What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-07 · 224 added, 271 removed, 345 unchanged (59% of the section changed)

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and any of its subsidiaries, other than the Partnership and its subsidiaries and its general partner.

On August 2, 2024, the Partnership entered into a Purchase and Sale Agreement with H2O Midstream Holdings, LLC (the “Seller") to purchase 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “H2O Midstream Acquisition”), related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas (the “Purchase Agreement”).

See Note 2 to our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q.

The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (ir.deleklogistics.com), the news section of its website (www.deleklogistics.com/news), and/or social media, including its X (formerly known as Twitter) account (@DelekLogistics).

On January 2, 2025, we acquired 100% of the limited liability company interests in Gravity Water Intermediate Holdings LLC ("Gravity") from Gravity Water Holdings LLC related to water disposal and recycling operations in the Permian Basin and the Bakken (the “Gravity Acquisition”).

See Note 2 to our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

The Partnership announces material information to the public about the Partnership, its products and services and other matters through a variety of means, including filings with the Securities and Exchange Commission, press releases, public conference calls, the Partnership's website (www.deleklogistics.com), the investor relations section of the website (www.deleklogistics.com/overview), the news section of its website (www.deleklogistics.com/news-releases), and/or social media, including its X (formerly known as Twitter) account (@DelekLogistics).

The Partnership encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information.

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These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities.

Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, including the H2O Midstream acquisition, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the actions of members of the Organization of Petroleum Exporting Countries ("OPEC") and other leading oil producing countries (together with OPEC, "OPEC+") with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, the benefits and synergies to be obtained from our completed and any future acquisitions, including the H2O Midstream and Gravity acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Words such as “may,” “will,” “should,” “could,” “would,” "forecasts", “predicts,” "strategy", “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “appears,” “projects” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved.

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• changes in insurance markets impacting costs and the level and types of coverage available;

• the timing and extent of changes in commodity prices and demand for refined products and the impact of the COVID-19 Pandemic on such demand;

• the timing and extent of changes in commodity prices and demand for refined products, and the impact of events such as the conflicts in Ukraine and the Middle East, and the global response to such conflicts, and any future public health crisis on such demand;

• the wholesale marketing margins we are able to obtain and the number of barrels of product we are able to purchase and sell in our West Texas wholesale business;

Management's Discussion and Analysis of Financial Condition and Results of Operations

• the shift from hydrocarbon energy sources to alternative energy sources;

• the suspension, reduction or termination of Delek Holdings' or its assignees' or third-party's obligations under our commercial agreements including the duration, fees or terms thereof;

• the ability to attract and retain key personnel;

• the results of our investments in joint ventures;

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• changes in general economic conditions, including uncertainty regarding the timing, pace and extent of economic recovery in the United States due to governmental fiscal policy or a public health crisis;

• the effects of existing and future laws and governmental regulations, including, but not limited to, the rules and regulations promulgated by the Federal Energy Regulatory Commission ("FERC") and state commissions and those relating to environmental protection, pipeline integrity and safety as well as current and future restrictions on commercial and economic activities in response to a public heal;

• the timely receipt of required government approvals and permits;

• significant operational, investment or other changes required by existing or future environmental statutes and regulations, including international agreements and national or regional societal, legislation;

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• inability to complete growth projects on time and on budget;

• our ability to successfully complete acquisitions and integrate acquired businesses, and to achieve the anticipated benefits therefrom, including the H2O Midstream acquisition;

• our ability to successfully complete acquisitions and integrate acquired businesses, and to achieve the anticipated benefits therefrom;

• disruptions due to acts of God, natural disasters, casualty losses, severe weather patterns, such as freezing conditions, cyber or other attacks on our electronic systems, and other matters beyond our control which might cause damage to our pipelines, terminal facilities and other assets and could impact our operating results through increased costs and/or loss of revenue;

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We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary:

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Business and Economic Environment Overview

During the nine months ended September 30, 2024, domestic markets have experienced an elevated hydrocarbon pricing environment that has resulted in a strong demand for hydrocarbons and presented an opportunity for the Partnership to leverage its extensive network of logistics assets, resulting in increased throughputs and higher utilization as compared to the prior year.

Additionally, the H2O Acquisition as well as our Delaware Gathering operations further diversify our logistics customer base to include significantly more third-party customers, and it allows us to provide comprehensive logistics services in the Delaware and Midland Basins, while also serving as a funnel into our existing midstream Permian activities.

As producers continue to ramp up production within the Permian Basin, the Partnership is well positioned to continue to add value through our gathering and processing services as a result of our Delaware Gathering operations which complement our existing Midland Gathering System assets.

During the three months ended March 31, 2025, we made significant strides in our commitment to being a full suite crude, gas and water midstream services provider in the Permian Basin, in addition to diversifying our customer base to include more third-party customers.

In January 2025, the Partnership closed the Gravity Acquisition which includes integrated full-cycle water systems in the Midland Basin, in addition to water gathering, and transportation assets in the Bakken, and along with our H2O Midstream Acquisition, provides a strong opportunity for integrated crude and water services to its customers.

Subsequent to March 31, 2025, we entered into a series of agreements with Delek Holdings, which among other things, will allow us to assume all of Delek Holdings’ rights and obligations to purchase crude oil under certain contracts associated with our existing Midland Gathering System.

These transactions along with the acquisition of H2O and Gravity, significantly enhance our competitive position in the Midland basin and serve to further our economic separation from our sponsor and contribute to an increase third party revenue.

As producers continue to ramp up production within the Permian Basin, the Partnership is well positioned to continue to add value through our gathering and processing services as we have expanded our dedicated crude acreage in our Midland Gathering system.

Additionally, in the Delaware Basin, we are expanding our natural gas processing capabilities by constructing a new natural gas processing plant and adding AGI and sour gas processing capabilities.

We are currently in the commissioning phase of the gas plant expansion and anticipate reaching full operational capacity in the latter half of 2025.

Our positioning allows our customers the ability to control quality and adds optionality to place barrels in a variety of markets.

Through our joint venture projects, we have increased our supply network to take advantage of growth opportunities in expanding markets and added additional flexibility which has delivered realized value through the Partnership system.

Net Income for the Partnership increased $3.3 million during the nine months ended September 30, 2024, as compared to the prior year period.

As a result of these efforts, the Partnership saw a $6.4 million increase in net income during the three months ended March 31, 2025, as compared to the prior year period.

Our EBITDA (as defined in "Non GAAP Measures" section below) decreased $16.0 million in 2025 as compared to 2024.

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As such, certain throughput and storage fees that were previously recorded as revenue are now recorded as interest income under sales-type lease accounting.

Our gathering and processing segment saw a $6.2 million decrease in segment EBITDA.

Our wholesale marketing and terminalling segment saw a $2.3 million increase in segment EBITDA.

Our gathering and processing segment saw a $10.2 million increase in segment EBITDA, largely due to the H2O Midstream and Gravity acquisitions.

Our wholesale marketing and terminalling segment saw a $12.0 million decrease in segment EBITDA.

