Delek Logistics Partners Q2 2025 Earnings Report

Delek Logistics Partners EPS Results

• Actual EPS: $0.83
• Consensus EPS: $0.79
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

Delek Logistics Partners Revenue Results

• Actual Revenue: $246.35 million
• Expected Revenue: $289.07 million
• Beat/Miss: Missed by -$42.72 million
• YoY Revenue Growth: N/A

Delek Logistics Partners Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 12:30PM ET

Delek Logistics Partners (NYSE:DKL), LP provides gathering, pipeline, transportation, and other services for crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling water disposal and recycling customers in the United States. The Gathering and Processing segment consists of pipelines, tanks, and offloading facilities that provide crude oil and natural gas gathering and processing, water disposal and recycling, and storage services, as well as crude oil transportation services to third parties. The Wholesale Marketing and Terminalling segment includes refined products terminals and pipelines in Texas, Tennessee, and Arkansas. This segment provides marketing services for the refined products and terminalling services at refined products terminals to independent third parties. The Storage and Transportation segment comprises tanks, offloading facilities, trucks, and ancillary assets, which provide crude oil, intermediate, and refined products transportation and storage services. Delek Logistics GP, LLC serves as the general partner of the company. Delek Logistics Partners, LP was incorporated in 2012 and is headquartered in Brentwood, Tennessee. Delek Logistics Partners, LP operates as a subsidiary of Delek US Holdings, Inc.

Delek Logistics Partners Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We delivered a record second quarter adjusted EBITDA of $120 million, up from $102 million a year ago, and reaffirmed full-year guidance of $480–$520 million.
• Positive Sentiment: The Libbey II gas plant was commissioned on time and on budget and is ramping to full capacity, with acid gas injection and sour gas handling expansions underway in the Delaware Basin.
• Positive Sentiment: Crude and water gathering volumes are rising in both the Delaware and Midland Basins, bolstered by the integration of the H2O and Gravity water systems to enhance our footprint.
• Positive Sentiment: Liquidity improved through a high-yield notes offering, boosting available capacity to over $1 billion while maintaining target leverage and a 1.22× DCF coverage ratio.
• Positive Sentiment: The Board approved the 50th consecutive increase in the quarterly distribution to $1.115 per unit, underscoring our commitment to financial discipline and stakeholder returns.

Presentation

[Operator]

Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the conference over to Robert Wright, Chief Financial Officer. You may begin.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

Good morning, and welcome to the Delek Logistics Partners second quarter earnings conference call. Participants joining me on today's call will include Abigail Sorek, President Ruben Spiegel, EVP. As a reminder, this conference call will contain forward looking statements as defined under the federal securities laws, including statements regarding guidance and future business outlook. Any forward looking statements made during today's call involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included in our SEC filings.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

The company assumes no obligation to update any forward looking statements. I will now turn the call over to Abagal for opening remarks. Abagal?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Thank you, Robert. Direct Logistics Partners had another record quarter. We reported approximately $120,000,000 in quarterly adjusted EBITDA. DKL is on track to deliver its full year EBITDA guidance of $480,000,000 to $520,000,000 Delek Logistics continued to make substantial progress in improving its position as a premier full service crude, natural gas and water provider in the most prolific areas of the Permian Basin. During the quarter, we successfully completed the commissioning of the new Libbey plant.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We are very excited about the opportunities this expansion has opened for us and expect to fill the plant to capacity in the 2025. This expansion and our ongoing efforts on acid gas injection and sour gas handling capabilities will further improve our natural gas offering in the Delaware Basin. I'm also very pleased with our crude and water gathering operations. Both DPG and DDG crude gathering operations have started the second half of the year strong with both showing significant rise in volumes. We look forward to continue building on its strength through the remainder of 2025 and beyond.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Between our two water acquisitions and increasing dedication, we expect to grow our competitive position in both Midland and the Delaware Basin. As we have demonstrated in the past, we will continue to grow our partnership to prudent management of leverage and coverage. We not only intend to remain good stewards of stakeholder capital, we also intend to continue to reward them through our peer leading distributions. I am pleased to announce that our Board of Directors have approved the fiftieth consecutive increase in quarterly distribution to $1.115 per unit. This is an extraordinary achievement and we're extremely proud of our team and financial prudence that have gotten us here.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

To conclude, we are very excited about the prospect of Delek Logistics. We expect to continue on our value creation path moving forward and we will continue to grow our distribution in the future. I will now hand it over to Ruben, who will provide more details on our operations.

[Reuven Spiegel, EVP - Special Projects & Director at Delek Logistics Partners]

Thank you, Abigail. As Abigail mentioned, our excitement about DKL's future is growing and we continue to work diligently to strengthen our advantaged Varymion position. As I mentioned on our last call, we had begun commissioning our Libbey II gas plant. Since then, we have completed the commissioning and transferred the plant to operation. The plant is performing according to expectations.

