Delek Logistics Partners Reports Strong Q1 Earnings

Delek Logistics Partners ((DKL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Delek Logistics Partners’ recent earnings call painted a picture of robust financial health and strategic advancements, despite facing some hurdles in specific segments. The overall sentiment was positive, with the company showcasing strong performance metrics and growth opportunities that overshadowed the challenges encountered in wholesale marketing, terminalling, storage, and transportation.

Record Quarterly Adjusted EBITDA

Delek Logistics Partners reported a record quarterly adjusted EBITDA of approximately $117 million. This milestone positions the company well to meet its full-year EBITDA guidance of $480 million to $520 million, reflecting its solid financial footing and operational efficiency.

Increased Economic Separation

The company has successfully increased its economic separation through intercompany transactions, boosting third-party contributions to cash flow from 70% to around 80% on a pro forma basis. This strategic move enhances Delek Logistics’ financial independence and stability.

Libby Plant Expansion Progress

Significant progress has been made in the Libby plant expansion, with the commissioning phase currently underway. The plant is expected to reach full capacity in the second half of 2025, marking a pivotal step in Delek Logistics’ growth strategy.

49th Consecutive Quarterly Distribution Increase

The Board of Directors approved a 49th consecutive increase in the quarterly distribution, raising it to $1.11 per unit. This consistent growth in distributions underscores the company’s commitment to delivering shareholder value.

Strong Performance in Gathering and Processing Segment

The gathering and processing segment reported an impressive adjusted EBITDA of $81 million for the quarter, up from $50 million in the first quarter of 2024. This growth was primarily driven by strategic acquisitions, including H2O and Gravity Midstream.

Significant Available Liquidity

Following the acquisition of Gravity and progress on the Libby 2 construction, Delek Logistics maintains approximately $450 million of available liquidity. This financial flexibility supports the company’s ongoing expansion and operational initiatives.

Decrease in Wholesale Marketing and Terminalling EBITDA

The wholesale marketing and terminalling segment experienced a decline in adjusted EBITDA to $18 million from $25 million in the prior year. This decrease was largely attributed to seasonal weather impacts affecting wholesale margins.

Storage and Transportation Segment Decline

The storage and transportation segment also saw a decline in adjusted EBITDA, dropping to $14 million compared to $18 million in the first quarter of 2024. This was primarily due to the amend and extend renegotiation completed last summer.

Forward-Looking Guidance

Delek Logistics Partners’ forward-looking guidance remains optimistic, with expectations of strong financial and operational performance. The company reaffirmed its full-year EBITDA guidance and highlighted significant advancements in the Permian Basin, particularly with the Libby II gas plant commissioning. The projected increase in distributable cash flow and strategic moves to enhance competitive positioning further bolster their growth outlook.

In summary, Delek Logistics Partners’ earnings call conveyed a positive sentiment, driven by record financial performance and strategic initiatives. Despite facing challenges in certain segments, the company’s growth prospects and commitment to shareholder value remain strong, positioning it well for future success.