Financial Data and Key Metrics Changes - In Q4 2024, the company reported a net loss of $414 million, equating to a negative $6.55 per share, with an adjusted net loss of $161 million or negative $2.54 per share [30] - Adjusted EBITDA for the quarter was a loss of $23 million, primarily due to a decrease in refining contributions, which fell by $80 million compared to Q3 2024 [31][32] - Cash flow from operations was a use of $164 million, influenced by a net loss and a $71 million outflow related to working capital movements [33] Business Line Data and Key Metrics Changes - The logistics segment delivered $107 million in adjusted EBITDA, continuing its strong performance despite challenges in the refining segment [32] - Total throughput in Tyler for Q4 was approximately 66,000 barrels per day, with a production margin of $6.66 per barrel [19] - In El Dorado, total throughput was approximately 77,000 barrels per day, with a production margin of $0.56 per barrel [20] Market Data and Key Metrics Changes - The refining margin environment was reported to be around $6 below mid-cycle in Q4 2024, indicating a challenging market [3] - The company noted that supply and marketing contributed a loss of $34.6 million in Q4, driven by seasonal low demand trends [27] Company Strategy and Development Direction - The company is focused on improving operational performance and profitability through initiatives like the zero-based budget program, which saved around $100 million [12] - A significant part of the strategy includes the economic separation from Delek Logistics, with plans to deconsolidate and enhance shareholder value [11][49] - The company is also pursuing growth in the Permian Basin and expanding its midstream capabilities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the successful turnaround at KSR and improved reliability at Big Spring [5][6] - The company anticipates no major turnarounds in 2025, expecting continued operational improvements [6] - Management is optimistic about the potential for regulatory relief regarding small refinery exemptions following a recent court ruling [15][16] Other Important Information - The company completed a major asset sale for $1.49 billion, which has allowed it to progress in a tough refining environment [7] - The company is committed to a disciplined approach to capital allocation, having paid $16 million in dividends and repurchased $22 million of its shares during the quarter [14] Q&A Session Summary Question: What more can be done to make El Dorado a competitive asset? - Management highlighted that El Dorado is a focus area, with efforts to improve product mix and process efficiency, aiming for better performance [42][44] Question: Is the strategy to look for smaller deals while growing DKL EBITDA? - Management confirmed that deconsolidation is ongoing, with a focus on growing third-party EBITDA and enhancing value for both DK and DKL [46][49] Question: Can you explain the supply and marketing dynamics in Q4? - Management noted that seasonal demand weakness impacted performance, but there was an improvement compared to the previous quarter [60][62] Question: What factors are influencing the OpEx guidance for Q1? - Management identified several factors, including the acquisition of Gravity Water Midstream and planned maintenance, affecting the OpEx guidance [72][74] Question: What is the timeline for the DKL unit repurchase program? - Management indicated that the buyback program is set until 2026, aimed at benefiting both companies and enhancing free cash flow [95][96]

Conference Call Participants Doug Irwin - Citi Neal Dingmann - Truist Securities Operator Today's presentation material can be found on the Investor Relations section of the Delek US website. Slide two contains our Safe Harbor statement regarding forward-looking comments. Any forward-looking information shared during today's call will 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 here a ...

Delek Logistics Partners (DKL) Q4 2024 Earnings Call February 25, 2025 12:30 PM ET Company Participants Robert Wright - SVP & Deputy CFOAvigal Soreq - President and CEOMark Hobbs - EVP & CFOReuven Spiegel - EVP - Special ProjectsNeal Dingmann - Managing Director - Energy Research Conference Call Participants Doug Irwin - Equity Research Analyst Operator Thank you for standing by. My name is Jaylen, and I will be your conference operator today. At this time, I would like to welcome everyone to the DKL Fourth ...

