Fubotv earnings beat by $0.10, revenue topped estimates
Delek Logistics Partners LP (DKL) reported its Q1 2025 earnings with significant revenue growth, surpassing forecasts despite missing earnings per share (EPS) expectations. The company posted a revenue of $249.93 million, exceeding the forecast of $235.98 million, while EPS came in at $0.73, below the anticipated $0.84. Following the earnings announcement, DKL’s stock price increased by 0.95%, reflecting a positive market reaction. With an impressive 11.42% dividend yield and a "GOOD" financial health rating according to InvestingPro, the company maintains a strong position in the midstream energy sector.
Key Takeaways
- Revenue exceeded forecasts by $13.95 million.
- EPS missed expectations by $0.11.
- Stock price rose by 0.95% post-announcement.
- Strong performance in the Gathering and Processing segment.
- Continued expansion efforts with the Libbey II Gas Plant.
Company Performance
Delek Logistics demonstrated robust performance in Q1 2025, driven primarily by its Gathering and Processing segment, which saw revenues increase to $81 million from $50 million in the same quarter the previous year. The company’s strategic focus on the Permian Basin, particularly the Delaware Basin, contributed significantly to its improved performance. Despite challenges in the Wholesale Marketing and Terminalling segment, Delek Logistics maintained a competitive position with its diversified offerings.
Financial Highlights
- Revenue: $249.93 million, up from the forecasted $235.98 million.
- Earnings per share: $0.73, below the forecasted $0.84.
- Adjusted EBITDA: $117 million, up from $102 million in Q1 2024.
- Distributable Cash Flow (DCF): $75 million.
Earnings vs. Forecast
Delek Logistics reported an EPS of $0.73, missing the forecast of $0.84 by $0.11, marking a significant deviation from expectations. However, the company achieved a revenue of $249.93 million, surpassing the forecast by $13.95 million, indicating strong operational performance and market demand.
Market Reaction
Following the earnings release, Delek Logistics’ stock price increased by 0.95%, closing at $38.88, up from the previous close. The stock’s movement aligns with the positive revenue surprise and reflects investor confidence in the company’s strategic initiatives and growth potential. According to InvestingPro Fair Value analysis, DKL currently appears undervalued, suggesting potential upside for investors. The stock has demonstrated low volatility with a beta of 0.74, making it an attractive option for stability-focused investors.
Outlook & Guidance
Looking ahead, Delek Logistics remains optimistic, with full-year EBITDA guidance set between $480 million and $520 million. The company plans to continue its expansion efforts, particularly with the Libbey II Gas Plant, and anticipates minimal capital expenditures in the latter half of the year. Notable is DKL’s impressive track record of raising dividends for 12 consecutive years, with a 6.22% dividend growth in the last twelve months. For comprehensive analysis and detailed forecasts, investors can access the full DKL Research Report, available exclusively on InvestingPro.
Executive Commentary
"We expect to continue our value creation path moving forward," stated Abigail Torek, President. Ruben Stiegel, EVP, added, "We have differentiated ourselves in the market because of our unique offering." These statements underscore Delek Logistics’ commitment to maintaining its competitive edge and driving growth.
Risks and Challenges
- Fluctuating commodity prices could impact profitability.
- Potential regulatory changes in the energy sector.
- Dependence on third-party cash flow contributions.
- Market competition from other midstream operators.
- Economic uncertainties affecting capital expenditure plans.
Q&A
During the earnings call, analysts inquired about the impact of recent acquisitions and restructuring. Executives clarified that there was no material EBITDA impact from these activities and emphasized the company’s strong market position in the Permian Basin.
Full transcript - Delek Logistics Partners LP (DKL) Q1 2025:
JL, Conference Operator: Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.
I would now like to turn the conference over to Robert Wright, Senior EVP and Chief Financial Officer. You may begin.
Robert Wright, Senior EVP and Chief Financial Officer, Delek Logistics Partners: Good morning, and welcome to the Delek Logistics Partners first quarter earnings conference call. Participants joining me on today’s call will include Abigail Torek, President and Ruben Stiegel, EVP. 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. Any forward looking information shared during today’s call will involve risks and uncertainties that may cause actual results to differ materially from today’s comments. Factors that could cause actual results to differ are included in our SEC filings.
The company assumes no obligation to update any forward looking statements. I will now turn the call over to Abigail for opening remarks. Abigail?
Abigail Torek, President, Delek Logistics Partners: Thank you, Robert. Delek Logistics Partners had another record quarter. We reported approximately $117,000,000 in quarterly adjusted EBITDA, facing DCL on track to deliver on its full year EBITDA guidance of $480,000,000 to $520,000,000 After transformational 2024, Delek Logistics continued to make substantial progress in improving its position as a premier full service crude, natural gas and water provider in the most prolific area of the Permian Basin. As we have communicated in the past, we are in a process of increasing our economic separation from DK. This week, we announced intercompany transaction, which further increased this economic separation, bringing third party contribution to our cash flow from 70% to around 80% on a pro form a basis.
