Breaking Down Delek Logistics Partners, LP (DKL) Financial Health: Key Insights for Investors

You're looking at Delek Logistics Partners, LP (DKL) and seeing a midstream Master Limited Partnership (MLP) that just delivered a mixed but powerful Q3 2025 earnings report, and honestly, the headline numbers tell a story of strategic execution in the Permian Basin. The partnership raised its full-year Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) guidance to the upper end of the range, now projecting between $500 million and $520 million, a defintely strong signal of operational confidence. But you also saw the earnings per unit miss consensus, even as quarterly revenue topped estimates at $261.3 million. The core strength is clear: Distributable Cash Flow (DCF) for the quarter was a solid $74.1 million, supporting a 1.24x coverage ratio and their 51st consecutive distribution increase to $1.12 per unit. Here's the quick math: that distribution growth is fantastic for an MLP, but the persistence of a high leverage ratio, around 4.44x, means we need to dig deeper into how their $220 million to $250 million in projected capital expenditures will truly pay off against their debt profile.

Revenue Analysis

You need to know where Delek Logistics Partners, LP (DKL) actually makes its money, and the story for 2025 is clear: acquisitions are driving a significant shift in the revenue mix and boosting overall performance. The headline for the trailing twelve months (TTM) ending September 30, 2025, shows total revenue at $967.42 million. However, the most recent quarter, Q3 2025, is where the momentum is, with revenue hitting $261.3 million. That's a strong beat, and it's why the stock is getting attention.

Looking at the year-over-year (YoY) growth rate, you see a mixed picture, but the trend is positive. The TTM revenue growth was actually down slightly at -1.78%, but that number hides the recent acceleration. The Q3 2025 revenue growth rate clocked in at a robust 22.05% YoY, reflecting the immediate impact of strategic moves. That's a defintely strong jump.

Deconstructing the Revenue Streams

Delek Logistics Partners, LP operates as a midstream energy partnership, meaning its primary revenue comes from fees for moving and storing crude oil and refined products. They have four core segments, and understanding their contribution is key to assessing risk and opportunity. While the full revenue breakdown isn't public, we can use Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) as a precise proxy for segment contribution to operational cash flow.

Here's the quick math on segment performance for Q3 2025, which shows exactly where the growth is coming from:

• Gathering and Processing: The clear winner, with Adjusted EBITDA surging to $82.8 million, up significantly from $55.0 million in Q3 2024.
• Wholesale Marketing and Terminalling: This segment pulled in $21.4 million in Adjusted EBITDA, a slight dip from $24.7 million in the prior year.
• Investments in Pipeline Joint Ventures: Income from these investments rose to $21.9 million, up from $15.6 million.
• Storage and Transportation: This segment remained stable, contributing $19.3 million in income.

The total Q3 2025 Adjusted EBITDA was $136.0 million, and management has raised its full-year 2025 Adjusted EBITDA guidance to a range of $500 million to $520 million. This shows confidence in the current trajectory.

Significant Changes and Future Outlook

The most significant change in DKL's revenue profile stems from strategic acquisitions like Gravity and H2O Midstream, which are heavily weighted toward the high-growth Gathering and Processing segment. This focus has led to record crude gathering volumes in the Delaware Basin, which is a major operational milestone. Crucially, DKL is actively reducing its reliance on its sponsor, Delek US Holdings. Recent intercompany agreements are pushing the third-party cash flow contribution to approximately 80%, which is a major de-risking factor for investors looking for independent financial stability.

The company is successfully transitioning to a more diversified, fee-based business model. This shift, driven by Permian Basin expansion and new sour gas treating capabilities, is why the Q3 revenue beat was so strong. For a deeper dive into the valuation and strategy, you should check out the full analysis on Breaking Down Delek Logistics Partners, LP (DKL) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if Delek Logistics Partners, LP (DKL) is actually making money, not just moving product. The short answer is yes, and their margins are healthy for a midstream master limited partnership (MLP), but you have to watch their cost of revenue closely.

