Delek Logistics raises full year EBITDA guidance to $500M–$520M as Libby 2 plant ramps up

Earnings Call Insights: Delek Logistics Partners, LP (DKL) Q3 2025

MANAGEMENT VIEW

* Avigal Soreq, President and CEO, reported "another record quarter" with approximately $136 million in quarterly adjusted EBITDA. The company increased its full year EBITDA midpoint guidance to the upper end of the $500 million to $520 million range.
* Soreq highlighted the commissioning of the Libby 2 plant, stating DKL advanced its "ongoing effort on acid gas injection and sour gas handling capabilities" and that these steps are "enabling DKL to fill the plant to capacity and paving the way for further processing capacity expansions."
* Soreq noted, “Our well-timed and cost-effective acquisition of 3 Bear, H2O Midstream and Gravity Water Midstream have supplemented our organic growth and enable DKL transition to full suite service provider.”
* The Board of Directors approved the 51st consecutive increase in the quarterly distribution to $1.12 per unit.
* Reuven Spiegel, EVP, stated, “The planned CapEx for Libby 2 included investments that will support future expansion of the Libby complex, and our confidence in these expansion opportunity is increasing as we progress our AGI infrastructure.”
* Robert Wright, EVP & CFO, remarked, “We maintain a strong financial position with approximately $1 billion of availability on our credit facilities, giving us flexibility to continue executing our growth agenda. Adjusted EBITDA for the quarter was approximately $136 million, up from $107 million in the same period last year. Distributable cash flow as adjusted totaled $74 million and the DCF coverage ratio as adjusted was approximately 1.24x.”

OUTLOOK

* Management raised full year EBITDA guidance to the upper end of the $500 million to $520 million range, up from the previous midpoint of $500 million. Soreq said, “we intend to remain good stewards of our stakeholder capital... we expect to continue to build on these strengths.”
* Wright reaffirmed confidence in the "earnings trajectory" and signaled that the DCF coverage ratio is expected to "continue to strengthen through the remainder of the year."

FINANCIAL RESULTS

* Adjusted EBITDA for the quarter was $136 million. Distributable cash flow as adjusted was $74 million, and the DCF coverage ratio as adjusted was 1.24x.
* Gathering and Processing segment adjusted EBITDA was $83 million, an increase from $55 million in the third quarter of 2024. Wholesale Marketing and Terminalling adjusted EBITDA was $21 million, compared to $25 million in the prior year. Storage and Transportation adjusted EBITDA remained at $19 million. Investments in pipeline joint venture segment contributed $22 million, up from $16 million.
* The capital program for the third quarter was approximately $50 million, with $44 million relating to growth CapEx, primarily for the Libby 2 gas plant and new connections in the gathering systems.

Q&A

* Douglas Irwin, Citigroup: Asked about ramping treating capacity and benefits from the sour gas offering. Soreq responded that “crude and water are extremely strong,” and credited the three-stream strategy for driving guidance increases. Spiegel added, “the actual construction and start-up of Libby 2 has been above our expectation on time and on budget,” and noted accelerated sour programs due to changing producer needs.
* Irwin followed up on CapEx and flexibility for next year. Soreq stated, “we still have some tactics to finish for planning for next year and budgeting and we plan to give you another guidance on the next earnings call.”
* Gabriel Moreen, Mizuho: Asked about the equity income line and sustainability of performance. Wright replied, “most of that line item was impacted by strong performance in the quarter by Wink to Webster... I think that's a good run rate of what to expect going forward.”
* Moreen inquired about competition and market trends. Soreq stated, “we were very fortunate to have the position we are at, and it's going very well to our expectations.”
* Moreen asked about timing for Libby 3 and AGI disposal. Soreq indicated detailed planning is ongoing and stated, “we are on the right timing. And I would say, with the right product basket to give to our customers.” Bhardwaj added, “we are very happy with our permitted capacity on the asset gas side, and we don't see any near-term restrictions.”

SENTIMENT ANALYSIS

* Analysts were inquisitive and focused on operational ramp, sustainability of equity contributions, and competitive positioning, with a neutral to slightly positive tone.
* Management’s prepared remarks were confident, highlighting "record quarter," "very high confidence," and "extraordinary achievement." During Q&A, management maintained a positive tone, responding directly to questions and emphasizing ongoing planning and confidence in asset performance.
* Compared to the previous quarter, management’s tone remained confident and proactive, with analysts sustaining their constructive inquiry but appearing reassured by management’s responses.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full year EBITDA was raised to the upper end of the $500 million to $520 million range, compared to the prior quarter’s range of $480 million to $520 million.
* Quarterly adjusted EBITDA increased from $120 million in Q2 to $136 million in Q3, and segment results, especially in Gathering and Processing, showed improvement.
* The number of consecutive quarterly distribution increases rose from 50 to 51.
* Strategic focus sharpened on ramping sour gas capabilities and leveraging water assets, with ongoing emphasis on prudent financial management and capital allocation.
* Analyst focus shifted toward sustainability of recent performance gains and expansion opportunities, with continued interest in competitive differentiation.

RISKS AND CONCERNS

* Management acknowledged ongoing planning needs for 2026 CapEx and flexibility for future guidance.
* Soreq highlighted a dynamic producer landscape, noting accelerated sour gas solutions were needed as drilling activity evolved.
* Analysts raised questions about sustainability of equity income and capacity for future expansion, with management responding by emphasizing robust permitted capacity and positive trends in their market position.

FINAL TAKEAWAY

Delek Logistics Partners reported a record quarter, raising its full year EBITDA guidance and highlighting the successful commissioning of the Libby 2 plant, continued integration of key water assets, and strong performance from its joint ventures. Management underscored growing confidence in their ability to expand capacity and deliver value through disciplined capital allocation and operational execution, signaling a positive outlook for continued growth and return to stakeholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dkl/earnings/transcripts]

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