What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 122 added, 281 removed, 333 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except unit and per unit data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

20 unchanged sentences

Accounts payable $ 26,313 $ 26,290

Accounts payable to related parties — 6,055

Current portion of long-term debt — 30,000

12 unchanged sentences

Common unitholders - public;

9,284,741 units issued and outstanding at September 30, 2023 ( 9,257,305 at December 31, 2022)

12,898,253 units issued and outstanding at March 31, 2024 ( 9,299,763 at December 31, 2023)

290,051 160,402

Common unitholders - Delek Holdings;

34,311,278 units issued and outstanding at September 30, 2023 ( 34,311,278 at December 31, 2022)

34,311,278 units issued and outstanding at March 31, 2024 ( 34,311,278 at December 31, 2023)

( 332,518 ) ( 322,271 )

6 unchanged sentences

(In thousands, except unit and per unit data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Affiliate (1)

12 unchanged sentences

Depreciation and amortization 1,328 1,341

Gain on disposal of assets ( 491 ) ( 132 ) ( 804 ) ( 120 )

Loss on disposal of assets 567 142

Total operating costs and expenses 187,533 179,593

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Common - Public Common - Delek Holdings Total

Balance as of June 30, 2023 $ 167,760 $ ( 297,262 ) $ ( 129,502 )

Balance as of December 31, 2023 $ 160,402 $ ( 322,271 ) $ ( 161,869 )

Cash distributions ( 10,012 ) ( 36,198 ) ( 46,210 )

1 unchanged sentence

7,404 25,244 32,648

Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 )

Common - Public Common - Delek Holdings Total

Balance as of June 30, 2022 $ 168,611 $ ( 285,070 ) $ ( 116,459 )

Cash distributions ( 9,229 ) ( 33,797 ) ( 43,026 )

Net income attributable to partners

Issuance of units 132,327 — 132,327

( 70 ) 707 637

Balance as of September 30, 2022 $ 168,911 $ ( 283,168 ) $ ( 114,257 )

Common - Public Common - Delek Holdings Total

Balance as of December 31, 2022 $ 172,119 $ ( 282,819 ) $ ( 110,700 )

Cash distributions ( 28,695 ) ( 105,679 ) ( 134,374 )

Net income attributable to partners 22,135 81,953 104,088

Other ( 87 ) 1,921 1,834

Balance as of September 30, 2023 $ 165,472 $ ( 304,624 ) $ ( 139,152 )

Balance as of March 31, 2024 $ 290,051 $ ( 332,518 ) $ ( 42,467 )

Common - Public Common - Delek Holdings Total

2 unchanged sentences

Net income attributable to partners

Delek Holdings unit sale to public 5,110 ( 5,110 ) —

Other ( 30 ) 1,443 1,413

Balance as of September 30, 2022 $ 168,911 $ ( 283,168 ) $ ( 114,257 )

7,940 29,427 37,367

( 95 ) 446 351

Balance as of March 31, 2023 $ 170,522 $ ( 287,944 ) $ ( 117,422 )

See accompanying notes to the condensed consolidated financial statements

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(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

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Non-cash lease expense 1,939 2,200

Amortization of customer contract intangible assets 5,408 5,408

Amortization of marketing contract intangible 1,803 1,803

Amortization of deferred revenue ( 572 ) ( 444 )

2 unchanged sentences

Dividends from equity method investments 9,509 9,238

Loss on extinguishment of debt 3,571 —

Other non-cash adjustments 1,492 780

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Purchases of intangible assets ( 781 ) ( 582 )

Business Combination, net of cash acquired — ( 625,413 )

Distributions from equity method investments 2,133 1,440

3 unchanged sentences

Distributions to common unitholders - Delek Holdings ( 36,198 ) ( 34,998 )

Proceeds from term debt 650,000 —

Payments on term debt ( 531,250 ) ( 3,750 )

Proceeds from revolving facility 184,900 143,500

Payments on revolving facility ( 400,200 ) ( 93,400 )

Payments on term loan debt ( 11,250 ) —

Proceeds from issuance of units 132,327 —

Payments on other financing agreements ( 6,214 ) —

Deferred financing costs paid ( 10,946 ) ( 400 )

Payments on financing lease liabilities ( 2,191 ) ( 1,911 )

Other financing activities ( 487 ) ( 727 )

Net cash (used in) provided by financing activities ( 28,080 ) 783

Net (decrease) increase in cash and cash equivalents ( 3,788 ) 10,653

Net increase in cash and cash equivalents 5,917 2,994

Cash and cash equivalents at the beginning of the period 3,755 7,970

3 unchanged sentences

Interest $ 28,503 $ 20,210

Income taxes $ 20 $ 43

Non-cash investing activities:

Increase (decrease) in accrued capital expenditures and other $ 10,084 $ ( 1,019 )

Increase in accrued capital expenditures $ 3,910 $ 8,258

Non-cash financing activities:

1 unchanged sentence

See accompanying notes to the condensed consolidated financial statements

Notes to Condensed Consolidated Financial Statements (Unaudited)

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Delek Logistics Partners, LP

4 unchanged sentences

("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner").