Looking at the Trailing Twelve Months (TTM) data as of November 2025, Delek Logistics Partners, LP (DKL) shows strong profitability, which is typical for a fee-based midstream business model. This stability is a key reason why MLPs attract income-focused investors.

• Gross Profit Margin: 34.12%
• Operating Profit Margin: 18.71%
• Net Profit Margin: 17.00%

That 17.00% Net Profit Margin tells you they are converting a solid portion of every revenue dollar into pure profit, which is a defintely good sign for distribution coverage.

Trends in Profitability and Operational Efficiency

The trend in 2025 shows steady, sequential growth in net income, which reflects the successful integration of new assets and increased throughput. This is the payoff from their capital investments. Here's the quick math on their reported quarterly net income for 2025:

Management is confident in this operational momentum, raising the full-year 2025 Adjusted EBITDA guidance to a range of $480 million to $520 million. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a critical measure for MLPs, showing the cash-generating ability of their core assets before financing and capital structure costs. Operational efficiency improvements, like the commissioning of the Libby 2 gas plant, directly support this high-end guidance by expanding processing capacity in the Permian Basin.

Industry Comparison and Valuation Context

When you look at the broader U.S. Oil and Gas industry, Delek Logistics Partners, LP (DKL) is trading at a slight premium based on earnings. Their Price-to-Earnings (P/E) ratio is 14.6x, which is a bit higher than the industry average of 13.5x. This suggests the market is willing to pay more for DKL's earnings, likely due to its strategic position in the Permian and its consistent distribution growth-they just announced their 51st consecutive quarterly increase.

However, comparing them to the midstream peer group using Enterprise Value to EBITDA (EV/EBITDA) is often better for MLPs. The MLP sub-group average for estimated 2025 EBITDA is around 8.8x. You need to check where DKL's specific EV/EBITDA falls, but the high profitability margins and raised EBITDA guidance suggest they are performing well. The entire sector is focused on disciplined capital allocation and debt reduction, which provides a margin of safety (that's why the sector's debt-to-EBITDA for the Solactive MLP & Energy Infrastructure index fell to 4.35 in Q1 2025). For a deeper look at the long-term vision driving these numbers, you can check out Mission Statement, Vision, & Core Values of Delek Logistics Partners, LP (DKL).

The key takeaway here is that DKL's margins are stable and their operational growth is translating directly into higher net income, which is what you want to see from a long-term infrastructure investment.

Debt vs. Equity Structure

You're looking at Delek Logistics Partners, LP (DKL)'s balance sheet and seeing a massive debt load relative to equity. Honestly, the headline number, the Debt-to-Equity (D/E) ratio, is startling. But for a Master Limited Partnership (MLP) like DKL, you have to look beyond the surface; the D/E ratio is often distorted by the partnership structure.

As of September 29, 2025, Delek Logistics Partners, LP (DKL) reported a total debt of approximately $2.288 billion. This debt is overwhelmingly long-term, which is typical for a capital-intensive midstream business. Here's the quick math on the major components that make up the liability side of the balance sheet:

• Total Debt (Sep 2025): $2.288 billion
• Long-Term Liabilities (approx. Sep 2025): $2.4 billion
• Short-Term Liabilities (approx. Sep 2025): $370.2 million

The company is defintely leaning heavily on debt financing to fund its Permian Basin growth strategy. You can see how this strategy plays out in their Mission Statement, Vision, & Core Values of Delek Logistics Partners, LP (DKL).

The Debt-to-Equity ratio for Delek Logistics Partners, LP (DKL) is exceptionally high-around 13,140.69% in the most recent quarter. This isn't a sign of immediate collapse, but a structural quirk. The total shareholder equity was only about $17.472 million as of September 29, 2025. MLPs distribute most of their cash flow, which reduces retained earnings and keeps the equity base small, making the D/E ratio an unreliable gauge of financial health.

A more meaningful metric for midstream companies is the Net Debt-to-Adjusted EBITDA ratio, which shows how many years of cash flow (earnings before interest, taxes, depreciation, and amortization) it would take to pay off the net debt. As of March 31, 2025, DKL's leverage ratio was approximately 4.21x. To be fair, this is slightly above the industry's preferred target range, which typically runs between 3x and 4x for large midstream names. It signals a more aggressive, but still manageable, use of financial leverage.