This intercompany transaction, along with our acquisition of H2O and Gravity, significantly enhance our competitive position in the Midland Basin. In the Delaware Basin, we are in the commissioning phase of the new Libbey plant expansion and we expect to fill the plant to capacity in the second half of twenty twenty five. We are also making progress on acid gas injection and sour gas handling capabilities in the Libbey Complex. We expect to start spudding our AGI gas well shortly. AGI wells and sour gas treating capabilities enhance our competitive position in the Dalla Basin and will provide good runway of growth for Delek Logistics in the future.
Despite the near term volatility in crude prices, we like our competitive position in the Delaware Basin, which we believe will continue to grow. As the Delaware Basin grows, we will continue to grow the partnership through prudent management of leverage and coverage. I’m also pleased to announce that the Board of Directors has approved a forty ninth consecutive increase in the quarterly distribution to $1.11 per unit. To conclude, we are very excited about the prospects of direct logistics. We expect to continue our value creation path moving forward and will continue to grow our distribution in the future.
I will now hand it over to Ruben, who will provide more details on our operations.
Ruben Stiegel, EVP, Delek Logistics Partners: Thank you, Abigail. As Abigail mentioned, we are excited about the future for Delek Logistics and continue to work diligently to strengthen our advantaged Permian position. Let me start with the Delaware Basin. We are pleased to announce that we have started the commissioning of our Libbey II gas plant, a timeframe that is less than seven months following the commencement of construction. We are very proud of our team for this outstanding accomplishment.
As a reminder, at Libbey II, we are adding 100,000,000 to 120,000,100 cubic feet per day of incremental capacity, which we expect to realize through the course of the year. Our planned CapEx for Libbey 2 does include investments that will allow us to utilize for future expansion of the Libbey complex. As Avigal mentioned, we’re also adding sour gas treating and gathering capabilities. We are in the process of activating the first of two AGI wells, which will allow us to sequester acid gas. We believe we have differentiated ourselves in the market because of our unique offering of expanded gas processing in addition to our sour gas handling capabilities.
Additionally, since we are one of the few companies which can handle crude, gas and water in the Delaware, our natural gas G and P expansions are opening opportunities for us on crude and water gathering. Furthermore, our two recent water acquisitions are exceeding our expectations. We are currently in the process of integrating the two water gathering system from H2O and Gravity and this integration has helped us enhance our combined crude and water offering in the Howard, Martin and Glasscock Counties in the Midland Basin. Finally, we continue to look for opportunities to make our operations more efficient with the target to improve margins across our operations. With that, I will pass it on to Robert.
Thank you, Ruben.
Robert Wright, Senior EVP and Chief Financial Officer, Delek Logistics Partners: As both Abigail and Ruben have mentioned, we are continuing the growth and deconsolidation story of Delek Logistics, while maintaining focus on a healthy management of liquidity and leverage. As previously announced, DKL has authorization to buy back common units of up to $150,000,000 from DK through 2026. During the first quarter, DKL repurchased a total of $10,000,000 worth of units under this authorization. Post the closing of our acquisition of Gravity and the significant progress we have made on the Libbey II construction, we currently have approximately $450,000,000 of available liquidity. As Abigail mentioned, we closed the acquisition of Gravity on January 2.
This acquisition was made through a combination of cash and units, which Gravity’s sponsors have subsequently liquidated in the market as of the April. These additional units in the market helped to improve DKL’s overall trading liquidity. Moving on to our first quarter results. The first quarter adjusted EBITDA was $117,000,000 compared to $102,000,000 in the same period of 2024. Distributable cash flow as adjusted was $75,000,000 and the DCF coverage ratio was approximately 1.27 times, which we expect to continue to rise throughout the remainder of this year.
For the Gathering and Processing segment, adjusted EBITDA for the quarter was $81,000,000 compared to $50,000,000 in the first quarter of twenty twenty four. The increase was primarily due to the acquisitions of H2O and Gravity Midstream. Wholesale marketing and terminalling adjusted EBITDA was 18,000,000 compared to $25,000,000 in the prior year. The decrease was primarily due to the seasonal weather impacts driving lower wholesale margins. Storage and transportation adjusted EBITDA in the quarter was $14,000,000 compared with $18,000,000 in the first quarter of twenty twenty four.
The decrease was primarily due to the amend and extend renegotiation we completed last summer. And lastly, the investments in pipeline joint venture segment contributed $10,000,000 this quarter compared with $8,000,000 in the first quarter of twenty twenty four. The increase was primarily due to the contribution from the Wink to Webster dropdown in August of last year. Moving on to capital expenditures. The capital program for the first quarter was approximately $72,000,000 of which $52,000,000 was due to the significant progress made in the construction of the Libbey II gas processing plant.
This amount includes $15,000,000 for future potential expansion opportunities at the Libbey site. The Libbey II gas plant remains on track from a timing and cost perspective. The remainder of the capital spend for the period was growth projects, namely advancing new connections in the Midland and Delaware gathering systems. As to our outlook for the balance of the year, we continue to remain on track for the EBITDA guidance we laid out for the full year of $480,000,000 to $520,000,000 With that, we can open the call for questions.
