Seeking Alpha • May 02

Delek Logistics Partners: Core Strengths And Opportunities Fuel Valuation And Technicals

Summary Delek Logistics Partners, LP remains resilient and undervalued, with robust fundamentals and a well-diversified, fee-based revenue structure. DKL's Q1 2026 revenue rose 19% YoY to $297.5M, driven by strong midstream activity and increased third-party exposure. Despite cost pressures, DKL maintains ample liquidity, strategic debt management, and stable cash flows supporting distributions. I reiterate my buy rating, with technicals and valuation models indicating upside potential—target price ranges from $66.22 to $80.71. Read the full article on Seeking Alpha

Seeking Alpha • Mar 26

Delek US Holdings: Focusing On Growing Cash Flows Into 2025 - Hold

Summary Delek US Holdings' shares dropped 44.78% YoY, with annual revenues declining 28.18% in FY 2024, but management plans to boost free cash flow in 2025. The company's cash balance fell 10.5% YoY, but CapEx reduction and an enterprise optimization plan aim to improve cash flow by $80-$120 million by H2 2025. Delek's EBITDA guidance for 2025 is $480-$520 million, a significant improvement from a $58 million loss in 2024, despite facing lower production margins. Delek Logistics' $150 million buyback could reduce DK's share balance by 14% by 2026, enhancing shareholder value despite ongoing challenges in the supply segment. Read the full article on Seeking Alpha

Seeking Alpha • Jan 18

Delek Logistics Partners Downgraded On Operational Concerns

Summary Delek Logistics Partners LP is rated as a hold at $44 due to its fair valuation and high dividend yield despite debt concerns. Positive industry trends and political banter about the energy industry boost prospects for higher stock prices, but insider selling and debt-financed growth raise red flags. Acquisitions are the company's growth path, yet the strategy increases debt and issuing shares dilutes shareholders. Read the full article on Seeking Alpha

Seeking Alpha • Nov 08

Delek Logistics Partners: Impressive Q3 Performance, Buy

Summary Delek Logistics Partners, LP has shown impressive yield growth, now at nearly 11%, with 47 consecutive quarterly dividend increases despite recent capital losses. The Q3 earnings report highlighted a record $107M in quarterly adjusted EBITDA, an 8.5% YoY increase, and successful integration of new acquisitions. DKL management's focus on operational efficiency and strategic acquisitions supports ongoing dividend hikes and financial stability, despite the sector's inherent volatility. Read the full article on Seeking Alpha

Seeking Alpha • Sep 09

Delek US Holdings: Refining Troubles And Rising Debt Spell Ratings Downgrade

Summary Delek US Holdings, Inc.'s Q2 performance was mixed, but Delek saw operational improvements but still struggled, with adjusted EBITDA of $201 million. Challenges persist, as Delek underperformed the S&P 500 and has negative earnings growth and inconsistent dividends. Recent sale: Delek sold its retail arm for $385 million to reduce debt and improve liquidity, but risks remain. Bearish outlook: High debt load, liquidity problems, and declining refining margins signal trouble. Read the full article on Seeking Alpha

Seeking Alpha • Aug 30

DKL Logistics LP: Record Earnings, 11% Yield, Major Expansion

Summary DKL Logistics LP, a master limited partnership, focuses on crude oil and refined products logistics, with significant assets supporting Delek US Holdings' refineries. Despite flat revenues and net income decline in 2023, DKL saw a 23.5% rise in EBITDA and 8.5% growth in distributable cash flow. DKL's recent acquisition of H2O Midstream for $230 million aims to diversify operations and reduce dependence on Delek US Holdings. At $39.00, DKL offers an 11.18% yield with strong distribution coverage and is trading below analysts' price targets, presenting a potential value opportunity. Read the full article on Seeking Alpha

Seeking Alpha • Dec 31

Delek Logistics Partners, LP Curiouser And Curiouser!

Summary Delek Logistics Partners, LP was benefitting in June from record-breaking oil production, but the share price of Delek Logistics dived since then. The company's primary source of income comes from its storage and transportation segment, which operates pipelines, tanks, and offloading facilities. Delek Logistics is financially curious to us. Its debt, low gross profit margin, little cash flow from operations, and extraordinarily high dividend payout ratio and yield undergird our Sell assessment. Read the full article on Seeking Alpha

Seeking Alpha • Oct 18

Delek Logistics: Great Distribution Growth, But There Are Better Options

Summary Delek Logistics has a great track record increasing its distribution. However, it has higher than peer leverage and it's not generating any excess cash after distributions. There are better values in the midstream space. Read the full article on Seeking Alpha