On April 8, 2022, DKL Delaware Gathering, LLC, a subsidiary of the Partnership ("Delaware Gathering"), entered into a Membership Interest Purchase Agreement (the “3 Bear Purchase Agreement”) with 3 Bear Energy – New Mexico LLC (the “Seller”) to purchase 100 % of the limited liability company interests in 3 Bear Delaware Holding – NM, LLC (“3 Bear”) (subsequently renamed to DKL Delaware Holding - NM, LLC), related to the Seller’s crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin of New Mexico (the “Delaware Gathering Acquisition”).

The Delaware Gathering Acquisition was completed on June 1, 2022 (the "Acquisition Date").

The Partnership provides gathering, pipeline and other transportation services primarily for crude oil and natural gas customers, storage, wholesale marketing and terminalling services primarily for intermediate and refined product customers, and water disposal and recycling services through its owned assets and joint ventures located primarily in the Permian Basin (including the Delaware sub-basin) and other select areas in the Gulf Coast region.

A substantial majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, El Dorado and Big Spring refineries.

A majority of our existing assets are both integral to and dependent upon the success of Delek Holdings' refining operations, as many of our assets are contracted exclusively to Delek Holdings in support of its Tyler, Texas (the "Tyler Refinery"), El Dorado, Arkansas (the "El Dorado Refinery") and Big Spring, Texas (the "Big Spring Refinery").

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Annual Report on Form 10-K"), filed with the U.S.

Securities and Exchange Commission (the "SEC") on March 1, 2023 and in accordance with the rules and regulations of the SEC.

Securities and Exchange Commission (the "SEC") on February 28, 2024 and in accordance with the rules and regulations of the SEC.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K.

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Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

Reclassifications

Certain prior period amounts have been reclassified in order to conform to the current period presentation .

New Accounting Pronouncements Adopted During 2023

ASU 2023-03 , Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)

In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718) (“ASU 2023-03”).

This ASU amends or supersedes various SEC paragraphs within the FASB Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC.

ASU 2023-03 does not provide any new guidance, so there is no transition or effective date.

We adopted ASU 2023-03 in July 2023.

There was no material impact on our condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Accounting Pronouncements Not Yet Adopted

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The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

The Partnership is currently evaluating the provisions of the amendments and the impact on its future consolidated statements, but does not currently expect adopting this new guidance will have a material impact on its consolidated financial statements and related disclosures.

Delaware Gathering (formerly 3 Bear)

We completed the Delaware Gathering Acquisition on June 1, 2022, in which we acquired crude oil and natural gas gathering, processing, and transportation and storage operations, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico.

The purchase price for the Delaware Gathering Acquisition was $ 628.3 million.

The Delaware Gathering Acquisition was financed through a combination of cash on hand and borrowings under the DKL Credit Facility.

For the three and nine months ended September 30, 2023, we incurred no incremental direct acquisition and integration costs.

For the three and nine months ended September 30, 2022, we incurred $ 4.2 million and $ 10.6 million, respectively, in incremental direct acquisition and integration costs that principally consist of legal, advisory and other professional fees.

Such costs are included in general and administrative expenses in the accompanying condensed consolidated statements of income for these periods.

The Delaware Gathering Acquisition was accounted for using the acquisition method of accounting, whereby the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values.

The excess of the consideration paid over the fair value of the net assets acquired was recorded as goodwill.

Determination of Purchase Price

The table below presents the purchase price (in thousands):

Base purchase price:

closing net working capital (as defined in the 3 Bear Purchase Agreement)

closing indebtedness (as defined in the 3 Bear Purchase Agreement)

Cash paid for the adjusted purchase price 547,682

Cash paid to payoff 3 Bear credit agreement (as defined in the 3 Bear Purchase Agreement) 80,618

Purchase price $ 628,300

Notes to Condensed Consolidated Financial Statements (Unaudited)

Purchase Price Allocation

The following table summarizes the final fair values of assets acquired and liabilities assumed in the Delaware Gathering Acquisition as of June 1, 2022 (in thousands):

Assets acquired:

Cash and cash equivalents $ 2,678

Accounts receivables, net 28,859

Inventories 1,836

Other current assets 986

Property, plant and equipment 382,799

Operating lease right-of-use assets 7,427

Goodwill 14,848

Customer relationship intangible, net 210,000

Rights-of-way 13,490

Other non-current assets 500

Total assets acquired 663,423

Liabilities assumed:

Accounts payable 8,020

Accrued expenses and other current liabilities 22,382

Current portion of operating lease liabilities 1,029

Asset retirement obligations 2,261

Operating lease liabilities, net of current portion 1,431

Total liabilities assumed 35,123

Fair value of net assets acquired $ 628,300

The fair value of property, plant and equipment was based on the combination of the cost and market approaches.

Key assumptions in the cost approach include determining the replacement cost by evaluating recently published data and adjusting replacement cost for physical deterioration, functional and economic obsolescence.

We used the market approach to measure the value of certain assets through an analysis of recent sales or offerings of comparable properties.

