Delek Logistics Partners, LP 10-Q

Item 1. Financial Statements Delek Logistics Partners, LP Condensed Consolidated Balance Sheets (Unaudited) (thousands, except unit and per unit data) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 2,107 $ 5,384 Accounts receivable 68,650 54,725 Accounts receivable from related parties 54,902 33,313 Lease receivable - affiliate 21,065 22,783 Inventory 8,659 5,427 Other current assets 1,528 24,260 Total current assets 156,911 145,892 Property, plant and equipment: Property, plant and equipment 1,653,350 1,375,391 Less: accumulated depreciation ( 331,367 ) ( 311,070 ) Property, plant and equipment, net 1,321,983 1,064,321 Equity method investments 317,466 317,152 Customer relationship intangibles, net 232,959 186,911 Other intangibles, net 130,681 94,547 Goodwill 12,203 12,203 Operating lease right-of-use assets 17,107 16,654 Net lease investment - affiliate 189,683 193,126 Other non-current assets 16,461 10,753 Total assets $ 2,395,454 $ 2,041,559 LIABILITIES AND DEFICIT Current liabilities: Accounts payable $ 59,948 $ 41,380 Interest payable 15,860 30,665 Excise and other taxes payable 9,282 6,764 Current portion of operating lease liabilities 5,534 5,340 Accrued expenses and other current liabilities 6,835 4,629 Total current liabilities 97,459 88,778 Non-current liabilities: Long-term debt, net of current portion 2,145,730 1,875,397 Operating lease liabilities, net of current portion 6,199 6,004 Asset retirement obligations 23,250 15,639 Other non-current liabilities 25,381 20,213 Total non-current liabilities 2,200,560 1,917,253 Equity: Common unitholders - public; 19,564,761 units issued and outstanding at March 31, 2025 ( 17,374,618 at December 31, 2024) 525,141 440,957 Common unitholders - Delek Holdings; 33,868,203 units issued and outstanding at March 31, 2025 ( 34,111,278 at December 31, 2024) ( 427,706 ) ( 405,429 ) Total equity 97,435 35,528 Total liabilities and equity $ 2,395,454 $ 2,041,559 See accompanying notes to the condensed consolidated financial statements 3 | Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (In thousands, except unit and per unit data) Three Months Ended March 31, 2025 2024 Net revenues Affiliate (1) $ 126,321 $ 139,625 Third party 123,609 112,450 Net revenues 249,930 252,075 Cost of sales: Cost of materials and other - affiliate (1) 89,966 92,882 Cost of materials and other - third party 39,086 30,810 Operating expenses (excluding depreciation and amortization presented below) 40,630 31,695 Depreciation and amortization 26,498 25,167 Total cost of sales 196,180 180,554 Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 355 221 General and administrative expenses 8,864 4,863 Depreciation and amortization 1,218 1,328 Other operating (income) expense, net ( 4,286 ) 567 Total operating costs and expenses 202,331 187,533 Operating income 47,599 64,542 Interest income ( 22,547 ) — Interest expense 41,101 40,229 Income from equity method investments ( 10,150 ) ( 8,490 ) 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 39,034 32,648 Comprehensive income $ 39,034 $ 32,648 Net income per unit: Basic $ 0.73 $ 0.74 Diluted $ 0.73 $ 0.73 Weighted average common units outstanding: Basic 53,604,659 44,406,356 Diluted 53,633,836 44,422,817 (1) See Note 3 for a description of our material affiliate revenue and purchases transactions. See accompanying notes to the condensed consolidated financial statements 4 | Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Partners' Equity (Unaudited) (in thousands) Common - Public Common - Delek Holdings Total Balance as of December 31, 2024 $ 440,957 $ ( 405,429 ) $ 35,528 Cash distributions (1) ( 21,609 ) ( 37,693 ) ( 59,302 ) Net income 14,224 24,810 39,034 Issuance of units 91,511 — 91,511 Unit repurchase — ( 10,000 ) ( 10,000 ) Other 58 606 664 Balance as of March 31, 2025 $ 525,141 $ ( 427,706 ) $ 97,435 Common - Public Common - Delek Holdings Total Balance as of December 31, 2023 $ 160,402 $ ( 322,271 ) $ ( 161,869 ) Cash distributions (1) ( 10,012 ) ( 36,198 ) ( 46,210 ) Net income 7,404 25,244 32,648 Issuance of units 132,327 — 132,327 Other ( 70 ) 707 637 Balance as of March 31, 2024 $ 290,051 $ ( 332,518 ) $ ( 42,467 ) (1) Cash distributions include $ 0.2 million related to distribution equivalents on vested phantom units for the three months ended March 31, 2024. There were no distribution equivalents on vested phantom units for the three months ended March 31, 2025 . See accompanying notes to the condensed consolidated financial statements 5 | Financial Statements Delek Logistics Partners, LP Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended March 31, 2025 2024 Cash flows from operating activities: Net income $ 39,034 $ 32,648 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,716 26,495 Non-cash lease expense 2,267 1,939 Amortization of marketing contract intangible — 1,803 Amortization of deferred revenue ( 830 ) ( 572 ) Amortization of deferred financing costs and debt discount 1,283 1,250 Income from equity method investments ( 10,150 ) ( 8,490 ) Dividends from equity method investments 7,338 9,509 Loss on extinguishment of debt — 3,571 Other non-cash adjustments ( 3,028 ) 1,492 Changes in assets and liabilities: Accounts receivable 2,508 ( 15,862 ) Inventories and other current assets 232 670 Accounts payable and other current liabilities ( 17,579 ) ( 2,359 ) Accounts receivable/payable to related parties ( 21,158 ) ( 8,145 ) Net investment in leases - affiliate 5,161 — Non-current assets and liabilities, net ( 1,244 ) ( 91 ) Net cash provided by operating activities 31,550 43,858 Cash flows from investing activities: Purchases of property, plant and equipment ( 55,474 ) ( 11,255 ) Proceeds from sales of property, plant and equipment 4,318 42 Purchases of intangible assets ( 4,558 ) ( 781 ) Business combination, net of cash acquired ( 181,180 ) — Distributions from equity method investments 2,127 2,133 Net cash used in investing activities ( 234,767 ) ( 9,861 ) Cash flows from financing activities: Distributions to common unitholders - public ( 21,609 ) ( 10,012 ) Distributions to common unitholders - Delek Holdings ( 37,693 ) ( 36,198 ) Proceeds from term debt — 650,000 Payments on term debt — ( 531,250 ) Proceeds from revolving facility 598,500 184,900 Payments on revolving facility ( 328,800 ) ( 400,200 ) Unit repurchase ( 10,000 ) — Proceeds from issuance of common units, net of underwriters' discount — 132,327 Payments on other financing agreements — ( 6,214 ) Deferred financing costs paid — ( 10,946 ) Other financing activities ( 458 ) ( 487 ) Net cash provided by (used in) financing activities 199,940 ( 28,080 ) Net (decrease) increase in cash and cash equivalents ( 3,277 ) 5,917 Cash and cash equivalents at the beginning of the period 5,384 3,755 Cash and cash equivalents at the end of the period $ 2,107 $ 9,672 Three Months Ended March 31, 2025 2024 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 54,623 $ 28,503 Non-cash investing activities: Common units issued in connection with Gravity Acquisition $ 91,511 $ — Increase in accrued capital expenditures $ 16,469 $ 3,910 Non-cash financing activities: Non-cash lease liability arising from obtaining right of use assets during the period $ 9,447 $ 537 See accompanying notes to the condensed consolidated financial statements 6 | Notes to the Condensed Consolidated Financial Statements (Unaudited) Delek Logistics Partners, LP Notes to the Condensed Consolidated Financial Statements (Unaudited) 1. Organization and Basis of Presentation As used in this report, the terms "Delek Logistics Partners, LP," the "Partnership," "we," "us," or "our" may refer to Delek Logistics Partners, LP, one or more of its consolidated subsidiaries or all of them taken as a whole. The Partnership is a Delaware limited partnership formed in April 2012 by Delek US Holdings, Inc. ("Delek Holdings") and its subsidiary Delek Logistics GP, LLC, our general partner (our "general partner"). 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 and other select areas in the Gulf Coast region. 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"). On January 2, 2025, we acquired 100 % of the limited liability company interests in Gravity Water Intermediate Holdings LLC from Gravity Water Holdings LLC (the "Seller") related to the Seller's water disposal and recycling operations in the Permian Basin and the Bakken (the “Gravity Acquisition”). See Note 2 for further information. 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, 2024 (our "Annual Report on Form 10-K"), filed with the U.S. Securities and Exchange Commission (the "SEC") on February 26, 2025 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, 2024 included in our Annual Report on Form 10-K. All adjustments necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been included. All intercompany accounts and transactions have been eliminated. Such intercompany transactions do not include those with Delek Holdings or our general partner, which are presented as related parties in these accompanying condensed consolidated financial statements. All adjustments are of a normal, recurring nature. 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. Accounting Pronouncements Not Yet Adopted ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"). ASU 2024-03 requires disaggregation of expenses into specific categories such as purchase of inventory, employee compensation, depreciation, and intangible asset amortization, by relevant expense caption on the statement of operations. This update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted on either a prospective or retrospective basis. The adoption will not affect our financial position or our results of operations. The adoption of ASU 2024-03 will not affect our financial position or our results of operations, but will result in additional disclosures. 2. Acquisitions Gravity Acquisition On January 2, 2025, we completed the Gravity Acquisition for a preliminary purchase price of $ 300.8 million, subject to customary adjustments for net working capital. The purchase price was comprised of $ 209.3 million in cash consisting of a cash deposit of $ 22.8 million paid in December 2024 upon execution of the purchase agreement and $ 186.5 million paid at closing on January 2, 2025 and 2,175,209 of common units. For the three months ended March 31, 2025, we incurred $ 3.1 million 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 and comprehensive income. Our consolidated financial and operating results reflect the Gravity Acquisition operations beginning January 2, 2025. Our results of operations included revenue and net income of $ 22.9 million and $ 9.9 million, respectively, for the period from January 2, 2025 through March 31, 2025 related to these operations. 