Seeking Alpha • Jul 31

Delek Logistics Partners LP: Offering A Great Dividend At A Good Price

Summary Delek Logistics Partners LP offers a unique way to benefit from the strong demand for oil in the US, with a dividend yield of over 8%. DKL is well-positioned to capture the growth in the US oil industry and has a solid base of revenues from diversified contracts. Despite some risks in the oil and gas sector, DKL's strong financial performance and potential for double-digit EPS growth make it an attractive investment opportunity. Read the full article on Seeking Alpha

Seeking Alpha • Jan 26

Delek Logistics Partners: An 8.30%-Yielder That Is Worthy Of Consideration

Summary Delek Logistics Partners, LP is a midstream company that primarily provides services to Delek US Holdings. The partnership has remarkably stable cash flows and has grown its EBITDA in each of the past seven years. The partnership acquired 3Bear last year, which reduces its reliance on Delek as a source of revenue. Delek Logistics Partners has more leverage than I really like to see, but it is really not that bad. The 8.30% yield is sustainable and the company constantly increases it, helping to overcome inflation. Delek Logistics Partners, LP (DKL) is a midstream drop-down master limited partnership that primarily operates to support the operations of refining and downstream giant Delek US Holdings, Inc. (DK). Drop-down partnerships used to be fairly common in the energy sector, as they provide a way for a larger energy company to recoup their capital expenditures incurred in the construction of midstream assets while still retaining most of the cash flows. However, these entities have become much less common since the pandemic-related lockdowns, and now Delek Logistics Partners is one of the few that are left. The company's business model is very similar to that of other midstream companies, which is nice because of the characteristics that it possesses. In particular, the company has remarkably stable cash flows, which allows it to pay out an attractive 8.30% forward distribution yield. The company also has some growth prospects, which may actually be strengthened somewhat given the growing demand for fuel, which I discussed in a few recent articles (see here and here). The company still has reasonable prospects even in the absence of growth, which is likewise nice considering the hostility of the Federal Government to new pipeline construction right now. Overall, Delek Logistics Partners looks like it could be a reasonable company to include in an energy income portfolio, but let us research it further in an effort to verify that. About Delek Logistics Partners As stated in the introduction, Delek Logistics Partners is a drop-down master limited partnership ("MLP") that operates a fairly extensive network of midstream assets throughout Texas and the surrounding states: Delek Logistics Partners In total, the company has 805 miles of crude oil and refined products pipelines, a 600-mile crude oil gathering system in Arkansas, a 200-mile gathering system in the Permian Basin, and ten million barrels of crude oil storage capacity. Admittedly, this is nowhere near the size of a giant midstream partnership like Energy Transfer LP (ET), but it is still nothing to sneeze at. However, the size of the company is not necessarily relevant, since it still boasts many of the characteristics that we typically appreciate with midstream companies. Perhaps the most important of these is that the company has fairly stable cash flows over time. As we can see here, the company has managed to increase its EBITDA in each of the past seven years with no down year: Delek Logistics Partners The company's net income varied a little bit, but generally, it showed the same trend. As I have pointed out in the past, though, net income is not really a good measurement of performance for a midstream company because they have high expenses related to depreciation and other things that affect net income but do not actually represent cash coming into or leaving the business. EBITDA and Distributable Cash Flow are the relevant metrics that we use to measure the financial performance of a midstream partnership like Delek Logistics Partners. As we can see here, the company's distributable cash flow has also consistently increased over the same time period without a single down year: Delek Logistics Partners The fact that Delek Logistics Partners, LP managed to increase its EBITDA and distributable cash flow in 2020 despite the fact that energy prices collapsed is certainly something that anyone will notice. This is a hallmark of the company's business model. Delek Logistics Partners enters into long-term (usually ten years or longer) contracts with its customers under which the customer sends resources through the partnership's infrastructure. Delek Logistics Partners bills the customer based on the volume of resources that are handled by its infrastructure, not on their value. This provides the company with a great deal of insulation against fluctuations in energy prices. We can certainly see this in the two above charts, as crude oil prices varied substantially over the 2016 to 2022 period, yet the company's cash flows were pretty much immune to these fluctuations. At this point, there may be some readers that point out that the production of crude oil tends to decline during periods of low prices. This is actually pretty common in America's various shale plays because the production can be ramped up or decreased very quickly. We saw this happen in response to the pandemic-related lockdowns and it is one reason why energy production during the first half of 2021 was a lot lower than it was in 2019. As Delek Logistics Partners uses a volume-based business model, we would expect this to decrease the company's cash flows. However, the partnership has a way to protect itself against this, which is one of the reasons why we did not see the decline that would otherwise be expected. In short, its contracts with its customers contain minimum volume commitments. These clauses specify a certain minimum volume of resources that the customer must send through the partnership's infrastructure or pay for anyway. Therefore, these contractual clauses effectively create a floor that the company's cash flows cannot decline beyond. This is very nice because it provides the company with a stable source of cash flow that it can use to pay the distribution. As of the third-quarter 2022, which is the most recent quarter that the company has reported, these commitments accounted for 67% of the company's gross margin (a similar metric to gross profit): Delek Logistics Partners Admittedly, the 67% figure may not sound particularly impressive. After all, that would still represent a fairly significant decrease if all the company's customers were to cut their throughput down to the minimum. However, this has never happened, even through two energy bear markets that occurred over the company's history. As