The fair value of customer relationships was based on the income approach.

Key assumptions in the income approach include projected revenue attributable to customer relationships, attrition rate, operating margins and discount rates.

The fair values discussed above were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

The fair values of all other current assets and payables were equivalent to their carrying values due to their short-term nature.

The goodwill recognized in the Delaware Gathering Acquisition is primarily attributable to enhancing our third party revenues, further diversification of our customer and product mix, expanding our footprint into the Delaware basin and bolstering our Environmental, Social and Governance ("ESG") optionality through furthering carbon capture opportunities and greenhouse gas reduction projects currently underway.

This goodwill is deductible for income tax purposes.

Goodwill related to the Delaware Gathering Acquisition is included in the Gathering and Processing segment.

Unaudited Pro Forma Financial Information

The following table summarizes the unaudited pro forma financial information of the Partnership assuming the Delaware Gathering Acquisition had occurred on January 1, 2021.

The unaudited pro forma financial information has been adjusted to give effect to certain pro forma adjustments that are directly related to the Delaware Gathering Acquisition based on available information and certain assumptions that management believes are factually supportable.

The most significant pro forma adjustments relate to (i) incremental interest expense and amortization of deferred financing costs associated with revolving credit facility borrowings incurred in connection with the Delaware Gathering Acquisition, (ii) incremental depreciation resulting from the estimated fair values of acquired property, plant and equipment, (iii) incremental amortization resulting from the estimated fair value of the acquired customer relationship intangibles, (iv) accounting policy alignment and (v) transaction costs.

The unaudited pro forma financial information excludes any expected cost savings or other synergies as a result of the Delaware Gathering Acquisition.

The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been achieved had the Delaware Gathering Acquisition been effective as of the date presented, nor is it indicative of future operating results of the combined company.

Actual results may differ significantly from the unaudited pro forma financial information.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except per unit data) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Net sales $ 294,025 $ 865,874

Net income attributable to partners $ 48,708 $ 114,100

Net income per limited partner unit:

Basic income per unit $ 1.12 $ 2.62

Diluted income per unit $ 1.12 $ 2.62

The Partnership is currently evaluating the provisions of the amendments and the impact on its future condensed consolidated statements, but does not currently expect adopting this new guidance will have a material impact on its condensed consolidated financial statements and related disclosures.

Related Party Transactions

5 unchanged sentences

See our Annual Report on Form 10-K for a more complete description of our material commercial agreements and other agreements with Delek Holdings.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Other Agreements with Delek Holdings

5 unchanged sentences

These amounts are recorded in other long-term liabilities and are amortized to revenue over the life of the underlying revenue agreement corresponding to the asset.

There was no reimbursement by Delek Holdings during the three and nine months ended September 30, 2023.

We were reimbursed a nominal amount by Delek Holdings during the nine months ended September 30, 2022, with no such reimbursements during the three months ended September 30, 2022.

There was no reimbursement by Delek Holdings during the three months ended March 31, 2024 and 2023.

Additionally, we are reimbursed or indemnified, as the case may be, for costs incurred in excess of certain amounts related to certain asset failures, pursuant to the terms of the Omnibus Agreement.

As of September 30, 2023 and December 31, 2022, there was no receivable from related parties for these matters.

As of March 31, 2024 and December 31, 2023, there was no receivable from related parties for these matters.

These reimbursements are recorded as reductions to operating expenses.

There were no reimbursements for these matters in each of the three and nine month periods ended September 30, 2023 and 2022.

There were no reimbursements for these matters in each of the three month periods ended March 31, 2024 and 2023.

Other Transactions

4 unchanged sentences

The agreement extends through December 2024.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended September 30, 2023 and 2022, respectively, and $ 1.2 million for both the nine months ended September 30, 2023 and 2022, respectively, which are recorded in affiliate revenue in our condensed consolidated statements of income.

Total fees paid to the Partnership were $ 0.4 million for both the three months ended March 31, 2024 and 2023, which are recorded in affiliate revenue in our condensed consolidated statements of income.

Additionally, the Partnership incurs the costs in connection with the construction of the assets and is subsequently reimbursed by Delek Holdings.

Amounts reimbursable by Delek Holdings are recorded in accounts receivable from related parties.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Related Party Revolving Credit Facility

7 unchanged sentences

In addition to these transactions, we purchase refined products and bulk biofuels from Delek Holdings, the costs of which are included in cost of materials and other-affiliate.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of revenue, purchases and expense transactions with Delek Holdings and its affiliates are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Revenues $ 139,625 $ 124,999

8 unchanged sentences

May 15, 2024 (1)

August 14, 2023

November 13, 2023 (1)

Total $ 72,911

1 unchanged sentence

May 15, 2023 $ 35,169

August 11, 2022 $ 33,797

November 10, 2022 $ 33,968

Total $ 70,167

(1) On October 25, 2023, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) On April 25, 2024, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination.