7 | Notes to the Condensed Consolidated Financial Statements (Unaudited) This acquisition was accounted for using the acquisition method of accounting, whereby the purchase price is measured at acquisition date fair value of assets acquired and liabilities assumed. Determination of Purchase Price The table below presents the estimated purchase price (in thousands): Base purchase price: $ 291,561 Less: Adjusted Net Working Capital (as defined in the Gravity Acquisition Agreement) 3,814 Plus: V arious closing adjustments 5,433 Adjusted purchase price $ 300,808 Cash paid $ 209,297 Fair value of common units issued (1) 91,511 Preliminary purchase price $ 300,808 (1) The increase from the $ 85.0 million base purchase price outlined in the purchase agreement for the common unit consideration was driven by an appreciation in the common unit price. Purchase Price Allocation The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the Gravity Acquisition as of January 2, 2025 (in thousands): Assets acquired: Cash and cash equivalents $ 5,317 Accounts receivables 16,433 Inventories 1,851 Other current assets 1,681 Property, plant and equipment 208,313 Operating lease right-of-use assets 107 Customer relationship intangible (1) 50,674 Other intangibles (1) 31,921 Other non-current assets 58 Total assets acquired 316,355 Liabilities assumed: Accounts payable 2,459 Accrued expenses and other current liabilities 5,783 Current portion of operating lease liabilities 54 Asset retirement obligations 7,202 Operating lease liabilities, net of current portion 49 Total liabilities assumed 15,547 Fair value of net assets acquired $ 300,808 (1) The acquired intangible assets amount includes the following identified intangibles: • Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 50.7 million, which we estimate to be amortized over 10 to 25 years. • Rights-of-way intangibles are valued at $ 31.9 million, the majority of which have an indefinite life. 8 | Notes to the Condensed Consolidated Financial Statements (Unaudited) These fair value estimates are preliminary and therefore, the final fair value of assets acquired and liabilities assumed and the resulting effect on our financial position may change once all necessary information has become available and we finalize our valuations. To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of March 31, 2025. We will continue to evaluate these items until they are satisfactorily resolved and adjust our purchase price allocation accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805. 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. Customer relationships were valued using the income approach, with essential assumptions including projected revenues from these relationships, attrition rates, 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. For all other current assets and payables, their fair values were considered equivalent to their carrying amounts due to their short-term nature. Unaudited Pro Forma Financial Information The following table summarizes the unaudited pro forma financial information of the Partnership assuming the Gravity Acquisition had occurred on January 1, 2024. The unaudited pro forma financial information has been adjusted to give effect to certain pro forma adjustments that are directly related to this 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 associated with revolving credit facility borrowings incurred in connection with this 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 intangible and, (iv) transaction costs. The unaudited pro forma financial information excludes any expected cost savings or other synergies as a result of this acquisition. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been achieved had this 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. Three Months Ended March 31, 2025 2024 (in thousands) Net sales $ 249,930 $ 283,775 Net income attributable to partners $ 42,134 $ 38,148 H2O Midstream Acquisition On September 11, 2024, we completed an acquisition in which we acquired 100 % of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC ("H2O Midstream Acquisition") from H2O Midstream Holdings, LLC. The H2O Midstream Acquisition included water disposal and recycling operations in the Midland Basin in Texas, for total consideration of $ 229.7 million, subject to customary adjustments for net working capital. The purchase price was comprised of $ 159.7 million in cash and $ 70.0 million of preferred units (“Preferred Units”). The cash portion was financed through a combination of cash on hand and borrowings under the DKL Credit Facility (as defined in Note 6 ). For the three months ended March 31, 2025, we incurred $ 0.1 million 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 and comprehensive income. Our results of operations included revenue and net income of $ 16.5 million and $ 7.1 million, respectively, for the three months ended March 31, 2025 related to these operations. This acquisition was accounted for using the acquisition method of accounting, whereby the purchase price is measured at acquisition date fair value of assets acquired and liabilities assumed. 