I pointed out in a recent blog post, it is quite unlikely that we will experience another energy market as weak as 2015 or 2020. Thus, it seems pretty unlikely that we will have to worry about the company's customers reducing their transported volumes too much. Overall, it seems that the company's finances should remain fairly stable even in a worst-case scenario. Naturally, as investors, we like to see more than just stability. We like to see growth. This is true for Delek Logistics Partners even though the company's yield is sufficient that we do not really need much growth in order to get an acceptable return. As a drop-down master limited partnership, the company's usual method for generating growth is to purchase midstream assets from Delek US Holdings. The basic point of this is for Delek to get back the money that it spent constructing the assets via the purchase price while still retaining a significant amount of the cash flows due to its ownership position in Delek Logistics Partners. However, Delek itself has not been constructing an enormous amount of midstream assets in recent years. The pandemic was one reason for that. As we can see here, the demand for fuel remains slightly lower than it did back in 2019: NuStar Energy/Data from ESAI One obvious reason for this is that many businesses continue to allow or even promote remote work, which reduces the amount of driving that they need to do for business or commuting to their offices. Another reason why the demand for fuel remains lower than prior to the pandemic is that gasoline and diesel prices have been substantially above 2019 levels for the past eighteen months. People tend to reduce their driving when gasoline prices climb for obvious reasons. Anecdotally, my household has been ordering much of what we need so that we can limit our driving to grocery shopping. I am certain that many other households are doing the same thing. As a result of this stagnant demand, Delek has had no reason to increase the amount of crude oil flowing to its refineries or refined products flowing out. Thus, there is little need to construct new infrastructure. The last time that Delek Logistics Partners bought a dropdown asset from Delek US Holdings was in the first quarter of 2020. That shows just how little need there has been for new midstream assets. That does not mean that Delek Logistics Partners has not had any growth. The company does have the ability to purchase assets from entities other than Delek US Holdings. In April 2022, Delek Logistics Partners announced the acquisition of 3Bear Delaware Holding, which was a midstream company operating in the Permian Basin in New Mexico. Delek Logistics Partners The acquisition, which closed in June, significantly increased Delek Logistics Partners' revenue that comes from customers other than Delek US Holdings. In fact, Delek accounted for 94% of the partnership's pipeline revenue prior to this acquisition. 3Bear had eighteen contractual customers that are now customers of Delek Logistics Partners. This reduced the company's revenue from Delek US to 65% of its total: Delek Logistics Partners This is a good thing for a number of reasons. The most important of these is that it is generally not a good idea for any company to be too dependent on a single customer for its revenue. This is because any financial problems suffered by that customer could then flow through to the company that depends on it. Ideally, we do not even want to see a single company accounting for 65% of the partnership's revenue but admittedly this is not unusual. For example, Rattler Midstream (RTLR) is highly dependent on Diamondback Energy (FANG), while Equitrans Midstream (ETRN) is highly dependent on EQT Corporation (EQT) for its revenue. Third-party business is always a good thing, though, and the fact that Delek Logistics Partners is reducing its reliance on Delek US Holdings is something that we should appreciate as investors. Financial Considerations It is always critical that we look at the way that a company finances itself before making an investment in it. This is because debt is a riskier way to finance a company than equity because debt must be repaid at maturity. This is typically accomplished by issuing new debt and using the proceeds to repay the existing debt. As a result, a company's interest expenses may increase following the rollover depending on conditions in the market. This is something that is quite important to remember today as interest rates have been climbing fairly rapidly over the past year and will almost certainly continue on that trajectory for a while. In addition to this risk, a company must make regular payments on its debt if it is to remain solvent. Thus, an event that causes a decline in cash flow may push a company into insolvency if it has too much debt. Although midstream companies like Delek Logistics Partners tend to have remarkably stable and recession-resistant cash flows, bankruptcies have occurred in the sector so this is still a risk that we should not ignore. One metric that we can use to evaluate a company's financial structure is the net debt-to-equity ratio. This ratio tells us the degree to which a company is financing its operations with debt as opposed to wholly-owned funds. In addition, it tells us how well a company's equity will cover its debt obligations in the event of a liquidation or bankruptcy event, which is arguably more important. As of September 30, 2022, Delek Logistics Partners had a net debt of $1.4534 billion compared to negative $114.3 million of shareholders' equity. This is not a particularly attractive scenario as it indicates that the company's liabilities exceed the value of its assets. The company would obviously not fare particularly well if its finances get stressed. Investopedia describes the risks of this situation thusly, "Negative shareholders' equity could be a warning sign that a company is in financial distress or it could mean that a company has spent its retained earnings and any funds from stock issuance on reinvesting in the company by purchasing expensive property, plant, and equipment. In other words, negative shareholders' equity should tell an investor to dig deeper and explore the reasons for the negative balance." Delek Logistics Partners is not alone among midstream companies in having negative shareholders' equity. As I pointed out in a previous article, Shell Midstream Partners had negative shareholders' equity back in 2019. Although that company no longer exists, it was able to carry its debt fairly successfully even through 2020. Although that company was ultimately completely purchased by Shell (SHEL), its financial structure was not the cause of its end as an independent company. Delek Logistics Partners' negative shareholders' equity comes mostly from the company reinvesting all of its funds from unit issuance on purchasing its assets that then had their value decline due to depreciation. By itself, this is not really a problem in this case.