Our storage and transportation segment saw a $13.7 million decrease in segment EBITDA.

Segment EBITDA for our investments in pipeline joint ventures increased by $9.1 million with the acquisition of the W2W Investment from Delek Holdings.

Segment EBITDA for our investments in pipeline joint ventures increased by $1.7 million with the acquisition of the investment in Wink to Webster Holdings, LLC (the "W2W Investment") from Delek Holdings.

See the “Results of Operations” section below for further discussion.

Looking forward, concerns about inflation and a possible economic downturn as well as initiatives to reduce carbon footprints through energy transition to renewables have softened the forward demand expectations for hydrocarbons and natural gas.

The near term economic outlook still has some uncertainty with the introduction of widespread tariffs by the U.S., geopolitical instability and commodity market volatility.

The uncertainty surrounding trade negotiations and the potential for further expansion of tariffs have contributed to increased market and commodity volatility and potential economic downturns.

That said, we are well positioned to manage through an economic downturn because of built-in recessionary protections which include minimum volume commitments on throughput and dedicated acreage agreements.

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Therefore, we expect that liquid transportation fuels will continue to be in high demand, and we expect to continue to leverage the strength of our cash flows and balance sheet in order to continue maximizing unitholder returns and the long-term prospects for return on investment.

Further, in order to position ourselves as a premier, full-service midstream provider in the Permian Basin, the Partnership has implemented several strategic initiatives, as discussed in detail below in 'Other 2024 Developments'.

See further discussion below in 'Other 2025 Developments' detailing the strategic initiatives the Partnership has implemented in order to position ourselves as a premier, full-service midstream provider in the Permian Basin.

These actions not only enhance our standing in the market but also move to align us as an independent, largely third-party cash flow company with a robust growth profile.

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Other 2025 Developments

H2O Midstream Acquisition

On September 11, 2024, the Partnership closed the H2O Midstream Acquisition, in which we acquired water disposal and recycling operations, in the Midland Basin in Texas (the "Midland Water Gathering System") for total consideration of $229.5 million, subject to customary adjustments under the Purchase Agreement for net working capital and indebtedness.

The purchase price is comprised of approximately $159.5 million in cash and $70.0 million of preferred equity.

Wink to Webster Pipeline Investment Acquisition

On August 5, 2024, the Partnership acquired Permian Pipeline Holdings, LLC, which holds 50% equity interests in Wink to Webster Holdings, LLC ("W2W Holdings"), (the "W2W Investment") from a wholly owned subsidiary of Delek Holdings.

W2W Holdings includes a 15.6% indirect interest in the Wink to Webster Pipeline, LLC joint venture ("Wink to Webster"), and related joint venture indebtedness.

Wink to Webster owns and operates a long-haul crude oil pipeline system with origin points at Wink and Midland in the Permian Basin and delivery points at multiple Houston area locations.

Total consideration was comprised of $83.9 million in cash (including $2.7 million post-closing adjustment), forgiveness of a $60.0 million receivable from Delek Holdings and 2,300,000 of common units representing limited partnership interest in us.

Commercial Agreements with Delek Holdings

On August 5, 2024, the Partnership amended and extended expired, or soon to be expired, commercial agreements with subsidiaries of Delek Holdings under which we provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to Delek Holdings.

These agreements have an initial term of five to seven years, with the ability to extend for an additional five years at Delek Holdings' option.

In addition, certain of these contracts have rate adjustments to be phased in over 2025 and 2026.

The amendments required the embedded leases within these agreements to be reassessed under Accounting Standards Codification 842, Leases .

As a result of these lease assessments, certain leases were reclassified from operating leases to sales-type leases.

In addition, the Partnership entered into an assignment agreement with Delek Holdings.

As a result of these agreements with Delek Holdings, we redeemed 2,500,000 common units representing limited partnership interest in us held by Delek Holdings to assign the Big Spring Refinery Marketing Agreement to Delek Holdings.

We also entered into an amended and restated Omnibus Agreement with Delek Holdings that provides Delek Holdings an option to purchase certain critical assets from us at market value during the period beginning upon any change in control or sale of substantially all assets involving us and extending (i) in the case of a transaction involving a third party, for six months following closing, and (ii) for any other transaction for four years following closing.

Natural Gas Plant

In the second quarter of 2024, the Partnership made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin.

The plant is expected to have a capacity of approximately 110 MMcf/d (as defined below) and aims to meet the rising demand for natural gas in the region.

We have engaged specialists to oversee the process, including permits, equipment procurement, and construction.

Financial projections estimate an EBITDA of approximately $40 million, considering increased production, cost savings, and market conditions.

The expansion also aligns with our commitment to sustainability, integrating advanced technologies to minimize emissions and optimize energy efficiency.

This strategic move positions us as a key player in the energy sector, contributing to regional economic growth and sustainability.

This expansion project will also increase the Partnership's third party revenue.

Contractual Rate Adjustments to Keep Pace with Inflation

On July 1, 2024, the tariffs on certain of our FERC regulated pipelines and the throughput fees and storage fees under certain of our agreements with Delek Holdings and third parties that are subject to adjustments using FERC indexing increased by approximately 1.3%, which was the amount of the change in the FERC oil pipeline index.

The tariff on FERC regulated system acquired from Delaware Gathering was adjusted as of January 1, 2024, but adjustments under agreements already in place will be capped at 3.0%.

Under certain of our agreements with Delek Holdings and third parties, the fees that are subject to adjustments using the consumer price index increased 3.3% and the fees that are subject to adjustments using the producer price index increased approximately 0.8%.

These adjustments allow us to maintain compliance with FERC regulations as well as to ensure that our results are reflective of current market conditions.

DKL Revolving Credit Facility

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 DKL 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.

On March 13, 2024, the Partnership sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029 (the “2029 Notes”), at par.

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

On April 17, 2024, the Partnership sold $200.0 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 101.25% and on August 16, 2024, the Partnership sold $200.0 million in aggregate principal amount of additional 8.625% senior notes due 2029, at 103.25% (collectively, the "Additional 2029 Notes").

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.

Equity Offerings

On October 10, 2024, we completed a public offering of its common units in which it sold 4,423,075 common units (including an overallotment option of 576,922 common units) to the underwriters of the offering at a price to the public of $39.00 per unit.

The net proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $165.3 million and were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $6.6 million.

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 $132.2 million and were used to redeem the Preferred Units and repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $5.5 million.

Unit Repurchase

On February 24, 2025, the Partnership and Delek Holdings entered into a Common Unit Purchase Agreement (the “Common Unit Purchase Agreement”) whereby the Partnership may repurchase common units from time to time from Delek Holdings in one or more transactions for an aggregate purchase price of up to $150.0 million through December 31, 2026 (each such repurchase, a “Repurchase”).

During the three months ended March 31, 2025, 243,075 common units were repurchased from Delek Holdings and cancelled at the time of the transaction for a

Management's Discussion and Analysis of Financial Condition and Results of Operations

total of $10.0 million.

No common units were repurchased for the three months ended March 31, 2024.