Financial Performance - Delek Logistics reported fourth quarter 2024 net income of $35.3 million, an increase from $22.1 million in the fourth quarter 2023, with net income per diluted common limited partner unit rising to $0.68 from $0.51[4]. - Adjusted EBITDA for the fourth quarter 2024 was $107.2 million, reflecting a 6% year-over-year increase from $100.9 million in the fourth quarter 2023[5][10]. - Total net revenues for Q4 2024 were $209.9 million, a decrease of 17.4% compared to $254.1 million in Q4 2023[24]. - Net income for Q4 2024 was $35.3 million, up 59.4% from $22.1 million in Q4 2023[24]. - Adjusted EBITDA for Q4 2024 was $107.2 million, an increase of 6.4% from $100.9 million in Q4 2023[27]. - Total revenue for the year ended December 31, 2024, reached $940,636,000, a decrease of 7.8% compared to $1,020,409,000 in 2023[31]. - Adjusted EBITDA for the year ended December 31, 2024, was $417,964,000, down from $385,128,000 in 2023, reflecting an 8.5% increase[31]. - Net income for Q4 2024 was $35,305,000, compared to $22,148,000 in Q4 2023, marking a 59.2% increase[30]. Cash Flow and Distributions - The company reported a net cash provided by operating activities of $49.9 million for Q4 2024, down from $114.7 million in Q4 2023[25]. - Distributions to partners increased to $59,303,000 for Q4 2024, up from $46,010,000 in Q4 2023, representing a 28.8% increase[28]. - Distributable cash flow for Q4 2024 was $66,721,000, slightly up from $64,569,000 in Q4 2023, indicating a 3.3% growth[28]. - The distributable cash flow coverage ratio for Q4 2024 was 1.13x, down from 1.40x in Q4 2023[28]. Debt and Capital Expenditures - Total debt as of December 31, 2024, was approximately $1.88 billion, with a leverage ratio of approximately 4.06x[7]. - Long-term debt increased to $1.88 billion in Q4 2024, compared to $1.67 billion in Q4 2023, marking a rise of 12.5%[23]. - Capital spending for the year ended December 31, 2024, totaled $139,986,000, up from $81,342,000 in 2023, indicating a 71.9% increase[31]. - Total capital spending for 2024 is projected to be $139.986 million, which includes $95.5 million for a new gas processing plant[33]. - Growth capital spending in the Gathering and Processing segment increased significantly to $127.328 million in 2024 from $72.636 million in 2023, representing a 75% increase[33]. - Total segment capital spending for the Gathering and Processing segment was $128.927 million in 2024, up from $74.683 million in 2023, reflecting a 72.5% increase[33]. - The total regulatory capital spending for 2024 is $1.946 million, down from $2.960 million in 2023, a decrease of about 34%[33]. Operational Performance - Adjusted EBITDA in the Gathering and Processing Segment for the fourth quarter 2024 was $66.0 million, up from $53.3 million in the fourth quarter 2023, driven by higher throughput from Permian Basin assets[11]. - The Wholesale Marketing and Terminalling Segment reported Adjusted EBITDA of $21.2 million for the fourth quarter 2024, down from $28.4 million in the fourth quarter 2023 due to declining wholesale margins[12]. - Average throughput for crude pipelines (non-gathered) decreased to 64,920 bpd in 2024 from 73,438 bpd in 2023, a decline of approximately 11%[34]. - Average throughput for refined products pipelines to Enterprise Systems decreased to 57,513 bpd in 2024 from 68,552 bpd in 2023, a decline of about 16%[34]. - Average water disposal and recycling throughput in the Midland Water Gathering System was 274,361 bpd in 2024, compared to no recorded throughput in 2023[34]. - The average gross margin per barrel for West Texas marketing decreased to $4.35 in 2024 from $4.73 in 2023, a decline of approximately 8%[34]. - The El Dorado Gathering System's average throughput increased to 13,883 bpd in 2024 from 13,329 bpd in 2023, an increase of about 4%[34]. - The average crude oil gathering throughput in the Delaware Gathering Assets increased to 123,346 bpd in 2024 from 112,522 bpd in 2023, a rise of approximately 10%[34]. Strategic Acquisitions - The acquisition of Gravity Water Midstream in January 2025 is expected to increase third-party cash flow contribution to approximately 70%[3]. - The company completed the acquisition of Delek US' interest in the Wink to Webster pipeline and closed the acquisition of H2O Midstream in 2024, enhancing its operational capabilities[9].