The following table represents a disaggregation of revenue for the gathering and processing, wholesale marketing and terminalling, and storage and transportation segments for the periods indicated (in thousands):

Three Months Ended September 30, 2023

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

Service Revenue - Third Party $ 14,929 $ — $ 3,507 $ 18,436

Service Revenue - Affiliate (1)

1,743 13,975 9,723 25,441

Product Revenue - Third Party 24,477 76,500 — 100,977

Product Revenue - Affiliate 3,776 43,475 — 47,251

Lease Revenue - Affiliate

49,900 13,160 20,659 83,719

Total Revenue $ 94,825 $ 147,110 $ 33,889 $ 275,824

Three Months Ended September 30, 2022

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

Service Revenue - Third Party $ 17,401 $ — $ 3,939 $ 21,340

Service Revenue - Affiliate (1)

4,050 9,076 — 13,126

Product Revenue - Third Party 42,832 102,703 — 145,535

Product Revenue - Affiliate 2,592 24,185 — 26,777

Lease Revenue - Affiliate

41,735 11,901 33,611 87,247

Total Revenue $ 108,610 $ 147,865 $ 37,550 $ 294,025

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

6 unchanged sentences

Total Revenue $ 95,883 $ 119,270 $ 36,922 $ 252,075

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated

6 unchanged sentences

Total Revenue $ 92,432 $ 112,309 $ 38,784 $ 243,525

(1) Net of $ 1.8 million of amortization expense for both the three months ended September 30, 2023 and 2022 and $ 5.4 million for the nine months ended September 30, 2023 and 2022, related to a customer contract intangible asset recorded in the wholesale marketing and terminalling segment.

As of September 30, 2023, we expect to recognize approximately $ 1.2 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings.

(1) Net of $1,803 of amortization expense for both the three months ended March 31, 2024 and 2023, related to marketing contract intangible recorded in the wholesale marketing and terminalling segment.

As of March 31, 2024, we expect to recognize approximately $ 1.1 billion in lease revenues related to our unfulfilled performance obligations pertaining to the minimum volume commitments and capacity utilization under the non-cancelable terms of our commercial agreements with Delek Holdings.

Most of these agreements have an initial term ranging from five to ten years , which may be extended for various renewal terms.

We disclose information about remaining performance obligations that have original expected durations of greater than one year.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Our unfulfilled performance obligations as of September 30, 2023 were as follows (in thousands):

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Our unfulfilled performance obligations as of March 31, 2024 were as follows (in thousands):

Remainder of 2024 $ 157,672

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Net Income per Unit

Basic net income per unit applicable to limited partners is computed by dividing limited partners' interest in net income by the weighted-average number of outstanding common units.

Diluted net income per unit applicable to common limited partners includes the effects of potentially dilutive units on our common units.

As of September 30, 2023, the only potentially dilutive units outstanding consist of unvested phantom units.

The table below represents total cash distributions applicable to the period in which the distributions are earned.

Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income allocations used in the calculation of net income per unit.

The calculation of net income per unit is as follows (dollars in thousands, except units and per unit amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Basic net income per unit attributable to limited partners is computed by dividing limited partners' interest in net income by the weighted-average number of outstanding common units.

Diluted net income per unit attributable to common limited partners includes the effects of potentially dilutive units on our common units.

As of March 31, 2024, the only potentially dilutive units outstanding consist of unvested phantom units.

The calculation of net income per unit is as follows (in thousands, except unit and per unit amounts):

Three Months Ended March 31,

Net income attributable to partners $ 32,648 $ 37,367

Limited partners' distribution 45,558 43,057 135,334 128,493

Earnings in (deficit) excess of distributions $ ( 10,733 ) $ 1,617 $ ( 31,246 ) $ ( 12,141 )

Limited partners' earnings on common units:

Distributions $ 45,558 $ 43,057 $ 135,334 $ 128,493

Allocation of earnings in (deficit) excess of distributions ( 10,733 ) 1,617 ( 31,246 ) ( 12,141 )

Total limited partners' earnings on common units $ 34,825 $ 44,674 $ 104,088 $ 116,352

Weighted average limited partner units outstanding:

Basic 43,588,316 43,485,779 43,578,636 43,477,801

Diluted 43,604,791 43,515,960 43,598,547 43,499,837

Weighted average limited partner units outstanding, basic 44,406,356 43,569,963

Dilutive effect of unvested phantom units 16,461 15,334

Weighted average limited partner units outstanding, diluted 44,422,817 43,585,297

Net income per limited partner unit:

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$ 0.73 $ 0.86

(1) Outstanding common units totaling 48,597 and 35,519 were excluded from the diluted earnings per unit calculation for the three and nine months ended September 30, 2023, respectively.

There were no outstanding common units excluded from the diluted earnings per unit calculation for the three months ended September 30, 2022.

Outstanding common units totaling 3,862 were excluded from the diluted earnings per unit calculation for the nine months ended September 30, 2022.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) There were 42,315 and $ 22,632 anti-dilutive common unit equivalents excluded from the diluted earnings per unit calculation during the three months ended March 31, 2024 and 2023, respectively.

