Delek Logistics Partners (DKL) Q4 2023 earnings summary

Executive summary

• FY2023 EBITDA rose to $370.3M from $311.9M, while net income fell to $126.2M from $159.1M, reflecting higher interest expense and a $14.8M goodwill impairment.

• Stronger Gathering and Processing, Wholesale Marketing and Terminalling, and Storage and Transportation EBITDA offset softer West Texas marketing revenue; quarterly distribution reached $1.055 per unit.

Financial highlights

• Revenue was $1,020.4M, down 1.5% YoY; operating income increased to $238.9M from $209.7M.

• Net income was $126.2M vs. $159.1M; diluted EPS was $2.89 vs. $3.66.

• Operating cash flow rose to $225.3M from $192.2M; distributable cash flow increased to $248.2M from $218.1M.

• Cost of materials and other fell 17.0% to $532.6M; operating expenses rose 33.7% to $118.1M, primarily due to Delaware Gathering operations.

Outlook and guidance

• 2024 priorities include stable cash flow, growth through acquisitions and investments, contract renewals, asset optimization, third-party customer growth, and lower carbon intensity.

• Expected continued demand for liquid transportation fuels in 2024; minimum volume commitments and dedicated acreage agreements provide some protection through economic downturns.

• Declared quarterly distribution of $1.055 per unit, or $4.22 annualized; management expects resources sufficient for the next 12 months’ working capital, debt service, distributions, and capital expenditures.