Delek Logistics(US:DKL)2024-02-27 20:20Financial Data and Key Metrics Changes - The fourth quarter of 2023 adjusted EBITDA was $100.9 million compared to $92.5 million in the same period of 2022, indicating a year-over-year increase [51] - Distributable cash flow was reported at $65 million with a DCF coverage ratio of 1.4% [4] - The capital program for 2024 is expected to be about $70 million, including approximately $20 million for sustaining and regulatory capital and $50 million for growth capital [52] Business Line Data and Key Metrics Changes - For the Gathering and Processing segment, adjusted EBITDA for the quarter was $53.3 million, up from $48.1 million in Q4 2022, primarily due to higher throughput from Delek Logistics Premium Basin assets [4] - Wholesale Marketing and Terminalling adjusted EBITDA increased to $28.4 million from $23.3 million year-over-year, driven by higher terminal utilization [38] - Storage and Transportation adjusted EBITDA rose to $17.5 million compared to $16.1 million in the fourth quarter of 2022, mainly due to higher storage and transportation rates [38] Market Data and Key Metrics Changes - The Delaware Gathering and Processing assets are performing in line with expectations, while Permian Basin volumes are slightly lower due to new production stabilizing over time [9] - The company anticipates an increase in volumes in the second half of the year as capital projects are incrementally advanced [58] Company Strategy and Development Direction - The company is focused on growing third-party revenues and exploring natural gas opportunities in the Delaware Basin, where significant growth is expected [50] - A significant capital budget is in place to enhance additional volume and connections in the Delaware and Midland areas [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about consistent improvement in business operations and highlighted a strong position in the Permian Basin [22][23] - The long-term outlook for the Delaware Gathering System remains unchanged despite a goodwill impairment due to increased interest rates [51] Other Important Information - The Board approved the 44th consecutive increase in the quarterly distribution to $1.055 per unit, reflecting confidence in maintaining competitive distributions [3] - The company has achieved a record year and a record quarter, exceeding $100 million in adjusted EBITDA [18] Q&A Session Summary Question: Long-term outlook for Delaware Gathering and Processing assets - Management confirmed that the three Bear assets are meeting expectations and the initial target of $100 million annual EBITDA remains a good number to work with [5] Question: 2024 outlook and growth targets - Management achieved a $100 million quarterly EBITDA run rate by the end of 2023 and is optimistic about future growth metrics [6] Question: Sequential volume changes in Midland and Delaware - Management noted that maintenance work expedited in Q4 affected gas volumes, but improvements are expected in Q1 [25] Question: Corporate expenses and debt maturities - Corporate expenses have decreased, and management is examining various instruments for refinancing upcoming debt maturities [44][45]