Delek Logistics Partners LP Files Q3 2024 10-Q

Ticker: DKL · Form: 10-Q · Filed: Nov 7, 2024 · CIK: 1552797

Sentiment: neutral

Topics: 10-Q, financials, energy, pipelines

Related Tickers: DKL

TL;DR

DKL Q3 24 10-Q filed. Financials and ops details out.

AI Summary

Delek Logistics Partners, LP filed its 10-Q for the period ending September 30, 2024. The filing details financial performance and operational updates for the third quarter. Key financial metrics and business segment information are provided, reflecting the company's activities in the energy and transportation sector.

Why It Matters

This filing provides investors with the latest financial health and operational performance of Delek Logistics Partners, LP, crucial for understanding its current standing and future prospects in the pipeline industry.

Risk Assessment

Risk Level: medium — The company operates in the volatile energy and transportation sector, which is subject to market fluctuations and regulatory changes.

Key Players & Entities

FAQ

What is the reporting period for this 10-Q filing?

The reporting period for this 10-Q filing is the quarter ended September 30, 2024.

When was this 10-Q filed with the SEC?

This 10-Q was filed with the SEC on November 7, 2024.

What is the Central Index Key (CIK) for Delek Logistics Partners, LP?

The Central Index Key for Delek Logistics Partners, LP is 0001552797.

What is the Standard Industrial Classification (SIC) code for Delek Logistics Partners, LP?

The Standard Industrial Classification code for Delek Logistics Partners, LP is 4610, which corresponds to PIPE LINES (NO NATURAL GAS).

What is the fiscal year end for Delek Logistics Partners, LP?

The fiscal year end for Delek Logistics Partners, LP is December 31.

Filing Stats: 4,549 words · 18 min read · ~15 pages · Grade level 19.1 · Accepted 2024-11-07 12:16:37

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

OTHER INFORMATION

PART II. OTHER INFORMATION 3

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 51

Legal Proceedings

Item 1. Legal Proceedings 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Comprehensive Income 51

Risk Factors

Item 1A. Risk Factors 5 Condensed Consolidated Statements of Partner's Equity (Deficit) 6 Condensed Consolidated Statements of Cash Flows 52

Other Information

Item 5. Other Information 7 Notes to Condensed Consolidated Financial Statements 7 Note 1 - Organization and Basis of Presentation 53

Exhibits

Item 6. Exhibits 8 Note 2 - Acquisitions 10 Note 3 - Related Party Transactions 54

Signatures

Signatures 13 Note 4 - Revenues 14 Note 5 - Net Income Per Unit 15 Note 6 - Long-Term Obligations 17 Note 7 - Equity 17 Note 8 - Preferred Equity 18 Note 9 - Equity Method Investments 19 Note 10 - Segments 20 Note 11 - Commitments and Contingencies 21 Note 12 - Leases 23 Note 13 - Subsequent Events 24

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Summary of Financial and Other Information 36 Results of Operations 36 Consolidated 39 Gathering and Processing 41 Wholesale Marketing and Terminalling 44 Storage and Transportation 46 Investments in Pipeline Joint Ventures 46 Liquidity and Capital Resources 49

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 50

Controls and Procedures

Item 4. Controls and Procedures 2 |

Financial Statements

Financial Statements

- FINANCIAL INFORMATION

Part I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Delek Logistics Partners, LP Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except unit and per unit data) September 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 7,317 $ 3,755 Accounts receivable 48,173 41,131 Accounts receivable from related parties — 28,443 Lease receivable - affiliate 23,852 — Inventory 4,632 2,264 Other current assets 1,967 676 Total current assets 85,941 76,269 Property, plant and equipment: Property, plant and equipment 1,480,553 1,320,510 Less: accumulated depreciation ( 440,557 ) ( 384,359 ) Property, plant and equipment, net 1,039,996 936,151 Equity method investments 322,745 241,337 Customer relationship intangible, net 191,655 181,336 Marketing contract intangible, net — 102,155 Other intangibles, net 95,538 59,536 Goodwill 12,203 12,203 Operating lease right-of-use assets 15,222 19,043 Net lease investment - affiliate 186,361 — Other non-current assets 11,062 14,216 Total assets $ 1,960,723 $ 1,642,246 LIABILITIES AND DEFICIT Current liabilities: Accounts payable $ 35,683 $ 26,290 Accounts payable to related parties 442 — Current portion of long-term debt — 30,000 Interest payable 15,559 5,805 Excise and other taxes payable 7,641 10,321 Current portion of operating lease liabilities 5,371 6,697 Accrued expenses and other current liabilities 4,886 11,477 Total current liabilities 69,582 90,590 Non-current liabilities: Long-term debt, net of current portion 1,894,257 1,673,789 Operating lease liabilities, net of current portion 5,820 8,335 Asset retirement obligations 15,453 10,038 Other non-current liabilities 20,719 21,363 Total non-current liabilities 1,936,249 1,713,525 Preferred units - 70,000 units issued and outstanding at September 30, 2024 70,000 — Equity (Deficit): Common unitholders - public; 12,932,311 units issued and outstanding at September 30, 2024 ( 9,299,763 at December 31, 2023) 282,458 160,402