9 | Notes to the Condensed Consolidated Financial Statements (Unaudited) Determination of Purchase Price The table below presents the estimated purchase price (in thousands): Base purchase price: $ 230,000 Less: Adjusted Net Working Capital (as defined in the H2O Midstream Acquisition Agreement) ( 2,596 ) Plus: various closing adjustments 2,331 Adjusted purchase price $ 229,735 Cash paid $ 159,735 Fair value of Preferred Units issued 70,000 Preliminary purchase price $ 229,735 Purchase Price Allocation The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the H2O Midstream Acquisition as of September 11, 2024 (in thousands): Assets acquired: Accounts receivables $ 6,644 Inventories 2,448 Other current assets 879 Property, plant and equipment 172,374 Operating lease right-of-use assets 2,058 Customer relationship intangible (1) 26,270 Other intangibles (1) 33,268 Other non-current assets 21 Total assets acquired 243,962 Liabilities assumed: Accounts payable 1,833 Accrued expenses and other current liabilities 7,045 Current portion of operating lease liabilities 278 Asset retirement obligations 4,852 Operating lease liabilities, net of current portion 219 Total liabilities assumed 14,227 Fair value of net assets acquired $ 229,735 (1) The acquired intangible assets amount includes the following identified intangibles: • Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 26.3 million, which will be amortized over an 13.4 years useful life. • Rights-of-way intangibles are valued at $ 28.5 million, which have an indefinite life. • Favorable supply contract intangible that is subject to amortization with a preliminary fair value of $ 4.8 million which will be amortized over a 4.8 years useful life. These fair value estimates are preliminary and therefore, the final fair value of assets acquired and liabilities assumed and the resulting effect on our financial position may change once all necessary information has become available and we finalize our valuations. To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of March 31, 2025. We will continue to evaluate these items until they are satisfactorily resolved and adjust our purchase price allocation accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805. 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. Customer relationships were valued using the income approach, with essential assumptions including projected revenues from these relationships, attrition rates, operating margins, and discount rates. 10 | Notes to the Condensed Consolidated Financial Statements (Unaudited) The fair values discussed above were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements. For all other current assets and payables, their fair values were considered equivalent to their carrying amounts due to their short-term nature. By acquiring Gravity and H20 Midstream, we intend to increase third-party revenue streams, diversify our customer and product mix, and expand our footprint in the Midland and Bakken basins, aligning with our strategic growth objectives. 3. Related Party Transactions Commercial Agreements The Partnership has a number of long-term, fee-based commercial agreements with 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. Most of these agreements have an initial term ranging from five to ten years , which may be extended for various renewal terms at the option of Delek Holdings. The fees under each agreement are payable to us monthly by Delek Holdings or certain third parties to whom Delek Holdings has assigned certain of its rights and are generally subject to increase or decrease on July 1 of each year, by the amount of any change in various inflation-based indices, however, in no event will the fees be adjusted below the amount initially set forth in the applicable agreement. Under each of these agreements, we are required to maintain the capabilities of our pipelines and terminals, such that Delek Holdings may throughput and/or store, as the case may be, specified volumes of crude oil, intermediate and refined products. See our Annual Report on Form 10-K for a more complete description of our material commercial agreements and other agreements with Delek Holdings. Other Agreements with Delek Holdings In addition to the commercial agreements described above, the Partnership has entered into the following agreements with Delek Holdings: Omnibus Agreement On November 7, 2012, the Partnership entered into an omnibus agreement with Delek Holdings, our general partner, Delek Logistics Operating, LLC, Lion Oil Company, LLC and certain of the Partnership’s and Delek Holdings' other subsidiaries, which has been amended and restated from time to time in connection with acquisitions from Delek Holdings (collectively, as amended and restated, the "Omnibus Agreement"). The Omnibus Agreement governs the provision of certain operational services and reimbursement obligations, among other matters, between the Partnership and Delek Holdings, and obligates us to pay an annual fee of $ 4.4 million to Delek Holdings for its provision of centralized corporate services to the Partnership. On August 5, 2024, the Partnership 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. On May 1, 2025, the Partnership 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. Pursuant to the terms of the Omnibus Agreement, we are reimbursed by Delek Holdings for certain capital expenditures. 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 were no reimbursements by Delek Holdings during the three months ended March 31, 2025 and 2024. 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 Agreeme nt. As of March 31, 2025 and December 31, 2024, there was no receivable from related parties for these matters. These reimbursements are recorded as reductions to operating expense. There were no reimbursements for these matters in each of the three month periods ended March 31, 2025 and 2024. 