Delek Logistics Partners (DKL) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 adjusted EBITDA of $107 million, up 9% year-over-year, reflecting strong operational performance and successful execution of strategic initiatives.

• Net income attributable to partners was $33.7 million, with distribution per unit increased 5.3% year-over-year to $1.10, marking the 47th consecutive increase.

• Closed key acquisitions, including H2O Midstream and Delek's interest in the Wink to Webster Pipeline, diversifying the customer base and expanding Permian Basin operations.

• Announced and progressed on a new gas processing plant expansion, with completion expected in H1 2025; plant is highly subscribed and on schedule and budget.

• Raised $165.3 million in equity in October 2024 to fund growth projects in the Delaware Basin.

Financial highlights

• Q3 2024 adjusted EBITDA was $107 million, up from $98.2 million in Q3 2023; reported EBITDA was $69.2 million, impacted by transaction costs and lease accounting.

• Q3 2024 net income was $33.7 million ($0.71 per diluted unit); Q3 2024 net revenues were $214.1 million, down 22.4% year-over-year.

• Distributable cash flow (DCF), as adjusted, was $62 million, with a DCF coverage ratio of 1.1x.

• Gathering and processing segment adjusted EBITDA rose to $55 million, driven by higher throughput and H2O Midstream contributions.

• Total debt as of September 30, 2024, was approximately $1.89 billion, with a leverage ratio of 4.15x.

Outlook and guidance

• DCF coverage ratio expected to return above the long-term target of 1.3x in H2 2025 as benefits from recent initiatives are realized.

• Management anticipates continued distribution growth and prudent capital allocation, leveraging recent equity offerings for growth in the Delaware Basin.

• New gas processing plant in the Permian Basin expected to add $40 million in annual EBITDA upon completion.

• Projected to spend $90–$100 million in H2 2024 on the new gas processing plant.

• Capital spending for 2024 forecast at $69.8 million (excluding gas plant spend).