Q2 2024 Delek Logistics Partners LP Earnings Call Transcript
Key Points
- Delek Logistics Partners LP (DKL) reported a record quarterly adjusted EBITDA of $102.4 million, showcasing strong financial performance.
- The company announced an extension of the contract with DK and Wink to Webster pipeline, securing long-term agreements of up to seven years.
- DKL's acquisition of H2O Midstream is immediately accretive on an EBITDA and free cash flow basis, enhancing its midstream service capabilities.
- The investment in a new gas processing plant is expected to generate cash on cash returns of more than 20%, with completion anticipated in the first half of 2025.
- The Board of Directors approved an increase in the quarterly distribution to $1.09 per unit, reflecting a strong track record of delivering value to unitholders.
- The company faces risks and uncertainties that may cause actual results to differ from forecasts, as highlighted in their forward-looking statements.
- Despite improvements, DKL's leverage remains a concern, although it has decreased to 3.81 times from a high of 4.84 at the end of 2022.
- The capital expenditure for the second quarter was $10.2 million, with expectations to spend $90 million to $100 million in the second half of 2024, indicating significant ongoing investment requirements.
- The EBITDA range for the recent transaction is broad ($55 million to $85 million), suggesting potential variability in expected financial outcomes.
- There are complexities involved in the exchange of units between companies as part of the Wink to Webster recontracting, which may impact financial reporting and tax efficiency.
Thank you for standing by. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners Q2 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be question-and-answer session. (Operator Instructions).
I would now like to turn the conference over to Robert Wright, Deputy CFO. You may begin.
Good morning, and welcome to the Delek Logistics Partners second quarter earnings conference call. Participants joining me on today's call will include Avigal Soreq, President; Joseph Israel, EVP Operations; Reuven Spiegel, EVP and Chief Financial Officer; and Odely Sakazi, SVP Delek Logistics.
As a reminder, this conference call will contain forward-looking statements as defined under the federal securities laws, including statements regarding guidance and future business outlook. These statements involve risks
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