Seeking Alpha • Jan 18

Delek US Holdings: Big Changes Could Be Coming In 2023 (Rating Downgrade)

Summary Delek US Holdings reinstated their dividends during 2022, before subsequently pushing them higher. After seeing booming cash flow performance in the second quarter, it was disappointing to see it slump during the third quarter due to inventory headwinds. Alas, this is simply par for the course in their inherently volatile industry and looking ahead, the more interesting news is their review of strategic options. I suspect this could focus on their midstream subsidiary, Delek Logistics Partners, possibly unlocking cash via divesting their remaining stake. Until more information comes to light on this potential big change, I believe that downgrading my rating to hold is now appropriate. Introduction When last reviewing Delek US Holdings (DK), shareholders had recently seen their dividends reinstated and as my previous article correctly predicted, more was coming with another increase subsequently following during the next quarter. Now that the calendar has flicked over to a new year, big changes could be coming in 2023 with management hiring advisors to review their strategic options. Coverage Summary & Ratings Since many readers are likely short on time, the table below provides a brief summary and ratings for the primary criteria assessed. If interested, this Google Document provides information regarding my rating system and importantly, links to my library of equivalent analyses that share a comparable approach to enhance cross-investment comparability. Author Detailed Analysis Author The inherent volatility of their cash flow performance was on full display during the third quarter of 2022 because after seeing their booming operating cash flow during the second quarter, it slumped during the third quarter. As a result of this sudden whipsaw, their operating cash flow during the first nine months only climbed modestly higher to $716m versus the previous $586m they had already generated during the first half. At least if nothing else, thanks to their modest capital expenditure, it was still sufficient to lift their free cash flow to $527m versus $463m across these same two periods of time, respectively. Plus, the resulting $64m during the third quarter alone had no issues providing very strong coverage to their dividend payments of $28m. Author When viewed on a quarter-to-quarter basis, the dramatic change is more easily visible with their reported operating cash flow during the third quarter of 2022 crashing to $130m, which is a fraction of their previous result of $559m they generated only one quarter prior. Even if excluding their working capital movements, these underlying results were still not materially different at $140m and $550m, respectively. Quite disappointingly, it means their underlying result during the third quarter of $140m was also back around where it was one year prior at $129m. Interestingly, this slump during the third quarter of 2022 extended into their accrual-based financial performance with their adjusted EBITDA landing at $135.8m, compared to $101.9m one year prior during the third quarter of 2021. When looking into their results, management attributed this slump during the former to $225.1m inventory headwinds, as per their third quarter of 2022 results announcement. Where their results for the recently ended fourth quarter of 2022 remain a mystery for another few weeks and more importantly, so too do their results for the year ahead as 2023 is likely to see another bumpy ride given the prospects of a recession on the horizon. Even though nothing can be done to resolve the inherent volatility of their industry, at least their capital expenditure guidance for 2023 is not too high at circa $350m, which in turn should help produce free cash flow. Elsewhere, it seems their share buybacks are poised to ramp up higher than the mere $40m of share buybacks conducted during the third quarter of 2022, as per the commentary from management included below. "With that said, going forward, we are looking to continue with the buyback aggressively well into 2023." -Delek US Holdings Q3 2022 Conference Call. When conducting the previous analysis, it outlined their new share buyback program that totals $400m and thus as only 10% was completed during the third quarter of 2022, it leaves $360m for the recently ended fourth quarter and further into 2023. They plan on conducting these "aggressively" and thus unless their cash flow performance rebounds much higher, they will likely consume most of their free cash flow, if not its entirety. Whilst I am not necessarily a fan of aggressive share buybacks for a volatile company, at least their lower outstanding share count should see their dividends pushed even higher in 2023 and beyond. Apart from this business-as-usual outlook, more interestingly, it seems that big changes could be coming given their decision to explore strategic options to unlock value, as per the commentary from management included below. "We hired a head of corporate development and engaged banker to advise us on strategic options. We will communicate our plan to the market once complete." Delek US Holdings Q3 2022 Conference Call (previously linked). Whilst I do not wish to publish pure speculation, I nevertheless feel there is a strong possibility of their strategic options centering around their subsidiary, Delek Logistics Partners (DKL). As anyone following the midstream industry would have noticed in the last two years, there were many players either merging together, being acquired by a larger competitor or reacquired by their parent company. In my eyes, this places their subsidiary in the crosshairs and following their acquisition of 3Bear Energy that diversified Delek Logistics Partners, I would not be surprised to see their stake divested, thereby setting it free to operate completely on its own accord. This would also unlock cash for Delek US Holdings, plus also remove the consolidated debt of their subsidiary and overall, simplify their company. That said, it is too early to tell and in the meantime, if any readers are interested in the outlook for Delek Logistics Partners, please refer to my other article. Author Following their net debt jumping higher during the second quarter of 2022 as they closed their 3Bear Energy acquisition, it was essentially flat during the third quarter, which ended with net debt of $1.58b versus the former that ended with net debt of $1.573b. As for the recently ended fourth quarter and going forwards into 2023, the inherent volatility of their cash flow performance makes it impossible to pinpoint where their net debt will land, although given their plans for aggressive share buybacks, it is difficult to imagine their net debt dropping to any material extent, unless they divest Delek Logistics Partners.

