Delek Logistics Partners Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2023

There are 4 speakers on the call.

Operator

Good day, and welcome to the Delek Logistics Partners Second Quarter Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Rosie Zuklic, Vice President of Investor Relations. Please go ahead.

Speaker 1

Welcome to the Dallas Logistics Partners' 2nd Quarter Earnings Conference Call. Participants on today's call will include Avigal Sorek, President Joseph Israel, EVP, Operations Ruben Spiegel, EVP and Chief Financial Officer and Odeli Sakhazi, SVP, Delek Logistics. As a reminder, this conference call will contain forward looking statements as defined under the federal securities laws, including without limitation, statements regarding guidance and future business outlook. These statements involve risks and uncertainties that may cause actual results to differ from our forecast. For more information, please refer to the risk factors discussed in the company's most recently filed annual report on the Form 10 ks and quarterly report on Form 10 Q filed with the SEC along with the press release associated with this call.

Speaker 1

The company assumes no obligation to update any forward looking statements or information, which speaks as of their respective dates. I'll now turn the call over to Abhagal for opening remarks.

Speaker 2

Thanks, Rosy. Delek Logistics Partners delivered another great quarter with $93,000,000 of EBITDA. Delek Logistics has been able to provide consistent And stable cash flow. We are encouraged by our positive outlook. As the production in the Permian Basin ramps up, We continue on our promising growth path with increased scale and efficiency.

Speaker 2

We are proud to say that our acreage It's outperformed average growth in the basin. The Midland Gathering System volumes have more than doubled from a year ago, and We are excited to identify more value add opportunities with our producers. Our Delaware gathering assets are performing well and meeting our expectations. We now expect to exceed $100,000,000 a quarter EBITDA run rate by Q4 of this year. On July 26, our Board of Directors approved 5.1% increase in the quarterly distribution from the prior year to $1.035 per limited partner unit for the Q2 of 2023.

Speaker 2

We are committed to continuing increasing the quarterly distribution. I will now hand it over to Ruben.

Speaker 3

Thank you, Abigail. Total EBITDA for logistics was $93,000,000 for the Q2 of 2023 compared with $65,000,000 for the same period in 20 22. For the Q2 of 2023, distributable cash flow was $60,000,000 and the DCF coverage ratio was 1.34. For the Gathering and Processing segment, EBITDA this quarter was $53,000,000 compared with $38,000,000 in the Q2 of 2022. The increase was primarily driven from strong contributions by the Midland Gathering System as well as Delaware Gathering.

Speaker 3

Group for the Midland Gathering averaged approximately 222,000 barrels per day for the Q2 of 2023, more than twice the average 100,000 barrels The wholesale and marketing and terminalling segment EBITDA of $28,000,000 for the quarter compared with $19,000,000 in the Q2 of 2022. The increase was due to higher terminalling throughput in East Texas and higher gross margin in our West Texas operation. The Storage and Transportation segment had EBITDA of $15,000,000 this quarter, which is in line with the last year results. And lastly, the investment in ByPlan joint venture segment contributed $7,000,000 toward the Q2 of 2023, flat with the Q2 of 20 22. Moving on to capital expenditures.

Speaker 3

2nd quarter of 2023 capital spending was $19,000,000 Most of that spend was for growth projects, namely advancing new connections In the Delaware and Midland Gathering Systems. For 2023, we maintain with our capital outlook of $81,000,000 With that, we can open the call for questions.

Operator

Since we have no questions at this time, we will Turn the conference over back to Avigal Sorek for any closing remarks.

Speaker 2

So I want to thank the executive around the table, to our employees, to the Board of Directors and to you, investor, for another great quarter of DKL. We are very much committed to the path we are at. We see a sustainable growth, and we are committed to Run the course and we'll talk again in the next quarter. Thank you.

Operator

And this ends the conference today. Thank you for attending today's presentation. You may now

Powered by Quartr

Key Takeaways

  • $93 million EBITDA in Q2 2023, up from $65 million a year ago, with $60 million in distributable cash flow and a 1.34x coverage ratio.
  • Midland Gathering System volumes more than doubled year-over-year to ~222,000 bbl/d, while Delaware gathering assets met expectations.
  • The Board approved a 5.1% increase in the quarterly distribution to $1.035 per unit, and management expects to continue raising payouts.
  • Delek Logistics now targets a $100 million+ quarterly EBITDA run rate by Q4 2023, supported by growing scale and efficiency.
  • Q2 capex totaled $19 million (of an $81 million full-year guide), primarily funding new connections on the Delaware and Midland gathering systems.
AI Generated. May Contain Errors.
Earnings Conference Call
Delek Logistics Partners Q2 2023
00:00 / 00:00