Financial Performance - The Partnership's net income increased by $3.3 million for the nine months ended September 30, 2024, compared to the prior year[108]. - EBITDA decreased by $11.1 million in 2024 compared to 2023, primarily due to a change in classification of certain commercial agreements with Delek[108]. - Net revenues for Q3 2024 were $214.07 million, a decrease of 22.4% compared to $275.82 million in Q3 2023[142]. - EBITDA for Q3 2024 was $69.18 million, down 29.6% from $98.24 million in Q3 2023[142]. - Net income attributable to partners for Q3 2024 was $33.67 million, a slight decrease of 0.4% from $34.83 million in Q3 2023[142]. - Distributable cash flow for Q3 2024 was $53.28 million, compared to $61.40 million in Q3 2023, reflecting a decrease of 13.5%[139]. - Operating income for Q3 2024 was $31.81 million, a decline of 49% compared to $62.55 million in Q3 2023[142]. - Interest expense for Q3 2024 was $37.02 million, slightly up from $36.90 million in Q3 2023[142]. - Net revenues decreased by $61.8 million, or 22.4%, in Q3 2024 compared to Q3 2023, primarily due to decreased revenue in West Texas marketing operations and lower RINs revenue[144]. - Year-to-date (YTD) net revenues decreased by $35.5 million, or 4.6%, in the nine months ended September 30, 2024, driven by lower average sales prices and RINs revenue, despite increased volumes sold[144]. Segment Performance - The gathering and processing segment experienced a $6.2 million decrease in segment EBITDA, while the wholesale marketing and terminalling segment saw a $2.3 million increase[108]. - The Gathering and Processing segment reported revenues of $81.53 million in Q3 2024, down 14% from $94.83 million in Q3 2023[142]. - The Wholesale Marketing and Terminalling segment generated $106.94 million in Q3 2024, a decrease of 27.2% from $147.11 million in Q3 2023[142]. - The Storage and Transportation segment's revenues fell to $25.61 million in Q3 2024, down 24.4% from $33.89 million in Q3 2023[142]. - The gathering and processing segment's net revenues decreased by $13.3 million, or 14.0%, in Q3 2024, primarily due to changes in revenue recognition[162]. - Net revenues for the wholesale marketing and terminalling segment decreased by $40.2 million, or 27.3%, in Q3 2024 compared to Q3 2023, driven by decreased revenue in West Texas marketing operations[170]. - Net revenues for the storage and transportation segment decreased by $8.3 million, or 24.4%, in Q3 2024 compared to Q3 2023[181]. Acquisitions and Investments - The H2O Midstream Acquisition was completed on September 11, 2024, for a total consideration of $229.5 million, consisting of $159.5 million in cash and $70.0 million in preferred equity[109]. - The Wink to Webster Pipeline Investment was acquired for $83.9 million in cash and the forgiveness of a $60.0 million receivable from Delek Holdings[110]. - The Partnership's investments in pipeline joint ventures increased segment EBITDA by $9.1 million following the acquisition of the W2W Investment[108]. - The Partnership made a final investment decision to build a new natural gas processing plant with a capacity of approximately 110 MMcf/d, projected to generate an EBITDA of around $40 million[111]. Financial Position and Liquidity - Total liquidity as of September 30, 2024, amounted to $702.4 million, consisting of $695.1 million in unused credit commitments and $7.3 million in cash[190]. - The DKL Revolving Credit Facility was increased by $100 million, resulting in total commitments of $1,150 million, with a maturity date of October 13, 2027[113]. - Total indebtedness as of September 30, 2024, was $1,904.9 million, reflecting an increase of $193.2 million from December 31, 2023, due to the issuance of 2029 Notes[201]. - The company expects future funding sources to be sustainable and profitable, although market conditions and crude oil prices may affect cash flows and liquidity[190]. Strategic Initiatives - The Partnership aims to position itself as a premier midstream provider in the Permian Basin through strategic initiatives and environmental stewardship[108]. - The 2024 strategic focus areas include generating stable cash flow, pursuing acquisitions, and expanding ESG consciousness to lower the carbon footprint[124]. - The Partnership's long-term strategic objectives focus on maintaining stable cash flows and growing quarterly distributions through acquisitions and project development[123]. Market Conditions and Economic Factors - Concerns about inflation and economic downturns have softened forward demand expectations for hydrocarbons, but liquid transportation fuels are expected to remain in high demand[108]. - Tariffs on certain FERC regulated pipelines increased by approximately 1.3% on July 1, 2024, while fees adjusted using