Delek Logistics(US:DKL)2025-05-07 17:30Financial Data and Key Metrics Changes - Delek Logistics Partners reported approximately $117 million in quarterly adjusted EBITDA, an increase from $102 million in the same period of 2024, indicating a year-over-year growth of approximately 14.7% [4][13] - Distributable cash flow as adjusted was $75 million, with a DCF coverage ratio of approximately 1.27 times, expected to rise throughout the year [13] - The company is on track to deliver full-year EBITDA guidance of $480 million to $520 million [4][16] Business Line Data and Key Metrics Changes - Gathering and Processing segment adjusted EBITDA for the quarter was $81 million, up from $50 million in Q1 2024, reflecting a significant increase due to acquisitions [14] - Wholesale marketing and terminalling adjusted EBITDA decreased to $18 million from $25 million in the prior year, primarily due to seasonal weather impacts [14] - Storage and transportation adjusted EBITDA was $14 million, down from $18 million in Q1 2024, attributed to renegotiation impacts [14] - Investments in pipeline joint venture segment contributed $10 million, compared to $8 million in the same quarter of the previous year [14] Market Data and Key Metrics Changes - The company is enhancing its competitive position in the Midland Basin through intercompany transactions and acquisitions, increasing third-party contribution to cash flow from 70% to around 80% on a pro forma basis [4][20] - The Delaware Basin is expected to continue growing, with the company optimistic about its competitive position despite near-term crude price volatility [6] Company Strategy and Development Direction - The company is focused on increasing its economic separation from DK and enhancing its position as a full-service crude, natural gas, and water provider in the Permian Basin [4][5] - The commissioning of the Libbey II gas plant is expected to add 100 million to 120 million cubic feet per day of incremental capacity, with plans for future expansions [8][9] - The company aims to improve operational efficiency and margins across its operations [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the Delaware Basin and the overall partnership, emphasizing prudent management of leverage and coverage [6][12] - The company is optimistic about the prospects of direct logistics and plans to continue its value creation path moving forward [6] Other Important Information - The Board of Directors approved a 49th consecutive increase in the quarterly distribution to $1.11 per unit [6] - The capital program for Q1 was approximately $72 million, with significant investments in the Libbey II gas processing plant [15][16] Q&A Session Summary Question: Details on intercompany agreements and optimization opportunities - Management clarified that the intercompany transaction involved cleaning up contracts and moving some midstream activities from DK to DKL, with no net material impact on EBITDA [20] Question: Customer feedback and contract mix in the current macro environment - Management reported stable volumes in the Midland Basin and increasing water volumes, indicating a strong customer base and competitive advantage [22][25] Question: CapEx and future growth plans - Management indicated limited direct commodity exposure with strong counterparties and forecasted an increase in produced water volumes despite volatility [25][26]