Segment Data (Notes)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Data

Segment Data

We aggregate our operating segments into 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 wholesale marketing and terminalling segment provides wholesale marketing and terminalling services to Delek's refining operations and independent third parties.

Our operating segments adhere to the 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 of its reportable segments based on segment contribution margin. Segment contribution margin is defined as net sales less cost of goods sold and operating expenses.

The following is a summary of business segment operating performance as measured by contribution margin for the periods indicated (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2017			2016		2017		2016
Pipelines and Transportation
Net sales:
Affiliate	$	27,668		$	26,136	$	54,168	$	52,442
Third party	2,555			5,874		4,732		12,351
Total pipelines and transportation	30,223			32,010		58,900		64,793
Operating costs and expenses:
Cost of goods sold	4,403			4,814		8,808		9,590
Operating expenses	7,933			6,899		16,088		14,639
Segment contribution margin	$	17,887		$	20,297	$	34,004	$	40,564
Capital spending (excluding business combinations)	$	1,660		$	718	$	3,797	$	1,424
Wholesale Marketing and Terminalling
Net sales:
Affiliate	$	12,156		$	10,558	$	22,275	$	23,012
Third party	84,390			69,285		175,067		128,104
Total wholesale marketing and terminalling	96,546			79,843		197,342		151,116
Operating costs and expenses:
Cost of goods sold	80,636			68,287		168,821		130,264
Operating expenses	2,033			1,831		4,236		4,555
Segment contribution margin	$	13,877		$	9,725	$	24,285	$	16,297
Capital spending (excluding business combinations)	$	459		$	130	$	1,113	$	508
Consolidated
Net sales:
Affiliate	$	39,824		$	36,694	$	76,443	$	75,454
Third party	86,945			75,159		179,799		140,455
Total consolidated	126,769			111,853		256,242		215,909
Operating costs and expenses:
Cost of goods sold	85,039			73,101		177,629		139,854
Operating expenses	9,966			8,730		20,324		19,194
Contribution margin	31,764			30,022		58,289		56,861
General and administrative expenses	2,656			2,698		5,504		5,611
Depreciation and amortization	5,742			4,812		10,935		9,808
(Gain) loss on asset disposals	(5		)	—		7		(44		)
Operating income	$	23,371		$	22,512	$	41,843	$	41,486
Capital spending (excluding business combinations)	$	2,119		$	848	$	4,910	$	1,932

The following table summarizes the total assets for each segment as of June 30, 2017 and December 31, 2016 (in thousands).

	June 30, 2017		December 31, 2016
Pipelines and transportation	$	338,781	$	337,349
Wholesale marketing and terminalling	76,751		78,198
Total assets	$	415,532	$	415,547

Property, plant and equipment and accumulated depreciation as of June 30, 2017 and depreciation expense by reporting segment for the three and six months ended June 30, 2017 were as follows (in thousands):

	Pipelines and Transportation			Wholesale Marketing and Terminalling			Consolidated
Property, plant and equipment	$	282,703		$	64,600		$	347,303
Less: accumulated depreciation	(75,751		)	(25,933		)	(101,684		)
Property, plant and equipment, net	$	206,952		$	38,667		$	245,619
Depreciation expense for the three months ended June 30, 2017	$	4,499		$	977		$	5,476
Depreciation expense for the six months ended June 30, 2017	$	8,564		$	1,839		$	10,403

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. There were no indicators of impairment of our property, plant and equipment as of June 30, 2017.