Financial Statements

Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (In thousands, except unit and per unit data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net revenues Affiliate (1) $ 114,899 $ 156,411 $ 411,352 $ 414,403 Third party 99,171 119,413 319,421 351,857 Net revenues 214,070 275,824 730,773 766,260 Cost of sales: Cost of materials and other - affiliate (1) 84,015 115,149 279,962 298,262 Cost of materials and other - third party 33,495 35,479 99,300 106,587 Operating expenses (excluding depreciation and amortization presented below) 27,746 32,611 88,895 85,302 Depreciation and amortization 19,969 23,261 67,882 65,494 Total cost of sales 165,225 206,500 536,039 555,645 Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 174 392 569 1,397 General and administrative expenses 15,745 5,545 26,624 19,666 Depreciation and amortization 1,235 1,324 4,024 3,923 Other operating income, net ( 117 ) ( 491 ) ( 1,294 ) ( 804 ) Total operating costs and expenses 182,262 213,270 565,962 579,827 Operating income 31,808 62,554 164,811 186,433 Interest income ( 23,470 ) — ( 23,498 ) — Interest expense 37,022 36,901 112,547 104,581 Income from equity method investments ( 15,602 ) ( 9,296 ) ( 31,974 ) ( 22,897 ) Other expense (income), net 34 ( 3 ) ( 177 ) ( 24 ) Total non-operating (income) expenses, net ( 2,016 ) 27,602 56,898 81,660 Income before income tax expense 33,824 34,952 107,913 104,773 Income tax expense 150 127 533 685 Net income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088 Comprehensive income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088 Net income per limited partner unit: Basic $ 0.71 $ 0.80 $ 2.32 $ 2.39 Diluted $ 0.71 $ 0.80 $ 2.32 $ 2.39 Weighted average limited partner units outstanding: Basic 47,109,008 43,588,316 46,248,00

Financial Statements

Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Partners' Equity (Deficit) (Unaudited) (in thousands) Common - Public Common - Delek Holdings Total Preferred Balance as of June 30, 2024 $ 287,195 $ ( 338,502 ) $ ( 51,307 ) $ — Cash distributions ( 14,082 ) ( 37,181 ) ( 51,263 ) — Net income attributable to partners 9,308 24,366 33,674 — Issuance of units — — — 70,000 Redemption of units — ( 97,949 ) ( 97,949 ) — Contributions — 50,873 50,873 — Other 37 827 864 — Balance as of September 30, 2024 $ 282,458 $ ( 397,566 ) $ ( 115,108 ) $ 70,000 Common - Public Common - Delek Holdings Total Preferred Balance as of June 30, 2023 $ 167,760 $ ( 297,262 ) $ ( 129,502 ) $ — Cash distributions ( 9,757 ) ( 35,513 ) ( 45,270 ) — Net income attributable to partners 7,412 27,413 34,825 — Other 57 738 795 — Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 ) $ — Common - Public Common - Delek Holdings Total Preferred Balance as of December 31, 2023 $ 160,402 $ ( 322,271 ) $ ( 161,869 ) $ — Cash distributions (1) ( 37,987 ) ( 110,092 ) ( 148,079 ) — Net income attributable to partners 27,812 79,568 107,380 — Issuance of units 132,202 — 132,202 70,000 Redemption of units — ( 97,949 ) ( 97,949 ) — Contributions — 50,873 50,873 — Other 29 2,305 2,334 — Balance as of September 30, 2024 $ 282,458 $ ( 397,566 ) $ ( 115,108 ) $ 70,000 Common - Public Common - Delek Holdings Total Preferred Balance as of December 31, 2022 $ 172,119 $ ( 282,819 ) $ ( 110,700 ) $ — Cash distributions (1) ( 28,695 ) ( 105,679 ) ( 134,374 ) — Net income attributable to partners 22,135 81,953 104,088 — Other ( 87 ) 1,921 1,834 — Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 ) $ — (1) Cash distributions include $ 0.3 million and $ 0.2 million related to distribution equivalents on vested phantom units for the nine months ended September 30, 2024 and 2023. See accompanying notes to the