Seeking Alpha • Nov 04

Delek Logistics Partners Q3 Earnings Preview

Delek Logistics Partners (NYSE:DKL) is scheduled to announce Q3 earnings results on Monday, November 7th, before market open. The consensus EPS Estimate is $0.88 (-12.0% Y/Y) and the consensus Revenue Estimate is $313.48M (+65.3% Y/Y). Over the last 1 year, DKL has beaten EPS estimates 0% of the time and has beaten revenue estimates 100% of the time. Over the last 3 months, EPS estimates have seen 0 upward revision and 0 downward. Revenue estimates have seen 1 upward revision and 0 downward.

Seeking Alpha • Oct 24

Delek US Holdings: Well-Diversified And Substantially Undervalued

Summary Delek US Holdings is a well-diversified downstream company that primarily operates refineries and convenience stores in Texas and the surrounding states. The company is moving into producing biodiesel, which could prove to be a long-term growth opportunity. The company's retail sales operation protects it somewhat against declines in crude oil prices. The company's debt still looks a bit high but this is mostly due to its subsidiary partnership and not due to Delek itself. The stock is substantially undervalued at the current price. Delek US Holdings, Inc. (DK) is a downstream energy company that operates in a few segments of the industry. The company is likely most well-known for its refining operations, but it also has interests in asphalt, renewable fuels, and logistics, and owns and operates a network of gasoline stations. This admittedly is a bit different than the upstream and midstream energy companies that I usually discuss in this column but many of the fundamentals are similar. We can clearly see this by looking at Delek's stock price, which has climbed an impressive 36.44% over the past year, clearly beating the market as a whole. Despite this strong appreciation, the stock still appears to be considerably undervalued so there is still time for investors to jump into it. This is reinforced by the company's reasonably strong growth pipeline and the overall fundamentals for the industry. Overall, this is a company that could certainly be worth considering for any investor. About Delek US Holdings As stated in the introduction, Delek US Holdings is a downstream energy company that has operations all across the downstream space. The company is mostly known as a refiner but it also manufactures asphalt. It also has interests in logistics, gasoline stations, and the emerging renewable fuels sector: Delek US Holdings One thing that we notice is that Delek's operations are primarily located in Texas and the surrounding states. This is not exactly unusual since Texas has been at the forefront of the American energy industry for a considerable period of time. This is mostly because of the Permian Basin, which is by far the most hydrocarbon-rich region of the United States. According to the U.S. Energy Information, the basin contains 5 billion barrels of crude oil and 19 trillion cubic feet of natural gas that is economically recoverable, despite the fact that the basin has been exploited by energy producers since the 1920s. As this is the location where the greatest oil production takes place, it makes sense to have refineries nearby in order to reduce transportation costs. It is also very nice to see that Delek is reasonably well-diversified. This is especially important in this industry given the general hostility that politicians have been expressing towards it over the past few years. As everyone reading this is no doubt well aware, the Federal government has been actively attempting to reduce the consumption of oil and refined products in the United States. Unfortunately, 75% of Delek's second-quarter 2022 revenue came from its refinery operations. The more that the company can develop the other segments of the business, the lower this percentage will ultimately end up being and the more protected it will be against hostile governments. Fortunately, so far there has been little decline in refined product demand. In fact, the nationwide demand is close to what it was prior to the 2020 COVID-19 lockdowns: NuStar Energy/Data from ESAI Thus, so far there appears to be no significant slowdown in the company's primary business, and in fact, its refinery operations saw considerable growth in the second quarter. The refining unit had a contribution margin of $618.3 million in the second quarter of 2022 compared to $14.1 million in the year-ago quarter. This was mostly due to a larger crack spread, which increased by 181.7% year-over-year. This is important because the crack spread is how refineries make money. The crack spread is defined as the difference between crude oil prices and refined product prices. Thus, contrary to popular belief, refineries are not necessarily more profitable when oil and gasoline prices rise, as they did during the second quarter. It is the difference between the two prices that is critical, which actually allows a refinery operator like Delek to serve as a partial hedge in a portfolio that is dominated by upstream companies. As stated earlier in the article, Delek is pushing to enter the emerging renewables industry. The company's move is not into the energy sources that many investors will likely think of when they picture a renewable company. The firm is not constructing wind farms or deploying solar panels. Rather, it is manufacturing biodiesel fuel. This is a form of diesel fuel that is made by combining lipids such as animal fat or soybean oil with alcohol. The nice thing about biodiesel is that it can generally use the same infrastructure as regular diesel fuel so customers do not need to construct new pipelines or replace existing truck engines in order to use this form of fuel. As it is made from biological products that would otherwise be disposed of, it is generally considered to be more environmentally sound than standard petroleum-based diesel fuel. Delek currently owns three biodiesel-production facilities that are capable of making approximately 40 million gallons of biodiesel fuel annually. When we consider