Long-Term Obligations

Outstanding borrowings under the Partnership’s debt instruments are as follows (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

DKL Revolving Facility $ 565,200 $ 780,500

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2028 Notes 400,000 400,000

2025 Notes — 250,000

Principal amount of long-term debt 1,615,200 1,711,750

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Long-term debt, net of current portion $ 1,601,226 $ 1,673,789

Notes to the Condensed Consolidated Financial Statements (Unaudited)

DKL Credit Facility

The DKL Term Facility principal of $ 300.0 million was drawn on October 13, 2022.

On November 6, 2023, the Partnership entered into a First Amendment, a Second Amendment and a Third Amendment to the DKL Credit Facility (together, the “Amendments” ) to the DKL Credit Facility to extend the maturity of the Term Loan Facility to April 15, 2025.

In addition, the Amendments added a maturity acceleration clause which will accelerate the maturity of the DKL Term Loan Facility to 180 days prior to the stated maturity date of the 2025 Notes if any of the 2025 Notes remain outstanding on that date.

This senior secured facility requires four quarterly amortization payments of $ 3.8 million in 2023, four quarterly amortization payments of $ 7.5 million in 2024 and one quarterly amortization payment of $ 7.5 million in 2025 with final maturity and principal due on April 15, 2025.

At the Partnership's option, borrowings bear interest at either the Adjusted Term Secured Overnight Financing Rate benchmark (“SOFR”) or U.S.

On October 13, 2022, the Partnership entered into a senior secured term loan with an original principal of $ 300.0 million (the "DKL Term Loan Facility").

On November 6, 2023, the Partnership entered into a First Amendment, a Second Amendment and a Third Amendment to the DKL Credit Facility (together, the “Amendments”) which among other things, extended the maturity of the DKL Term Loan Facility to April 15, 2025.

The outstanding principal balance of $ 281.3 million was paid on March 13, 2024 from a portion of the proceeds received with the issuance of the 2029 Notes as indicated below.

At the Partnership's option, borrowings bore interest at either the Adjusted Term Secured Overnight Financing Rate benchmark (“SOFR”) or U.S.

dollar prime rate, plus an applicable margin.

The applicable margin is 2.50 % for the first year of the DKL Term Facility and 3.00 % for the second year for U.S.

The applicable margin was 2.50 % for the first year of the DKL Term Loan Facility and 3.00 % for the second year for U.S.

dollar prime rate borrowings.

SOFR rate borrowings include a credit spread adjustment of 0.10 % to 0.25 % plus an applicable margin of 3.50 % for the first year and 4.00 % for the second year.

At September 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.92 % and 7.92 %, respectively.

The effective interest rate was 9.48 % as of September 30, 2023.

The DKL Revolving Facility has a total capacity of $ 900.0 million, including up to $ 115.0 million for letters of credit and $ 25.0 million in swing line loans.

This facility has a maturity date of October 13, 2027 which will accelerate to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date.

On November 6, 2023, the Partnership entered into the Amendments which among other things:

(i) increased the U.S.

Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $ 150.0 million, resulting in aggregate lender commitments under the DKL Revolving Credit Facility in an amount of $ 1.050 billion and (ii) increased the limit allowed for general unsecured debt (as defined in the DKL Credit Facility) by an amount equal to $ 95.0 million, resulting in an unsecured general debt limit of $ 150.0 million.

SOFR rate borrowings included a credit spread adjustment of 0.10 % to 0.25 % plus an applicable margin of 3.50 % for the first year and 4.00 % for the second year.

At December 31, 2023, the weighted average borrowing rate was approximately 9.46 %.

Debt extinguishment costs were $ 2.1 million and are recorded in interest expense, net in the accompanying condensed consolidated statements of income.

On March 29, 2024, the Partnership entered into a Fourth Amendment to the fourth amended and restated senior secured revolving credit agreement (the "DKL Revolving Facility") which among other things increased the U.S.

Revolving Credit Commitments (as defined in the DKL Credit Facility) by an amount equal to $ 100.0 million resulting in aggregate lender commitments under the Delek Logistics Revolving Credit Facility in an amount of $ 1,150.0 million, including up to $ 146.9 million for letters of credit and $ 31.9 million in swing line loans.

This facility has a maturity date of October 13, 2027.

The DKL Revolving Facility requires a quarterly unused commitment fee based on average commitment usage, currently at 0.45 % per annum.

1 unchanged sentence

dollar prime rate plus an applicable margin of 1.00 % to 2.00 % depending on the Partnership’s Total Leverage Ratio (as defined in the DKL Credit Agreement), or a SOFR rate plus a credit spread adjustment of 0.10 % or 0.25 % and an applicable margin ranging from 2.00 % to 3.00 % depending on the Partnership’s Total Leverage Ratio.

As of September 30, 2023 and December 31, 2022, the weighted average interest rate was 8.45 % and 7.55 %, respectively.

There were no letters of credit outstanding as of September 30, 2023 or December 31, 2022.

The obligations under the 2022 DKL Credit Facility are secured by first priority liens on substantially all of the Partnership’s and its subsidiaries’ tangible and intangible assets.

The carrying values of outstanding borrowings under the 2022 DKL Credit Facility as of September 30, 2023 and December 31, 2022 approximate their fair values.

