has previously been stated, these projects are instrumental in meeting requirements of our customers and allows us to take advantage of growth opportunities in the market.

With respect to our most recent acquisition of the four Pennsylvania Terminals as we discussed last quarter, these assets require incremental capital that we expect to invest over the next several months for the purpose of inspecting, repairing tanks, placing tanks in the service, enhancing truck racks, and installing bio-diesel blending system.

Many of these projects were active in the second quarter 2016 with expected completion date occurring over the next two quarters. While we focus on improving these assets throughout the year, we have been successful on attracting new business at these terminals and we'll continue to pursue additional customer agreements over the next several months as additional tankage is placed back into service and this new infrastructure is installed.

In closing, Arc will continue to build on the growth that is achieved in 2016 and we look to maintain this trend and execute our business strategy.

With that, I'll turn the call back over to Vince.

Vince Cubbage

Thanks John. And thank you everyone for joining us today. We're ready to take questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]

And our first question comes from the line of Tristan Richardson with SunTrust. Your line is now open.

Tristan Richardson

Hey, good evening guys.

Vince Cubbage

Hey Tristan.

Tristan Richardson

Just curious on the Joliet opportunity or at least the increased scope there. I mean is there opportunity with that contract to -- I know you said that sort of take-or-pay terms were unchanged, but is there opportunity to earn above that with this new contract? And is it related to the heating project you guys have talked about in the past or is this something different?

Vince Cubbage

Yes, so Tristan, there's a couple of things going on, yes, there is an investment that we made that allows the customer to bring in additional barrel that they were unable to bring in when they executed the contract initially and with that will come incremental revenue when the barrel -- when those barrels are delivered to the terminal.

And look, the amendment has created more optionality for that customer and allows us to -- and allows them actually to work with other marketers to bring in incremental barrels in associates.

Tristan Richardson

Okay. But you don't necessarily expect an incremental cash impact from this contract, but it could provide that.

Bradley Oswald

It could very well, yes.

Tristan Richardson

Okay. No, that's helpful. And then could you talk a little bit about just sort of the competitive environment at Pawnee with the new terminal south of you guys also feeding into the lateral?

John Blanchard

The Buckingham terminal?

Tristan Richardson

Yes.

John Blanchard

Yes, so, there is something going on with respect to that specific terminal. We understand what their strategy is and then candidly, there are two tiers to their strategy. They are looking to deliver in a separate stream than we have at our Pawnee Terminal and outside of that, they are also looking for barrels coming in from different parts of the Niobrara. So, we don't expect to see a lot of attrition of our customer base with respect to their Buckingham facility.

Tristan Richardson

Okay. And understood -- the contract protections are in place. So, even if volumes were to deteriorate, you're protected, but I didn't know if there was a volume impact from that project.

John Blanchard

At this point, we don't expect to see one.

Tristan Richardson

Okay.

John Blanchard

With relation to that, not at all.

Tristan Richardson

Helpful. And then lastly, Vince, I always ask just sort of generally what you're seeing in the M&A environment out there, I mean we obviously hear a lot about private equity and private capital out there. I'm curious sort of any change in the market that you're seeing?

Vince Cubbage

It's a great open-ended question. We haven't seen any reduction in the number of assets that have been on the market. In a macro sense, we've seen some of the assets that come to market not transact, and sort of each deal, of course, is very unique.

But this still has not yet been a closing of the gap between sellers' expectations, some other sort of craziest froth evaluations and buyers' willingness to transact at a multiple. So, there is a bid out spread between some of the assets throughout there and then having yet transacting.

Some of the assets out there are stuck between sort of changing strategies around the field, I think those are pretty well-known in the industry. And we've been a part of all of those processes, we've looked at sort of anything that's relevant to our business, we've done our very best to look at it. I don't think we've missed anything.

Where we see the most interesting current opportunities aren't same as -- that are assets specific that are privately negotiated and just negotiated between buyer and seller. A lot of the stuff that's out -- some of the investment banks are working on is a lot bigger, it's drawing more competition and it's a large macro play. Many of the things we're spending most of our time on are more customer-driven custom solutions. And we hope to make progress on that because some of those have very interesting multiple.

Tristan Richardson

That's great. Thank you, guys. I'll turn it over.

Operator

Thank you. And our next question comes from the line of Ryan Levine with Citigroup. Your line is now open.

Ryan Levine

Good evening guys. What's the decision process timeline post-January 2017 for the Gulf LNG dispute? Is it likely to be resolved within a matter of weeks from that meeting?

Steven Schnitzer

Sure. It's Steve Schnitzer of General Counsel. And so the way arbitration hearing play out is after the hearing is concluded there is often an opportunity for either side to deliver post-hearing memorials, it's kind of like a brief and arbitration panel that can give parties approximately 30 days to do that.

And then it takes a while for the arbitration panel to render their decision. It really depends on the panel and the complexity of the arbitration. So, based off of historical precedence, you see arbitration panel rendering decision anywhere from say, two to three months from the early side to even as long as a year on the top end and you just can't predict how long it'll take.

Ryan Levine

So, it can take anywhere from February 2017 to February 2018, is that what you're suggesting?

Steven Schnitzer

Well, I guess in the long sight that would be correct, although we don't anticipate it to take that long.

Ryan Levine

Okay. And then regarding your ethanol blending capability, would you be able to provide some color around the number of gallons that you've blended in the past year or what your capacity is on that across your platform?

John Blanchard

We blend 10% of all our gasoline volumes. So, I'd have to look back and try to figure out what those are and we generally don't share volume by product. But I can say consistently that we're blending in every location that we have gasoline, which is all of our light products terminals.

Ryan Levine

Are you expecting a meaningful uptick in your cash flow given the rent development as we look out the next two to three years of your contracts fell off?

John Blanchard

Yes, so our contracts do not have any rent involvement, the way that we're -- our contracts are structured is simply an ethanol blending fee. So, when ethanol is injected into a truck or in line flowing into a truck, we'll get a fee for that. There's no link to rents.

Ryan Levine

But as your contracts fell off, presumably the value of that blending capability increases? Are you expecting to capture that is what I'm trying to get at?

Vince Cubbage

Well, I think the one thing we offer as an independent which some of the other competing terminals do not do, is we do allow customers to maintain their own rent, a lot of our competing terminals that are owned by majors, they force other customers to basically buy a finished product from them and the owner of the terminal will keep the rent themselves. So, we can differentiate ourselves from our competition that way for sure.

Bradley Oswald

And Ryan just furthermore, just to get a better understanding of that, most of our gasoline customers are typically are one year evergreen so they're continually renewing on an annual basis because they're effectively supplying end user demand. And they're providing their own ethanol and we're just blending on their behalf and they keep the rents.

Ryan Levine

Okay. To the extent that they keep on renewing on an evergreen feature, they're capturing the benefit as oppose to you.

John Blanchard

That's right.

Ryan Levine

Okay. And then, is there any color you could provide around the background for your restructuring of your Exxon contract?

Vince Cubbage

I'm sorry, say that again?

Ryan Levine

You mentioned that you adjusted the contract terms for your Exxon contracts increased volumes, is there any color you provide around the background or what type of incremental upside you see from that?

Vince Cubbage

Yes, so, as we discussed it since the acquisition of that asset, we identified one of the strategies that we knew would add value to that asset was to install the incremental heating infrastructure to allow the delivery of heated products and that can include heavy bitumen and it can include BTO [ph], include certain other feedstock.

And what that does is it creates optionality for ExxonMobil to bring in incremental barrels or other customers to deliver incremental barrels. This form of the agreement that was executed did not have the -- did not offer that ability to bring in the heated product into the terminal.

So, one of the key aspects there was to obviously put that availability into the agreement. So, they have that option and certainly a long-term strategy of that asset we feel is to be able to offer up incremental or different types of crude oil and expand what the customer can bring in. So, it did yes. It opened up the optionality and created opportunity.