today's incredibly high price for diesel fuel and the fact that the United States currently only has enough diesel fuel to last for 25 days, it should be easy to see the opportunity here as the country attempts to reduce its reliance on traditional fossil fuels. Delek is moving to take advantage of this opportunity. The company recently sold the Bakersfield Refinery to a company known as GCE Holdings Acquisitions, LLC. This company intends to turn the refinery into the largest biodiesel production facility in the western United States. This facility, when completed, will be capable of producing approximately 220 million gallons of biodiesel and is expected to begin operation during the second quarter of 2023. The reason that this will benefit Delek is that Delek holds an option to allow it to receive 33% of the facility's cash flow into perpetuity at an upfront cost of only $13.3 million. The company has not stated whether or not it will exercise this option but it appears to be implying that it will based on statements that have been made in various presentations and earnings calls. This, therefore, presents a growth opportunity for the company next year. As mentioned earlier, Delek is also an owner and operator of gasoline stations and convenience stores throughout Texas and New Mexico. This offers additional diversification for the company, primarily because it is able to sell products that are completely outside of the energy sector. This is in fact quite lucrative because the profit margin on these products is substantially higher than the profit margin on gasoline. In the second quarter of 2022, Delek's retailing operation only had an average profit margin of $0.33 per gallon of gasoline, down from $0.39 per gallon of gasoline in the year-ago quarter. This is less than a 10% margin considering the prevailing price of gasoline during the quarter. However, it had an average 34.0% margin on merchandise sold in its convenience stores during the same quarter. In addition, this aspect of the company's business is consistently profitable. In fact, it has increased its earnings per store at a 17% compound annual growth rate since 2016: Delek US Holdings One of the most surprising things that we see here is that Delek even managed to grow its earnings per store in 2020 despite the steep drop in gasoline demand and prices. This is something that we should be able to appreciate as investors since it shows that the company's diversified downstream operations help to provide a hedge against a decline in crude oil prices. This is something that may become very important over the next few quarters because of macroeconomic conditions in the United States. The country posted negative gross domestic product growth during the first two quarters of 2022, which is the classical definition of a recession. As I pointed out in a recent article, it is very likely that there will be another negative gross domestic product print in the third quarter. Thus, the country clearly appears to be in a recession, and oil price declines usually accompany recessions. We therefore might see a short-term decline in crude oil prices in the near future. Gasoline stations, however, tend to see higher profits when crude oil prices decline as we can see above in 2020. The company's retail segment could thus help add a measure of support to Delek's cash flow in such an event and offset any decline in the other areas of its business. It is far from a full hedge though since the retail operation only accounted for 2.69% of the company's second-quarter 2022 profits. The retail segment accounted for 33.85% of the company's second-quarter 2021 profits though, so we can clearly see how this particular segment benefits from lower energy prices. Financial Considerations It is always important to analyze the way that a company finances itself before making an investment in it. This is because debt is a riskier way to finance a company than equity because debt must be repaid. As most companies lack the cash to completely pay off their debt as it matures, this is usually accomplished by issuing new debt and using the money to repay the existing debt. This can cause a company's interest costs to increase following the rollover depending on the conditions in the market. In addition, a company needs to make regular payments on its debt if it is to remain solvent. Thus, any event that causes its cash flows to decline could push the company into financial distress if it has too much debt. This is an especially big concern in the energy industry due to the overall volatility of commodity prices and as such is a risk that no investors should ignore. One metric that we can use to analyze a company's financial structure is the net debt-to-equity ratio. This ratio tells us the degree to which a company is financing its operations with debt as opposed to wholly-owned funds. In addition, the ratio tells us how well the company's equity can cover its debt in the event of a bankruptcy or liquidation event, which is arguably more important. As of June 30, 2022, Delek had a net debt of $2.0149 billion compared to $1.3374 billion of shareholders' equity. This gives the company a net debt-to-equity ratio of 1.51, which is considerably better than the 2.03 ratio that Delek US Holdings had the last time that I looked at the company. However, it is still not nearly as good as the sub-1.0 ratios that many of the best companies in the sector possess. Ultimately though, a company's ability to carry its debt is more important than the raw amount of debt on its balance sheet. The usual way that we judge this is by looking at the company's leverage ratio, which is also known as the debt-to-EBITDA ratio. This ratio essentially tells us how many years it would take the company to completely pay off its debt if it were to devote all its pre-tax cash flow to that task. As of June 30, 2022, Delek US Holdings had a leverage ratio of 4.66 based on its trailing twelve-month EBITDA. This is a substantial increase over what the company had at the same time last year: Delek US Holdings

