Delek Logistics(US:DKL)2025-08-06 17:32Financial Data and Key Metrics Changes - The company reported approximately $120 million in quarterly adjusted EBITDA, an increase from $102 million in the same period of 2024, indicating a year-over-year growth of approximately 17.6% [4][12] - Distributable cash flow as adjusted was $73 million, with a DCF coverage ratio of approximately 1.22 times, expected to rise as growth projects contribute to results [12][13] - The capital program for the second quarter was approximately $119 million, with $115 million allocated to growth CapEx [15] Business Line Data and Key Metrics Changes - For the Gathering and Processing segment, adjusted EBITDA was $78 million, up from $55 million in 2024, primarily due to acquisitions [13] - Wholesale Marketing and Terminalling adjusted EBITDA decreased to $23 million from $30 million in the prior year [13] - Storage and transportation adjusted EBITDA remained stable at $17 million compared to the previous year [13] - Investments in the pipeline joint venture segment contributed $11 million this quarter, up from $8 million in 2024 [13] Market Data and Key Metrics Changes - The company is focused on enhancing its competitive position in both the Midland and Delaware Basins through acquisitions and operational improvements [5][6] - The integration of two water gathering systems is progressing well, expected to enhance crude and water offerings in specific counties [11] Company Strategy and Development Direction - The company aims to maintain healthy liquidity to support growth while ensuring leverage aligns with long-term targets [12] - The successful commissioning of the new Libbey plant is expected to fill to capacity in 2025, enhancing natural gas offerings [4][5] - The company plans to continue rewarding stakeholders through peer-leading distributions, with a recent increase to $1.115 per unit [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year EBITDA guidance of $480 million to $520 million, despite market volatility [12][36] - The company noted an uptick in crude volumes for Q3, indicating strong relationships with producers and favorable breakeven costs [36][37] - Management remains open to M&A opportunities that are free cash flow accretive and align with strategic goals [31][32] Other Important Information - The company completed the commissioning of the Libbey II gas plant on schedule, focusing on sour gas processing and infrastructure projects [9][21] - The Board of Directors approved the fiftieth consecutive increase in quarterly distribution, highlighting financial prudence [6] Q&A Session Summary Question: Trends in processing plant volumes post-commissioning - Management confirmed that the plant is flowing gas gradually and expects to reach full capacity by year-end [20][21] Question: Insights on sour gas treating and competitive environment - Management acknowledged the competitive landscape and highlighted their unique capabilities compared to recent asset transactions in the Delaware Basin [24][26] Question: M&A market observations and liquidity utilization - Management emphasized a focus on creating value for investors and being opportunistic in M&A while maintaining a strategic approach [31][33] Question: Producer relationships and guidance amidst commodity price volatility - Management expressed confidence in their guidance, citing strong relationships with producers and low breakeven costs in their operational areas [36][37]