• Quarterly Adjusted EBITDA: $107 million for Q4 2024.
• 2025 EBITDA Guidance: $480 million to $520 million, representing around 20% growth over 2024 adjusted EBITDA.
• Distributable Cash Flow (DCF): $69.5 million for Q4 2024.
• DCF Coverage Ratio: Approximately 1.2 times for Q4 2024.
• Gathering and Processing Segment Adjusted EBITDA: $66 million for Q4 2024, up from $53.3 million in Q4 2023.
• Wholesale Marketing and Terminals Adjusted EBITDA: $21.2 million for Q4 2024, down from $28.4 million in Q4 2023.
• Storage and Transportation Adjusted EBITDA: $17.8 million for Q4 2024, up from $17.5 million in Q4 2023.
• Pipeline Joint Venture Segment Contribution: $11.3 million for Q4 2024, up from $8.5 million in Q4 2023.
• Capital Expenditures: $49.4 million for Q4 2024, with $42.1 million allocated to the new gas processing plant.
• Liquidity Post-Acquisition: Approximately $530 million after acquiring Gravity Water Midstream.
• Quarterly Distribution Increase: 48th consecutive increase to $1.10 per unit.

• Warning! GuruFocus has detected 8 Warning Signs with DKL.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Delek Logistics Partners LP (NYSE:DKL) reported a record quarterly adjusted EBITDA of approximately $107 million.
• The company completed the acquisition of Delek's portion in the Wing to Webster pipeline, enhancing asset quality and competitive position.
• DKL announced a strong 2025 EBITDA guidance of $480 million to $520 million, representing around 20% growth over 2024 adjusted EBITDA.
• The board of directors approved the 48th consecutive increase in the quarterly distribution to $1.10 per unit.
• DKL has approximately $530 million of liquidity post-acquisition of Gravity Water Midstream, supporting financial flexibility.

Negative Points

• Wholesale marketing and terminaling adjusted EBITDA decreased to $21.2 million from $28.4 million in the prior year, primarily due to lower wholesale margins.
• The distributable cash flow coverage ratio was approximately 1.2 times, below the long-term objective of 1.3 times.
• The company faces risks and uncertainties that may cause actual results to differ materially from forward-looking statements.
• The capital expenditure for the fourth quarter was $49.4 million, with significant allocation to new gas processing plant projects.
• The buyback program is subject to market conditions and compliance with company covenants, which may impact execution timing.

Q & A Highlights

Q: Doug Irwin from Citi asked about the guidance, noting it seemed conservative at the low end, and inquired about factors that might drive results to the high end of the range. A: Avigal Soreq, President, explained that this is the first time DKL is providing guidance. The company is growing and increasing economic separation from its sponsor, DK. They are confident in the guidance provided and will update as necessary. Opportunities for growth remain, and further modeling questions can be addressed in detail later.

Q: Doug Irwin also asked about the $150 million buyback program, specifically the timeline for execution and funding strategy. A: Avigal Soreq stated that the buyback is beneficial from a free cash flow standpoint, with a cost of capital around 7% and a yield close to 11%. The deconsolidation effort is a joint initiative with DK. Reuven Spiegel, CFO, added that it's a two-year program, subject to market conditions and compliance with company covenants and leverage ratio targets.

Q: Neal Dingmann from Truist Securities inquired about other notable drivers for the upside potential in EBITDA guidance. A: Avigal Soreq highlighted several transactions, including the completion of the Gravity and H2O deals, the Libby plant expansion, and the AGI & Sour effort. These synergies, along with the W2W transaction, contribute to the guidance. The company aims to reflect the discounted value of their currency compared to the ANZI index.

Q: Neal Dingmann also asked about the demand and utilization of key assets. A: Avigal Soreq confirmed strong demand, particularly in the Delaware area, with ongoing discussions with producers. The comprehensive offering of crude, gas, and water is proving successful, and similar strategies are being implemented in the Midland Basin.

Q: Doug Irwin followed up on the buyback program, asking if it would be funded internally or through debt. A: Avigal Soreq reiterated the benefits of the buyback from a free cash flow perspective and emphasized the strategic importance of the deconsolidation effort. The execution will depend on market conditions, and further details can be provided by Reuven Spiegel.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.