As of March 31, 2024 and December 31, 2023, the weighted average interest rate was 8.18 % and 8.46 %, respectively.

There were no letters of credit outstanding as of March 31, 2024 or December 31, 2023.

The obligations under the DKL Revolving Facility are secured by first priority liens on substantially all of the Partnership’s and its subsidiaries’ tangible and intangible assets.

The carrying value of outstanding borrowings under the DKL Revolving Facility as of March 31, 2024 and December 31, 2023 approximate their fair values.

Our debt facilities contain affirmative and negative covenants and events of default the Partnership considers usual and customary.

As of September 30, 2023, we were in compliance with covenants on all of our debt instruments.

As of March 31, 2024, we were in compliance with covenants on all of our debt instruments.

Related Party Revolving Credit Facility

4 unchanged sentences

The Related Party Revolving Credit Facility will mature on June 30, 2028.

The Related Party Revolving Credit Facility contains certain affirmative covenants, mandatory prepayments and events of

Notes to Condensed Consolidated Financial Statements (Unaudited)

default that the Partnership considers to be customary for an arrangement of this sort.

The Related Party Revolving Credit Facility contains certain affirmative covenants, mandatory prepayments and events of default that the Partnership considers to be customary for an arrangement of this sort.

The obligations under the Related Party Revolving Credit Facility are unsecured.

On May 2, 2024, the Boards of Directors of Delek Holdings and our general partner authorized the termination of the intercompany loan agreement between Delek Holdings and the Partnership, with the termination expected to be effective on or around May 31, 2024.

On March 13, 2024, the Partnership and our wholly owned subsidiary Delek Logistics Finance Corp.

("Finance Corp." and together with the Partnership, the "Issuers") sold $ 650.0 million in aggregate principal amount of 8.625 % senior notes due 2029 (the "2029 Notes") at par, pursuant to an indenture with U.S.

Bank Trust Company, National Association as trustee.

Net proceeds were used to redeem the 2025 Notes including accrued interest, pay off the DKL Term Facility including accrued interest and to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

On April 17, 2024, the Issuers sold $ 200.0 million in aggregate principal amount of additional 8.625 % senior notes due 2029 (the “Additional 2029 Notes”), at 101.25 %.

The Additional 2029 Notes were issued under the same indenture as the 2029 Notes and formed a part of the same series of notes as the 2029 Notes.

The net proceeds were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The 2029 Notes are general unsecured senior obligations of the Issuers and are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's subsidiaries other than Finance Corp., and will be unconditionally guaranteed on the same basis by certain of the Partnership’s future subsidiaries.

The 2029 Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right payment to any future subordinated indebtedness of the Issuers.

The 2029 Notes will mature on March 15, 2029, and interest on the 2029 Notes is payable semi-annually in arrears on each March 15 and September 15, commencing September 15, 2024.

At any time prior to March 15, 2026, the Issuers may redeem up to 35 % of the aggregate principal amount of the 2029 Notes with the net cash proceeds of one or more equity offerings by the Partnership at a redemption price of 108.625 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to March 15, 2026, the Issuers may also redeem all or part of the 2029 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

In addition, beginning on March 15, 2026, the Issuers may, subject to certain conditions and limitations, redeem all or part of the 2029 Notes, at a redemption price of 104.313 % of the redeemed principal for the twelve-month period beginning on March 15, 2026, 102.156 % for the twelve-month period beginning on March 15, 2027, and 100.00 % beginning on March 15, 2028 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the 2029 Notes from holders at a price equal to 101.00 % of the principal amount thereof, plus accrued and unpaid interest.

We recorded $ 10.4 million of debt issuance costs which will be amortized over the term of the 2029 Notes and included in interest expense in the accompanying condensed consolidated statements of income.

As of March 31, 2024, the effective interest rate was 8.81 %.

The estimated fair value of the 2029 Notes was $ 664.3 million as of March 31, 2024, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Our 2028 Notes are general unsecured senior obligations comprised of $ 400.0 million in aggregate principal of 7.125 % senior notes maturing June 1, 2028.

The 2028 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries.

As of September 30, 2023, the effective interest rate was 7.39 %.

The estimated fair value of the 2028 Notes was $ 365.5 million and $ 359.7 million as of September 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

As of March 31, 2024, the effective interest rate was 7.39 %.

The estimated fair value of the 2028 Notes was $ 391.4 million and $ 380.4 million as of March 31, 2024 and December 31, 2023, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Our 2025 Notes are general unsecured senior obligations comprised of $ 250.0 million in aggregate principal of 6.75 % senior notes maturing on May 15, 2025.

The 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by the Partnership's existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of the Partnership's future subsidiaries.

As of September 30, 2023, the effective interest rate was 7.18 %.

The estimated fair value of the 2025 Notes was $ 245.6 million and $ 243.4 million as of September 30, 2023 and December 31, 2022, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

Concurrent with the issuance of the 2029 Notes, the Partnership made a cash tender offer (the "Offer") for all of the outstanding 2025 Notes with a conditional notice of full redemption for the remaining balance not received from the Offer.