As of March 31, 2025, there was $140.0 million of authorization remaining under the Common Unit Repurchase Agreement.

Gravity Acquisition

On January 2, 2025, we acquired Gravity and related to water disposal and recycling operations in the Permian Basin and the Bakken for total consideration of $300.8 million.

The purchase price was comprised of $209.3 million in cash and 2,175,209 of common units.

This transaction further enhances our position as full service (crude, natural gas and water) provider in the Permian basin.

The acquisition is synergistic to our recent acquisition of H2O Midstream and supplements our integrated crude and produced water gathering and disposal offering in the Midland Basin.

Delek Permian Gathering Dropdown

On May 1, 2025, Delek Holdings transferred the Delek Permian Gathering purchasing and blending business to the Partnership (the "DPG Dropdown”).

In connection with the DPG Dropdown, the Partnership will assume all of Delek Holdings’ rights and obligations to purchase crude oil under certain contracts associated with the Partnership’s existing Midland Gathering System.

Total consideration included the execution of the Termination Agreement (as defined below), the execution of the Throughput Agreement (as defined below), the execution of the El Dorado Purchase Agreement (as defined below) and cancellation of $58.8 million in existing receivables owed by Delek Holdings.

Commercial Agreements

On May 1, 2025, the Partnership entered into an agreement to terminate, in its entirety, the East Texas Marketing Agreement effective as of January 1, 2026 ("Termination Agreement").

On May 1, 2025, in connection with the DPG Dropdown, the Partnership amended and restated a throughput agreement with Delek Holdings for the El Dorado rail facility (the “Throughput Agreement”), which includes a minimum volume commitment for refined products until the termination of the Throughput Agreement, which will occur at the closing of the El Dorado Purchase (as defined below).

Additionally, on May 1, 2025, in connection with the DPG Dropdown, the Partnership and Delek Holdings, entered into an asset purchase agreement (the “El Dorado Purchase Agreement”), whereby Delek Holdings will purchase the related El Dorado rail facility assets from the Partnership for cash consideration of $25.0 million (the “El Dorado Purchase”).

The El Dorado Purchase is currently set to close January 1, 2026, subject to certain closing conditions as set forth in the El Dorado Purchase Agreement.

Omnibus Agreement

On May 1, 2025, we entered into an amended and restated Omnibus Agreement with Delek Holdings that provides for an increase in the Administrative Fee (as defined therein), which will be phased in over the two years beginning July 1 2025 and a binding obligation for both parties to enter into transition services agreements in the event of a change in control.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Segment Overview

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Management measures the operating performance of each reportable segment based on the segment EBITDA, except for the investments in pipeline joint ventures segment, which is measured based on net income.

Segment reporting is discussed in more detail in Note 10 to our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q.

Segment reporting is discussed in more detail in Note 9 to our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Gathering and Processing

The operational assets in our gathering and processing segment consist of Midland Gathering Assets, Midland Water Gathering Assets and Delaware Gathering Assets.

The operational assets in our gathering and processing segment consist of our pipeline assets, Midland Gathering Assets, Midland Water Gathering Assets and Delaware Gathering Assets.

The Midland Gathering Assets support our crude oil gathering activities which primarily serves Delek Holdings refining needs throughout the Permian Basin.

The Midland Water Gathering Assets support our water disposal and recycling operations, in the Midland Basin in Texas.

The Delaware Gathering Assets support our crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico, and serving primarily third-party producers and customers.

Finally, our gathering and processing assets are integrated with our pipeline assets, which we use to transport gathered crude oil as well as provide other crude oil, intermediate and refined products transportation in support of Delek Holdings' refining operations in Tyler, Texas, El Dorado, Arkansas and Big Spring, Texas, as well as to certain third parties.

The Midland Water Gathering Assets support our water disposal and recycling operations primarily in the Midland Basin in Texas.

Finally, our gathering and processing assets are integrated with our pipeline assets, which we use to transport gathered crude oil as well as provide other crude oil, intermediate and refined products transportation mainly in support of Delek Holdings' refining operations in Tyler, Texas, El Dorado, Arkansas and Big Spring, Texas, as well as to certain third parties.

In providing these services, we do not take ownership of the refined products or crude oil that we transport.

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Investments in Pipeline Joint Ventures

The Partnership owns a portion of three joint ventures (accounted for as equity method investments) that have constructed separate crude oil pipeline systems and related ancillary assets primarily in the Permian Basin and Gulf Coast regions and with strategic connections to Cushing, Midland and other key exchange points, which provide crude oil and refined product pipeline transportation to third parties and subsidiaries of Delek Holdings.

The Partnership owns a portion of four joint ventures (accounted for as equity method investments) that have constructed separate crude oil pipeline systems and related ancillary assets primarily in the Permian Basin and Gulf Coast regions and with strategic connections to Cushing, Midland and connections from Wink, Texas to Webster, Texas and other key exchange points, which provide crude oil and refined product pipeline transportation to third parties and subsidiaries of Delek Holdings.

Corporate and Other

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When applicable, it may also contain operating segments that are not reportable and do not meet the criteria for aggregation with any of our existing reportable segments.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Strategic Overview

Long-Term Strategic Objectives

The Partnership’s Long-Term Strategic Objectives have been focused on maintaining stable cash flows and to grow the quarterly distributions paid to our unitholders over time.

To that end, we have been focused on growing our asset base within our geographic area, through acquisitions, project development, joint ventures, enhancing our existing systems and lowering our carbon footprint, as we continue to evaluate ways to provide Delek Holdings with logistics services and look for ways to reduce our reliance on Delek Holdings as our primary customer.

The Partnership’s Long-Term Strategic Objectives have been focused on providing a competitive yield and growing our distribution while maintaining healthy coverage and leverage ratios.

To that end, we are focused on growing our asset base through a slew of accretive growth opportunities we are seeing in our areas of operation.

We are supplementing our organic growth opportunities by accretive bolt-on acquisitions which enhance our full suite services offering to our customers.

A secondary benefit of growing our contribution of third-party cash flows is to continue to increase our economic separation from our sponsor Delek Holdings and to progress deconsolidation.

2025 Strategic Focus Areas

We continue to believe that our strategic focus areas are the right ones.

As such, we continue to refine our processes for evaluating risks and returns while maintaining a keen eye on our overarching Long-Term Strategic Objectives and our desire to create long-term operational sustainability.

To that end, our 2024 Strategic Focus Areas are as follows:

• Generate Stable Cash Flow.

Continue to pursue opportunities to provide logistics, marketing and other services to Delek Holdings and third parties pursuant to long-term, fee-based contracts.

In new service contracts, endeavor to include minimum volume throughput or other commitments, similar to those included in our current commercial agreements with Delek Holdings.

• Focus on Growing Our Business.

Continue to evaluate and pursue opportunities to grow our business through both strategic acquisitions and expansion and construction projects, both internally funded or in combination with potential external partners and through investments in joint ventures.

Additionally, where possible, leverage our strong relationship with Delek Holdings to enhance our opportunities to grow our business.

