Delek Logistics(US:DKL)2023-05-08 18:08Financial Data and Key Metrics Changes - Delek Logistics Partners reported a record EBITDA of over $93 million for Q1 2023, compared to $66 million in Q1 2022, reflecting a significant increase [3][5] - Distributable cash flow for Q1 2023 was $62 million, with a DCF coverage ratio of 1.38 times [5] - The company approved a 4.6% increase in quarterly distribution to $1.025 per limited partner unit, marking 41 consecutive quarterly distribution increases [4] Business Line Data and Key Metrics Changes - The Gathering and Processing segment's EBITDA increased to $55 million in Q1 2023 from $32 million in Q1 2022, driven by strong contributions from the Midland and Delaware Gathering systems [22] - The Storage and Transportation segment's EBITDA rose to $13 million in Q1 2023, up from $11 million in the same period last year, primarily due to higher utilization and fees [23] - The Wholesale Marketing and Terminalling segment maintained an EBITDA of $22 million, consistent with the prior year [6] Market Data and Key Metrics Changes - Throughput of the Midland Gathering averaged approximately 222,000 barrels per day in Q1 2023, significantly up from about 100,000 barrels per day in Q1 2022 [43] - The overall production in the Midland area increased by approximately 10%, with the company's specific area seeing more than double the production [25] Company Strategy and Development Direction - The company is focused on maintaining its strong track record of growth and is optimistic about the midstream business outlook [48] - Capital expenditures for Q1 2023 were $36 million, with $33 million allocated for growth projects, maintaining an annual capital outlook of $81 million [38][40] - The management is exploring cost reduction initiatives and operational efficiencies to enhance gross margins and operational expenditures [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's performance and the ability to continue increasing distributions, highlighting a positive operational environment [9][26] - The company anticipates a decrease in leverage ratio moving forward, supported by EBITDA growth and capital project funding [29][40] Other Important Information - The company achieved a milestone of 4 million man-hours worked without lost time injuries, emphasizing its commitment to safety [20][41] - The investment in the Pipeline Joint Venture segment contributed $6 million in Q1 2023, down from $7 million in Q1 2022, due to lower throughput from the Delek Tyler Refinery turnaround [7] Q&A Session Summary Question: Update on Permian operations and overall operating environment - Management noted a 10% increase in Midland total production and more than double the production in their specific area, indicating a positive trend [25] Question: Cost reduction initiatives at the MLP level - Management confirmed they are exploring opportunities for cost reductions and operational efficiencies, which will positively impact gross margins and operational expenditures [13][14] Question: Leverage trends and debt levels - Management indicated that while absolute debt levels increased slightly, they expect the leverage ratio to decrease throughout the year due to EBITDA growth and capital project funding [29][40]