11 | Notes to the Condensed Consolidated Financial Statements (Unaudited) Other Transactions The Partnership manages long-term capital projects on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of gathering systems in the Permian Basin. The majority of the gathering systems have been constructed, however, additional costs pertaining to a pipeline connection that was not acquired by the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for oversight of the project design, procurement and construction of project segments and provides other related services. Pursuant to the terms of the DPG Management Agreement, the Partnership receives a monthly operating services fee and a construction services fee, which includes the Partnership's direct costs of managing the project plus an additional percentage fee of the construction costs of each project segment. The agreement extends through December 2025. Total fees paid to the Partnership were $ 0.4 million for both the three months ended March 31, 2025 and 2024, which are recorded in affiliate revenue in our accompanying condensed consolidated statements of income and comprehensive 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. Summary of Transactions Income from affiliates consist primarily of revenues from gathering, transportation, storage, offloading, Renewable Identification Numbers, wholesale marketing and products terminalling services provided primarily to Delek Holdings under commercial agreements based on regulated tariff rates or contractually based fees and product sales, and interest income associated with those commercial agreements classified as sales-type leases. Affiliate operating expenses are primarily comprised of amounts we reimburse Delek Holdings, or our general partner, as the case may be, for the services provided to us under the Partnership Agreement. These expenses could also include reimbursement and indemnification amounts from Delek Holdings, as provided under the Omnibus Agreement. Additionally, the Partnership is required to reimburse Delek Holdings for direct or allocated costs and expenses incurred by Delek Holdings on behalf of the Partnership and for charges Delek Holdings incurred for the management and operation of our logistics assets, including an annual fee for various centralized corporate services, which are included in general and administrative expenses. 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. A summary of income, purchases and expense transactions with Delek Holdings and its affiliates are as follows (in thousands): Three Months Ended March 31, 2025 2024 Revenues $ 126,321 $ 139,625 Interest income from sales-type leases $ 22,547 $ — Purchases from Affiliates $ 89,966 $ 92,882 Operating and maintenance expenses $ 21,940 $ 18,218 General and administrative expenses $ 2,220 $ 2,999 Quarterly Cash Distributions Date of Distribution Distributions paid to Delek Holdings (in thousands) February 11, 2025 $ 37,693 May 15, 2025 (1) 37,594 Total $ 75,287 February 12, 2024 $ 36,198 May 15, 2024 36,713 Total $ 72,911 (1) On April 28, 2025, the board of directors of our general partner declared this quarterly cash distribution based on the available cash as of the date of determination. Distributions paid are estimated based on common units held by Delek Holdings as of March 31, 2025. 12 | Notes to the Condensed Consolidated Financial Statements (Unaudited) 4. Revenues 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 March 31, 2025 Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated Service Revenue - Third Party $ 18,454 $ — $ 1,582 $ 20,036 Service Revenue - Affiliate (1) 1,506 6,657 13,974 22,137 Product Revenue - Third Party 61,582 41,991 — 103,573 Product Revenue - Affiliate 3,219 49,326 — 52,545 Lease Revenue - Affiliate 33,842 8,725 9,072 51,639 Total Revenue $ 118,603 $ 106,699 $ 24,628 $ 249,930 Three Months Ended March 31, 2024 Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Consolidated Service Revenue - Third Party $ 23,385 $ — $ 2,732 $ 26,117 Service Revenue - Affiliate (1) 2 13,216 13,545 26,763 Product Revenue - Third Party 19,945 66,388 — 86,333 Product Revenue - Affiliate 3,950 27,746 — 31,696 Lease Revenue - Affiliate 48,601 11,920 20,645 81,166 Total Revenue $ 95,883 $ 119,270 $ 36,922 $ 252,075 (1) Net of $ 1.8 million for the three months ended March 31, 2024, related to marketing contract intangible recorded in the wholesale marketing and terminalling segment. For the three months ended March 31, 2025, no amortization was recorded related to this intangible, as the associated agreement was terminated on August 5, 2024. As of March 31, 2025, we expect to recognize approximately $ 1.0 billion in service 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. Our unfulfilled performance obligations as of March 31, 2025 were as follows (in thousands): Remainder of 2025 $ 161,055 2026 199,025 2027 199,025 2028 152,716 2029 and thereafter 254,907 Total expected revenue on remaining performance obligations $ 966,728 5. Net Income per Unit Basic net income per unit is computed by dividing net income by the weighted-average number of outstanding common units. Diluted net income per unit includes the effects of potentially dilutive units on our common units. For the three months ended March 31, 2025 and 2024, potentially dilutive units outstanding consist of unvested phantom units. 13 | Notes to the Condensed Consolidated Financial Statements (Unaudited) The calculation of net income per unit is as follows (in thousands, except unit and per unit amounts): Three Months Ended March 31, 2025 2024 Net income $ 39,034 $ 32,648 Weighted average common units outstanding, basic 53,604,659 44,406,356 Dilutive effect of unvested phantom units 29,177 16,461 Weighted average common units outstanding, diluted 53,633,836 44,422,817 Net income per unit: Basic $ 0.73 $ 0.74 Diluted (1) $ 0.73 $ 0.73 (1) There were 28,692 and 42,315 anti-dilutive common unit equivalents excluded from the diluted earnings per unit calculation during the three months ended March 31, 2025 and 2024, respectively. 