In service to these overarching Long-Term Strategic Objectives, as we begin 2025, we focus on the following Strategic Focus Areas :

Achieve Strong Cash Flow Growth

Pursue Attractive Expansion Opportunities

Engage in Mutually Beneficial Transactions with Delek Holdings

Optimize Our Existing Assets and Expand Our Customer Base

Expand our ESG Consciousness and Lower our Carbon Footprint

• Achieve Strong Cash Flow Growth.

2025 is likely to be a transformational year for Delek Logistics as it completes the expansion of the Libby gas processing plant and integrates two free cash flow accretive acquisitions in H2O Midstream and Gravity.

The plant expansion and combined crude and water offerings in the Midland Basin are going to increase the Partnership's overall cash flow and improve our distribution coverage ratio.

• Pursue Attractive Expansion Opportunities.

Continue to evaluate and pursue opportunities to grow our business through several organic growth opportunities and bolt-on acquisitions

◦ Organic growth opportunities.

The partnership is in the middle of pursuing several attractive organic growth opportunities enabled by its advantageous position in the prolific Permian Basin.

The gas plant expansion and addition of AGI and sour gas processing capabilities is enabling several additional growth options for the Partnership in the Delaware Basin.

In the Midland Basin combined crude and water offering is appealing for our customers and bringing additional growth opportunities to our system.

◦ Pursue Acquisitions.

Pursue strategic acquisitions that both complement our existing assets and provide attractive returns for our unitholders, with a focus on expanding our third-party business.

Leverage our current asset base, and our knowledge of the regional markets in which we operate, to target and complete attractive third-party acquisitions, which will enhance our third-party revenues and margin, further diversifying our customer and product mix.

◦ Investments in Joint Ventures.

Continue to focus on leveraging and, when appropriate, expanding our investments in joint ventures, which have contributed to our initiative to grow our midstream business while increasing our crude oil sourcing flexibility.

Delek logistics will also continue to look for attractive bolt-on acquisitions which are accretive to its free cash flow, EBITDA and leverage profiles.

• Engage in Mutually Beneficial Transactions with Delek Holdings.

Delek Holdings is required, under certain circumstances, to offer us the opportunity to purchase additional logistics assets that Delek Holdings may acquire or construct in the future.

Further, we will continue to evaluate additional growth opportunities through subsequent dropdowns of logistics assets acquired or developed by Delek Holdings, while factoring in associated impact on our capital structure and critically evaluating anticipated return on investment.

As certain of our commercial agreements with Delek Holdings have expired or are set to expire soon, we are currently engaged in negotiations to renew these contracts and ensure continued value for both ourselves and our sponsor.

• Pursue Attractive Expansion and Construction Opportunities.

Continue to evaluate, and when appropriate in the context of our return on investment and risk assessment criteria, pursue organic growth opportunities that complement our existing businesses or that provide attractive returns within or outside our current geographic footprint.

Continue to evaluate potential opportunities to make capital investments that will be used to expand our existing asset base through the expansion and construction of new logistics assets to support growth of any of our customers', including Delek Holdings', businesses and from increased third-party activity.

These construction projects may be developed either through joint venture relationships or by us acting independently, depending on size and scale.

A key tenet of the Partnership's strategy is to continue to increase its economic separation from Delek Holdings and increase the contribution of third-party cash flows in its overall profile.

We will continue to evaluate our commercial agreements with Delek Holdings to engage in mutually beneficial negotiations to create incremental value for both ourselves and our sponsor.

• Optimize Our Existing Assets and Expand Our Customer Base.

Continue seeking to enhance the profitability of our existing assets by adding incremental throughput volumes, improving operating efficiencies and increasing system-wide utilization.

Additionally, continue to seek opportunities to further diversify our customer base by increasing third-party throughput volumes running through certain of our existing systems and expanding our existing asset portfolio to service more third-party customers.

We will continue to enhance the profitability of our existing assets by adding incremental throughput volumes, improving operating efficiencies and increasing system-wide utilization.

Additionally, we are seeking opportunities to further diversify our customer base by increasing third-party throughput volumes utilizing certain of our existing systems and expanding our existing asset portfolio to service more third-party customers.

• Expand our ESG Consciousness and Lower Our Carbon Footprint.

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We expect to achieve this objective through ESG-Conscious Investments with Clear Value Propositions and Sustainable Returns.

We continue to be focused on growth opportunities in the Permian Basin given our advantageous location in the Midland and the Delaware Basins.

We believe that opportunities exist in crude, natural gas and water which will continue to enhance our gathering and processing segment.

The Partnership prioritizes safe and reliable operation of its assets to maintain financial stability and growth.

We have successfully avoided lost time injuries for four years, demonstrating our strong safety protocols and adherence to regulations.

This commitment protects employees, assets, and operations, minimizing financial losses and maintaining stakeholder trust.

Additionally, we have prioritized reducing our leverage ratio, providing us with more financial flexibility to pursue opportunities and expand operations.

By reducing our leverage and maintaining a strong financial position, we are better equipped to navigate challenges that may arise.

This financial stability also allows us to seize emerging opportunities that align with our strategic goals, ensuring that we can continue to deliver value to our unitholders.

Management's Discussion and Analysis of Financial Condition and Results of Operations

2025 Strategic Scorecard

Description of Strategic Success Achieve Strong Cash Flow Growth Pursue Attractive Expansion Opportunities Engage in Mutually Beneficial Transactions with Delek Holdings Optimize Our Existing Assets and Expand Our Customer Base Expand our ESG Consciousness and Lower our Carbon Footprint

Acquisition of Gravity ü ü ü

Repurchase of common units from Delek Holdings ü ü

Started commissioning phase for the natural gas processing plant expansion

Executed agreements with Delek Holdings to further our economic separation and increase third-party revenue ü ü

Market Trends

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Additionally, the demand for hydrocarbon-based refined products and related crack spreads significantly impact production decisions of our refining customers and likewise throughputs on our pipelines and other logistics assets.

Finally, fluctuations in demand and commodity prices for refined products,

as well as the value attributable to RINs, directly impacts our wholesale marketing operations, where we are subject to short-term commodity price fluctuations at the rack.

Finally, fluctuations in demand and commodity prices for refined products, as well as the value attributable to RINs, directly impacts our wholesale marketing operations, where we are subject to short-term commodity price fluctuations at the rack.

Most of the logistics services we provide (including transportation, gathering and processing services) are subject to long-term fee-based contracts with minimum volume commitments or long-term dedicated acreage agreements which mitigate most of our short-term financial risk to price and demand volatility.

