Delek Logistics Partners, LP Q2 FY2025 earnings call

• Delek Logistics Partners had a record quarter with approximately $120 million in quarterly adjusted EBITDA and is on track to deliver full-year EBITDA guidance of $480 million to $520 million.
• Successfully completed commissioning of the new Libby plant and expects to fill it to capacity in the second half of 2025. Progressing sour gas treating, gathering, and acid gas injection capabilities.
• Crude gathering operations from VPG and DTG started the second half strong with significant volume rises. Water acquisitions and integration progressing to strengthen position in Midland and Delaware basins.
• Board approved 50th consecutive increase in quarterly distributions to $1.11 per unit.
• Libby 2 gas plant commissioned and performing as expected, with focus on sour gas handling and expanding gas processing capabilities.

For the Gathering and Processing segment, adjusted EBITDA for the second quarter of 2025 was $78 million, compared to $55 million in the second quarter of 2024. Wholesale Marketing and Terminalling adjusted EBITDA in Q2 2025 was $23 million, down from $30 million in the prior year. Storage and Transportation adjusted EBITDA in Q2 2025 was $17 million, same as Q2 2024. The investments in pipeline joint venture segment contributed $11 million in Q2 2025, compared with $8 million in Q2 2024.

• On track for full-year EBITDA guidance of $480 million to $520 million.
• DCF coverage ratio expected to rise throughout the remainder of the year as growth projects like the Libby 2 gas plant contribute.
• Libby plant expected to be filled to capacity in the second half of 2025.

Forward-looking statements involve risks and uncertainties as actual results may differ materially from comments. Factors causing differences are included in SEC filings, and the company assumes no obligation to update forward-looking statements.

Q: Wanted to start with the processing plant here, asking about volumes trending today as commissioning was completed and timing of further expansions including treating capacity.

A: The plant was completed on time, flowing gas gradually and expected to run full by year-end. Focus now on sour gas processing, with Amine unit constructed and working on AGI wells and related infrastructure. Further developments will be announced when ready.

Q: Follow-up on sour gas treating side, view on recent asset deals in Delaware and broader competitive environment for treating capacity.

A: The transaction is a reaffirmation of strategy. Our system has capabilities not necessarily in others', and the high multiple in the neighborhood is good for showing intrinsic value. Our comprehensive gas processing, gathering, etc., strategy is better.

Q: Talk about M&A thoughts and what's heard from producers regarding guidance.

A: Looking for M&A that's free cash flow accretive, accretive to leverage and coverage ratios, fits strategy. Feeling good about $480M to $520M guidance as seeing uptick in crude volumes in Q3 and good relationship with customers, with stable crude prices supporting the guidance.