The Partnership received tenders from holders of approximately $ 156.2 million in aggregate principal amount.

All the remaining 2025 Notes were redeemed by March 29, 2024, pursuant to the notice of conditional redemption.

Debt extinguishment costs were $ 1.5 million and are recorded in interest expense, net in the accompanying condensed consolidated statements of income.

The estimated fair value of the 2025 Notes was $ 248.7 million as of December 31, 2023, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

On March 12, 2024, we completed a public offering of its common units in which it sold 3,584,416 common units (including an overallotment option of 467,532 common units) to the underwriters of the offering at a price to the public of $ 38.50 per unit.

The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $ 132.3 million and were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $ 5.5 million.

Equity Activity

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2022 through September 30, 2023.

The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2023 through March 31, 2024.

Common - Public Common - Delek Holdings (1)

2 unchanged sentences

14,074 — 14,074

Balance at September 30, 2023 9,284,741 34,311,278 43,596,019

(1) As of September 30, 2023, Delek Holdings owned a 78.7 % limited partner interest in us.

(2) Unit-based compensation awards are presented net of 10,714 units withheld for taxes as of September 30, 2023.

Units issued 3,584,416 — 3,584,416

Balance at March 31, 2024 12,898,253 34,311,278 47,209,531

(1) As of March 31, 2024, Delek Holdings owned a 72.7 % limited partner interest in the Partnership.

(2) Unit-based compensation awards are presented net of 6,711 units withheld for taxes as of March 31, 2024.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Cash Distributions

Our Partnership Agreement sets forth the calculation to be used to determine the amount and priority of available cash distributions that our limited partner unitholders will receive.

5 unchanged sentences

September 30, 2023 $ 1.045 $ 45,558

December 31, 2023 $ 1.055 $ 46,010

March 31, 2024 $ 1.070 $ 50,514

June 30, 2023 $ 1.035 $ 45,112

September 30, 2023 $ 1.045 $ 45,558

Equity Method Investments

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Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas with capacity of 235,000 bpd.

Summarized financial information for Red River on a 100% basis is shown below (in thousands):

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of September 30, 2023 As of December 31, 2022

Current Assets $ 35,187 $ 33,365

Non-current Assets $ 388,231 $ 394,267

Current liabilities $ 8,544 $ 5,144

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Revenues $ 26,892 $ 25,340 $ 65,299 $ 69,475

Gross profit $ 17,745 $ 17,210 $ 41,468 $ 46,476

Operating income $ 17,564 $ 15,469 $ 40,912 $ 44,381

Net income $ 17,748 $ 15,509 $ 41,441 $ 44,386

We have two additional joint ventures that have constructed separate crude oil pipeline systems and related ancillary assets, which are serving third parties and subsidiaries of Delek Holdings.

We own a 50 % membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P.

("CP LLC") to operate one of these pipeline systems and a 33 % membership interest in the entity formed with Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics"), formerly known as Rangeland Energy II, LLC ("Rangeland Energy") to operate the other pipeline system.

Combined summarized financial information for these two equity method investees on a 100% basis is shown below (in thousands):

As of September 30, 2023 As of December 31, 2022

Current assets $ 22,421 $ 18,888

Non-current assets $ 223,532 $ 231,898

Current liabilities $ 2,855 $ 1,973

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Revenues $ 14,330 $ 11,949 $ 39,501 $ 32,402

Gross profit $ 9,275 $ 7,014 $ 25,219 $ 18,472

Operating income $ 8,331 $ 6,284 $ 22,255 $ 16,474

Net Income $ 8,486 $ 6,306 $ 22,637 $ 16,501

The Partnership's investments in these three entities were financed through a combination of cash from operations and borrowings under the DKL Credit Facility.

Additionally, we have two pipeline joint ventures, in which we own a 50 % membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P.

("CP LLC") to operate one of these pipeline systems and a 33 % membership interest in the entity formed with Andeavor Logistics RIO Pipeline LLC ("Andeavor Logistics") to operate the other pipeline system.

The Partnership's investment balances in these joint ventures were as follows (in thousands):

As of September 30, 2023 As of December 31, 2022

As of March 31, 2024 As of December 31, 2023

Red River $ 140,036 $ 141,091

2 unchanged sentences

Total Equity Method Investments $ 238,185 $ 241,337

We do not consolidate any part of the assets or liabilities or operating results of our equity method investees.

Our share of net income or loss of the investees will increase or decrease, as applicable, the carrying value of our investments in unconsolidated affiliates.

With respect to our equity method investments, we determined that these entities do not represent variable interest entities and consolidation is not required.

We have the ability to exercise significant influence over each of these joint ventures through our participation in the management committees, which make all significant decisions.

However, since all significant decisions require the consent of the other investor(s) without regard to economic interest, we have determined that we have joint control and have applied the equity method of accounting.

Our investment in these joint ventures is reflected in our investments in pipeline joint ventures segment.

Notes to Condensed Consolidated Financial Statements (Unaudited)

We aggregate our operating segments into four reportable segments:

4 unchanged sentences

Operations that are not specifically included in the reportable segments are included in Corporate and other segment.

