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Item 5. Market for Registrant’s Common Equity

2021-03-01 compared with 2020-02-28 · 26 added, 28 removed, 54 unchanged (50% of the section changed)

2 unchanged sentences

Our common units trade on the NYSE under the symbol "DKL." There were four holders of record of our common units held by the public as of February 19, 2021.

In addition, as of February 21, 2020 , Delek Holdings and its affiliates owned 15,294,046 of our common units and 498,482 of our general partner units (a 2.0% general partner interest), which together constitute a 63.4% ownership interest in us.

In addition, as of February 19, 2021, Delek Holdings and its affiliates owned 34,745,868 of our common units.

See Note 12 to the consolidated financial statements in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K, for a discussion of historic cash distributions.

6 unchanged sentences

◦ comply with applicable law, any of our debt instruments or other agreements;

provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of such reserves will prevent us from distributing the minimum quarterly distribution on all common units for the current quarter);

◦ provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters;

pursuant to the IDR Restructuring Transaction on August 13, 2020, the general partner will no longer receive any cash distributions;

• plus , if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.

Under our Partnership Agreement, working capital borrowings are generally borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners, and with the intent of the borrower to repay such borrowings within 12 months with funds other than from additional working capital borrowings.

Intent to Distribute the Minimum Quarterly Distribution

We intend to pay a quarterly distribution of at least $0.375 per unit per quarter, or $1.50 per unit on an annualized basis, to the extent we have sufficient available cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our general partner.

We believe our business should support our continued commitment to grow our distribution per limited partner unit by 5% annually through 2020.

However, we do not have a legal obligation to pay this distribution.

The amount of distributions paid under our policy, and the decision to make any distribution, is determined by our general partner, taking into consideration the terms of our Partnership Agreement.

General Partner Interest and Incentive Distribution Rights

Our general partner is currently entitled to 2.0% of all quarterly distributions that we make prior to our liquidation.

This general partner interest is represented by 498,482 general partner units.

Our general partner has the right, but not the obligation, to contribute up to a proportionate amount of capital to us to maintain its current general partner interest.

The general partner’s 2.0% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its 2.0% general partner interest.

Our general partner also currently holds incentive distribution rights that entitle it to receive increasing percentages, up to a maximum of 48.0%, of the cash we distribute from Operating Surplus (as defined in our Partnership Agreement) in excess of $0.43125 per unit per quarter.

The maximum incentive distribution right of 48.0% was achieved in 2019, 2018 and 2017.

The maximum distribution of 48.0% does not include any distributions that our general partner or its affiliates may receive on common or general partner units that it owns.

Market for Registrant's Common Equity, Stockholder Matters and Issuer Purchases

Unregistered Sales of Equity Securities

Pursuant to the terms of our Partnership Agreement, our general partner has the right to maintain its proportionate 2.0% general partner interest in the Partnership.

The following table provides information regarding the exercise of such right by our general partner during the three months ended December 31, 2019 .

The sale listed below was exempt from registration under Section 4(a)(2) of the Securities Act.

Number of General Partner Units Sold

Price per General Partner Unit

Consideration Paid to the Partnership

December 10, 2019

Incentive Distribution Rights

Effective August 13, 2020, the Partnership closed on the IDR Restructuring Transaction and the general partner no longer receives any cash distributions.

Prior to August 13, 2020, our general partner was entitled to 2.0% of all quarterly distributions that we make prior to our liquidation.

Our general partner had the right, but not the obligation, to contribute up to a proportionate amount of capital to us to maintain its current general partner interest.

Our general partner held IDRs that entitled it to receive increasing percentages, up to a maximum of 48.0%, of the cash we distributed from operating surplus (as defined in our Partnership Agreement) in excess of 0.43125 per unit per quarter.

The maximum distribution was 48.0% and did not include any distributions that our general partner or its affiliates may have received on common or general partner units that it owns.

As of August 12, 2020, the IDRs held by our general partner were entitled to receive the maximum distribution.

Financial Data

SELECTED FINANCIAL DATA

8 unchanged sentences

Prior to each acquisition date, we refer to the Acquisitions from Delek Holdings collectively as our “Predecessors.”

During the year ended December 31, 2018 , the Partnership, through its wholly-owned subsidiary DKL Big Spring, LLC, acquired the Big Spring Logistic Assets from Delek Holdings, which are primarily located at or adjacent to the Big Spring Refinery.

During the year ended December 31, 2019, the Partnership, through its wholly-owned subsidiary DKL Big Spring, LLC, acquired the Big Spring Logistics Assets from Delek Holdings, which are primarily located at or adjacent to the Big Spring Refinery.

The Big Spring Logistic Assets Acquisition was considered a transaction between entities under common control.

During the year ended December 31, 2020, the Partnership, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering Assets from Delek Holdings, located in Howard, Borden and Martin Counties, Texas.

In addition, the Partnership, through its wholly-owned subsidiary DKL Transportation, LLC acquired the Trucking Assets from Delek Holdings.

The Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition were considered transactions between entities under common control.

However, prior periods have not been recast, as these assets did not constitute a business in accordance with Accounting Standard Update 2017-01, "Clarifying the Definition of a Business."

As our Predecessors recorded revenues, general and administrative expenses and financed operations differently than the Partnership, our financial results may not be comparable.

See "Factors Affecting the Comparability of Our Financial Results" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.

The following tables should be read in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements in Item 8.

See "Factors Affecting the Comparability of Our Financial Results" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report on Form 10-K for additional information.

Financial Data

2 unchanged sentences

Statements of Income and Other Comprehensive Income Data:

Net revenues $ 563,418 $ 583,992 $ 657,609 $ 538,075 $ 448,059

Operating costs and expenses 383,625 458,180 531,852 449,898 370,409

3 unchanged sentences

Income tax expense (benefit) 223 967 534 (222) 81

Loss attributable to Predecessors

Net income attributable to partners $ 159,256 $ 96,749 $ 90,182 $ 69,409 $ 62,804

3 unchanged sentences

Common - basic

$ 4.18 $ 2.61 $ 2.65 $ 2.09 $ 2.08

Common - diluted

$ 4.18 $ 2.61 $ 2.65 $ 2.09 $ 2.07

Subordinated - Delek Holdings basic and diluted

$ — $ — $ — $ — $ 2.19

Weighted average limited partner units outstanding:

1 unchanged sentence

Common units - diluted

33,597,418 24,418,641 24,396,881 24,367,972 22,558,717

Subordinated units - Delek Holdings basic and diluted

— — — — 1,803,167

Cash distributions per limited partner unit

$ 3.605 $ 3.440 $ 3.120 $ 2.835 $ 2.575

Year Ended December 31,

2 unchanged sentences

Property, plant and equipment, net $ 464,812 $ 295,044 $ 312,562 $ 255,068 $ 251,029

Total assets 956,417 744,447 624,593 443,530 415,547

Total debt, including current maturities 992,291 833,110 700,430 422,649 392,600

1 unchanged sentence

Total deficit (108,301) (151,119) (134,823) (29,225) (13,284)

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity