Delek Logistics 2025 Q1 Earnings Net Income Rises 19.6% Despite Revenue Dip

Delek Logistics (DKL) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The total revenue decreased by 0.9% to $249.93 million from $252.07 million in the previous year. The company’s net income, however, saw a significant increase of 19.6% to $39.03 million compared to $32.65 million in the first quarter of 2024. Delek Logistics is on track to deliver full-year Adjusted EBITDA in the range of $480 million to $520 million. The company continues to project consistent distribution growth, highlighted by a recent increase to $1.110 per unit.

Revenue

Delek Logistics reported a total revenue of $249.93 million, reflecting a 0.9% decline from the previous year's quarter. The Gathering and Processing segment contributed $118.60 million, while the Wholesale Marketing and Terminalling segment added $106.70 million. The Storage and Transportation segment achieved revenue of $24.63 million.

Earnings/Net Income

Delek Logistics's EPS declined slightly by 1.4% to $0.73 from $0.74 in the previous year. However, the company demonstrated robust profitability, with net income increasing by 19.6% to $39.03 million, indicating strong financial performance despite a minor dip in EPS.

Price Action

The stock price of Delek Logistics experienced a marginal decrease of 0.26% during the latest trading day, with a 0.61% decline over the past week, and a 1.84% decrease month-to-date.

Post-Earnings Price Action Review

Investors adopting a strategy of buying Delek Logistics shares after a quarterly revenue drop and holding for 30 days realized a 36.09% return over the past five years. This return, however, fell short of the benchmark return of 84.08%, resulting in an excess return of -48.00%. The strategy exhibited a Sharpe ratio of 0.50, indicating moderate returns and risk. Additionally, the approach faced a maximum drawdown of -13.84% and displayed a volatility of 12.87%. Despite the revenue dip, the company's strategic initiatives and stable performance have allowed for positive albeit modest returns, illustrating the ongoing potential for investors adhering to this strategy.

CEO Commentary

“Delek Logistics started 2025 on a strong note, enhancing our position as a premier midstream provider in the Permian basin. We provide the best combination of yield and growth in the midstream sector with a long runway of growth driven by its advantageous position in the Midland and Delaware basins. We are proud of the 49th consecutive increase in our distribution and we expect to continue to increase our distribution in the future. The completion of the acquisition of Gravity in January and today's announcement of intercompany transactions push third-party cash flow contribution at Delek Logistics to approximately 80%, further increasing our economic separation from our sponsor Delek US,” said Avigal Soreq, President of Delek Logistics' general partner. “Going forward, we look forward to adding AGI & sour gas treating capabilities at the Libby Complex and further expanding our overall capacity at the plant. We will also focus on making our combined crude and water offering in the Midland basin more attractive while strengthening and growing Delek Logistics through prudent management of liquidity and leverage.”

Guidance

Delek Logistics is on track to deliver full-year Adjusted EBITDA in the range of $480 million to $520 million. The company expects to continue its consistent distribution growth policy, highlighted by a recent increase to $1.110 per unit. Future expectations include expanding overall capacity at the Libby Complex and enhancing the attractiveness of its combined crude and water offerings in the Midland basin.

Additional News

In January 2025, Delek Logistics completed the acquisition of Gravity Water Midstream, which has positively contributed to the company's operations. Additionally, Delek Logistics engaged in further intercompany transactions with Delek US, boosting its third-party cash flow contribution to approximately 80%. The company also announced a quarterly cash distribution increase to $1.110 per common limited partner unit, demonstrating a commitment to consistent distribution growth. As of March 31, 2025, Delek Logistics reported total debt of approximately $2.15 billion, with a leverage ratio of around 4.21x, and additional borrowing capacity under its revolving credit facility. These strategic moves highlight Delek Logistics' focus on enhancing financial flexibility and shareholder value.