Delek Logistics(US:DKL)2024-11-06 19:50Financial 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]