[Reuven Spiegel, EVP - Special Projects & Director at Delek Logistics Partners]

And as Avigal mentioned, we expect to fill up the plant up over the remainder of the year. As we also mentioned in our last call, planned CapEx for Libbey 2 included investments that will support future expansions of the Libbey Complex. Our current focus around Libbey Complex is to continue progressing our sour gas treating, gathering and acid gas injections capabilities. We continue to believe that our expanded gas processing and sour gas handling capabilities provide a unique offering to our customers and provides us with a long runway of growth in the Delaware Basin. Additionally, since we are one of the few companies which can handle all three streams, crude, gas and water, our natural gas G and P expansion is opening additional opportunities for us on crude and water gathering in the Delaware Basin.

[Reuven Spiegel, EVP - Special Projects & Director at Delek Logistics Partners]

As Abhaygo mentioned, we have seen our crude gathering volumes rise to start the third quarter and we expect to continue to see this trend going forward. On the Midland side, the integration of the two water gathering systems from H2O and Gravity is progressing well and we expect to use our larger footprint to enhance our combined crude and water offering in the Howard, Martin and Glasgow Counties. Finally, we continue to look for opportunities to make our operations more efficient with target to improve margins across our operations. With that, I will pass it on to Robert.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

Thank you. As both Abigail and Ruben have mentioned, we are continuing the growth story of Delek Logistics. We remain focused on maintaining healthy liquidity to support this growth while ensuring that our leverage aligns with our long term targets. Specifically, the success of our high yield notes offering completed earlier this summer increased our availability by $700,000,000 to over $1,000,000,000 Moving on to our second quarter results. The second quarter adjusted EBITDA was approximately $120,000,000 compared to $102,000,000 in the same period of twenty twenty four.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

Distributable cash flow as adjusted was $73,000,000 and the DCF coverage ratio was approximately 1.22 times. We expect this ratio to continue to rise throughout the remainder of the year as our growth projects, including the Levy 2 gas plant, start to meaningfully contribute to our results. For the Gathering and Processing segment, adjusted EBITDA for the quarter was $78,000,000 compared to $55,000,000 in the 2024. The increase was primarily due to the acquisitions of H2O and Gravity. Wholesale Marketing and Terminalling adjusted EBITDA was $23,000,000 compared to $30,000,000 in the prior year.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

The decrease was primarily due to the impact of last summer's amend and extend agreements with DK. Storage and transportation adjusted EBITDA in the quarter was $17,000,000 compared with $17,000,000 in the 2024. And lastly, the investments in pipeline joint venture segment contributed $11,000,000 this quarter compared with $8,000,000 in the 2024. The increase was primarily due to the Wink to Webster dropdown in August. Moving on to capital expenditures.

[Robert Wright, EVP & CFO at Delek Logistics Partners]

The capital program for the second quarter was approximately $119,000,000 $115,000,000 of this capital spend relates to growth CapEx, with around $48,000,000 attributed to the completion of the Libbey II gas processing plant. The project was very successful and finished on track from both a timing and cost perspective. The remainder of the capital spend for the period was other growth projects, namely advancing new connections in the Midland and Delaware gathering systems. As to our outlook for the balance of the year, we continue to remain on track for the EBITDA guidance we laid out for the full year of $480,000,000 to $520,000,000 With that, we can now open the call for questions.

[Operator]

Thank you. The floor is now open for questions. Your first question comes from the line of Doug Irwin of Citi. Your line is open.

[Doug Irwin, Vice President at Citi]

Thanks for the questions. I wanted to start with the processing plant here. I realize you talked about ramping to capacity in the second half of the year, but just wondering if you could share where you're seeing volumes trending today as commissioning was completed. And then the press release pointed to further expansions here potentially. Just curious how you're thinking about any timing of those expansions and whether those would also include more treating capacity along with with more processing.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yeah. Taghi, thank you for joining us. As you as we said on the prepared remarks, we are really excited about the the operation and what we have done there both on the capital side and the operation side, and it's all coming together very, very nicely, and we are very happy about that. So with that said, I will let the woven that takes the lead around that activity give some more color.

[Reuven Spiegel, EVP - Special Projects & Director at Delek Logistics Partners]

Thank you, Abigail, and thanks for the question. As Abigail said, plant was completed on time. The commissioning phase takes some time, but it was done according to our planned schedule and with a big focus on reliability. As we're speaking right now, we are flowing gas. We're doing it gradually and we expect to run full by year end.

[Reuven Spiegel, EVP - Special Projects & Director at Delek Logistics Partners]

The execution of this project within the timeline and the budget is what gives us the confidence and the comfort to reaffirm our guideline of $480,000,000 to $520,000,000 In addition to that, our focus is now on the sour gas processing and we're working we already constructed the I mean unit and now we're working on drilling the AGI wells and executing on other infrastructure related projects associated with the sour. So we are on track on that project as well and we are coordinating the timeline and the efforts with their producers.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

More development, we have to stay tight. We obviously have the opportunity. We said in the previous call that we have made some investment, but we will but we will announce it once we feel that we are ready to announce it, not not announce it before. So that's very much on our mind.

