Thank you for standing by. My name is Jayl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek US Holdings, Inc. Fourth Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. I would now like to turn the conference over to Robert Wright, Deputy CFO. You may begin.

Good morning, and welcome to the Delek Logistics Partners fourth quarter earnings conference. Participants joining me on today's call will include Avigal Soreq, President; Reuven Spiegel, EVP; and Mark Hobbs, EVP. As a reminder, this conference call will contain forward-looking statements defined under the federal securities laws, including statements regarding guidance and future business outlook. Forward-looking statements made during today's call involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks. Avigal?

Thank you, Robert. Delek Logistics Partners had another record quarter. We reported approximately $107 million in quarterly adjusted EBITDA. 2024 has been a transformational year for Delek Logistics, and we are pleased with its continued strong performance. In 2024, Delek US Holdings, Inc. is taking key steps to becoming a premier full-service crude, natural gas, and water provider in the prolific Permian Basin, and we expect to make further progress in 2025. I would like to take a moment to reflect on the things we were able to accomplish in 2024. We increased the financial and trading liquidity of Delek Logistics. We were also the first MLP to do two primary offerings in a year since 2017. We amended and extended contracts between Delek Logistics and Delek US Holdings, Inc. for a period of up to seven years, providing certainty around cash flows. We completed the acquisition of Delek's portion in the Wink to Webster pipeline, which increased the overall asset quality at Delek Logistics and enhanced Delek Logistics' position. We announced acquisitions in the Midland Basin, Edge Draw Midstream, and Gravity Water Midstream, enhancing our competitive position in the Midland Basin significantly. We are excited about our combined offering, and we are extremely pleased with the initial success we have seen so far. In the Delaware Basin, we are also making good progress in our processing plant expansion. The expansion is set to complete on time and on budget in the first half of 2025. As we complete the plant expansion, we also announced an FID on acid gas injection at the Lindy complex. AGI wells and solid gas treating capabilities enhance our competitive position in the Delaware and provide a good runway of growth for Delek Logistics in the future. Looking forward to 2025, we will continue to grow the partnership through prudent management of leverage and coverage. Delek Logistics also initiated a strong 2025 EBITDA guidance of $480 to $520 million. This represents around 20% growth over 2024 adjusted EBITDA. Delek Logistics continues to provide one of the best combinations of yield and growth in the entire AMZI index. We will continue to enhance our economic separation with our sponsor, Delek US Holdings, Inc. We are progressing the economic separation in a few different ways, and today, we have announced an additional tool to enable the deconsolidation. Our board of directors has authorized up to $150 million buyback from our sponsor, Delek US Holdings, Inc., to enhance value for the Delek Logistics unit holders. I'm also pleased to announce that the board of directors has approved the 48th consecutive increase in the quarterly distribution to $1.10 per unit. To conclude, we are very excited about the prospect of Delek Logistics. We expect to continue on our value creation path moving forward, and we will continue to grow our distribution in the future. I will now hand it over to Mark.

Thank you. As Avigal mentioned, we are growing Delek Logistics with prudent management of liquidity and leverage. We managed our financial liquidity throughout 2024 by accessing both the debt and equity markets. Post the close of our acquisition of Gravity Water Midstream, we have approximately $530 million of liquidity. We are also managing our leverage as we complete several important organic growth projects next year. Moving on to our fourth quarter results. The fourth quarter adjusted EBITDA was $107.2 million compared to $100.9 million in the same period of 2023. Distributable cash flow as adjusted was $69.5 million, and the DCF coverage ratio was approximately 1.2 times. As mentioned previously, we expect this ratio to steadily move back to our long-term objective of 1.3 times in the second half of 2025. As for the gathering and processing segment, adjusted EBITDA for the quarter was $66 million compared to $53.3 million in the fourth quarter of 2023. The increase was primarily due to higher throughput from Delek Logistics' Permian Basin assets and contributions from H2O Midstream. Wholesale marketing and terminaling adjusted EBITDA was $21.2 million compared to $28.4 million in the prior year. The decrease was primarily due to lower wholesale margins and the impact of intercompany transactions. Storage and transportation adjusted EBITDA in the quarter was $17.8 million compared with $17.5 million in the fourth quarter of 2023. The increase was mainly driven by higher storage and transportation rates. Lastly, the investments in pipeline joint ventures segment contributed $11.3 million this quarter compared with $8.5 million in the fourth quarter of 2023. The increase was primarily due to the contribution from the Wink to Webster drop down in August of last year. Moving on to capital expenditures. The capital program for the fourth quarter was $49.4 million, of which $42.1 million was allocated to the new gas processing plant. The remainder of the spend in the quarter was for growth projects, namely advancing new connections in the Midland and Delaware gathering systems. Along with initiating our full-year EBITDA guidance, we have also announced today our 2025 capital guidance. In 2025, we expect to spend a total of approximately $75 million on completing our Lindy processing plant expansion and approximately $160 million on growth and maintenance projects. With that, we can open the call for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking a question. We do ask that you, for today's session, please restrict yourself to one question and one follow-up. Your first question comes from the line of Doug Leggate of Citi. Your line is open.

Hey. Good morning, Doug. Hi. Thanks for the questions. Good morning. EBITDA guidance here. Just looking at some of the prior benchmarks you have put around the acquisitions and the processing plant expectations, on a relatively conservative guide at least at the low end of the range. So I was just curious if you could maybe talk a little bit about what might drive the high end for solo and tier, and then maybe kind of where you see yourself exiting the year given some of the moving pieces throughout.

Hey, Doug. Thanks for the question, and listen, that's the first time we are giving guidance. Delek Logistics obviously is a growing company as we demonstrate and as you can very well see. Obviously, we are increasing the economic separation between Delek US Holdings, Inc. and Delek Logistics in every step that we are doing, and for sure with the step that we announced today of the $150 million buyback from our sponsor. And we want to help you and others to model better, and that's what we try to do today. We feel confident with the guidance we gave today. And, obviously, we are looking forward to updating you down the road. If there are more modeling questions, obviously, you can follow up with Mohit Bhardwaj for more detailed questions on how to get the exact model, but that's where we are today. Obviously, there are always opportunities in the future.

Understood. Yeah. Appreciate the first-time guidance. Maybe a follow-up on the buyback program. Maybe a two-part question here. Just first, just curious how quickly you expect to be able to execute on that $150 million and then second, just how you are thinking about funding these buybacks or if you are looking to potentially fund it all internally with free cash flow, or you may be willing to use debt here given the discounted yield relative to where the equity is trading? And if so, I was just curious where you see leverage over the near term.

Yeah. Absolutely. So if we are looking at it from the free cash flow standpoint, again, I am sure that you can appreciate it, our cost of capital on the debt side is around 7%, and what we see here today at $40 is close to 11%. So that's obviously very beneficial from a free cash flow standpoint for Delek Logistics, and that's something that our partnership likes a lot. Also, you can for sure appreciate that the deconsolidation effort is an initiative for both companies, both Delek Logistics and Delek US Holdings, Inc., and the reason that it will allow Delek US Holdings, Inc. to completely fulfill its potential without a sponsor. So those two initiatives are very well embedded in that. We are not going to give specific guidance. It's going to be subject to market conditions and Delek US Holdings, Inc. offering that to Delek Logistics. But that's something that we definitely look very closely at and are working hard on that, but I will let Mohit Bhardwaj chime in more depth and give some more colors. Well, just two bullet points. One, it's a two-year program. And we have to execute that while complying with the company covenant and leverage ratio target. And obviously, that will be in place as long as the Delek Logistics share price makes sense from a free cash flow accretive for the company.

Understood. Thanks.

Hey. Good morning.

Morning. Thanks for the time, guys. Michael, just a little bit about the same good. Love to see the guidance. Obviously, it looks great on EBITDA. I'm just wondering, besides you mentioned the release, which is nice to see the upside that's going to happen around the Lindy plant expansion. You know, could you speak to maybe just other notable drivers you would share with us that's driving this upside potential around the EBITDA that you're showing this year? Yeah. So we have many chips in this guidance, right? We obviously finished the Gravity deal, we finished the H2O deal, announced the Lindy plant, we announced the AGR and the sour effort. And obviously, there are synergies among all of that. And we have Wink to Webster. So there is really a mix of transactions we have done, and we felt, Neil, that it's very much necessary to give you guys a clear guidance and make your life just a little bit easier in terms of where we land. And I think it's very important for investors to see how much our currency is cheap versus the entire AMZI index, and how we look at the position it is. So I think that's the reason we decided to give that. Because of the number of transactions we did, and to reflect more how discounted we think our currency is, so that's the reason we did it, and I'm sure that you can appreciate it.

You know, I definitely appreciate it, and the discount is definitely, obviously, seen out there right now. And then my just my follow-up would be on the key three bear assets here, which continue to be so good. Just wondered how how is you know, when you when you look at those assets, just wondering how is demand and utilization of these assets looking?

Yeah. So we would not expand those assets if we did not see a strong demand. Obviously, the gas in the Delaware area looks very good. We have made discussions with our producer that we have expertise education with. But another point I would like to highlight for you, Neil, is our comprehensive offering of crude, gas, and water proves itself very nicely in the Delaware, and that's part of the reasoning that we implemented the same concept also in the Midland Basin. So that's paying dividends, and we are very happy about that. That's the reason we felt confident with Lindy too. So we feel confident in all the expansion, and we went also to the tactics and also to the strategy. Very good. Thank you.

With no further questions, that concludes our Q&A session. Now turn the conference back over to Avigal Soreq for closing remarks.

Yes, absolutely. Thank you today. I would like to thank my colleagues around the table. I would like to thank the entire Delek Logistics employees, our board of directors, and for you investors, and we meet again in the next quarter. Thank you.

This concludes today's conference call. You may now disconnect.