Delek Logistics Partners, LP Announces 2025 Financial Expectations

Rhea-AI Summary

Delek Logistics Partners (NYSE: DKL) has announced its preliminary 2025 financial projections, forecasting approximately 20% year-over-year growth in Adjusted EBITDA. The company expects to generate between $480-$520 million in Adjusted EBITDA for 2025.

President Avigal Soreq attributed this growth to strong business fundamentals in the Permian Basin, recent significant acquisitions, additional acreage dedications in the crude business, and capabilities in sour natural gas treating and acid gas injection. DKL is enhancing its 'full suite' strategy to become the preferred midstream services provider in the Permian Basin.

Additional 2025 expectations include:

• Coverage ratio of approximately 1.3x by year end
• Capital expenditures of $220-$250 million, including expansion projects
• Continued growth in distributions to unitholders

Positive

• 20% year-over-year growth in Adjusted EBITDA expected for 2025
• Projected Adjusted EBITDA of $480-$520 million for 2025
• Coverage ratio of approximately 1.3x by year end 2025
• Commitment to continue growing distributions to unitholders
• Expansion in Permian Basin operations through recent acquisitions

Negative

• Significant capital expenditures of $220-$250 million planned for 2025

Insights

Financial Analyst

Delek Logistics Partners' 2025 financial projections reveal robust growth expectations, with projected Adjusted EBITDA of $480-$520 million representing approximately 20% year-over-year growth. This significant increase outpaces the broader midstream sector, where average growth rates typically range from 5-8%, positioning DKL as an outperformer in the space.

The capital expenditure plan of $220-$250 million represents a substantial commitment relative to DKL's market cap of $2.1 billion. This aggressive investment strategy signals confidence in high-return opportunities within the Permian Basin, where production volumes continue to grow despite broader industry constraints. The capital intensity appears justified by the robust EBITDA growth projection, suggesting an implied return on invested capital that likely exceeds DKL's cost of capital.

The projected distribution coverage ratio of approximately 1.3x by year-end provides a solid cushion for the promised distribution growth. This coverage level, while healthy, is slightly below the 1.5-2.0x that many larger midstream players target, indicating DKL is balancing growth investments with unitholder returns. Investors should note that this implies roughly 77% of distributable cash flow will be paid out, leaving retained capital for debt reduction outside of the planned capex.

DKL's strategic focus on being the "preferred crude, gas, and water midstream services provider" in the Permian Basin represents a comprehensive approach that can capture multiple revenue streams from producer customers. This integrated service model creates operational synergies and potential competitive advantages through bundled service offerings, potentially leading to more stable, long-term commercial relationships with producers.

The emphasis on "recent significant acquisitions" and "additional acreage dedications" suggests DKL is successfully executing both organic and inorganic growth strategies. However, investors should monitor how efficiently these acquisitions are integrated and whether they deliver the projected returns, as acquisition-driven growth can sometimes lead to integration challenges or underperformance relative to initial expectations.

While these projections paint an optimistic picture, potential headwinds include rising interest rates affecting refinancing costs, potential producer consolidation in the Permian that could impact contract negotiations, and the execution risk associated with the substantial capital program. Nevertheless, the strong projected EBITDA growth and commitment to distribution increases position DKL as an attractive option for yield-focused investors in the midstream energy space.

BRENTWOOD, Tenn.--(BUSINESS WIRE)-- Delek Logistics Partners, LP (NYSE: DKL) (“Delek Logistics”) announced today its preliminary 2025 financial projections. “We expect to have approximately 20% year over year growth in Adjusted EBITDA⁽¹⁾ as a result of strong business fundamentals we are seeing in the Permian Basin,” said Avigal Soreq, President of Delek Logistics.

“We expect to continue benefiting from the recent significant acquisitions, additional acreage dedications in the crude business, as well as sour natural gas treating, and acid gas injection capabilities. DKL continues to enhance its ‘full suite’ strategy and is committed to being the preferred crude, gas, and water midstream services provider in the Permian Basin. We are also dedicated to returning additional value to our unitholders and remain committed to growing our distributions,” Mr. Soreq concluded.

Below is a summary of DKL’s expectations for 2025:

Generate $480 - $520 million of Adjusted EBITDA
Coverage ratio of approximately 1.3x by year end
Invest $220 - $250 million in capital expenditures, including expansion projects
Expect to continue growing the distributions in 2025

About Delek Logistics Partners, LP

Delek Logistics Partners, LP is a midstream energy master limited partnership headquartered in Brentwood, Tennessee. Through its owned assets and joint ventures located primarily in and around the Permian Basin, including both the Midland and the Delaware Basins, and other select areas in the Gulf Coast region, Delek Logistics provides gathering, pipeline, transportation, and other services for its customers in crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling, water disposal, and recycling. Delek US Holdings, Inc. (NYSE: DK) (“Delek US”) owns the general partner interest as well as a majority limited partner interest in Delek Logistics Partners, LP, and is also a significant customer.

Safe Harbor Provisions Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. Investors are cautioned that important factors may affect these forward-looking statements, as described in Delek US’s and Delek Logistics’ filings with the SEC, including risks disclosed in their respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings and reports with the SEC.

Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Neither Delek US nor Delek Logistics undertakes any obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which they become aware of, after the date hereof, except as required by applicable law or regulation.

(1) Adjusted EBITDA is a "non-GAAP" operational measure we believe is important to investors in assessing our operating results and profitability and that supplements our financial information presented in accordance with U.S. GAAP. "Adjusted EBITDA" is calculated as net income before interest, income taxes, depreciation and amortization, as adjusted for significant, infrequently occurring transaction costs and throughput and storage fees associated with the lease component of commercial agreements subject to sales-type lease accounting. However, due to the inherent difficulty and impracticability of estimating certain amounts required by US GAAP with a reasonable degree of certainty at this time without unreasonable effort and imprecision, we have not provided a reconciliation of forward-looking Adjusted EBITDA guidance.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250225104940/en/

Investor Relations and Media/Public Affairs Contact:

investor.relations@delekus.com

Source: Delek Logistics Partners, LP

FAQ

What is Delek Logistics Partners' (DKL) projected Adjusted EBITDA for 2025?

Delek Logistics Partners projects Adjusted EBITDA of $480-$520 million for 2025, representing approximately 20% year-over-year growth.

How much will DKL invest in capital expenditures in 2025?

DKL plans to invest $220-$250 million in capital expenditures in 2025, including expansion projects.

What is DKL's expected coverage ratio for 2025?

DKL expects to achieve a coverage ratio of approximately 1.3x by year-end 2025.

Will Delek Logistics Partners (DKL) increase distributions to unitholders in 2025?

Yes, DKL has stated they expect to continue growing distributions to unitholders in 2025.

What is driving Delek Logistics Partners' growth in the Permian Basin?

DKL's growth is driven by strong business fundamentals, recent acquisitions, additional acreage dedications in crude business, and capabilities in sour natural gas treating and acid gas injection.