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Delek Logistics Partners, LP (DKL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a record quarter: Adjusted EBITDA reached $136.0M (+27% YoY), net income was $45.6M ($0.85/unit), and net revenues were $261.3M; management raised full-year Adjusted EBITDA guidance to $500–$520M .
  • Versus consensus, DKL beat revenue ($261.3M vs $253.6M*) but missed EPS ($0.85 vs $1.04*); EBITDA comparison is mixed given definitional differences (company GAAP EBITDA $102.0M vs consensus $129.6M*) .
  • Operationally, Delaware crude oil gathering hit record volumes; Libby 2 commissioning completed and AGI/sour gas treating capabilities progressed, supporting capacity fill and potential earlier expansion (Libby 3) .
  • Distribution increased for the 51st consecutive quarter to $1.120/unit; leverage ratio was ~4.44x with ~$1.0B revolver availability, reinforcing liquidity while funding growth .
  • Stock narrative catalyst: guidance raise, record crude volumes, and sour gas infrastructure execution; risks include wholesale margin exposure and JV income variability .

What Went Well and What Went Wrong

What Went Well

  • Record Adjusted EBITDA ($136.0M, +27% YoY) on H2O/Gravity contributions, W2W dropdown impacts, and higher wholesale margins; full-year Adjusted EBITDA guidance raised to $500–$520M .
  • Delaware crude gathering volumes hit a record; Libby 2 commissioning completed; AGI/sour gas treating progressing to fill plant and enable potential earlier expansion: “AGI and sour gas handling… enabling DKL to fill the plant to capacity and paving the way for further processing capacity expansions” .
  • Strong JV performance (Wink to Webster) lifted equity income to $21.9M in Q3; CFO: “that’s a good run rate of what to expect going forward” .

What Went Wrong

  • EPS missed consensus (actual $0.85 vs $1.04*), highlighting sensitivity to lease accounting reclassifications and financing costs; wholesale segment Adjusted EBITDA fell YoY ($21.4M vs $24.7M) after Big Spring marketing assignment to Delek US .
  • Net income margin declined sequentially (17.44% in Q3 vs 18.09% in Q2*) amid higher depreciation and interest expense linked to growth capex and debt issuance *.
  • Natural gas gathering throughput fell YoY (62,692 Mcfd vs 75,719 Mcfd), reflecting evolving producer mix and the pivot to sour treatment needs .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Revenues ($USD Millions)$214.070 $246.350 $261.277
GAAP EBITDA ($USD Millions)$69.181 $90.089 $101.978
Adjusted EBITDA ($USD Millions)$106.829 $120.891 $135.978
Net Income ($USD Millions)$33.674 $44.574 $45.560
Diluted EPS ($USD)$0.71 $0.83 $0.85

Q3 2025 vs Consensus (S&P Global):

MetricConsensus Q3 2025Actual Q3 2025
Revenue ($USD Millions)$253.615*$261.277
Primary EPS ($USD)$1.04*$0.85
EBITDA ($USD Millions)$129.563*$101.978

Values marked with * retrieved from S&P Global.

Margins Trend

MetricQ4 2024Q1 2025Q2 2025Q3 2025
EBITDA Margin %29.92%*28.41%*32.28%*30.68%*
Net Income Margin %16.82%*15.62%*18.09%*17.44%*

Values marked with * retrieved from S&P Global.

Segment Adjusted EBITDA

SegmentQ3 2024 ($M)Q3 2025 ($M)
Gathering & Processing$55.024 $82.787
Wholesale Marketing & Terminalling$24.695 $21.374
Storage & Transportation$19.404 $19.280
Investments in Pipeline JVs (equity income)$15.602 $21.878
Corporate & Other$(7.896) $(9.341)

Key Operating KPIs

KPIQ3 2024Q3 2025
Delaware Crude Oil Gathering (avg bpd)125,123 153,745
Natural Gas Gathering & Processing (Mcfd)75,719 62,692
Midland Water Disposal & Recycling (avg bpd)311,290 616,484
West Texas Gross Margin per Barrel ($/bbl)$3.38 $4.50
Tyler Refinery Sales Volumes (avg bpd)70,172 67,439

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$480–$520M (reaffirmed in Q2 PR) $500–$520M Raised midpoint (+$20M)
Distribution per UnitQ2 2025 → Q3 2025$1.115 (Q2 declared) $1.120 (Q3 declared) Raised (+0.4%)
Distribution per Unit (YoY)Q3 2024 → Q3 2025$1.100 (Q3’24) $1.120 (Q3’25) Raised (+1.8%)

Management did not provide revenue/margin/OpEx/OI&E/tax rate guidance in Q3 materials; forward guidance focused on Adjusted EBITDA and capital program execution .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Libby 2 Gas PlantCommissioning started; sour gas capabilities planned Successfully completed; advancing AGI/sour treating Plant performing; AGI/sour treating progressing to fill capacity and enable expansion Accelerating execution
Sour Gas (AGI) StrategyPlanned capability build-out Progress on AGI & sour treating Confidence in permitted AGI capacity; no near-term restrictions Strengthening
Crude Gathering VolumesStrong Midland throughput Continued strength Record Delaware volumes; strength continues into Q4 Improving
Water Midstream IntegrationGravity acquisition closed; Midland combined offering planned Integration progressing Larger footprint enhances combined crude/water offering in Midland Improving
JV Performance (Wink to Webster)JV contribution positive JV income $10.5M Equity income $21.9M; W2W stronger, expected sustainable run-rate Improving
Wholesale Margin/Big Spring AgreementMargin decline and intercompany changes hurt wholesale Assignment to DK pressured wholesale EBITDA Wholesale down YoY; margin improvement partially offsets Mixed

Management Commentary

  • “We reported approximately $136 million in quarterly adjusted EBITDA… increased full-year EBITDA guidance… between $500 and $520 million” .
  • “Libby 2 gas plant… AGI and sour gas handling capabilities are enabling DKL to fill the plant to capacity and paving the way for further processing capacity expansions” .
  • “Record crude [gathering]… strength has continued in the fourth quarter… transition to full-suite service provider” .
  • CFO: “Approximately $1 billion of availability on our credit facilities… flexibility to continue executing our growth agenda” .
  • On JVs: “Most of [equity income] was impacted by strong performance… Wink to Webster… year-to-date is a good run rate” .

Q&A Highlights

  • Treating capacity ramp and producer activity: Management accelerated sour programs due to producer needs; confident in filling Libby 2 and potentially expanding sooner .
  • Capex and 2026 flexibility: 2026 plan under development; guidance to be provided next quarter; Q3 capex ~$50M with $44M growth capex focused on Libby 2 optimization and new connections .
  • Sustainability of JV equity income: Wink to Webster drove strength; year-to-date run-rate viewed as reasonable going forward .
  • Water landscape and competition: DKL sees favorable gas/oil and water/crude ratios; believes H2O and Gravity were acquired at attractive valuations; SWD permitting constraints create strategic advantage .
  • AGI capacity adequacy for future expansions: “Very happy with our permitted capacity on the acid gas side… do not see any near-term restrictions” .

Estimates Context

  • Revenue beat: Actual $261.3M vs consensus $253.6M*; EPS miss: $0.85 vs $1.04* .
  • EBITDA comparison is nuanced: S&P Global EBITDA consensus $129.6M* vs company GAAP EBITDA $102.0M; company emphasizes Adjusted EBITDA $136.0M (non-GAAP) .
  • Implications: Street likely raises revenue/Adjusted EBITDA trajectory on stronger volumes and execution, but may revisit EPS frameworks to reflect lease accounting impacts and higher interest/depreciation. Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance raised to $500–$520M Adjusted EBITDA on strong execution; record crude volumes and progressing sour gas infrastructure are positive drivers .
  • Distribution increased to $1.120/unit (51st consecutive raise); coverage improved to 1.24x as adjusted, supporting continued capital returns .
  • Operational mix shift: wholesale weaker YoY post Big Spring assignment, but offset by stronger Gathering & Processing and JV contributions .
  • Near-term catalysts: Libby 2 optimization, AGI commissioning milestones, producer drilling response to sour solutions; watch for potential Libby complex expansion timing updates .
  • Balance sheet/liquidity: ~$1.0B revolver availability and ~4.44x leverage provide flexibility to fund growth while maintaining coverage targets .
  • Risk watch: throughput variability (gas vs sour mix), wholesale margin exposure, JV performance normalization; monitor regulatory constraints on SWD permitting in Delaware Basin .
  • Positioning: Full-suite Permian offering (crude, gas, water) with strategic AGI capability underpins medium-term growth and potential earlier capacity expansions .

Values marked with * retrieved from S&P Global.