Delek Logistics Partners LP (DKL) Q4 2022 Earnings Call Transcript

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Delek Logistics Partners LP (NYSE:DKL) Q4 2022 Earnings Conference Call February 28, 2023 4:30 PM ET

Company Participants

Rosy Zuklic - VP, IR

Avigal Soreq - President, CEO & Director

Todd O'Malley - COO

Conference Call Participants

Douglas Irwin - Citigroup


Good day, and invited to nan Delek Logistics Partners Fourth Quarter 2022 Earnings Call. [Operator Instructions]. Please note, this arena is being recorded. I would now for illustration to move nan convention complete to Rosy Zuklic, Vice President of Investor Relations. Please spell ahead.

Rosy Zuklic

Good afternoon, and invited to nan Delek Logistics Partners Fourth Quarter Earnings Conference Call. Participants connected today's telephone will see Avigal Soreq, President; Todd O'Malley, EVP and Chief Operating Officer; Reuven Spiegel, EVP and Chief Financial Officer; arsenic good arsenic different guidance squad members.

As a reminder, this convention telephone will incorporate forward-looking statements arsenic defined nether nan national securities laws, including without limitation, statements regarding guidance and early business outlook. These statements impact risks and uncertainties that whitethorn origin existent results to disagree from our forecast. For much information, please mention to nan consequence factors discussed successful nan company's astir precocious revenge yearly study connected Form 10-K and quarterly study connected Form 10-Q revenge pinch nan SEC, on pinch nan property merchandise associated pinch this call. The institution assumes nary responsibility to update immoderate forward-looking statements aliases information, which speak arsenic of their prospective date. I'll now move nan telephone complete to Avigal for opening remarks.

Avigal Soreq

Thanks, Rosy. Delek Logistics Partners ended nan twelvemonth pinch a grounds growth. Our logistics strategy extremity highly good this quarter, contributing to a grounds EBITDA of $92.5 million, 33% higher than a record. A large driver for nan summation was nan successful integration of nan 3 Bear asset. We are very pleased pinch nan integration of 3 Bear and see nan integration phase complete.

Their logistics had a safe and reliable cognition each twelvemonth long. This was a nonstop consequence of dedicated labor and contractors. We achieved 3 cardinal man hours worked without a mislaid clip injury, a awesome milestone we purpose to continue. Our Board approved an summation successful nan quarterly distribution to $1.02 per portion for nan 4th quarter. This marks 40 consecutive quarterly distribution increases.

We successfully achieved our extremity to present a 5% distribution summation successful 2022 and expect to proceed this inclination into 2023. From a macro perspective, we are optimistic connected nan outlook for nan midstream business. Delek Logistics is good positioned to proceed its beardown way grounds to turn and to beryllium semipermanent important midstream player. I will now manus it complete to Todd.

Todd O'Malley

Thanks, Avigal. Starting this quarter, we changed our reporting segments to amended align our financial reporting pinch really we negociate nan business. Change chiefly centered astir reporting nan results from our Delek Permian gathering strategy and 3 Bear assets successful 1 caller conception called Gathering and Processing.

Total EBITDA per DKL was $92.5 cardinal for nan 4th fourth of '22 compared pinch $70 cardinal for nan aforesaid play of 2021. The 4th fourth of 2022, distributable rate travel was $51 cardinal and nan DCF sum ratio was 1.16x. For nan Gathering and Processing segment, EBITDA this 4th was $48 cardinal compared pinch $34 cardinal successful nan 4th fourth of '21.

The summation was chiefly driven from beardown contributions by nan Delek Permian Gathering System arsenic good arsenic nan 3 Bear assets. Wholesale Marketing and Terminalling conception contributed $23 cardinal of EBITDA this 4th fourth compared pinch $19 cardinal successful nan aforesaid play past year. The main driver for nan summation year-over-year was owed to our West Texas Wholesale business.

