DKL

Delek Logistics is a fee-based pipeline/terminalling MLP having its best earnings year of the cycle: FY2025 net income of $176M is up 23.7% and a five-year high, on revenue of $1.01B (+7.7%), with healthy 17.4% net and 17.9% operating margins and $237M of operating cash flow. Asset base jumped 36.1% to $2.78B as the H2O Midstream and Gravity acquisitions (named in the MD&A's forward-looking section) bulked up the Permian footprint. On price, $51.01 implies ~15.5x earnings and 2.7x sales — squarely fair for a stable midstream, neither a bargain nor stretched. That balance is why this is an own-don't-chase situation rather than a buy.

The balance sheet is where conviction caps out. Long-term debt rose 25% to $2.34B against barely $10.9M of cash, and book equity is razor-thin (assets $2.78B less ~$2.70B of debt and current liabilities) — this is a heavily levered vehicle, roughly 7-8x debt to EBITDA (operating income $182M plus $126M D&A). Capex of $268M (up 107.5%) now exceeds operating cash flow, so the partnership is running negative free cash flow and funding growth with borrowing, not internally generated cash. Note too that operating income actually fell 10.3% even as net income rose — the bottom-line gain leans on equity-method JV income and acquisition timing, not core operating leverage.