In mid-2025, Delek Logistics Partners, LP (DKL) made a clear move to manage its debt structure and enhance liquidity. They closed an upsized offering of $700 million in 7.375% senior notes due 2033 on June 30, 2025. This was a smart refinancing move, primarily intended to repay a portion of the outstanding borrowings under their revolving credit facility. This successful issuance immediately increased DKL's financial liquidity to over one billion dollars, which provides a solid buffer to pursue growth opportunities in the Permian Basin. This is how they balance: use long-term debt to fund growth, then refinance and manage the short-term borrowings on the credit facility.

Liquidity and Solvency

You need to know if Delek Logistics Partners, LP (DKL) can meet its short-term obligations, and the quick answer is yes, but with a typical midstream structure that leans on external funding. Their liquidity ratios are tight, but they are backed by a substantial credit facility and strong operating cash flow growth in 2025.

Current and Quick Ratios: A Tight but Improving Position

As of the trailing twelve months (TTM) ending November 2025, Delek Logistics Partners, LP's liquidity positions show a slight deficit. The Current Ratio, which measures current assets against current liabilities, stands at 0.93. The Quick Ratio (or acid-test ratio), which excludes inventory-the least liquid current asset-is slightly lower at 0.89. A ratio below 1.0 means current liabilities exceed current assets, suggesting a working capital (current assets minus current liabilities) deficit. Honestly, for a Master Limited Partnership (MLP) like DKL, which operates on long-term contracts and capital-intensive assets, a sub-1.0 current ratio isn't defintely a red flag, but it does mean they rely on cash flow or external financing to cover immediate bills.

Working Capital and Cash Flow Trends

The working capital trend for Delek Logistics Partners, LP is one of gradual improvement, moving from a Current Ratio of 0.84 at the end of 2024 toward the 1.0 mark in the TTM data. The company's cash balance is low, sitting at just $6.9 million as of September 30, 2025. This low cash figure is typical for a growth-focused MLP that quickly reinvests or distributes cash, but it makes the availability of their credit line crucial.

The cash flow statement for 2025 tells a story of strong operational performance funding aggressive investment. Here's the quick math for Q3 2025:

• Operating Cash Flow: Net cash provided by operating activities was $54.9 million in Q3 2025, a significant jump from $31.6 million in Q1 2025. This is a great sign.
• Investing Cash Flow: Capital expenditures (CapEx) for Q3 2025 were approximately $50 million, with $44 million dedicated to growth projects like the Libby 2 gas processing plant. This high CapEx is why Free Cash Flow (FCF) for the last twelve months is negative, at around -$39.37 million.
• Financing Cash Flow: The company continues its long-standing policy of increasing distributions, with the Q3 2025 distribution at $1.120 per unit. They also carry total debt of approximately $2.3 billion as of Q3 2025, which is how they fund the gap between operating cash and high growth CapEx.

Liquidity Strengths and Concerns

The primary liquidity concern is the sub-1.0 Current Ratio and the low cash balance. However, the strength is the immediate access to capital. As of September 30, 2025, Delek Logistics Partners, LP had substantial liquidity with $1.0 billion of additional borrowing capacity available under its $1.2 billion revolving credit facility. That's a huge safety net. Plus, the Distributable Cash Flow (DCF) coverage ratio was approximately 1.24x in Q3 2025, meaning they generated 1.24 times the cash needed to cover their distributions, which is a healthy margin for an MLP. For a deeper look at their long-term strategy, check out the Mission Statement, Vision, & Core Values of Delek Logistics Partners, LP (DKL).

The clear action here is that while the balance sheet looks tight, the operational cash generation and the massive credit line make their short-term liquidity position fundamentally sound. Finance: Monitor the utilization of the revolving credit facility closely.

