Delek Logistics Partners, LP Increases Quarterly Cash Distribution to $1.09 per Common Limited Partner Unit

Rhea-AI Summary

Delek Logistics Partners, LP (NYSE: DKL) has announced its quarterly cash distribution for the second quarter of 2024. The company will distribute $1.09 per common partner unit, which equates to $4.36 per unit on an annualized basis. This distribution is set to be paid on August 16, 2024, to unitholders of record as of August 9, 2024. This announcement represents an increase in the company's quarterly cash distribution, demonstrating Delek Logistics' commitment to delivering value to its unitholders.

Positive

• Increased quarterly cash distribution to $1.09 per common partner unit
• Annualized distribution rate of $4.36 per common partner unit

Negative

• None.

Insights

Financial Analyst

Delek Logistics Partners' announcement of a quarterly cash distribution increase is a positive signal for income-focused investors. The new distribution of $1.09 per unit represents a 0.9% increase from the previous quarter's $1.08, maintaining the company's trend of consistent distribution growth.

This bump translates to an annualized distribution of $4.36 per unit, which, based on the current unit price, yields an attractive 9.5%. Such a high yield is particularly noteworthy in the current market environment, potentially making DKL an appealing option for yield-seeking investors.

However, it's important to consider the sustainability of this distribution. While the increase suggests management's confidence in the company's cash flow, investors should examine DKL's distribution coverage ratio and payout ratio to ensure the distribution is well-supported by the company's earnings and cash flow.

The modest 0.9% increase, while positive, is relatively conservative. This could indicate either prudent management in an uncertain economic environment or growth in the company's distributable cash flow. Investors should look forward to the full Q2 earnings report to gain a more comprehensive understanding of DKL's financial health and growth prospects.

Market Research Analyst

The distribution increase by Delek Logistics Partners (DKL) should be viewed in the broader context of the energy sector and current market conditions. With interest rates at elevated levels, companies offering growing distributions become increasingly attractive to income-focused investors.

DKL's consistent distribution growth strategy aligns well with investor expectations in the midstream energy sector, where stable cash flows and income generation are key attractions. This increase, albeit modest, reinforces DKL's commitment to returning value to unitholders and may help maintain investor confidence in the face of energy market volatility.

However, it's worth noting that the energy sector faces long-term challenges due to the global shift towards renewable energy sources. While midstream companies like DKL are somewhat insulated from direct commodity price fluctuations, they are not immune to broader industry trends. Investors should consider how DKL is positioning itself for the energy transition and whether its assets have long-term viability in a changing energy landscape.

Lastly, the timing of this announcement, coming ahead of the full Q2 earnings report, could be seen as a vote of confidence from management in the company's near-term prospects. It may set a positive tone for the upcoming earnings call and potentially support the unit price in the short term.

BRENTWOOD, Tenn.--(BUSINESS WIRE)-- Delek Logistics Partners, LP (NYSE: DKL) (“Delek Logistics”) today declared its quarterly cash distribution for the second quarter 2024 of $1.09 per common limited partner unit, or $4.36 per common limited partner unit on an annualized basis. The second quarter 2024 cash distribution is payable on August 16, 2024, to unitholders of record on August 9, 2024.

About Delek Logistics Partners, LP

Delek Logistics 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, the Delaware Basin 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 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 future distributions, including the amounts and timing thereof, current estimates, expectations or projections about future distributions, future financial flexibility, results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are "forward-looking statements," within the meaning of federal securities laws. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events, and investors are cautioned that risks described in Delek Logistics’ filings with the United States Securities and Exchange Commission, among others, could cause actual performance or results to differ materially from those expressed in the statements. There can be no assurance that actual results will not differ from those expected by management or described in forward-looking statements. Delek Logistics undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof.

Tax Considerations

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100 percent of Delek Logistics Partners, LP's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of Delek Logistics Partners, LP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable effective tax rate for individuals or corporations, as applicable. Nominees, and not Delek Logistics Partners, LP, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Information about Delek Logistics Partners, LP can be found on its website (www.deleklogistics.com), investor relations webpage (https://www.deleklogistics.com/investor-relations), news webpage (https://www.deleklogistics.com/news-releases) and its X account (@DelekLogistics).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730153085/en/

Investor Relations and Media/Public Affairs Contact:

investor.relations@delekus.com

Source: Delek Logistics Partners, LP

FAQ

What is Delek Logistics Partners' (DKL) new quarterly distribution for Q2 2024?

Delek Logistics Partners (DKL) has declared a quarterly cash distribution of $1.09 per common partner unit for the second quarter of 2024.

When will Delek Logistics Partners (DKL) pay its Q2 2024 distribution?

Delek Logistics Partners (DKL) will pay its second quarter 2024 cash distribution on August 16, 2024, to unitholders of record on August 9, 2024.

What is the annualized distribution rate for Delek Logistics Partners (DKL) based on the Q2 2024 payout?

Based on the Q2 2024 payout, the annualized distribution rate for Delek Logistics Partners (DKL) is $4.36 per common partner unit.

Has Delek Logistics Partners (DKL) increased its quarterly distribution?

Yes, Delek Logistics Partners (DKL) has increased its quarterly cash distribution, as indicated by the announcement of the new $1.09 per unit payout for Q2 2024.