Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
General
Our common units represent limited partner interests in us that entitle the holders to the rights and privileges specified in our Partnership Agreement. 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 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.
Distributions of Available Cash
Our Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date.
Definition of Available Cash
Available cash generally means, for any quarter, all cash and cash equivalents on hand at the end of that quarter:
• less the amount of cash reserves established by our general partner to:
◦ provide for the proper conduct of our business (including cash reserves for our future capital expenditures and anticipated future debt service requirements and refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to the FERC rate proceedings or rate proceedings under applicable law subsequent to that quarter);
◦ comply with applicable law, any of our debt instruments or other agreements; or
◦ 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.
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.
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Financial Data
ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth certain selected consolidated financial data as of and for each of the five years in the period ended December 31, 2020, along with descriptions of certain transactions that occurred during the year ended December 31, 2015. All financial results have been adjusted for subsequent transactions with our Predecessors as noted below.
During the year ended December 31, 2016, the Partnership entered into various transactions with Delek Holdings and our general partner pursuant to which we acquired the following assets from Delek Holdings:
• two crude oil rail offloading racks, which are designed to receive up to 25,000 bpd of light crude oil or 12,000 bpd of heavy crude oil, or any combination of the two, delivered by rail to Delek Holdings' El Dorado Refinery (the "El Dorado Refinery") and related ancillary assets (the “El Dorado Assets”) effective March 31, 2015 (such transaction, the "El Dorado Rail Offloading Racks Acquisition"); and
• a crude oil storage tank (the "Tyler Crude Tank") with a shell capacity of approximately 350,000 barrels located adjacent to Delek Holdings' Tyler Refinery (the "Tyler Refinery") and certain ancillary assets (collectively, with the Tyler Crude Tank, the "Tyler Assets") effective March 31, 2015 (such transaction, the "Tyler Crude Tank Acquisition"); the Tyler Assets, together with the El Dorado Assets, are hereinafter collectively referred to as the "Logistics Assets".
The El Dorado Rail Offloading Racks Acquisition and the Tyler Crude Tank Acquisition were accounted for as transfers between entities under common control; such acquisitions hereinafter collectively referred to as the "Acquisitions from Delek Holdings." As entities under common control with Delek Holdings, transfers between entities under common control are accounted for as if the transfer occurred at the beginning of the period, and prior years have been retrospectively adjusted to include the historical results of the assets acquired in the Acquisitions from Delek Holdings prior to the effective date of each acquisition for all periods presented. Prior to each acquisition date, we refer to the Acquisitions from Delek Holdings collectively as our “Predecessors.”
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, in this Annual Report on Form 10-K 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, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.
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Financial Data
Year Ended December 31,
(In thousands, except units and per unit data) 2020 2019 2018 2017 2016
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
Operating income 179,793 125,812 125,757 88,177 77,650
Non-operating costs and expenses 20,314 28,096 35,041 18,990 14,765
Income before income tax expense (benefit) 159,479 97,716 90,716 69,187 62,885
Income tax expense (benefit) 223 967 534 (222) 81
Net income attributable to partners $ 159,256 $ 96,749 $ 90,182 $ 69,409 $ 62,804
Less: General partners' interest in net income, including incentive distribution rights 18,724 33,080 25,543 18,429 12,193
Limited partners' interest in net income $ 140,532 $ 63,669 $ 64,639 $ 50,980 $ 50,611
Net income per limited partner unit:
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:
Common units - basic 33,594,284 24,413,294 24,390,286 24,348,063 22,490,264
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,
(In thousands) 2020 2019 2018 2017 2016
Balance Sheet Data:
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
Total liabilities 1,064,718 895,566 759,416 472,755 428,831
Total deficit (108,301) (151,119) (134,823) (29,225) (13,284)
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Management's Discussion and Analysis