Delek Logistics Reports Record Q2 Earnings

By Bobby Samwell • Tuesday, August 06 08:11 • Permanent Link

Delek Logistics Partners, LP (NYSE: DKL) has reported record-breaking financial results for the second quarter of 2024. The net income attributable to all partners increased to $41.1 million from $31.9 million in the second quarter of 2023, marking a substantial 28.8% growth. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the same period rose to $102.4 million compared to $92.8 million in the second quarter of 2023, representing a 10.4% increase.

In terms of distributable cash flow, Delek Logistics generated $67.8 million in the second quarter of 2024, up from $60.5 million in the second quarter of 2023, indicating a solid 12% increase. The distributable cash flow coverage ratio also improved to 1.32x from the previous period, demonstrating the partnership's strong financial position.

Following the end of the second quarter, Delek Logistics made strategic moves including the acquisition of H2O Midstream for $230 million, the acquisition of Delek US' interest in the Wink to Webster pipeline, and the announcement of the final investment decision on a new gas processing plant adjacent to the existing Delaware plant.

Furthermore, the partnership improved its leverage ratio to 3.81x from 4.34x at year-end 2023, reflecting enhanced financial leverage. Additionally, Delek Logistics delivered distribution growth with a recent increase to $1.090 per unit, marking the 46th consecutive quarterly distribution increase.

The strategic actions position Delek Logistics as a premier, full-service midstream provider in the prolific Permian Basin, according to Avigal Soreq, President of Delek Logistics' general partner. Soreq also emphasized the board's commitment to returning value to unitholders, evident in the approved 46th consecutive increase in the quarterly distribution.

Financially, the total debt stood at approximately $1.57 billion as of June 30, 2024, with cash of $5.1 million and additional borrowing capacity of $819.8 million under the $1.15 billion third-party revolving credit facility. The leverage ratio of approximately 3.81x was within the requirements of the maximum allowable leverage ratio under the credit facility.

Segment-wise, the gathering and processing segment's EBITDA increased to $54.7 million in the second quarter of 2024 from $52.7 million in the same period of 2023, primarily due to higher throughput from Permian Basin assets. The wholesale marketing and terminalling segment also saw growth, with EBITDA rising to $30.2 million from $28.0 million, driven by higher terminalling utilization. Additionally, the storage and transportation segment reported an increase in EBITDA to $16.8 million from $15.0 million, mainly due to higher storage and transportation rates.

Delek Logistics' corporate EBITDA improved, with a loss of $7.1 million in the second quarter of 2024 compared to a loss of $10.1 million in the second quarter of 2023.

The market has reacted to these announcements by moving the company's shares -2.6% to a price of $39.67. Check out the company's full 8-K submission here.

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