the consumer price index rose by 3.3% and those using the producer price index increased by approximately 0.8%[112]. Cash Flow and Expenses - Net cash provided by operating activities increased by $45.8 million to $156.4 million for the nine months ended September 30, 2024, compared to $110.6 million in 2023[195][196]. - Net cash used in investing activities increased by $258.9 million, primarily due to acquisitions totaling $243.4 million and increased capital expenditures[197]. - Total capital spending for the nine months ended September 30, 2024, was $69.8 million, with $37.2 million spent in the current period[205]. - Operating expenses decreased by $5.1 million, or 15.4%, in Q3 2024 compared to Q3 2023, while YTD operating expenses increased by $2.8 million, or 3.2%[147]. - General and administrative expenses increased by $10.2 million, or 183.9%, in Q3 2024, primarily due to transaction costs related to acquisitions[148].

Financial Data and Key Metrics Changes - The company reported approximately $107 million in quarterly adjusted EBITDA for Q3 2024, an increase from $98.2 million in the same period of 2023 [5][8] - Distributable cash flow (DCF) as adjusted was $62 million, with a DCF coverage ratio of approximately 1.1x, expected to improve to above 1.3x in the second half of 2025 [8] Business Line Data and Key Metrics Changes - Gathering and Processing segment adjusted EBITDA was $55 million, up from $52.9 million in Q3 2023, driven by higher throughput from Permian Basin assets and contributions from H2O [9] - Wholesale Marketing and Terminalling adjusted EBITDA decreased to $24.7 million from $28.1 million due to lower wholesale margins [9] - Storage and Transportation adjusted EBITDA increased to $19.4 million from $17.9 million, attributed to higher storage and transportation rates [9] - Investment in pipeline joint venture segment contributed $15.6 million, up from $9.3 million in Q3 2023, primarily from Wink to Webster contributions [9] Market Data and Key Metrics Changes - The company is experiencing strong performance in the Permian Basin, with ongoing expansion projects and acquisitions enhancing its market position [5][6] Company Strategy and Development Direction - The company is focused on organic and inorganic growth opportunities, with recent acquisitions aimed at enhancing service offerings in the Midland Basin [5][6] - A quarterly distribution increase to $1.10 per unit was approved, reflecting the company's commitment to value creation for unitholders [6] - The capital program for Q3 was $65.2 million, with significant allocation towards the new gas processing plant [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth trajectory, citing strong performance and strategic acquisitions as key drivers [5][6] - The company is managing liquidity and leverage prudently, with approximately $780 million of liquidity post-equity offering [7] Other Important Information - The company is on track to complete the expansion of its processing plant on time and on budget in the first half of 2025, with additional opportunities in sour gas treatment [6][14] Q&A Session Summary Question: Progress on the processing plant and sour gas opportunities - Management confirmed that the processing plant is progressing well and is on schedule for completion in the first half of 2025, with exciting opportunities in sour gas treatment [12][13][14] Question: Trends in Midland's volumes and acreage dedication - Management noted a slight decrease in volumes but expects to see growth in the future, with new acreage dedication enhancing their position in the Midland area [16][18] Question: Integration of H2O midstream acquisition - Management reported successful integration of H2O midstream, enhancing bundling sales opportunities and operational synergies [20][21] Question: Capital allocation strategy regarding distribution growth and debt payment - Management emphasized a balanced approach to growth opportunities, liquidity, leverage, and distribution coverage, aiming for sustainable growth [22][23][24]

Financial Performance - Net income attributable to limited partners for Q3 2024 was $33.7 million, or $0.71 per diluted common limited partner unit, compared to $34.8 million, or $0.80 per diluted common limited partner unit in Q3 2023[1] - Adjusted EBITDA for Q3 2024 reached a record $106.8 million, up 9% year over year from $98.2 million in Q3 2023[1] - Distributable cash flow, as adjusted, was $62.0 million in Q3 2024, slightly up from $61.4 million in Q3 2023[1] - Net income for Q3 2024 was $33,674, a decrease of 3.3% from $34,825 in Q3 2023[17] - Adjusted EBITDA for Q3 2024 increased to $106,829, up from $98,241 in Q3 2023, representing an increase of 8.1%[17] - Distributable cash flow for Q3 2024 was $61,959, compared