Delek Logistics Lifts EBITDA as Gathering Gains Offset Marketing Slide
Second-quarter net income fell to $28.9 million from $44.6 million a year earlier.
Delek Logistics Partners (DKL), a midstream energy partnership, increased second-quarter adjusted EBITDA 12.6% to $143.5 million as stronger gathering and processing operations outweighed a contraction in wholesale marketing.
The result extended an operating rebound from the first quarter, when adjusted EBITDA was $132.3 million, and topped the $142.3 million reported in the fourth quarter. GAAP EBITDA rose to $120.0 million from $94.9 million sequentially as sales-type lease accounting impacts declined.
Net income fell to $0.54 per unit from $0.83 per unit a year earlier and $0.60 in the first quarter. Operating cash flow dropped to $71.2 million from $107.4 million a year earlier and $170.4 million sequentially, when favorable working-capital movements had lifted cash generation.
Gathering and Processing adjusted EBITDA rose 33.4% to $104.1 million, driven by increased margins. Delaware natural-gas gathering and processing volume climbed 32.4% to 80,715 Mcf a day, while crude gathering volume increased 14.6% to 157,156 barrels a day.
Wholesale Marketing and Terminalling adjusted EBITDA fell 46.1% to $12.6 million after the East Texas marketing agreement ended and wholesale margins narrowed. East Texas refinery sales volumes ceased following the agreement's Jan. 1 termination, while West Texas marketing throughput fell to 4,191 barrels a day from 10,757 a year earlier.
Adjusted distributable cash flow rose to $80.5 million from $72.5 million a year earlier, and distribution coverage improved to 1.33 times from 1.22 times. The leverage ratio increased to about 4.23 times from 4.05 times at the end of March as total debt rose to roughly $2.4 billion.
Delek Logistics continues to expect 2026 EBITDA of $520 million to $560 million, a range maintained for a second consecutive quarter. Its Libby sour-gas processing, treating and handling system was nearing completion, and record DDG crude-oil gathering volumes were achieved.
The partnership raised its quarterly distribution to $1.135 per unit, its 54th consecutive quarterly increase, while refinancing parts of its capital structure to extend maturities and reduce interest expense.