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01/10 16:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted strong financial performance, with a significant increase in EBITDA and distributable cash flow. The company announced its 51st consecutive distribution increase, indicating strong shareholder returns. Although there were concerns about operational risks and financial leverage, the Q&A revealed confidence in meeting producer needs and strong performance from joint ventures. Despite management avoiding direct answers on future CapEx and Libby 3 timing, the positive guidance, expansion plans, and acquisitions suggest a positive stock price movement, especially for a small-cap company.
Quarterly Adjusted EBITDA $136 million, up from $107 million in the same period last year, representing a year-over-year increase. The increase was attributed to acquisitions and operational improvements.
Distributable Cash Flow (DCF) as Adjusted $74 million with a DCF coverage ratio of approximately 1.24x. The ratio is expected to strengthen due to contributions from recent growth projects like the Libby 2 gas plant.
Gathering and Processing Segment Adjusted EBITDA $83 million, compared to $55 million in the third quarter of 2024. The increase was primarily due to the acquisition of H2O and Gravity Water Midstream.
Wholesale Marketing and Terminalling Adjusted EBITDA $21 million, compared to $25 million in the prior year. The decrease was primarily due to the impact of last summer's amend and extend agreements with DK.
Storage and Transportation Adjusted EBITDA $19 million, unchanged from $19 million in the third quarter of 2024.
Investments in Pipeline Joint Venture Segment Contribution $22 million, compared with $16 million in the third quarter of 2024. The increase was primarily due to the contribution from the Wink to Webster drop down in August of last year and stronger performance by the venture in the current period.
Capital Expenditures (CapEx) $50 million, with $44 million allocated to growth CapEx, including optimization of the Libby 2 gas processing plant. The remainder was spent on other growth projects, such as new connections in the Midland and Delaware gathering systems.
Libby 2 gas plant: Successfully commissioned and operational, performing as expected. Investments made to support future expansion of the Libby complex.
Permian Basin position: Advancing position as a full-service provider in natural gas, crude, and water businesses. Competitive position in Midland and Delaware basins strengthened through acquisitions and increased dedication.
Operational efficiencies: Focus on optimizing synergies and increasing margin profile. Integration of water gathering systems progressing well.
Acquisitions: Completed acquisitions of H2O Midstream and Gravity Water Midstream, enhancing service offerings and supporting growth.
Financial strategy: Maintaining strong financial position with $1 billion credit availability. Focus on achieving long-term leverage and coverage targets.
Market Conditions: Potential risks from economic uncertainties or market volatility that could impact demand for services or pricing.
Regulatory Hurdles: Possible challenges related to compliance with federal and state regulations, especially in the energy and midstream sectors.
Supply Chain Disruptions: Risks associated with delays or inefficiencies in acquiring necessary materials or equipment for operations and expansions.
Strategic Execution Risks: Challenges in successfully integrating recent acquisitions (H2O Midstream and Gravity Water Midstream) and optimizing synergies to achieve expected financial benefits.
Operational Risks: Potential inefficiencies or issues in the operation of new infrastructure, such as the Libby 2 gas plant and associated sour gas AGI infrastructure.
Financial Leverage: Risks related to maintaining long-term leverage and coverage targets while pursuing aggressive growth and expansion strategies.
Full Year EBITDA Guidance: Delek Logistics Partners has increased its full year EBITDA midpoint guidance to the upper end of the range between $500 million and $520 million.
Libby 2 Gas Plant Expansion: The planned capital expenditures for the Libby 2 gas plant include investments to support future expansion of the Libby complex. Confidence in these expansion opportunities is increasing as the associated sour gas AGI infrastructure progresses.
Crude Gathering Volumes: Crude gathering volumes had a record third quarter, and this trend is expected to continue through the remainder of the year.
Water Gathering Systems Integration: The integration of the two water gathering systems from H2O and Gravity is progressing well, with expectations to enhance combined crude and water offerings in Howard, Martin, and Glasgow counties.
Financial Position and Growth Agenda: The company maintains a strong financial position with approximately $1 billion of availability on credit facilities, providing flexibility to execute its growth agenda.
Earnings Trajectory: The company remains confident in its earnings trajectory, expecting the recent growth projects, including the Libby 2 gas plant, to contribute meaningfully to financial performance through the remainder of the year.
Quarterly Distribution Increase: The Board of Directors has approved the 51st consecutive increase in the quarterly distribution to $1.12 per unit.
The earnings call highlighted strong financial performance, with a significant increase in EBITDA and distributable cash flow. The company announced its 51st consecutive distribution increase, indicating strong shareholder returns. Although there were concerns about operational risks and financial leverage, the Q&A revealed confidence in meeting producer needs and strong performance from joint ventures. Despite management avoiding direct answers on future CapEx and Libby 3 timing, the positive guidance, expansion plans, and acquisitions suggest a positive stock price movement, especially for a small-cap company.
The earnings report shows strong financial performance with a 17.6% increase in EBITDA and a 41.8% rise in gathering and processing EBITDA. The company maintains a positive outlook with increased quarterly distributions, successful project completions, and strategic acquisitions. Despite some risks, management's confidence in guidance and strategic execution, alongside the company's strong market position, supports a positive sentiment. Given the company's market cap and these factors, a stock price increase of 2% to 8% over the next two weeks is likely.
The earnings call reflects strong financial performance with increased EBITDA, a consecutive distribution increase, and robust liquidity. Despite competitive and regulatory challenges, the company is expanding through acquisitions and has a solid shareholder return plan. The Q&A revealed some management opacity, but overall sentiment remains positive due to strategic acquisitions and a stable customer base. Given the company's market cap, the stock price is likely to see a positive movement of 2% to 8% over the next two weeks.
The earnings call summary shows strong financial performance with significant EBITDA growth due to acquisitions and increased distributable cash flow. The company has a robust liquidity position and plans for capital expenditure, indicating financial health. Shareholder returns are positive with a distribution increase and share buyback authorization. The Q&A suggests stable customer relationships and increased water volume expectations. Despite some operational challenges and unclear management responses, the overall sentiment is positive, especially for a small-cap stock, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
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