Snowflake Score
Valuation	3/6
Future Growth	1/6
Past Performance	4/6
Financial Health	0/6
Dividends	4/6

Historical stock prices
Current Share Price	US$51.70
52 Week High	US$55.89
52 Week Low	US$40.10
Beta	0.48
1 Month Change	5.92%
3 Month Change	-5.88%
1 Year Change	24.91%
3 Year Change	5.88%
5 Year Change	21.30%
Change since IPO	131.32%

	DKL	US Oil and Gas	US Market
7D	1.3%	6.3%	-0.9%
1Y	24.9%	32.9%	24.4%

DKL volatility
DKL Average Weekly Movement	4.1%
Oil and Gas Industry Average Movement	6.0%
Market Average Movement	7.2%
10% most volatile stocks in US Market	16.2%
10% least volatile stocks in US Market	3.1%

DKL fundamental statistics
Market cap	US$2.74b
Earnings (TTM)	US$169.78m
Revenue (TTM)	US$1.06b

DKL income statement (TTM)
Revenue	US$1.06b
Cost of Revenue	US$721.58m
Gross Profit	US$339.28m
Other Expenses	US$169.51m
Earnings	US$169.78m

Earnings per share (EPS)	3.19
Gross Margin	31.98%
Net Profit Margin	16.00%
Debt/Equity Ratio	-11,386.0%

Data	Last Updated (UTC time)
Company Analysis	2026/05/15 06:00
End of Day Share Price	2026/05/15 00:00
Earnings	2026/03/31
Annual Earnings	2025/12/31

Package	Data	Timeframe	Example US Source ^*
Company Financials	10 years	Income statement Cash flow statement Balance sheet	SEC Form 10-K SEC Form 10-Q
Analyst Consensus Estimates	+3 years	Forecast financials Analyst price targets	Analyst Research Reports Blue Matrix
Market Prices	30 years	Stock prices Dividends, Splits and Actions	ICE Market Data SEC Form S-1
Ownership	10 years	Top shareholders Insider trading	SEC Form 4 SEC Form 13D
Management	10 years	Leadership team Board of directors	SEC Form 10-K SEC Form DEF 14A
Key Developments	10 years	Company announcements	SEC Form 8-K

Analyst	Institution
Richard Gross	Barclays
Jean Ann Salisbury	BofA Global Research
Douglas Irwin	Citigroup Inc

Delek Logistics Partners (DKL) Stock Overview

Rewards

Risk Analysis

Analyst Price Targets

New Gas Plant And Water Integrations Will Drive Permian Progress

Sour Gas Corridor And Water Integration Will Constrain Future Utilization And Margin Potential

Sour Gas Build Out And Permian Water Footprint Will Support Long Term Strength

Top Analyst Narratives

New Gas Plant And Water Integrations Will Drive Permian Progress

Sour Gas Corridor And Water Integration Will Constrain Future Utilization And Margin Potential

Sour Gas Build Out And Permian Water Footprint Will Support Long Term Strength

Delek Logistics Partners, LP Competitors

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Price History & Performance

Recent News & Updates

Delek Logistics Eyes Longer Debt Maturities With $800 Million Notes Offering and Tender Progress

New minor risk - Negative shareholders equity

DKL: Neutral Stance And Slower Libby 2 Ramp Will Shape Outlook

Delek Logistics Partners: Core Strengths And Opportunities Fuel Valuation And Technicals

New minor risk - Negative shareholders equity

First quarter 2026 earnings: Revenues exceed analysts expectations while EPS lags behind

Recent updates

Delek Logistics Eyes Longer Debt Maturities With $800 Million Notes Offering and Tender Progress

New minor risk - Negative shareholders equity

DKL: Neutral Stance And Slower Libby 2 Ramp Will Shape Outlook

Delek Logistics Partners: Core Strengths And Opportunities Fuel Valuation And Technicals

New minor risk - Negative shareholders equity

First quarter 2026 earnings: Revenues exceed analysts expectations while EPS lags behind

Fourth quarter dividend of US$1.13 announced

Delek Logistics Partners, LP Increases Quarterly Cash Distribution on Common Limited Partner Unit for the First Quarter 2026, Payable on May 11, 2026

DKL: Slower Libby 2 Ramp And Neutral Stance Will Shape 2027 Outlook

Delek Logistics Partners, LP to Report Q1, 2026 Results on Apr 29, 2026

DKL: Slower Libby 2 Ramp Will Shape Balanced 2027 Skewed Outlook

Price target increased by 11% to US$49.00

Sour Gas Corridor And Water Integration Will Constrain Future Utilization And Margin Potential

DKL: Slower Libby 2 Ramp Will Likely Cap Future Upside

Consensus revenue estimates fall by 11%

Sour Gas Build Out And Permian Water Footprint Will Support Long Term Strength

DKL: Lower Margin Outlook Will Likely Outweigh Supportive Distribution Yield

Full year 2025 earnings: EPS and revenues miss analyst expectations

Delek Logistics Partners, LP to Report Q4, 2025 Results on Feb 27, 2026

Third quarter dividend of US$1.13 announced

Delek Logistics Partners, LP Increases Quarterly Cash Distribution for the Fourth Quarter 2025, Payable on February 12, 2026

Third quarter 2025 earnings: Revenues exceed analysts expectations while EPS lags behind

Second quarter dividend of US$1.12 announced

Delek Logistics Partners, LP Increases Quarterly Cash Distribution, Payable on November 13, 2025

Delek Logistics Partners, LP to Report Q3, 2025 Results on Nov 07, 2025

Second quarter 2025 earnings: EPS and revenues miss analyst expectations

First quarter dividend of US$1.12 announced

Delek Logistics Partners, LP Declares Quarterly Cash Dividend for the Second Quarter of 2025, Payable on August 14, 2025

Delek Logistics Partners, LP to Report Q2, 2025 Results on Aug 06, 2025

First quarter 2025 earnings: Revenues exceed analysts expectations while EPS lags behind

Fourth quarter dividend of US$1.11 announced

Delek Logistics Partners, LP Increases Quarterly Cash Distribution, Payable on May 15, 2025

Delek Logistics Partners, LP to Report Q1, 2025 Results on May 07, 2025

Investor sentiment deteriorates as stock falls 15%

Delek US Holdings: Focusing On Growing Cash Flows Into 2025 - Hold

Full year 2024 earnings: EPS and revenues miss analyst expectations

Delek Logistics Partners, LP to Report Q4, 2024 Results on Feb 25, 2025

Third quarter dividend of US$1.11 announced

Delek Logistics Partners, LP Declares Cash Distribution for the Fourth Quarter 2024, Payable on February 11, 2025

Delek Logistics Partners Downgraded On Operational Concerns

Delek Logistics Partners, LP (NYSE:DKL) completed the acquisition of Gravity Water Midstream, LLC from Gravity Oilfield Services Inc.

Delek Logistics Partners, LP (NYSE:DKL) agreed to acquire Gravity Water Midstream, LLC from Gravity Oilfield Services Inc. for approximately $290 million.

Delek Logistics Partners: Impressive Q3 Performance, Buy

Third quarter 2024 earnings: EPS and revenues miss analyst expectations

Second quarter dividend of US$1.10 announced

Delek Logistics Partners, LP Declares Quarterly Cash Distribution, Payable on November 14, 2024

Delek Logistics Partners, LP has completed a Follow-on Equity Offering in the amount of $149.999967 million.

Delek Logistics Partners, LP has filed a Follow-on Equity Offering in the amount of $150 million.

Delek Logistics Partners, LP to Report Q3, 2024 Results on Nov 06, 2024

Calculated Moves Secure DKL's Future In The Permian Basin With Promising Profit Margins

Delek US Holdings: Refining Troubles And Rising Debt Spell Ratings Downgrade

DKL Logistics LP: Record Earnings, 11% Yield, Major Expansion

Delek Logistics Partners, LP (NYSE:DKL) agreed to acquire H2O Midstream, LLC from EIV Capital, LLC and others for $230 million.

First quarter dividend of US$1.09 announced

Delek Logistics Partners, LP Increases Quarterly Cash Distribution, Payable on August 16, 2024

Delek Logistics Partners Q3 Earnings Preview