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The charts on the following page provide historical commodity pricing statistics for crude oil, refined product and natural gas.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Non-GAAP Measures

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Reconciliation of net income to EBITDA (in thousands)

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

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 39,034 $ 32,648

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Reconciliation of net cash from operating activities to distributable cash flow (in thousands)

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

2024 2023 2024 2023

Three Months Ended March 31,

Net cash provided by operating activities $ 31,550 $ 43,858

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(645) (1,279)

Reimbursement from (refund to) Delek Holdings for capital expenditures (2)

— (69) 282 942

Reimbursement from Delek Holdings for capital expenditures (2)

Sales-type lease receipts, net of income recognized 5,159 —

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Deferred income taxes (185) (101)

Gain on disposal of assets 97 491 6,727 804

Gain (loss) on disposal of assets 4,286 (567)

Distributable cash flow $ 71,705 $ 67,991

Management's Discussion and Analysis of Financial Condition and Results of Operations

(1) Regulatory and sustaining capital expenditures represent cash expenditures (including for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity.

Examples include expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.

(2) Reimbursement from Delek Holdings for capital expenditures represents amounts for certain capital expenditures reimbursable to us from Delek Holdings pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q).

Management's Discussion and Analysis of Financial Condition and Results of Operations

Summary of Financial and Other Information

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Summary Statement of Operations Data (1)

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

2024 2023 2024 2023

Three Months Ended March 31,

Net revenues:

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Depreciation and amortization 27,716 26,495

Other operating income, net (117) (491) (1,294) (804)

Other operating (income) expense, net (4,286) 567

Operating income $ 47,599 $ 64,542

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Income from equity method investments (10,150) (8,490)

Other expense (income), net 34 (3) (177) (24)

Total non-operating (income) expenses, net (2,016) 27,602 56,898 81,660

Other income, net (21) (171)

Total non-operating expenses, net 8,383 31,568

Income before income tax expense 39,216 32,974

Income tax expense 182 326

Net income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088

Comprehensive income attributable to partners $ 33,674 $ 34,825 $ 107,380 $ 104,088

Net income 39,034 32,648

Comprehensive income 39,034 32,648

$ 85,486 $ 101,501

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Management measures the operating performance of each of its reportable segments based on the segment EBITDA.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Consolidated Results of Operations — Comparison of the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023

Net revenues decreased by $61.8 million, or 22.4%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by the following:

• decreased revenue of $36.2 million in our West Texas marketing operations primarily driven by decreases in volumes sold, a decrease in average sales prices per gallon and decrease in RINs revenue:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.42 and $0.71 per gallon, respectively;

◦ RINs revenue decreased from $3.5 million in the third quarter of 2023 to $1.3 million in the third quarter of 2024, due to decrease in RINs prices;

• decreased revenue of $13.3 million and $8.3 million in our gathering and processing and storage and transportation segments, respectively due to recording certain throughput and storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Net revenues decreased by $35.5 million, or 4.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Consolidated Results of Operations — Comparison of the three months ended March 31, 2025 compared to the three months ended March 31, 2024

Net revenues decreased by $2.1 million, or 0.9%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The decrease was primarily driven by the following:

• decreased revenue of $28.7 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon and decrease in RINs revenue, partially offset by increases in volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.33 and $0.36 per gallon, respectively;

◦ RINs revenue decreased from $9.1 million in the nine months ended September 30, 2023 to $3.7 million in the nine months ended September 30, 2024, due to decrease in RINs prices;

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively.

• decreased revenue of $10.4 million and $8.6 million in our gathering and processing and storage and transportation segments, respectively due to recording certain throughput and storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period;

• partially offset by increase in terminalling and marketing revenue primarily due to increased volumes and rate increases.

• decrease due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period;

• decrease of $6.0 million due to the assignment of the Big Spring Refinery marketing agreement to Delek Holdings in the third quarter of 2024;

• decreased revenue of $2.7 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon, partially offset by an increase in volumes sold;

• partially offset by incremental revenue associated with the H2O Midstream and Gravity Acquisitions of $16.5 million and $22.9 million, respectively.

Cost of Materials and Other

Cost of materials and other decreased by $33.1 million, or 22.0%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by the following:

• decreased costs of materials and other of $29.4 million in our West Texas marketing operations primarily driven by decreases in the volumes and average cost per gallon of gasoline and diesel sold:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.23 per gallon and $0.73 per gallon, respectively.

Cost of materials and other decreased by $25.6 million, or 6.3%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by

• decreased costs of materials and other of $13.2 million in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by increases in the average volumes of gasoline and diesel sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.20 per gallon and $0.31 per gallon, respectively;

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively;

• decrease of $8.0 million in our gathering and processing segment driven primarily by lower natural gas costs.

Cost of materials and other increased by $5.4 million, or 4.3%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• increased costs in our gathering and processing segment of $6.5 million primarily associated with incremental costs associated with the H2O Midstream and Gravity Acquisitions and increased Midland Gathering volumes;

• partially offset by decreased costs of $2.3 million in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by an increase in volumes sold.

Operating Expenses

Operating expenses decreased by $5.1 million, or 15.4%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by a decrease in outside services.

Operating expenses increased by $2.8 million, or 3.2%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by an increase in contract services.

Operating expenses increased by $9.1 million, or 28.4%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• incremental expenses associated with the H2O Midstream and Gravity Acquisitions of $5.4 million and $6.8 million, respectively;

• partially offset by a decrease in outside services.

General and Administrative Expenses

General and administrative expenses increased by $10.2 million, or 183.9%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by the following:

• transaction costs associated with the H2O Acquisition, W2W Investment acquisition, and amendments of certain agreements with Delek Holdings of $8.7 million;

• increase in insurance expense primarily related to H2O.

General and administrative expenses increased by $7.0 million, or 35.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• transaction costs associated with the H2O Acquisition, W2W Investment acquisition, and amendments of certain agreements with Delek Holdings of $8.7 million;

• increase in insurance expense primarily due to H2O Acquisition;

• partially offset by decreases in lease expense and contract services.

General and administrative expenses increased by $4.0 million, or 82.3%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by transaction costs associated with the Gravity Acquisition.

Depreciation and Amortization

Depreciation and amortization decreased by $3.4 million, or 13.8%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to the derecognition of fixed assets in connection with the recognition of sales-type leases in the third quarter of 2024.

Depreciation and amortization increased by $2.5 million, or 3.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• the derecognition of fixed assets in connection with the recognition of sales-type leases in the third quarter of 2024;

• depreciation associated with new projects in-serviced during the period.

Depreciation and amortization increased by $1.2 million, or 4.6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the H2O Midstream and Gravity Acquisitions.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Other operating income, net

Other operating income, net decreased by $0.4 million, or 76.2%, in the third quarter of 2024 compared to the third quarter of 2023.

Other operating income, net increased by $0.5 million, or 60.9%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• increase in gain on disposal of assets of $6.0 million, predominantly due to $8.3 million in condemnation proceeds received in the second quarter of 2024;

• partially offset by $5.4 million related to settlement of payment dispute.

Other operating income, net increased by $4.9 million, or 855.9%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by $4.3 million in condemnation proceeds received in the first quarter of 2025.

Interest Income

Interest income increased by $23.5 million, or 100.0%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by income from certain of our commercial agreements with Delek Holdings that met the criteria to be accounted for as sales-type leases during the third quarter of 2024.