The Storage and Transportation conception had EBITDA of $16 cardinal this 4th quarter, successful statement pinch nan 4th fourth of '21. And lastly, nan investments successful Pipeline Joint Venture conception contributed $9 cardinal towards nan 4th fourth of '22 compared pinch $7 cardinal successful nan 4th fourth of '21, chiefly owed to accrued volumes astatine nan Red River and Caddo associated ventures. Moving to superior expenditures.

For nan afloat twelvemonth of '22, we spent $131 million, excluding nan 3 Bear acquisition, of which $120 cardinal was earmarked for growth. For 2023, we person a superior fund of $81 million, of which $66 cardinal is earmarked for growth. With that, operator, we tin unfastened nan telephone for questions.

Question-and-Answer Session


[Operator Instructions]. Our first mobility comes from Doug Irwin from Citi.

Douglas Irwin

Just wanted to commencement pinch nan '23 outlook and nan Permian G&P segment. As you've already achieved nan anterior target of doubling nan bequest Permian volumes, I'm conscionable funny what your expectations are astir measurement maturation moving guardant from here. And past connected 3 Bear, funny if you're capable to supply an update astir wherever those assets are trending comparative to nan $100 cardinal EBITDA that was implied by nan first valuation multiple.

Avigal Soreq

Yes, Doug, it's Avigal. Good afternoon, convey you for joining america today. So nan DPG is highly a bully asset. We are very pleased versus what we are seeing. I'm not going to springiness you a circumstantial number for 2023, but I'm going to springiness you immoderate highlights astir nan assets. We do person 325,000 acreage pinch -- and a statement successful show for more. But conscionable organically, we spot an increase, conscionable talking to shaper successful a very bully percentage, good transcend what nan remainder of nan Permian see.

We person 25 rigs connected that acreage, which is very bully and a prolific number versus nan remainder of nan basin. And we expect it to beryllium very bully growth, good transcend nan mean of nan marketplace during nan year, during nan remainder of nan year. Probably successful nan first quarter, we'll effort to springiness you much circumstantial numbers astir nan growth. But that plus and that stone is highly well, and we are very fortunate pinch that plus and that investment.

Around 3 Bear, connected nan book it was very clear. We person -- we spot nan integration shape complete. We really changed nan sanction to Delaware Gathering System to bespeak that completion of nan integration. And we are good positioned to proceed nan inclination to deed our target. So that this is arsenic elemental arsenic it could be.

Douglas Irwin

Great. That's adjuvant detail. Then arsenic my 2nd question, I was conscionable wondering if you could talk astir really you're reasoning astir nan wide partner, benignant of successful nan discourse of nan sum of nan parts reappraisal astatine nan DK level.

So nan GP building is thing that you position arsenic an obstacle to perchance being capable to deconsolidate nan elaborate indebtedness connected nan equilibrium sheet. And if so, could you possibly talk astir immoderate of nan different options that are retired location to perchance reside that?

Avigal Soreq

Yes. So let's beryllium clear, first, each woody that we mightiness put together is, first and foremost, to nan use of nan unitholders. We are very proud of having 40 quarters that we summation distribution clip aft time, aft time. And we are taking a batch of pridefulness successful our expertise to service our unitholder. So we will commencement pinch that information first, what's nan correct point to do for nan finance community. And past we'll understand what is nan correct point to do for nan business.

I'm judge erstwhile location is simply a -- we'll lead nan measurement and we'll building nan correct woody and nan correct firm authorities to let america to do nan correct woody for nan investors and for nan company.

Douglas Irwin

Got it.

Avigal Soreq

Thank you for joining america today.


There are nary much questions successful nan queue. And This concludes our question-and-answer session. I would for illustration to move nan convention backmost complete to Avigal Soreq for immoderate closing remarks.

Avigal Soreq

Yes. So first of all, I want to convey nan guidance squad astir nan array of moving difficult to make nan business arsenic bully arsenic it tin beryllium and to convey nan Board of Directors of starting successful arsenic nan investor organization of sticking pinch america and trusting successful our performance.

And first and foremost, to our dedicated labor that are moving days, nights, rainfall and sunny days, Thank you truthful much.


Conference has now concluded. Thank you for attending today's presentation. You whitethorn now disconnect.

Editor: Naga

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