Financial Statements

Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net income $ 107,380 $ 104,088 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,906 69,417 Non-cash lease expense 5,689 7,407 Amortization of marketing contract intangible 4,206 5,408 Amortization of deferred revenue ( 2,055 ) ( 1,331 ) Amortization of deferred financing costs and debt discount 3,955 3,476 Income from equity method investments ( 31,974 ) ( 22,897 ) Dividends from equity method investments 28,309 24,118 Loss on extinguishment of debt 3,571 — Other non-cash adjustments ( 4,015 ) 2,312 Changes in assets and liabilities: Accounts receivable ( 399 ) 21,430 Inventories and other current assets ( 332 ) ( 2,290 ) Accounts payable and other current liabilities ( 5,982 ) ( 29,180 ) Accounts receivable/payable to related parties ( 30,625 ) ( 73,144 ) Net investment in leases - affiliate 6,168 Non-current assets and liabilities, net 639 1,816 Net cash provided by operating activities 156,441 110,630 Cash flows from investing activities: Asset acquisitions from Delek Holdings ( 83,903 ) — Purchases of property, plant and equipment ( 83,008 ) ( 58,564 ) Proceeds from sales of property, plant and equipment 10,191 1,036 Purchases of intangible assets ( 1,690 ) ( 2,583 ) Business combination ( 159,495 ) — Distributions from equity method investments 3,377 4,477 Net cash used in investing activities ( 314,528 ) ( 55,634 ) Cash flows from financing activities: Distributions to common unitholders - public ( 37,987 ) ( 28,695 ) Distributions to common unitholders - Delek Holdings ( 110,092 ) ( 105,679 ) Proceeds from term debt 1,059,000 — Payments on term debt ( 531,250 ) ( 11,250 ) Proceeds from revolving facility 1,021,600 304,500 Payments on revolving facil

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Determination of Purchase Price (1) The table below presents the estimated purchase price (in thousands): Base purchase price: $ 230,000 Less: closing net working capital (as defined in the H2O Midstream Purchase Agreement) ( 2,508 ) Plus: various closing adjustments 2,003 Adjusted purchase price $ 229,495 Cash paid $ 159,495 Fair value of preferred units issued 70,000 Preliminary purchase price $ 229,495 (1) These amounts are based upon estimates at closing, but are subject to a subsequent review and revision period pursuant to the H2O Midstream Acquisition agreement at which time final settlements for these components will be determined. Such subsequent adjustments may result in changes to the preliminary purchase price. Purchase Price Allocation The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the H2O Midstream Acquisition as of September 11, 2024 (in thousands): Assets acquired: Accounts receivables 6,643 Inventories 2,448 Other current assets 879 Property, plant and equipment 174,548 Operating lease right-of-use assets 470 Customer relationship intangible (1) 24,006 Other intangibles (1) 34,841 Other non-current assets 21 Total assets acquired $ 243,856 Liabilities assumed: Accounts payable $ 3,954 Accrued expenses and other current liabilities 5,059 Current portion of operating lease liabilities 278 Asset retirement obligations 4,851 Operating lease liabilities, net of current portion 219 Total liabilities assumed 14,361 Fair value of net assets acquired $ 229,495 (1) The acquired intangible assets include the following identified intangibles: Rights-of-way intangibles valued at $ 30.1 million, of which, the majority has an indefinite life. Favorable supply contract intangible that is subject to amortization with a preliminary fair value of $ 4.8 million which will be amortized over a 4.8 years useful life. The estim

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements The fair value of property, plant and equipment was based on the combination of the cost and market approaches. Key assumptions in the cost approach include determining the replacement cost by evaluating recently published data and adjusting replacement cost for physical deterioration, fun

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