to $61,396 in Q3 2023, reflecting a slight increase of 0.9%[18] - Total revenue for Q3 2024 was $214,070, a decrease of 6.5% from $228,000 in Q3 2023[19] - Operating income decreased to $31,808,000 for the three months ended September 30, 2024, compared to $62,554,000 in the prior year, a decline of 49.1%[16] - The company reported a net income of $107.380 million for the nine months ended September 30, 2023, compared to a net loss in the previous year[22] Cash Distribution and Coverage - The company declared a quarterly cash distribution of $1.100 per common limited partner unit, representing a 5.3% increase over Q3 2023 distribution of $1.045[2] - The distribution cash flow coverage ratio, as adjusted, was 1.1x, lower than the target of 1.3x due to timing effects[2] - Cash distribution per common limited partner unit increased to $1.095 for the three months ended September 30, 2024, compared to $1.045 in the same period of 2023, a rise of 4.8%[16] - The distributable cash flow coverage ratio for Q3 2024 was 0.94x, down from 1.35x in Q3 2023[18] - The company expects to continue increasing distributions in the future, maintaining a consistent growth policy[1] Debt and Liabilities - Total debt as of September 30, 2024, was approximately $1.89 billion, with a leverage ratio of approximately 4.15x[2] - Long-term debt increased to $1,894,257,000 as of September 30, 2024, compared to $1,673,789,000 at December 31, 2023, an increase of 13.2%[14] - Total liabilities increased to $2,005,831,000 as of September 30, 2024, compared to $1,804,115,000 at December 31, 2023, an increase of 11.1%[14] - Total current liabilities decreased to $69,582,000 as of September 30, 2024, from $90,590,000 at December 31, 2023, a reduction of 23.2%[14] Revenue and Segment Performance - Net revenues for the three months ended September 30, 2024, were $214,070,000, down 22.3% from $275,824,000 in the same period of 2023[16] - The company reported an increase in Adjusted EBITDA from the Gathering and Processing segment to $55.0 million in Q3 2024, up from $52.9 million in Q3 2023[3] - Segment EBITDA for the Gathering and Processing segment was $42,380, while the Wholesale Marketing and Terminalling segment reported $20,245 for Q3 2024[19] - The Gathering and Processing segment reported revenues of $270.053 million for the nine months ended September 30, 2023, compared to $143.992 million in 2022, a growth of 87.5%[22] - The Wholesale Marketing and Terminalling segment generated revenues of $361.808 million for the nine months ended September 30, 2023, up from $186.345 million in the previous year, marking a 93.7% increase[22] Capital Expenditures - Capital spending for Q3 2024 was $65,198, significantly higher than $1,910 in Q3 2023[19] - The company plans to invest $53.4 million in capital spending related to a new gas processing plant in 2024[24] - Capital spending for the nine months ended September 30, 2023, totaled $90.550 million, compared to $68.628 million in 2022, indicating a 31.9% increase[24] Cash Flow and Operating Activities - Net cash provided by operating activities was $24,944,000 for the three months ended September 30, 2024, down from $46,828,000 in 2023, a decrease of 46.8%[15] - The company’s net cash provided by operating activities for Q3 2024 was $24,944, down from $46,828 in Q3 2023[17] - Cash and cash equivalents at the end of the period were $7,317,000, up from $4,182,000 in the same period of 2023, an increase of 74.1%[15] Acquisitions and Growth Opportunities - The acquisition of H2O Midstream was completed during Q3 2024, enhancing growth opportunities in the Delaware Basin[1] - Income from equity method investments rose to $15.6 million in Q3 2024, compared to $9.3 million in Q3 2023, driven by the W2W dropdown[6] - Average throughput for the Gathering and Processing segment was 125,123 bpd for the nine months ended September 30, 2023, compared to 111,973 bpd in 2022, an increase of 11.4%[25]

Core Viewpoint - Delek Logistics Partners, L.P. (DKL) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which significantly influences stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Delek Logistics Partners indicate an improvement in the company's underlying business, suggesting potential for stock price appreciation [5][10]. Earnings Estimate Revisions - For the fiscal year ending December 2024, Delek Logistics Partners is expected to earn $3.41 per share, reflecting a 5.6% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for the company has increased by 4.3%, indicating positive sentiment among analysts [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Delek Logistics Partners to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting strong potential for market-beating returns in the near term [10].