[Doug Irwin, Vice President at Citi]

Understood. And maybe just a follow-up on the sour gas treating side. We obviously saw some assets change hands in the Delaware recently. Just curious your view of that deal, how kind of those assets might compare to your footprint right there in the Delaware as well and just your views to some of the broader competitive environment for treating capacity in the Delaware as it seems like it's becoming an increased focus for for some players in the basin.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yeah. Doug, I think you're absolutely right. You cover the sector very well, and you are you are dead on. Obviously, Northwind, you're probably referring to that is a very close system to us. There is some similarity in configuration, but we also have capabilities that are not necessarily in Northwind and Mohit will cover that in a second.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

With that said, every time that we see such a high multiply in our neighborhood, it's a good thing for us and it showed the intrinsic value that we see in the DKL asset. And we are very proud and excited to develop them to full capacity to the benefit of the unit holder. Rohit, do want to explain the difference between the systems?

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yeah. Regal, thanks. So Doug, I think, you know, we've talked about this multiple times in the past. This transaction is a great reaffirmation of our strategy and as far as the gas processing gathering and our entire business and the delivery is concerned. So we're very happy to see that benchmark.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

And I think I mentioned this on an earlier Delek call. I don't know if you got a chance to listen to it. Northwind just has treating capacity. They don't have processing capacity. We have a much bigger, fuller strategy around natural gas, including sour gas gathering, treating, processing, and we like our comprehensive system a lot better.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

But, you know, this definitely provides us a benchmark. We we followed the transaction very closely, and and I think it's a great reaffirmation of our strategy, as I mentioned before.

[Doug Irwin, Vice President at Citi]

Understood. That's all for me. Thanks for the time. Thank you, Doug.

[Operator]

Your next question comes from the line of Gabe Moreen of Mizuho. Your line is open.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Hey Gabe, how are you? Good.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

How are you doing? I'm doing well. Thank you. Good. Just wanted to stay on the M and A topic.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Just kind of wondering your latest thoughts in terms of what you're seeing out there in the market. Obviously, you've got a lot of liquidity now on the DKL side post the high yield offerings. So just wondering what you're seeing out there, whether in the Delaware, Midland, water, crude or gas or otherwise?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

So thank you, Gabe. We do have liquidity, but our thought in mind is to create value for investors. We have done that through increasing distribution. We have done that in organic development and we are doing that by reducing our cost of capital. That was very big initiative for that high yield.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Specifically on the high yield markets, when we are looking on M and A, we are looking and these things. It needs to be free cash flow accretive. It needs to be accretive to leverage ratio. It needs to be accretive for coverage ratio. And it needs to fit our strategy.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We are always looking. And if the opportunity presents itself, are not trying to make a move. But we are also on the sell side, if the opportunity presents itself on the other side, we can do the other way around. So we are not I want you to fully understand that we are not made to an asset. All purpose in life is to create value and we can as we demonstrate in the last year, can play on each side of the table by creating a huge value to investors. So I think that's the message.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Perfect. Thanks, Aravikal. And then maybe if we can talk about just what you're hearing from producers and their plans. Clearly, there's been a lot of commodity price volatility, where you're feeling about where you may come in, in the $480,000,000 to $520,000,000 range for guidance. Just maybe your latest thoughts there, given all the shifting background there.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes, absolutely. So let's start with the easy one. Let's talk about producers. So we are as I said many times in the past, we are in the most prolific area of the Permian Basin. We feel very good with our guidance April to 05/20.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

And I think we are one of the few that reiterated guidance versus the sector that took some some breather room on the guidance and took them down down just a little bit. So you need to feel very good with that. You probably also heard me saying on the prepared remark that we see uptick in volume on Q3 on crude, both from the Delaware system, the DDG and Midland system DPG. So that's another thing that you need to feel good about. We are very we have a very good relationship with our customer.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We have a mature customer. We have a great rock to work with. Our breakeven in our area are low. So I don't think that any there is no where crude is 65 stable kind of a deal. I don't see any problem with where where we are giving the lowest breakeven. So we feel very good with where we are.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Perfect. Thanks, Avigal.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Thank you, Matt.

[Operator]

There are no further questions. That concludes our Q and A session. I'll now turn the conference back over to Avigal Sodak for closing remarks.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Thank you. So I would like to thank my colleagues here around the table. I would like to thank you, the investors, sell side, buy side. And I would like to thank the Board of Directors and mostly to thank our entire employees that make our partnership as good as it is. So thank you.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Robert Wright, EVP & CFO
• Avigal Soreq, President, CEO & Director
• Reuven Spiegel, EVP - Special Projects & Director

Analysts

• Doug Irwin, Vice President at Citi
• Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US
• Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.