Delek Logistics Partners (DKL) Q1 2025 earnings summary

Executive summary

• Achieved record Q1 2025 results with net income of $39.0 million and Adjusted EBITDA of $117 million, driven by acquisitions and expanded operations in the Permian Basin.

• Completed strategic acquisitions of H2O Midstream and Gravity Midstream, enhancing water disposal, recycling, and crude gathering capabilities, and increasing third-party revenue and geographic diversification.

• Third-party EBITDA contribution rose to approximately 80% on a pro forma basis following new intercompany agreements and dropdowns.

• Board approved the 49th consecutive increase in quarterly distribution to $1.110 per unit, a 3.7% year-over-year rise.

• Commissioned Libby 2 plant, expanding processing capacity in Lea County, NM.

Financial highlights

• Q1 2025 Adjusted EBITDA was $117 million, up from $101.5 million year-over-year; net income was $39.0 million, up from $32.6 million.

• Distributable cash flow, as adjusted, was $75 million–$75.1 million, with a coverage ratio of 1.27x and expectations for further improvement.

• Gathering and processing segment Adjusted EBITDA rose to $81 million–$81.1 million, driven by recent acquisitions.

• Wholesale marketing and terminalling Adjusted EBITDA fell to $17.8 million–$18 million from $25 million–$25.3 million due to lower margins and seasonal/weather impacts.

• Storage and transportation Adjusted EBITDA was $14 million–$14.5 million, down from $18 million–$18.1 million, mainly due to contract renegotiations and lower rates.

Outlook and guidance

• Full-year Adjusted EBITDA guidance reaffirmed at $480–$520 million, with continued strong cash flow growth expected from acquisitions and Libby plant expansion.

• Strategic focus on increasing third-party revenue, optimizing assets, and expanding ESG initiatives.

• LIBI 2 gas plant expansion in Delaware Basin expected to reach capacity in the second half of 2025; CapEx expected to decrease after heavy investment in 2024 and early 2025.

• Plans to add AGI & sour gas treating at Libby Complex and expand Midland basin offerings.

• Anticipates further growth in the Permian Basin and continued distribution increases.