During the fourth quarter 2022, we realigned our reportable segments for financial reporting purposes to reflect changes in the manner in which our Chief Operating Decision Maker ("CODM") uses financial information to make key operating decisions and assess performance.

The changes primarily represent reporting the operating results of our pipeline operations and legacy gathering assets and the operating results of the Delaware Gathering operations within a new reportable segment called gathering and processing.

Prior to this change, the pipeline operations and legacy gathering assets were reported as part of the pipelines and transportation segment.

The remaining operations of the former pipelines and transportation reportable segment was renamed to storage and transportation.

Unallocated corporate costs, including general and administrative expenses, interest expense and depreciation and amortization, are now presented in corporate and other.

Additionally, the CODM determined that Segment EBITDA is the key performance measure for planning and forecasting purposes and discontinued the use of Contribution Margin as a measure of performance.

While this reporting change did not change our consolidated results, segment data for previous years has been restated and is consistent with the current year presentation throughout the financial statements and the accompanying notes.

The CODM evaluates performance based on EBITDA for planning and forecasting purposes.

EBITDA is an important measure used by management to evaluate the financial performance of our core operations.

1 unchanged sentence

A reconciliation of EBITDA to Net Income is included in the tables below.

We define EBITDA as net income (loss) before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.

Assets by segment is not a measure used to assess the performance of the Partnership by the CODM and thus is not disclosed.

Notes to Condensed Consolidated Financial Statements (Unaudited)

We define EBITDA as net income (loss) before net interest expense, income tax expense, depreciation and amortization expense, including amortization of marketing contract intangible, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.

Assets by segment are not a measure used to assess the performance of the Partnership by the CODM and thus is not disclosed.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The following is a summary of business segment operating performance as measured by EBITDA for the periods indicated (in thousands):

Three Months Ended September 30, 2023

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

Net revenues:

Affiliate $ 55,419 $ 70,610 $ 30,382 $ — $ — $ 156,411

Third party 39,406 76,500 3,507 — — 119,413

Total revenue $ 94,825 $ 147,110 $ 33,889 $ — $ — $ 275,824

Segment EBITDA $ 52,906 $ 28,135 $ 17,914 $ 9,288 $ ( 10,002 ) $ 98,241

Depreciation and amortization 19,263 1,769 2,704 — 849 24,585

Amortization of customer contract intangible — 1,803 — — — 1,803

Interest expense, net — — — — 36,901 36,901

Income tax expense 127

Net income $ 34,825

Capital spending $ 12,002 $ 2,123 $ 522 $ — $ — $ 14,647

Three Months Ended September 30, 2022

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

Net revenues:

Affiliate $ 48,377 $ 45,162 $ 33,611 $ 127,150

Third party 60,233 102,703 3,939 — — 166,875

Total revenue $ 108,610 $ 147,865 $ 37,550 $ — $ — $ 294,025

Segment EBITDA $ 56,551 $ 20,272 $ 14,575 $ 8,567 $ ( 11,003 ) $ 88,962

Depreciation and amortization 17,779 1,628 2,087 — ( 1,954 ) 19,540

Amortization of customer contract intangible — 1,802 — — — 1,802

Interest expense, net — — — — 22,559 22,559

Income tax expense 387

Net income $ 44,674

Capital spending $ 30,895 $ 1,065 $ — $ — $ — $ 31,960

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

1 unchanged sentence

Affiliate (1)

$ 52,553 $ 52,882 $ 34,190 $ — $ — $ 139,625

Third party 43,330 66,388 2,732 — — 112,450

7 unchanged sentences

Capital spending (2)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30, 2022

$ 14,723 $ ( 84 ) $ 526 $ — $ — $ 15,165

Three Months Ended March 31, 2023

(In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated

1 unchanged sentence

Affiliate (1)

$ 52,761 $ 33,751 $ 38,487 $ — $ — $ 124,999

Third party 39,671 78,558 297 — — 118,526

7 unchanged sentences

Capital spending (2)

$ 32,789 $ 3,116 $ 196 $ — $ — $ 36,101

(1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible.

(2) Capital spending includes additions on an accrual basis.

Commitments and Contingencies

5 unchanged sentences

Numerous permits or other authorizations are required under these laws and regulations for the operation of our terminals, pipelines, saltwells, trucks and related operations, and may be subject to revocation, modification and renewal.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

These laws and permits raise potential exposure to future claims and lawsuits involving environmental and safety matters, which could include soil, surface water and groundwater contamination, air pollution, personal injury and property damage allegedly caused by substances which we may have handled, used, released or disposed of, transported, or that relate to pre-existing conditions for which we may have assumed responsibility.

5 unchanged sentences

Distribution Declaration

On October 25, 2023, our general partner's board of directors declared a quarterly cash distribution of $ 1.045 per unit, payable on November 13, 2023, to unitholders of record on November 6, 2023.

On April 25, 2024, our general partner's board of directors declared a quarterly cash distribution of $ 1.070 per unit, payable on May 15, 2024, to unitholders of record on May 8, 2024 .

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements