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Delek Logistics Partners Reports Q4/2016

|Includes: Delek Logistics Partners LP (DKL)

First off - I do not know the Delek story - so the alarm bells that follow in this intro text could be false alarms. It does have a GP - but I do not see any drop downs in my stats. I do see a strongly growing GP take from DCF. I see distribution coverage disappearing. The credit metrics are better than average - but not by much. There is a big problem potential in this fact - all of the debt is credit facility debt.

If you own DKL for the near 8% yield and 15% LTM (last twelve month) distribution growth, you probably think you own an undiscovered gem. But I see a boat load of 'potential' problems that merit immediate attention. I need a 2017 DCF number provided in company guidance along with a very convincing story on how that DCF will happen. I need to know there will be a swift shift toward some longer term debt. I fail to see a good connection between the operating metrics and the financial metrics - so that means that if I owned DKL, I owned something I do not understand. I could be showing the wrong (or much less than meaningful) operating metrics. If the lone margin number is not meaningful (it does not appear to correlate with EBITDA or DCF), then why is that the lone margin number they are revealing? Why is the debt growing when the DCF is flat? Why is the DCF so dang volatile? If you own this - you should know these answers. Please provide them in the comment section.

The numbers:

Delek Logistics Partners, LP operating metrics
  Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015 Q2-2015 Q1-2015 Q4-2014 Q3-2014 Q2-2014 Q1-2014 Q4-2013 Q3-2013 Q2-2013 Q1-2013
Lion Crude bpd 58,353 55,217 56,302 56,342 54,342 54,973 53,863 56,687 50,303 57,254 59,038 26,644 44,096 47,675 49,270 45,018
Lion refined bpd 52,895 47.974 53,670 53,779 60,549 54,397 58,572 55,929 56,343 65,439 59,888 31,773 55,637 52,301 47,315 43,359
SALA bpd 16,518 17,237 18,288 19,001 19,741 20,264 21,305 21,538 23,949 22,258 21,300 23,113 21,904 21,921 2,661 22,130
El Dorado Rail             2,964                  
Tyler Refinery 68,114 67,812 70,188 66,414 66,950 75,313 66,860 26,956 62,172 59,659 61,231 62,432 55,279 61,698 64,973 53,086
West Texas Marketing 13,906 12,164 12,594 14,370 45,488 18,824 17,490 16,645 15,441 17,923 17,451 15,999 18,009 18,966 19,082 16,555
West Texas Margin $1.96 $1.16 $2.13 $0.53 $1.05 $1.50 $1.31 $1.40 $6.36 $2.20 $6.52 $3.57 $1.24 $1.63 $2.20 $3.69
Terminalling bpd 119,934 120,099 126,476 118,218 114,136 126,051 113,578 66,828 110,396 95,024 98,962 86,600 69,994 74,024 13,961 13,836

Delek Logistics Partners, LP financial metrics

  Q4-2016 Q3-2016 Q2-2016 Q1-2016 Q4-2015 Q3-2015 Q2-2015 Q1-2015 Q4-2014 Q3-2014 Q2-2014 Q1-2014 Q4-2013 Q3-2013 Q2-2013 Q1-2013
Revenues 124,680 107,470 111,853 104,056 108,931 165,092 172,134 143,512 173,347 228,036 236,343 203,527 223,097 243,295 230,141 210,684
Costs 105,517 90,469 89,341 85,082 91,069 143,245 150,995 127,098 151,536 210,794 212,232 187,668 209,755 230,408 217,516 202,684
EBITDA 24.377 22.049 27.118 23.741 23.623 26.095 25.734 20.914 25.886 21.089 27.734 19.366 16.704 15.731 14.997 11.751
DCF dollars 18.487 19.105 23.713 20.423 18.901 22.016 20.943 16.667 21.599 17.506 23.856 15.949 13.295 12.892 12.776 6.928
GPs DFC dollars 3.994 3.382 2.775 2.253 1.784 1.383 1.109 0.887 0.855 0.598 0.620 0.293 0.227 0.250 0.235 0.244
Net DCF dollars 14.493 15.723 20.938 18.170 17.117 20.633 19.834 15.780 20.744 16.908 23.236 15.656 13.068 12.642 12.541 6.684
Units 24.367 24.380 24.367 24.367 24.359 24.369 24.360 24.356 24.328 24.326 24.290 24.280 24.193 24.187 24.158 24.092
DCF/unit $0.5948 $0.6449 $0.8593 $0.7457 $0.7027 $0.8467 $0.8142 $0.6479 $0.8527 $0.6951 $0.9566 $0.6448 $0.5401 $0.5227 $0.5191 $0.2774
Upcoming Distrib. $0.680 $0.655 $0.630 $0.610 $0.590 $0.570 $0.550 $0.530 $0.510 $0.4900 $0.475 $0.4250 $0.415 $0.405 $0.3950 $0.3850
Calculated Coverage 0.87x 0.98x 1.36x 1.22x 1.19x 1.49x 1.48x 1.22x 1.67x 1.42x 2.01x 1.52x 1.30x 1.29x 1.31x 0.72x
Reported Coverage 0.90x 0.99x 1.31x 1.19x 1.17x 1.50x 1.47x 1.23x 1.67x 1.42x 2.01x 1.61x 1.30x 1.38x 1.32x 1.39x

Broker1_DCF/unit   $0.64 $0.86 $0.74 $0.70 $0.85 $0.82 $0.65 $0.87              
LTM EBITDA 97.285 96.531 100.577 99.193 96.366 98.609 93.623 95.623 94.075 84.893 79.535 66.768 59.183      
Total Debt 392.600 375.000 362.550 357.900 351.600 325.150 316.900 316.364 251.750 230.000 239.000 260.500 164.800 161.000 90.000 90.000
Calculated Total Debt/EBITDA 4.03x 3.88x 3.60x 3.61x 3.65x 3.30x 3.38x 3.31x                
Reported Debt/EBITDA       3.48x 3.49x 3.11x 3.14x 3.00x 2.56x 2.55x 2.69x 3.21x 2.40x 2.28x 1.58x 1.70x
Interest Expense 3.695 3.409 3.284 3.119 3.042 2.843 2.616                  
Interest Coverage 6.60x 6.47x 8.26x 7.61x 7.76x 9.18x 9.84x    

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.