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Segment Data (Notes)
 3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Segment Data
Segment Data
We report our assets and operating results in two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling:
•
The assets and investments reported in the pipelines and transportation segment provide crude oil gathering, and crude oil, intermediate and finished products transportation and storage services to Delek's refining operations and independent third parties.
•
The assets in the wholesale marketing and terminalling segment provide marketing and terminalling services to Delek's refining operations and independent third parties.
Our operating segments adhere to the same accounting policies used for our consolidated financial statements. Our operating segments are managed separately because each segment requires different industry knowledge, technology and marketing strategies. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each reportable segment based on segment contribution margin. Segment contribution margin is defined as net sales less cost of sales and operating expenses, excluding depreciation and amortization.
On February 10, 2014 and March 31, 2015, we acquired the El Dorado Terminal and Tank Assets and the Logistics Assets, respectively, from Delek. Our historical financial statements have been retrospectively adjusted to reflect the results of operations attributable to the El Dorado Terminal and Tank Assets and the Logistics Assets as if we owned the assets for all periods presented. The results of the El Dorado Terminal are included in the wholesale marketing and terminalling segment. The results of the El Dorado Tank Assets and the Logistics Assets are included in the pipelines and transportation segment.
The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):
 
 
Three Months Ended
 
 
March 31,
 
 
2015
 
2014
Pipelines and Transportation
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
23,985

 
$
17,501

     Third-Party
 
7,017

 
2,767

          Total Pipelines and Transportation
 
31,002

 
20,268

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
4,813

 
1,126

     Operating expenses (1) (2)
 
6,918

 
7,176

     Segment contribution margin
 
$
19,271

 
$
11,966

 Capital spending (excluding business combinations) (1) (2)
 
$
4,553

 
$
2,288

 
 
 
 
 
Wholesale Marketing and Terminalling
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
8,295

 
$
7,781

     Third-Party
 
104,215

 
175,478

          Total Wholesale Marketing and Terminalling
 
112,510

 
183,259

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
103,594

 
171,083

     Operating expenses
 
3,859

 
2,320

     Segment contribution margin
 
$
5,057

 
$
9,856

 Capital spending (excluding business combinations)
 
$
3,020

 
$
28

 
 
 
 
 
Consolidated
 
 
 
 
Net Sales:
 
 
 
 
     Affiliate
 
$
32,280

 
$
25,282

     Third-Party
 
111,232

 
178,245

     Net sales
 
143,512

 
203,527

     Operating costs and expenses:
 
 
 
 
     Cost of goods sold
 
108,407

 
172,209

     Operating expenses (1) (2)
 
10,777

 
9,496

     Contribution margin
 
24,328

 
21,822

     General and administrative expenses
 
3,409

 
2,663

     Depreciation and amortization
 
4,500

 
3,477

     Loss on asset disposals
 
5

 
—

     Operating income
 
$
16,414

 
$
15,682

 Capital spending (excluding business combinations) (1) (2)
 
$
7,573

 
$
2,316

            

(1) Includes operating expenses and capital spending expenditures incurred in connection with the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition for the three months ended March 31, 2015.

(2) Adjusted to include operating expenses and capital spending expenditures incurred in connection with the assets acquired in the El Dorado Offloading Racks Acquisition and the Tyler Crude Tank Acquisition for the three months ended March 31, 2014.


The following table summarizes the total assets for each segment as of March 31, 2015 and December 31, 2014 (in thousands).
 
 
March 31, 2015
 
December 31, 2014
Pipelines and Transportation
 
$
287,104

 
$
230,572

Wholesale Marketing and Terminalling
 
45,452

 
100,993

     Total Assets
 
$
332,556

 
$
331,565

Property, plant and equipment, accumulated depreciation and depreciation expense by reporting segment as of and for the three months ended March 31, 2015 were as follows (in thousands):
 
 
Pipelines and Transportation
 
Wholesale Marketing and Terminalling
 
Consolidated
Property, plant and equipment
 
$
291,225

 
$
19,990

 
$
311,215

Less: accumulated depreciation
 
(47,235
)
 
(10,312
)
 
(57,547
)
Property, plant and equipment, net
 
$
243,990

 
$
9,678

 
$
253,668

Depreciation expense for the three months ended March 31, 2015
 
$
3,476

 
$
759

 
$
4,235


In accordance with ASC 360, Property, Plant & Equipment, we evaluate the realizability of property, plant and equipment as events occur that might indicate potential impairment.