Ryan Levine

Okay, great. Thank you.

Operator

Thank you. And our next question comes from the line of [Indiscernible] with Stifel. Your line is now open.

Unidentified Analyst

A couple of quick ones for me. Can you just expand a little bit more on the Blakeley terminals and the progress you're making there?

John Blanchard

Sure. This is in reference to the comment about the infrastructure?

Unidentified Analyst

Yes.

John Blanchard

Yes. So, we've entered into an agreement with a new customer, a long-term agreement that -- with a customer that's actively growing and basically what that requires for them to come into our asset is what's called tank lining which is basically the coating within the tank itself along with some tank interconnections with piping.

And basically that is something that the customer wants to maintain their product quality. So, it's an investment within these assets, it's for a long-term contract and we're in the middle of doing that for them right now.

Unidentified Analyst

Okay. And then I guess going over the Pennsylvania Terminals, if I understood you correctly, you've got two of them finished through the second quarter and you've got another two that you'll finish up by the end of the year?

John Blanchard

No. I'm sorry I wasn’t clear on that. So, we're in the process of upgrading and putting tanks back into service and adding bio-diesel to all four of those. Each of them has their own unique projects that they need to done.

Specifically, some of the larger projects were several tanks were out of service, biodiesel was needed in three of them, each of them needed new automation systems and truck rack enhancements. So, we're in the process of doing all four of those simultaneously.

Unidentified Analyst

I got you. So, at this point, none of them are back in service and when do you anticipate them being back in service?

John Blanchard

So, they are in service while we do this, so all of them are in service, all we're doing right now is just improving the infrastructure.

Unidentified Analyst

Okay. All right. Thanks very much.

Vince Cubbage

Thanks [Indiscernible].

Operator

Thank you. And our next question comes from the line of Poe Fratt with D.A. Davidson. Your line is now open.

Poe Fratt

Thanks guys. I compliment you on the detail you gave in your press release if you could, I think -- it was interesting you grouped Pawnee and Pennsylvania together as far as the $3.5 million incremental benefit, any chance you'd break that out further.

Bradley Oswald

Unfortunately, Poe, we can't. Obviously, you understand why, but unfortunately, the way we looked at it was those are two acquisitions that were completed in the second half of 2015 that aren't reflective, and so we looked at them altogether and we typically don't describe individual terminal performance.

Poe Fratt

Yes. I thought I'd try. And then when you look at the amendment to Exxon, did that extend the term of the contract at all, was there -- or does it -- is it still a three-year agreement?

Vince Cubbage

So, what that agreement previously had was a set amount of barrels, that if Exxon gets certain amount of throughput, it would add up that number of barrels, throughput to our facility, this lot in three years.

So, it was either that -- as a certain amount of barrels going through the facility or three years, right now, it's now three years. So, it could have expired earlier, hopefully, I'm explaining that well.

Poe Fratt

Yes, you did. I mean they're not putting -- essentially, they are not putting as much through as they expected. So, now it's a three-year contract?

John Blanchard

Yes. It's a three-year contract and one of the other things, Poe that we added was that if the customer has not hit their minimums during any specific quarter, they have the ability to what we call the deficiency volumes; they have the ability to add those deficiencies volumes past year three. So, in essence, if they elect to do so, they can go beyond the three years.

Poe Fratt

Do they like a year expiration or six month expiration on those, John, are they open ended?

Vince Cubbage

So, the way it works, first of, there are two optional renewal terms built into the contract. In addition, on these deficiency period volume as John was referring to, the customer has to make a decision throughout the first three year period when to take them. And they will go on for a period of time beyond the initial term of the contract.

John Blanchard

I think the other point everyone chipping on is, the point is that those deficiency barrels carry an additional charge.

Vince Cubbage

Yes, fair enough.

Poe Fratt

Is there a penalty fee?

John Blanchard

It's not penalty fee, it's just a specified throughput rate.