JL, Conference Operator: Thank you. The floor is now open for questions. Your first question comes from the line of Doug Irwin of Citi. Your line is open.
Doug Irwin, Analyst, Citi: Hey, team. Thanks for the question. I hoping to start by just getting a little more detail on the intercompany agreements that you announced. Did this actually involve assets changing hands? Or was it more driven by recontracting?
And then just looking forward, are there more opportunities to optimize the footprint internally? Or are most of the remaining deconsolidation steps probably more external at this point?
Abigail Torek, President, Delek Logistics Partners: Hey, Doug. It’s Avigal. Good morning. Thank you for joining us today and thank you for your support. I’ll let Robert, our partnership CFO to pick up
Robert Wright, Senior EVP and Chief Financial Officer, Delek Logistics Partners: on that. Please, Robert. Yeah. Thanks, Avigal. What we announced today was another important milestone in our journey to be an independent company.
The related party transaction enabled us to clean up some of our contracts between DK and DKL. The effort helped to advance our deconsolidation efforts as we were able to move some of the refining related activities from DKL back to DKL. And importantly to DKL, we also moved some midstream related activities from DK to DKL. It’s important to note that as a result of this transaction, there was no net material impact to our EBITDA of either entity. One of the other important benefits of this transaction was that it helped increase DKL’s third party EBITDA to approximately 80% on a pro form a basis, which should help further drive the mutual goal of economic separation with DK.
Doug Irwin, Analyst, Citi: Okay. Understood. That’s helpful. And then maybe a follow-up more on the macro side. You’re obviously more dependent on third party producer activity today than you’ve been in the past.
Just wondering if you could talk about what you’re hearing from customers on your acreage given the current macro environment. And then just any detail you’re willing to share around your overall contract mix, particularly for the water assets you’ve acquired over the last year would be helpful.
Abigail Torek, President, Delek Logistics Partners: Yes, absolutely. I will take that question. So if you are looking holistically on our activity, we look at the Midland I will start with the Midland Basin, right? Midland Basin, we have
Ruben Stiegel, EVP, Delek Logistics Partners: a very
Abigail Torek, President, Delek Logistics Partners: strong customer base produced over there. We see stable volume, and we are happy with what we see. And as you know, we just finished two very timely acquisitions that allow us to have a combined offer. And why is that so important? Because we see as we speak water volume goes up, not down.
And that give us the compelling offering that we are giving is very, very good for us in that basin. In the Delaware, it’s probably the lowest, especially in our area, the lowest breakeven for Shell in the entire nation. You have seen I think we provide a slide that shows that most of our acreage in this area is still didn’t was not drilled. So that’s a very good positive as well. And when we are sure and we had gas that we didn’t really able to drill because of size that we are moving into the plant we’re just finishing on the order of 20,000,000 to 30,000,000 scaff a day.
The combined offer in this area of these streams give us definitive competitive advantage and a lot of other opportunities. So we’re in a good spot. We are happy about the offering we have and we look forward. But I love Ruben that is very close and making a lot
Ruben Stiegel, EVP, Delek Logistics Partners: of great progress in this business to chime in, please. Yeah. Thank you, Abigail. Just maybe some color on a couple of points. As far as our contracts, we have limited direct commodity exposure with strong counterparties.
In the Midland Basin, we actually forecast that even in some volatility the produced water volumes to increase. As far as our CapEx, it was heavy twenty four percent and first half at 25%. We don’t have material investment for the second half. So that should give us a lower run rate as far as CapEx and expenses. And the gas plant ramp up was actually the whole idea of the Libbey II was twofold.
One to fulfill demand that already existed that we weren’t able to suffice. And the second one is dedicated acreage growth, which Abigail just addressed. And in addition to all that, bring one more component to the formula, which is the sour and water handling capabilities. So all that together makes us feel very comfortable about where we are.
Abigail Torek, President, Delek Logistics Partners: Doug, I want to emphasize the style of capability we have. The long time on that on New Mexico is very long, and we are very fortunate about that. And that give us a very good competitive advantage that most of the plant in there doesn’t just doesn’t have and probably will not have.
Doug Irwin, Analyst, Citi: Understood. That’s all. Really helpful detail. Appreciate the time.
Abigail Torek, President, Delek Logistics Partners: Thank you, Doug.
Ruben Stiegel, EVP, Delek Logistics Partners: Thank you.
JL, Conference Operator: With no further questions, that concludes our Q and A session. I’ll now turn the conference back over to Avigal Sodak for closing remarks.
Abigail Torek, President, Delek Logistics Partners: Absolutely. So I would like to thank management here around the table, our Board of Directors, our investors that they like the story and invest in our unit. And most importantly to our great employees that make our partnership so good. Thank you.
JL, Conference Operator: This concludes today’s conference call. You may now disconnect.
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