Interest income increased by $23.5 million, or 100.0%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by income from certain of our commercial agreements with Delek Holdings that met the criteria to be accounted for as sales-type leases during the third quarter of 2024.

Interest income increased by $22.5 million, or 100.0%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by income from certain of our commercial agreements with Delek Holdings that met the criteria to be accounted for as sales-type leases during the third quarter of 2024.

Interest Expense

Interest expense decreased by $0.1 million, or 0.3%, in the third quarter of 2024 compared to the third quarter of 2023.

Interest expense decreased by $8.0 million, or 7.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• debt extinguishment costs of $3.6 million associated with the payoff of the DKL Term Loan Facility and the 2025 Notes with proceeds from the 2029 Notes issued in March 2024;

• interest associated with the 2029 Notes issued in the first quarter of 2024;

• partially offset by a decrease in interest associated with the DKL Revolving Facility due to lower average outstanding borrowings.

Interest expense increased by $0.9 million, or 2.2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Results from Equity Method Investments

Income from equity method investments increased by $6.3 million, or 67.8%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to the W2W Investment, which was acquired on August 5, 2024, and contributed income of $6.4 million during the period.

Income from equity method investments increased by $9.1 million, or 39.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to the W2W Investment, which was acquired on August 5, 2024, and contributed income of $6.4 million during the period and increases in throughput at two of our joint ventures that were negatively impacted by the turnaround at the Tyler Refinery in prior year.

Income from equity method investments increased by $1.7 million, or 19.6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the following:

• The acquisition of the W2W Investment on August 5, 2024, which contributed income of $5.4 million during the period;

• partially offset by a $3.0 million decrease in income from our investment in Red River Pipeline Company LLC.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Operating Segments

Gathering and Processing Segment

The following tables and discussion present the results of operations and certain operating statistics of the gathering and processing segment for the three and nine months ended September 30, 2024 and 2023:

The following tables and discussion present the results of operations and certain operating statistics of the gathering and processing segment for the three months ended March 31, 2025 and 2024:

Gathering and Processing

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

2024 2023 2024 2023

Three Months Ended March 31,

Net revenues $ 118,603 $ 95,883

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Throughputs (bpd (1) )

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

2024 2023 2024 2023

Three Months Ended March 31,

El Dorado Assets:

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Delaware Gathering Assets Volumes

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

2024 2023 2024 2023

Three Months Ended March 31,

Natural Gas Gathering and Processing (Mcfd (2) )

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Midland Water Gathering System Volumes (3)

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

2024 2023 2024 2023

Three Months Ended March 31,

Water Disposal and Recycling (bpd (1) )

100,335 — 100,335 —

(1) bpd - average barrels per day.

(2) Mcfd - average thousand cubic feet per day.

(3) 2024 volumes include volumes from September 11, 2024 through September 30, 2024.

Operational comparison of the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:

Net revenues for the gathering and processing segment decreased by $13.3 million, or 14.0%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Net revenues for the gathering and processing segment decreased by $10.4 million, or 3.7%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

(3) Consists of volumes of H2O Midstream and Gravity.

Gravity volumes are from January 2, 2025 to March 31, 2025.

Operational comparison of the three months ended March 31, 2025 compared to the three months ended March 31, 2024

Net revenues for the gathering and processing segment increased by $22.7 million, or 23.7%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the following:

• an increase in revenue associated with the H2O Midstream operations of $16.5 million which began in the third quarter of 2024;

• an increase in revenue associated with the Gravity operations of $22.9 million which began on January 1, 2025;

• partially offset by a decrease due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Cost of Materials and Other

Cost of materials and other for the gathering and processing segment decreased by $0.6 million, or 3.0%, in the third quarter of 2024 compared to the third quarter of 2023.

Cost of materials and other for the gathering and processing segment decreased by $8.0 million, or 12.2%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven primarily by lower natural gas costs.

Cost of materials and other for the gathering and processing segment increased by $6.5 million, or 36.2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, driven primarily by the following:

• incremental costs associated with the H2O Midstream and Gravity Acquisitions of $0.8 million and $2.0 million, respectively;

• increased Midland Gathering volumes.

Operating Expenses

Operating expenses for the gathering and processing segment decreased by $2.4 million, or 11.4%, in the third quarter of 2024 compared to the third quarter of 2023.

Operating expenses for the gathering and processing segment increased by $2.0 million, or 3.7%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by an increase in contract services.

EBITDA decreased by $10.5 million, or 19.9%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by lower revenue related to sales-type lease accounting.

EBITDA decreased by $6.2 million, or 3.8%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily driven by lower revenue related to sales-type lease accounting, partially offset by lower natural gas costs.

Operating expenses for the gathering and processing segment increased by $10.9 million, or 55.2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• incremental costs associated with the H2O Midstream and Gravity Acquisitions of $5.4 million and $6.8 million, respectively;

• partially offset by a decrease in outside services.

EBITDA increased by $10.2 million, or 17.6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily driven by the following:

• incremental EBITDA of $10.2 million and $13.9 million associated with H2O Midstream and Gravity Acquisitions, respectively;

• partially offset by lower revenue related to sales-type lease accounting.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Wholesale Marketing and Terminalling Segment

The following tables and discussion present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three and nine months ended September 30, 2024 and 2023:

The following tables and discussion present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three months ended March 31, 2025 and 2024:

Wholesale Marketing and Terminalling

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

2024 2023 2024 2023

Three Months Ended March 31,

Net revenues $ 106,699 $ 119,270

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Operating Information

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

2024 2023 2024 2023

Three Months Ended March 31,

East Texas - Tyler Refinery sales volumes (average bpd) (1)

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(1) Excludes jet fuel and petroleum coke.

(2) Marketing agreement terminated on August 5, 2024 upon assignment to Delek Holdings.

(3) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas terminals, our El Dorado and North Little Rock, Arkansas terminals and our Memphis and Nashville, Tennessee terminals.

Operational comparison of the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:

Net revenues for the wholesale marketing and terminalling segment decreased by $40.2 million, or 27.3%, in the third quarter of 2024 compared to the third quarter of 2023, driven primarily by the following:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.42 and $0.71 per gallon, respectively;

◦ RINs revenue decreased from $3.5 million in the third quarter of 2023 to $1.3 million in the third quarter of 2024, due to decrease in RINs prices;

Operational comparison of the three months ended March 31, 2025 compared to the three months ended March 31, 2024

Net revenues for the wholesale marketing and terminalling segment decreased by $12.6 million, or 10.5%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• decrease due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period;

Net revenues for the wholesale marketing and terminalling segment decreased by $16.4 million, or 4.3%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• decrease of $6.0 million due to the assignment of the Big Spring refinery marketing agreement to Delek Holdings in the third quarter of 2024;

• decreased revenue of $2.7 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon, partially offset by an increase in volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.20 and $0.32 per gallon, respectively;

◦ RINs revenue decreased from $9.1 million in the nine months ended September 30, 2023 to $3.7 million in the nine months ended September 30, 2024, due to decrease in RINs prices;

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively.

