Q2 2026 Delek Logistics Partners LP Earnings Call Transcript
Key Points
- Delek Logistics Partners LP (DKL) reported a record quarterly adjusted EBITDA of $144 million, up from $127 million in the same period last year, and reaffirmed full-year 2026 guidance of $520 million to $560 million.
- The company announced its 54th consecutive quarterly distribution increase, raising the distribution to $1.135 per unit, reflecting strong financial discipline and commitment to unitholder returns.
- The Delaware crude gathering business achieved record volumes of over 157,000 barrels per day in Q2, up from 129,000 in Q1, and produced water volumes increased to over 687,000 barrels per day, up from 557,000 in Q1.
- The Libby Gas Complex is nearing completion, with gas volumes ramping to over 80 million cubic feet per day in Q2, up from 64 million in Q1, and a step change in utilization is expected as the sour gas solution comes online later this year.
- The company proactively refinanced its high-yield debt, issuing $800 million in senior notes due 2034, reducing annual interest costs and extending its maturity profile, while maintaining robust liquidity of approximately $1.1 billion.
- Growth capital investments of $180 million to $190 million are expected to generate up to $75 million in run-rate EBITDA, with a highly attractive return, and the company expects to manage leverage down as this EBITDA is realized.
- Leverage ratio increased to 4.23 times in Q2, up modestly from Q1, due to capital investments, which is above the long-term target of 3.5 times.
- Wholesale Marketing and Terminalling segment adjusted EBITDA declined to $13 million from $23 million a year ago, largely due to the effects of the 2024 amend and extend agreement with Delek.
- Storage and Transportation segment adjusted EBITDA decreased to $16 million from $17 million in the prior period, reflecting the January 2026 related party transaction.
- The company faces uncertainty from commodity price fluctuations, though higher crude prices and strengthening Waha prices are expected to drive demand, but these are subject to market volatility.
- The company's growth is heavily dependent on the successful completion and ramp-up of the Libby Gas Complex and sour gas infrastructure, which carries execution and timing risks.
- Despite strong performance, the company's guidance range suggests potential conservatism, and management did not provide specific upside scenarios, leaving some uncertainty about future earnings growth.
Hello, everyone. Thank you for joining us, and welcome to the Delek Logistics Partners second-quarter 2026 Earnings Call. (Operator Instructions)
I will now hand the conference over to Robert Wright, EVP and Chief Financial Officer. Robert, please go ahead.
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 and Chairman; Mark Hobbs, EVP; as well as other members of our management team.
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 statements made during today's call 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
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