Valuation Analysis

You're looking at Delek Logistics Partners, LP (DKL) and asking the core question: is it overvalued, undervalued, or priced just right? The quick answer is that the market seems to view it as fairly valued right now, but a deep dive into the ratios reveals a mixed picture that demands a realist's eye, especially around dividend sustainability.

The stock has had a solid run, increasing by +15.53% over the last 52 weeks as of mid-November 2025. That's a strong performance, especially when you consider the 52-week price range was between a low of $34.59 and a high of $48.00. The closing price around $44.69 suggests the stock is sitting comfortably in the upper half of its trading range, indicating investor confidence in the midstream sector's stability and DKL's strategic positioning in the Permian Basin.

Is Delek Logistics Partners, LP (DKL) Overvalued or Undervalued?

To figure out the valuation, we need to look past the stock price and dig into the core multiples. Here's the quick math on where DKL stands against its earnings and assets:

• Price-to-Earnings (P/E) Ratio: The trailing P/E is 14.56, which is reasonable for a stable midstream operator. More importantly, the forward P/E drops to 9.15, suggesting analysts expect a significant earnings jump in the near term. That forward multiple looks defintely attractive.
• Enterprise Value-to-EBITDA (EV/EBITDA): This is arguably the most relevant metric for a Master Limited Partnership (MLP). DKL's EV/EBITDA is around 17.32 as of November 2025. This is on the higher side compared to some peers, which often trade in the 10x-15x range. It signals that the market is placing a premium on DKL's expected 2025 Adjusted EBITDA guidance of $480 million to $520 million.
• Price-to-Book (P/B) Ratio: This is a major red flag. DKL's P/B ratio is an eye-watering 138.26 to 139.05. This kind of number is common for MLPs due to how asset depreciation and partnership accounting work, but it still means the market price is vastly higher than the book value per share. You should rely more on the EV/EBITDA for this company.

Dividend Health and Analyst Consensus

The yield is the main draw for many investors. Delek Logistics Partners, LP offers a stellar annual dividend of approximately $4.48 per share, translating to a dividend yield of about 10.03% as of mid-November 2025. That's a massive income stream.

But you can't ignore the risk: the payout ratio is high. The trailing 12-month payout ratio sits at approximately 143.93% of earnings. A ratio over 100% means the company is paying out more in distributions than it is earning in net income. They are covering this by drawing on cash flow, with a targeted distribution coverage ratio of approximately 1.3x by year-end 2025, which is a much healthier metric for an MLP. Still, a high earnings payout ratio means you need to keep a close eye on their distributable cash flow (DCF) generation.

Wall Street analysts are cautious but generally positive. The consensus rating is a 'Hold,' with an average 12-month price target of $45.50. Other firms see enough upside to rate it a 'Buy,' with targets reaching up to $50. This consensus suggests the stock is currently trading very close to its fair value, with limited immediate upside based on traditional models. For a deeper understanding of the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Delek Logistics Partners, LP (DKL).

Risk Factors

You need to know that while Delek Logistics Partners, LP (DKL) is executing well-raising its full-year 2025 Adjusted EBITDA guidance to the upper range of $500 million to $520 million-its primary risks are structural dependency on its sponsor and elevated financial leverage. The biggest risk is not a market crash, but a stumble by its largest customer, Delek US Holdings (DK).

The core structural risk has always been DKL's relationship with DK, which owns the general partner interest and is a significant customer. To be fair, DKL has made huge progress on this front in 2025. Through strategic acquisitions like Gravity Water Midstream and new intercompany agreements, DKL has pushed its third-party cash flow contribution to approximately 80% of its total earnings, effectively increasing its economic separation from its sponsor. This is a defintely a strong move toward mitigating the concentration risk, but the financial health of DK still matters deeply to DKL's throughput volumes.

The most immediate risk you should monitor is DKL's financial leverage. The company's strategy of funding growth through debt has led to a high leverage ratio, which remains a short-term concern despite strong cash flow generation. As of September 30, 2025, DKL's total debt stood at approximately $2.3 billion, resulting in a leverage ratio of about 4.44x. High debt levels mean increased interest expense pressures, and that requires DKL to sustain its current high earnings and volume trends just to keep its head above water.

Here's the quick math on the financial risk profile based on Q3 2025 data:

Operational risks are also present, mainly tied to DKL's concentration in the Permian Basin. While the Permian is a growth engine, any significant regulatory change or a sustained drop in drilling activity there would hit DKL hard. Plus, even though DKL has modest exposure to commodity price fluctuations, a sharp drop can still impact the margins in its Wholesale Marketing and Terminalling segment, which saw a decline in Q3 2025 Adjusted EBITDA to $21 million from $25 million in the prior year.

The good news is that management is taking clear, concrete steps to mitigate operational risks and drive future growth, which should help strengthen the distributable cash flow (DCF) coverage ratio (which was about 1.24x in Q3 2025). They are not sitting still.

• Commissioning the new Libby 2 gas plant.
• Advancing acid gas injection (AGI) capabilities.
• Optimizing crude and water offerings in the Midland basin.
• Executing a $150 million buyback from Delek US Holdings.

What this estimate hides is the execution risk on these new projects; if onboarding takes longer than expected, the projected 2025 EBITDA growth might soften. So, your next step is to drill into the Q4 2025 guidance and specifically look for updates on the Libby 2 plant's full capacity ramp-up. For a deeper dive into the valuation and strategy, read our full post: Breaking Down Delek Logistics Partners, LP (DKL) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for where Delek Logistics Partners, LP (DKL) goes next, and the answer is simple: deeper into the Permian Basin and into higher-margin services. The company is defintely executing on its strategy to become a full-suite midstream provider, which is the key driver for their strong 2025 outlook.

We saw the results of this focus in the third quarter of 2025, where the company reported a net income of $45.6 million, a solid jump from $33.7 million in the same period last year. Here's the quick math: that growth is directly tied to strategic acquisitions and infrastructure projects coming online, not just market luck.

• Product Innovations: The new Libby 2 gas processing plant is a big deal. It's designed to handle up to 79,139 MCF/day and, coupled with new sour gas handling and acid gas injection (AGI) capabilities, it allows DKL to serve producers drilling their most challenging and productive wells.
• Market Expansions: The primary focus is the Permian Basin, specifically the Midland and Delaware Basins. This is where the company is securing additional acreage dedications and seeing record crude gathering volumes in its Delaware system.
• Acquisitions: Acquisitions like H2O Midstream and Gravity Water Midstream have been well-timed, enabling DKL's transition to a comprehensive crude, gas, and water service provider.

For the full 2025 fiscal year, Delek Logistics Partners, LP has raised its Adjusted EBITDA guidance to the upper end of the $500 million to $520 million range, which is a projected year-over-year growth of approximately 20%. This strong earnings trajectory is supported by a consensus full-year revenue estimate of $1.13 billion, with earnings per share (EPS) projected around $3.90 per share.

What this estimate hides is the power of their strategic initiatives. The company is investing heavily in its future, with a planned capital expenditure of $220 million to $250 million in 2025, largely focused on these expansion projects. This commitment to growth capital is why they expect their coverage ratio to strengthen to approximately 1.3x by year-end, which is great for distribution stability.

The core competitive advantage is DKL's strategic asset base-a network of pipelines, terminals, and storage facilities-that is integral to its sponsor, Delek US Holdings. This relationship is cemented by long-term contracts with minimum volume commitments, giving DKL a predictable revenue floor. Still, the opportunity lies in expanding third-party revenue to reduce reliance on the sponsor, which the full-suite strategy in the Permian is designed to do. Plus, they continue to reward unitholders, having approved their 51st consecutive quarterly distribution increase to $1.120 per unit for Q3 2025.

You can see the full picture of their long-term direction here: Mission Statement, Vision, & Core Values of Delek Logistics Partners, LP (DKL).

Here is a snapshot of the 2025 financial projections:

The next action is to monitor Q4 2025 results for confirmation that the Libby 2 plant and the AGI capabilities are contributing the expected EBITDA uplift. That's the real test of the investment thesis.