• decrease due to recording certain throughput fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period;

• partially offset by increase in terminalling and marketing revenue primarily due to increased volumes and rate increases.

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the three and nine months ended September 30, 2024 and 2023.

◦ the average volumes of gasoline and diesel sold increased by 1.1 million and 1.7 million gallons, respectively.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations for the three months ended March 31, 2025 and 2024.

Cost of Materials and Other

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $31.9 million, or 27.5%, in the third quarter of 2024 compared to the third quarter of 2023, driven primarily by the following:

• decreased costs of materials and other of $29.4 million in our West Texas marketing operations primarily driven by decreases in volumes and average cost per gallon of gasoline and diesel sold:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.23 per gallon and $0.73 per gallon, respectively.

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $12.5 million, or 4.3% , in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

Cost of materials and other for the wholesale marketing and terminalling segment decreased by $2.3 million, or 2.4% , in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• decreased costs of materials and other of $2.3 million in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by an increase in volumes sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.16 per gallon and $0.31 per gallon, respectively;

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively.

The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the three and nine months ended September 30, 2024 and 2023.

◦ the average volumes of gasoline and diesel sold increased by 1.1 million and 1.7 million gallons, respectively.

The following chart shows a summary of the average prices per gallon of gasoline and diesel purchased in our West Texas operations for the three months ended March 31, 2025 and 2024.

Refer to the Refined Products Volume - Gallons chart above for a summary of volumes impacting our West Texas operations.

Operating Expenses

Operating expenses for the wholesale marketing and terminalling segment decreased by $1.6 million, or 31.1%, in the third quarter of 2024 compared to the third quarter of 2023, driven primarily by a decrease in outside service costs.

Operating expenses for the wholesale marketing and terminalling segment decreased by $2.9 million, or 21.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven primarily by a decrease in outside service costs.

EBITDA decreased by $7.9 million, or 28.0%, in the third quarter of 2024 compared to the third quarter of 2023, driven primarily by the following:

• a decline in wholesale margins partially due to lower RINs prices;

• lower revenue related to sales-type lease accounting.

EBITDA decreased by $2.3 million, or 3.0%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by the following:

• a decline in wholesale margins partially due to lower RINs prices;

Operating expenses for the wholesale marketing and terminalling segment were flat, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Management's Discussion and Analysis of Financial Condition and Results of Operations

EBITDA decreased by $12.0 million, or 47.6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily driven by the following:

• lower revenue related to sales-type lease accounting;

• partially offset by an increase in terminalling utilization.

• a $0.51 decline in wholesale margins.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Storage and Transportation Segment

The following tables and discussion present the results of operations and certain operating statistics of the storage and transportation segment for the three and nine months ended September 30, 2024 and 2023:

The following tables and discussion present the results of operations and certain operating statistics of the storage and transportation segment for the three months ended March 31, 2025 and 2024:

Storage and Transportation

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

2024 2023 2024 2023

Three Months Ended March 31,

Net revenues $ 24,628 $ 36,922

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Segment EBITDA $ 4,414 $ 18,127

Operation comparison of the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023

Net revenues for the storage and transportation segment decreased by $8.3 million, or 24.4%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to recording certain storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Net revenues for the storage and transportation segment decreased by $8.6 million, or 8.0%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to recording certain storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Operation comparison of the three months ended March 31, 2025 compared to the three months ended March 31, 2024

Net revenues for the storage and transportation segment decreased by $12.3 million, or 33.3%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to recording certain storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Cost of Materials and Other

Cost of materials and other for the storage and transportation segment decreased by $0.7 million, or 4.6%, in the third quarter of 2024 compared to the third quarter of 2023 primarily due to decrease in trucking activity.

Cost of materials and other for the storage and transportation segment decreased by $8.2 million, or 16.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to decrease in trucking activity.

Cost of materials and other for the storage and transportation segment increased by $1.1 million, or 8.2%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Operating Expenses

Operating expenses for the storage and transportation segment increased by $1.6 million, or 52.7%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to an increase in contract services.

Operating expenses for the storage and transportation segment increased by $1.5 million, or 11.9%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an increase in contract services.

EBITDA decreased by $10.4 million, or 58.0%, in the third quarter of 2024 compared to the third quarter of 2023, primarily due to decrease in revenue related to sales-type lease accounting and an increase in outside services.

EBITDA decreased by $3.9 million, or 8.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to decrease in revenue associated with sales-type lease accounting and lower cost associated with decrease in trucking activity.

Operating expenses for the storage and transportation segment increased by $0.1 million, or 2.8%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

EBITDA decreased by $13.7 million, or 75.6%, in the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a decrease in revenue related to sales-type lease accounting.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Investments in Pipeline Joint Ventures Segment

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The other Joint Venture owners are usually major shippers on the pipelines resulting in a majority of the revenue of the Joint Venture entities coming from MVC agreements with related entities.

Investments in pipeline joint ventures segment include the Partnership's joint ventures investments described in Note 9 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q.

Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the three and nine months ended September 30, 2024.

Investments in pipeline joint ventures segment include the Partnership's joint ventures investments described in Note 8 of our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Refer to Consolidated Results of Operations above for details and discussion of the investments in pipeline joint ventures segment for the three months ended March 31, 2025.

Liquidity and Capital Resources

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(iii) potential issuance of additional equity;

At September 30, 2024, our total liquidity amounted to $702.4 million comprised of $695.1 million in unused credit commitments under our third-party revolving credit facility (as discussed in Note 6 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q), and $7.3 million in cash and cash equivalents.

At March 31, 2025, our total liquidity amounted to $447.0 million comprised of $444.9 million in unused credit commitments under our third-party revolving credit facility (as discussed in Note 6 of our condensed consolidated financial statements in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q), and $2.1 million in cash and cash equivalents.

Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash distributions and operational capital expenditures, and we expect the same to continue in the foreseeable future.

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Cash Distributions

On October 29, 2024, the board of directors of our general partner declared a distribution of 1.100 per common unit (the "Distribution"), which equates to an estimated amount of approximately $51.5 million per quarter, or approximately $206.1 million per year, based on the number of common units outstanding as of September 30, 2024.

The Distribution will be paid on November 14, 2024 to common unitholders of record on November 8, 2024 and represents a 5.3% increase over the third quarter 2023 distribution.

On April 28, 2025, the board of directors of our general partner declared a distribution of $1.110 per common unit (the "Distribution"), which equates to an estimated amount of approximately $59.3 million per quarter, or approximately $237.2 million per year, based on the number of common units outstanding as of March 31, 2025.

The Distribution will be paid on May 15, 2025 to common unitholders of record on May 8, 2025 and represents a 3.7% increase over the first quarter 2024 distribution.

This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term.

Although our Partnership Agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The table below summarizes the quarterly distributions related to our quarterly financial results:

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September 30, 2024 $1.100 $56,613

December 31, 2024 $1.105 $59,302

March 31, 2025 $1.110 $59,311

June 30, 2024 $1.090 $51,263

September 30, 2024 (1)

$1.100 $51,513

(1) On October 29, 2024, the board of directors of our general partner declared this quarterly cash distribution, payable on November 14, 2024, to unitholders of record on November 8, 2024.