6. Long-Term Obligations Outstanding borrowings under the Partnership’s debt instruments are as follows (in thousands): March 31, 2025 December 31, 2024 DKL Revolving Facility $ 705,100 $ 435,400 2029 Notes 1,050,000 1,050,000 2028 Notes 400,000 400,000 Principal amount of long-term debt 2,155,100 1,885,400 Less: Unamortized discount and premium and deferred financing costs 9,370 10,003 Total debt, net of unamortized discount and premium and deferred financing costs $ 2,145,730 $ 1,875,397 DKL Credit Facility On October 13, 2022, the Partnership entered into a senior secured term loan with Fifth Third, as administrative agent and a syndicate of lenders with an original principal of $ 300.0 million (the "DKL Term Loan Facility"). 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. Debt extinguishment costs were $ 2.1 million for the three months ended March 31, 2024 and were recorded in interest expense in the accompanying condensed consolidated statements of income and comprehensive income. On March 29, 2024, the Partnership entered into a Fourth Amendment to the 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. As of March 31, 2025 and December 31, 2024, the weighted average interest rate was 7.19 % and 7.27 %, respectively. There were no letters of credit outstanding as of March 31, 2025 or December 31, 2024. 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, 2025 and December 31, 2024 approximate their fair values. Our debt facilities contain affirmative and negative covenants and events of default the Partnership considers usual and customary. As of March 31, 2025, we were in compliance with covenants on all of our debt instruments. 2029 Notes Our 2029 Notes are general unsecured senior obligations comprised of $ 1,050.0 million in aggregate principal 8.625 % senior notes maturing on March 15, 2029. The 2029 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 March 31, 2025, the effective interest rate was 8.81 %. The estimated fair value of the 2029 Notes was $ 1,088.7 million and $ 1,086.9 million as of March 31, 2025 and December 31, 2024, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy. 14 | Notes to the Condensed Consolidated Financial Statements (Unaudited) 2028 Notes 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 March 31, 2025, the effective interest rate was 7.38 %. The estimated fair value of the 2028 Notes was $ 400.2 million and $ 399.1 million as of March 31, 2025 and December 31, 2024, respectively, measured based upon quoted market prices in an active market, defined as Level 1 in the fair value hierarchy. 2025 Notes Our 2025 Notes were general unsecured senior obligations comprised of $ 250.0 million in aggregate principal of 6.75 % senior notes maturing on May 15, 2025. 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 for the three months ended March 31, 2024 and were recorded in interest expense in the accompanying condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2024. 15 | Notes to the Condensed Consolidated Financial Statements (Unaudited) 7. Equity Equity Activity The table below summarizes the changes in the number of limited partner units outstanding from December 31, 2024 through March 31, 2025. Common - Public Common - Delek Holdings (1) Total Balance at December 31, 2024 17,374,618 34,111,278 51,485,896 Unit-based compensation awards (2) 14,934 — 14,934 Issuance of units in connection with Gravity Acquisition 2,175,209 — 2,175,209 Unit repurchase — ( 243,075 ) ( 243,075 ) Balance at March 31, 2025 19,564,761 33,868,203 53,432,964 (1) As of March 31, 2025, Delek Holdings owned a 63.4 % interest in the Partnership. (2) Unit-based compensation awards are presented net of 6,976 units withheld for taxes for three months ended March 31, 2025. 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”). The purchase price per common unit in each Repurchase will be the 30-day volume weighted average price of the common units at the close of trading on the day prior to the closing date subject to certain limitations set forth in the Common Unit Purchase Agreement. 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. 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. Our distributions earned with respect to a given period are declared subsequent to quarter end. The table below summarizes the quarterly distributions related to our quarterly financial results: Quarter Ended Total Quarterly Distribution Per Limited Partner Unit Total Cash Distribution (in thousands) December 31, 2023 $ 1.055 $ 46,010 March 31, 2024 $ 1.070 $ 50,521 June 30, 2024 $ 1.090 $ 51,263 September 30, 2024 $ 1.100 $ 56,613 December 31, 2024 $ 1.105 $ 59,302 March 31, 2025 (1) $ 1.110 $ 59,311 (1) On April 28, 2025, the board of directors of our general partner declared this quarterly cash distribution, payable on May 15, 2025, to unitholders of record on May 8, 2025. The total cash distribution is estimated based on the number of common units outstanding as of March 31, 2025. 8. Equity Method Investments The Partnership owns a 33 % membership interest in Red River Pipeline Company LLC ("Red River"), a joint venture operated with Plains Pipeline, L.P, which owns and operates a crude oil pipeline running from Cushing, Oklahoma to Longview, Texas. 