Thank you for standing by. My name is Jael and I will be a conference operator today. At this time, I would like to welcome everyone to the DKL fourth quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's 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. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Robert Wright, Deputy CFO. You may begin.

Robert Wright Wright Good morning, and welcome to the Delic Logistics Partners' fourth quarter earnings conference call. Participants joining me on today's call will include Abigail Sorek, President, Reuven Spiegel, EVP, Mark Hobbs, EVP. As a reminder, this conference call will contain forward-looking statements as defined under the federal securities laws, including statements regarding guidance and future business outlook. Any 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 FCC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigol for opening remarks. Avigol? Thank you, Robert.

Teleg Logistics partner had another record quarter.

We reported approximately $107 million in quarterly adjusted EBITDA. 2024 has been a transformational year for Delac Logistics, and we are pleased with its continued strong performance. In 2024, DKL is taking key steps to becoming a premier full-service, crude, natural gas, and water provider in the prolific permanent 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 DKL. We were also the first MLP to do two primary offerings in a year since 2017. We amend and extend contact between DKL and DK for a period of up to seven years, providing certainty around cash flows. We completed the acquisition of DELEC portion in Wink to Webster pipeline, which increased the overall asset quality at DKL and enhanced DKL permit position. position.

We announced two acquisitions in the Midland Basin.

Edge to our midstream and gravity water midstream enhance 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 Libby Complex. AGI wells and sour gas treating capabilities enhance our competitive position in the Delaware and provide a good runway of growth for DELEC logistics in the future. Looking forward, in 2025, we'll continue to grow the partnership to prudent management of leverage and coverage. DKL also initiated a strong 2025 EBITDA guidance of $480 to $520 million. dollars. This represents around 20 percent growth over 2024 adjusted EBITDA. DKL continues to provide one of the best combinations of yield and growth in the entire ANZI index. We will continue to increase our economic separation with our sponsor DK. 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 have authorized up to $150 million buyback from our sponsor, DK, to enhance value for the DKL unit holders. I'm also pleased to announce that the Board of Directors has approved the 48 consecutive increase in the quarterly distribution to $1.10.50 per unit. To conclude, we are very excited about the prospect of Telec 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 end it over to Mark.

Thank you. As Avagol mentioned, we are growing DELIC Logistics with a prudent management of liquidity and leverage. We manage 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 this 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. 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 Dellic Logistics Permian Basin assets and contribution from H2O Midstream. Wholesale marketing and termiling 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 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. And lastly, the investments in pipeline joint venture 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 Link 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 of approximately $500 million at the midpoint, we have also announced today our 2025 capital guidance. In 2025, we expect to spend a total of approximately $75 million on completing our Libby Processing Plan 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 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 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 your question.

We do ask for today's session that you please restrict yourself to one question and one follow-up. your first question comes from the line of doug erwin of city your line is open hey good morning doug thanks for the questions morning um just looking at some of the prior benchmarks you've put around the acquisitions and the the process and plant expectations uh points to a relatively conservative guide at least at the low end of the range um so i was just curious if you could maybe to talk a little bit about what might drive the high-end first to low-end here, 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're giving guidance. DKL obviously is a growing company, as we demonstrate, and as you can very well see. Obviously, we are increasing the economical separation between DK and DKL in every step that we are doing, and for sure with the step that we announced today of the $150 million buyback form, our sponsor. And we want to help you and others to model us 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 update you down the road. If there is more modeling questions, obviously you can follow up with Mohit for more detailed questions how to get the exact model, but that's where we are today. And, obviously, there is always opportunities in the future.

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

Yeah, absolutely. So if we're looking at it from a free cash flow standpoint, Doug, and I'm 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 DKL, and that's something that our partnership liked a lot. Also, you can for sure appreciate that the deconsolidation effort is an initiative of both companies, both DKL and DK, and the reason is that it will allow DKL to completely fulfill its potential without sponsors. So those two initiatives are very well embedded in that. We are not going to give guidance, specific guidance.

It's going to be subject to market condition and dkl offering that to dk but that's something that we definitely look very closer and they're working hard on that but i will let the woven to chime in more that and to give some more colors well just two um two bullet points one it's a two-year program and we have to do execute that while complying with the company covenant and lever ratio leverage ratio target And obviously, that will be in place as long as the DKL share price makes sense from free cash flow accretive for the company.

Understood. Thanks.

Thank you. Your next question comes from a line of Neil Dingman of True Securities. Your line is open.

Morning. Thanks for the time, guys. My question is a little bit about the same. I'd love to see the guidance. Obviously, it looks great on EBITDA. I'm just wondering, besides you mentioned release, it's nice to see the upside that's going to happen around the Libby plant expansion. Could you speak to maybe other notable drivers you would share with us that's driving this upside potential around the EBITDA 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 we announced the liby plant we announced the agl and the sour effort and obviously there are synergies among all of that and we did we have w2w so there is really a mix of transactions we have done and we felt nil that it's very much necessary to give you guys a clear guidance and making your life just a little bit easier in terms of where we land and i think it's very important to investors to see how much our currency is cheap versus the entire ANZI index and how good of a position it is. So I think that's the reason we decided to give that because of the amount of transaction 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 would definitely appreciate the discount is definitely obviously seen out there right now. And then my just, my follow-up would be on the key three bare assets here, which continue to be so good. Just wondering, how is, you know, 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 you wouldn't see a strong demand. Obviously, the gas in the Dallow area looks very good. We have many discussions with our producer that we have acreage education with. But another point I would like to highlight for you, Neil, is our comprehensive offering of crude, gas, and water proving 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 us dividends, and we are very happy about that. That's the reason we felt confident with Libby 2, or the expansion, and we went also to the sour. So we feel confident to the tactics and also to the strategy.

Very good. thank you.

With no further questions, that concludes our Q&A session. I will now turn the conference back over to Avigal Sorak for closing remarks.

Yeah, absolutely. Thank you. Today, I would like to thank my colleagues around the table. I would like to thank the entire DERC logistics employees, our board of directors, and for you investors, and we'll meet again in the next quarter. Thank you.

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