The total cash distribution was estimated based on the number of common units outstanding as of September 30, 2024.

Equity Offerings

Underwriting discounts totaled $6.6 million.

The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.2 million and were used to repay a portion of the outstanding borrowings under the DKL Revolving Facility.

Underwriting discounts totaled $5.5 million.

The following table sets forth a summary of our condensed consolidated cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine Months Ended September 30,

Unit Repurchase

On February 24, 2025, the Partnership and Delek Holdings entered into a Common Unit Purchase Agreement whereby the Partnership may repurchase common units from time to time from Delek Holdings in one or more transactions for an aggregate purchase price of up to $150.0 million through December 31, 2026 (each such repurchase, a “Repurchase”).The Partnership may fund Repurchases using cash on hand or borrowings under its existing credit facility, subject to compliance with applicable covenants.

During the three months ended March 31, 2025, 243,075 common units were repurchased from Delek Holdings and cancelled at the time of the transaction for a total of $10.0 million.

No common units were repurchased for the three months ended March 31, 2024.

As of March 31, 2025, there was $140.0 million of authorization remaining under the Common Unit Repurchase Agreement.

The following table sets forth a summary of our consolidated cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Net cash provided by operating activities $ 31,550 $ 43,858

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Net cash provided by (used in) financing activities 199,940 (28,080)

Net increase (decrease) in cash and cash equivalents $ 3,562 $ (3,788)

Net (decrease) increase in cash and cash equivalents $ (3,277) $ 5,917

Operating Activities

Net cash provided by operating activities increased by $45.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The cash receipts from customer activities decreased by $28.4 million and cash payments to suppliers and for allocations to Delek Holdings for salaries decreased by $75.7 million.

In addition, cash dividends received from equity method investments increased by $4.2 million and cash paid for debt interest increased by $5.7 million.

Net cash provided by operating activities decreased by $12.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The cash receipts from customer activities increased by $43.7 million and cash payments to suppliers and for allocations to Delek Holdings for salaries decreased by $27.7 million.

In addition, cash dividends received from equity method investments decreased by $2.2 million and cash paid for debt interest increased by $26.1 million.

Investing Activities

Net cash used in investing activities increased by $258.9 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to acquisition of W2W investment for $83.9 million, H2O Acquisition for $159.5 million, increase of $24.4 million in purchases of property, plant and equipment primarily associated with growth projects in our gathering and processing segment, a nd a $9.2 million increase in proceeds from sale of property, plant and equipment predominantly due to $8.3 million of condemnation proceeds received from eminent domain proceedings in Texas in the current period.

Net cash used in investing activities increased by $224.9 million during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to Gravity Acquisition for $181.2 million.

Additionally, purchases of property, plant and equipment and intangibles increased $44.2 million and $3.8 million, respectively, primarily associated with growth projects in our gathering and processing segment.

Partially offsetting these increases was an increase in proceeds from sale of property, plant and equipment predominantly due to $4.3 million of condemnation proceeds received from eminent domain proceedings in Texas in the current period.

Financing Activities

Net cash provided by financing activities increased by $220.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

This increase was primarily driven by increase in net proceeds from term loans of $539.0 million due to issuance of 2029 Notes net of the extinguishment of 2025 Notes and term facility, partially offset by net payments under our revolving credit facility which increased by $416.3 million due to paydown in conjunction with the issuance of the 2029 Notes.

Additionally contributing to this increase was an increase of $132.2 million due to proceeds from the equity issuance in March 2024.

Partially offsetting these increases was an increase in deferred financing costs paid of $16.5 million associated with the 2029 Note issuances, an increase in distributions paid of $13.7 million and a $6.2 million increase in payments on other financing arrangements.

Net cash provided by financing activities increased by $228.0 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

This increase was primarily driven by increase in net proceeds from our revolving credit facility which increased by $485.0 million.

Additionally contributing to this increase was a $6.2 million decrease in payments on other financing arrangements, and a decrease in deferred financing costs paid of $10.9 million associated with the 2029 Note issuances in prior year.

Partially offsetting these increases was a decrease of $132.3 million due to proceeds received from the equity issuances in October and March 2024;

a decrease in net proceeds from term loans of $118.8 million due to issuance of 2029 Notes net of the extinguishment of 2025 Notes and term facility in the prior year, an increase in distributions paid of $13.1 million and a decrease of $10.0 million due to unit repurchases from Delek Holdings in the current period.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Debt Overview

As of September 30, 2024, we had total indebtedness of $1,904.9 million.

The increase of $193.2 million in our long-term debt balance compared to the balance at December 31, 2023 resulted from the issuance of the 2029 Notes during the nine months ended September 30, 2024, which was partially offset by the payments under the DKL Credit Facility and the 2025 Notes.

As of September 30, 2024, our total indebtedness consisted of:

As of March 31, 2025, we had total indebtedness of $2,155.1 million.

The increase of $269.7 million in our long-term debt balance compared to the balance at December 31, 2024 resulted from additional borrowings under our revolving credit facility during the three months ended March 31, 2025.

As of March 31, 2025, our total indebtedness consisted of:

• An aggregate principal amount of $705.1 million under the DKL Revolving Facility, due on October 13, 2027, with an average borrowing rate of 7.19%.

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• An aggregate principal amount of $1,050.0 million, under the 2029 Notes (8.625% senior notes), due in 2029, with an effective interest rate of 8.81%.

We believe we were in compliance with the covenants in all debt facilities as of September 30, 2024.

See Note 6 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q for a complete discussion of our third-party indebtedness.

We believe we were in compliance with the covenants in all debt facilities as of March 31, 2025.

See Note 6 to our condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Agreements Governing Certain Indebtedness of Delek Holdings

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Depending on the magnitude, funding for such projects may include cash generated from operations, borrowings under existing credit facilities, or issuances of additional debt or equity securities.

The following table summarizes our actual capital expenditures, including any material capital expenditure payments made or forecasted to be made in advance of receipt of goods and materials, for the nine months ended September 30, 2024:

(in thousands) Full Year 2024 Forecast (1)

Nine Months Ended September 30, 2024 (1)

Management's Discussion and Analysis of Financial Condition and Results of Operations

(in thousands) Full Year 2025 Forecast Three Months Ended March 31, 2025

Gathering and Processing

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Sustaining 3,022 79

Growth 6,800 —

Wholesale Marketing and Terminalling Segment Total $ 16,780 $ 90

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Total Capital Spending $ 235,310 $ 71,943

(1) Excludes an estimated $90 million to $100 million and actual 2024 capital spending of $53.4 million related to the new gas processing plan.

Refer to 'Other 2024 Developments' section of Item 2.

Management's Discussion and Analysis, of this Quarterly Report on Form 10-Q for further information.

The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects.

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We have no off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q.

Quantitative and Qualitative Disclosures about Market Risk

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 2. Management’s Discussion and Analysis