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. On August 5, 2024, the Partnership acquired Permian Pipeline Holdings, LLC, which holds 50 % equity interests in W2W Holdings, from a wholly owned subsidiary of Delek Holdings. Our interest in W2W Holdings includes a 15.6 % indirect interest in the Wink to Webster joint venture, and related joint venture indebtedness. 16 | Notes to the Condensed Consolidated Financial Statements (Unaudited) W2W Holdings was originally formed by Delek Holdings and MPLX Operations LLC to obtain financing and fund capital calls associated with its collective and contributed interests in Wink to Webster. 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. We determined that W2W Holdings is a VIE. While we have the ability to exert significant influence through participation in board and management committees, we are not the primary beneficiary since we do not have a controlling financial interest in W2W Holdings, and no single party has the power to direct the activities that most significantly impact W2W Holdings' economic performance. Distributions received from WWP are first applied to service the debt of W2W Holdings wholly owned finance LLC, with excess distributions made to the W2W Holdings members as provided for in the W2W Holdings LLC Agreement and as allowed for under its debt agreements. The obligations of the W2W Holdings members under the W2W Holdings LLC Agreement are guaranteed by the parents of the member entities. As of March 31, 2025, except for the guarantee of member obligations under the joint venture, we do not have other guarantees with or to W2W Holdings, nor any third-party associated with W2W Holdings contracted work. The Partnership's maximum exposure to any losses incurred by W2W Holdings is limited to its investment. The Partnership's investment balances in these joint ventures were as follows (in thousands): As of March 31, 2025 As of December 31, 2024 Red River $ 133,690 $ 136,455 W2W Holdings 91,493 86,117 CP LLC 57,786 59,252 Andeavor Logistics 34,497 35,328 Total Equity Method Investments $ 317,466 $ 317,152 9. Segment Data We aggregate our operating segments into four reportable segments: (i) gathering and processing; (ii) wholesale marketing and terminalling; (iii) storage and transportation; and (iv) investment in pipeline joint ventures. Operations that are not specifically included in the reportable segments are included in Corporate and other segment. The Partnership defines its segments based on how internally reported financial information is regularly reviewed by its chief operating decision maker ("CODM") to analyze financial performance, make decisions and allocate resources. The CODM is the President of the Partnership. The CODM evaluates performance based on EBITDA for planning and forecasting purposes. The CODM considers budget to actual variances on a monthly basis when making decisions about allocation of operating and capital resources to each segment. EBITDA is an important measure used by management to evaluate the financial performance of our core operations. EBITDA is not a GAAP measure, but the components of EBITDA are computed using amounts that are determined in accordance with GAAP. 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 marketing contract intangible, which is included as a component of net revenues in our accompanying condensed consolidated statements of income and comprehensive income. Assets by segment are not a measure used to assess the performance of the Partnership by the CODM and thus is not disclosed. 17 | 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 March 31, 2025 (In thousands) Gathering and Processing Wholesale Marketing and Terminalling Storage and Transportation Investments in Pipeline Joint Ventures Corporate and Other Consolidated Net revenues: Affiliate (1) $ 38,567 $ 64,708 $ 23,046 $ — $ — $ 126,321 Third party 80,036 41,991 1,582 — — 123,609 Total revenue 118,603 106,699 24,628 — — 249,930 Cost of materials and other 24,344 89,653 15,027 — 28 129,052 Operating expenses 30,581 3,799 5,161 — 1,444 40,985 Income from equity method investments — — — ( 10,150 ) — ( 10,150 ) Other segment items (2) ( 4,261 ) 10 26 — 8,782 4,557 Segment EBITDA $ 67,939 $ 13,237 $ 4,414 $ 10,150 $ ( 10,254 ) 85,486 Depreciation and amortization $ 24,723 $ 952 $ 1,281 $ — $ 760 27,716 Interest income $ ( 11,365 ) $ ( 4,161 ) $ ( 7,021 ) $ — $ — ( 22,547 ) Interest expense $ — $ — $ — $ — $ 41,101 41,101 Income tax expense 182 Net income $ 39,034 Capital spending (3) $ 71,311 $ 90 $ 542 $ — $ — $ 71,943 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 Net revenues: Affiliate (1) $ 52,553 $ 52,882 $ 34,190 $ — $ — $ 139,625 Third party 43,330 66,388 2,732 — — 112,450 Total revenue 95,883 119,270 36,922 — — 252,075 Cost of materials and other 17,869 91,904 13,893 — 27 123,693 Operating expenses 19,705 3,828 5,021 — 3,362 31,916 Income from equity method investments — — — ( 8,490 ) — ( 8,490 ) Other segment items (2) 550 ( 1,736 ) ( 119 ) — 4,760 3,455 Segment EBITDA $ 57,759 $ 25,274 $ 18,127 $ 8,490 $ ( 8,149 ) 101,501 Depreciation and amortization $ 21,154 $ 1,712 $ 2,775 $ — $ 854 26,495 Amortization of marketing contract intangible $ — $ 1,803 $ — $ — $ — 1,803 Interest expense $ — $ — $ — $ — $ 40,229 40,229 Income tax expense 326 Net income $ 32,648 Capital spending (3) $ 14,723 $ ( 84 ) $ 526 $ — $ — $ 15,165 (1) Affiliate revenue for the wholesale marketing and terminalling segment is presented net of amortization expense pertaining to the marketing contract intangible of $ 1.8 million for the three months ended March 31, 2024. There was no amortization recorded during the three months ended March 31, 2025 related to this intangible, as the associated agreement was terminated on August 5, 2024. (2) Other segment items include general and administrative expense, other operating (income) loss and other income. Additionally, the wholesale marketing and terminalling segment includes amortization of the marketing contract intangible for the three months ended March 31, 2024. (3) Capital spending includes additions on an accrual basis. 