Poe Fratt

Got you. And then speaking to minimums how was Pawnee relative to the MBCs that you have at that terminal?

Vince Cubbage

We don't give again similar to -- we don't really disclose on the MBCs and relationship to the contract, but it's suffice to say the contract is -- the assets performing -- the volumes are performing in line with our expectations when close our transactions.

Poe Fratt

Got you. And then, Brad, color on the drop in G&A, it looks like what you had a $1.6 million as far as due diligence expenses that weren't there this quarter. Can you give us some color there?

Bradley Oswald

Yes, a lot of that was both the due diligence expenses from prior years. And as you recall, right last year we did both the Joliet and Pawnee transactions. And as a result of those going away, there are some minimal expenses this year really related to the [Indiscernible] transaction. But in large measure, it was the reduction of acquisition-related expenses that weren't completed.

Poe Fratt

So, what's a good run rate for the second half?

Bradley Oswald

I think what you're seeing in this quarter is probably a good run rate. All things being equal, obviously, it's a partnership moves toward, but that's a good run rate as we think about it.

Poe Fratt

And it seems like John is spending a little more money than I thought he would, so CapEx were what close to $6 million during the quarter. Do you--?

Bradley Oswald

He is spending it faster than I would.

Poe Fratt

What's sort of the target for the full year as far as CapEx?

Bradley Oswald

So, on the maintenance side, Poe, I think we've been guiding everyone to approximately $6 million. That's still a good number. I think, when we were in the last call, we had indicated, we thought we would be sort of trending -- we'd be more balanced over the second and third quarter. I think we're seeing a little bit more in the second quarter and I would suspect that the second quarter was accelerated and that the third quarter will be reduced.

On the growth side, I think we're trending towards anywhere from $12 million to $15 million on the CapEx side and that really just determines on the opportunities and the timeline around the Pennsylvania Terminal, some of the opportunities -- some of the construction associated with the Pawnee Terminal, and then if there's any opportunity that we find that there is incremental -- sort of immediate incremental cash flow, we're obviously going to take advantage of those and some of them are small and some of them are larger projects.

Poe Fratt

And then if you can give me a flavor for the tone of pricing on either the new contracts, the extensions or renewals, either sort -- what's the sort of a general sense on the pricing of those?

John Blanchard

So, I'll give you just a relative comparison to what we've seen historically Poe. The prices have been in line where they've been historically. Pennsylvania, that market, the pricing is much in line with our Midwest assets and some of our Southeast terminals or light products terminals.

And then in the new contracts down in Mobil, our Gulf Coast as we can call it, bigger area, those are right in line where we've historically seen our volume storage contracts as well.

Poe Fratt

So, historically, I mean John, what low single-digits as far as percentage increases or can I get a flavor for that?

John Blanchard

I would say they are flat.

Poe Fratt

Flat. Okay.

John Blanchard

I mean that yes, to Brad's point, the CPI escalators for those that are under our evergreen provisions. So, we do see those. But generally, what you're seeing is a narrow range and I'm obviously not going to tell you what that range is to give those numbers away. But they've been consistent since our ownership of the terminal themselves.

Poe Fratt

Great. Thanks for your time guys.

Vince Cubbage

Hey Poe, [Indiscernible] question, you will see us in a lot of time working on increasing volumes. So, in this market, you can take a flat rate, you can put an incentive structure and where John and the guys are spending time, negotiating contracts and contracts renewals in it, focused around volume metrics, and you are seeing those volume metrics flow through our numbers.

Operator

Thank you. And our next question comes from the line of Mike Gyure with Janney. Your line is now open.

Michael Gyure

Yes, guys. I think all my questions have been answered. Thanks.

Operator

Thank you. And I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Vince Cubbage for any final remarks.

Vince Cubbage

Great. Thank you everyone for your attention this evening and for dialing in and listening to our call. We appreciate your support and we look forward to speaking with you in the future. Everybody have a good night.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.

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