Core Insights - DKL Logistics LP is expanding its operations through acquisitions and diversifying its sales base, which is expected to increase EBITDA by at least 14% [2][6][7] Company Profile - DKL Logistics LP, based in Brentwood, Tennessee, is a publicly traded master limited partnership formed in 2012 by Delek US Holdings, Inc. to manage logistics and marketing assets for crude oil and refined products [3] - The company operates primarily in the southeastern United States and west Texas, supporting Delek's refining operations [3] Holdings and Operations - DKL's operations include gathering, transporting, and storing crude oil, as well as marketing and distributing refined products [4] - The company has a significant infrastructure, including a 200-mile gathering system and over 800 miles of transportation pipelines [5] Acquisitions and Expansion - On August 6, 2024, DKL announced the acquisition of Delek US's interest in the Wink to Webster pipeline, which is expected to enhance asset quality and diversify operations [6] - The acquisition is projected to increase third-party EBITDA contribution from 50% to 64% and diversify EBITDA sources across various segments [6][7] Financial Performance - DKL's Q2 2024 saw record EBITDA of $102.4 million, a 10% increase from Q2 2023, with a 9.7% growth in EBITDA and 11% growth in distributable cash flow [13][14] - The company reported a net income of $73.71 million for Q1-2 2024, reflecting a 6.43% increase year-over-year [14] Dividends - DKL recently increased its distribution from $1.07 to $1.09, marking the 46th consecutive quarterly increase, yielding 11.18% as of August 28, 2024 [15][16] Analyst Ratings and Price Targets - DKL received upgrades from Citigroup and Truist, with price targets of $45 and $46, respectively, indicating potential upside from the current price of $39 [28][29][31] Valuations - DKL is currently trading at a low Price/DCF ratio of 6.66X, significantly below midstream averages, suggesting potential undervaluation [32][34]

Core Insights - Three stocks with strong income characteristics and buy rankings are highlighted for investors to consider on August 26th [1] Group 1: Medical Properties Trust (MPW) - Medical Properties Trust is a self-advised real estate investment trust focused on acquiring and developing net-leased healthcare facilities [1] - The Zacks Consensus Estimate for its current year earnings has increased by 7.1% over the last 60 days [1] - The company has a dividend yield of 13.30%, significantly higher than the industry average of 4.54% [2] Group 2: NexPoint Real Estate Finance (NREF) - NexPoint Real Estate Finance is a real estate investment trust that invests in first mortgage loans, mezzanine loans, preferred equity, and alternative structured financings in commercial real estate [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 18.63% over the last 60 days [3] - The company has a dividend yield of 12.80%, compared to the industry average of 11.79% [4] Group 3: Delek Logistics Partners (DKL) - Delek Logistics Partners owns, operates, acquires, and constructs logistics and marketing assets for crude oil and refined products [4] - The Zacks Consensus Estimate for its current year earnings has increased nearly 4.3% over the last 60 days [4] - The company has a dividend yield of 11.2%, which is higher than the industry average of 7.2% [4]