18 | Notes to the Condensed Consolidated Financial Statements (Unaudited) 10. Commitments and Contingencies Litigation In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our financial statements. Texas Department of Transportation Settlement Beginning in August 2023, the Partnership was involved in litigation with the State of Texas Department of Transportation. The subject of the litigation was the expansion of the highway where the Partnership's Nettleton Station is situated. As a result of this expansion, two tanks owned by the Partnership were impacted. This litigation was settled in the second quarter of 2024 and resulted in the Partnership recovering $ 8.3 million in condemnation proceeds, which was recorded in other operating income, net in the condensed consolidated statements of income and comprehensive income. In the first quarter of 2025, we recovered additional $ 4.3 million related to this settlement, which is recorded in other operating income, net in the accompanying condensed consolidated statements of income and comprehensive income. Environmental, Health and Safety We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the Environmental Protection Agency (the "EPA"), the United States Department of Transportation, the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies. These laws and regulations govern the discharge of materials into the environment, waste management practices and pollution prevention measures, as well as the safe operation of our pipelines and the safety of our workers and the public. The State of New Mexico promulgated new regulations to limit emissions from oil and gas operations in 2022. The cost to comply is not expected to be material. 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. 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. We believe that our current operations are in substantial compliance with existing environmental and safety requirements. However, there have been and we expect that there will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including the receipt and response to notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures. While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required to comply with existing and new requirements, as well as evolving interpretations and enforcement of existing laws and regulations. Releases of hydrocarbons or hazardous substances into the environment could, to the extent the event is not insured, or is not a reimbursable event under the Omnibus Agreement, subject us to substantial expenses, including costs to respond to, contain and remediate a release, to comply with applicable laws and regulations and to resolve claims by governmental agencies or other persons for personal injury, property damage, response costs, or natural resources damages. 11. Leases Lessor We are the lessor under certain agreements for gathering, transportation, storage, terminalling, and offloading with Delek Holdings. Revenue from these leases are recorded in affiliate revenue in the condensed consolidated statements of income and comprehensive income. We elected the practical expedient to carry forward historical lease classification conclusions until a modification of an existing agreement occurs. Once a modification occurs, the amended agreement is required to be assessed under ASC 842, to determine whether a reclassification of the lease is required. The net investment in sales-type leases is recorded utilizing the estimated fair value of the underlying leased assets at contract modification date and are nonrecurring fair value measurements. The leased assets were valued using a cost method valuation approach which utilizes Level 3 inputs. We recognized any billings in excess of minimum volume requirements as variable lease payments, and these variable lease payments were recorded in lease revenues. 19 | Notes to the Condensed Consolidated Financial Statements (Unaudited) Lease income included in the condensed consolidated statements of income and comprehensive income were as follows: Three Months Ended March 31, (in thousands) 2025 Operating leases: Lease revenue $ 48,599 Sales-type leases: Interest income (Sales-type rental revenue-fixed minimum) 22,547 Lease revenue (Revenue from variable lease payments) 3,040 Sales-type lease income $ 25,587 We recorded $ 81.2 million in operating lease revenue for the three months ended March 31, 2024. There were no sales-type leases during the three months ended March 31, 2024. 12. Subsequent Events Distribution Declaration On April 28, 2025, our general partner's board of directors declared a quarterly cash distribution of $ 1.110 per unit, payable on May 15, 2025, to unitholders of record on May 8, 2025. 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 to the Partnership 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 (the "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. 20 | Management's Discussion and Analysis of Financial Condition and Results of Operations