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Delek Logistics Misses on Earnings, Shares Up

Zacks Equity Research

Delek Logistics Partners, LP (DKL) reported fourth-quarter 2013 operating earnings of 46 cents per unit, 8% lower than the Zacks Consensus Estimate of 50 cents. 2013 operating earnings of the partnership were $1.93 per share, 1.5% short of the Zacks Consensus Estimate of $1.96.

Despite the earnings miss in the reported quarter, the investor community seems confident of the future prospects of Delek Logistics. The partnership was formed in late 2012 and can build on its current position through organic growth projects and strategic acquisitions. The partnership gained 1.0% to close at $33.09 yesterday.

Total Revenue

Total revenues at the end of the fourth quarter were $223.1 million, 10.4% below the Zacks Consensus Estimate of $249 million.

2013 revenues were $0.9 billion, down 11.9% from the prior-year revenue of $1.02 billion.

Highlights of the Release

Total operating costs and expenses were $209.8 million, down 14.1% from $244.0 million incurred in the year-ago period. The decline in expenses was primarily due to a 14.1% fall in input costs.

Interest expenses were $1.8 million versus $0.9 million in fourth quarter 2012.

Contribution margin from its segments in the reported quarter was $18.6 million.

Other Earnings Releases

Buckeye Partners L.P.’s (BPL) fourth quarter 2013 earnings of 75 cents per unit missed the Zacks Consensus Estimate of 85 cents by 11.8%.

Plains All American Pipeline L.P.  (PAA) announced fourth-quarter 2013 earnings of 74 cents per unit, beating the Zacks Consensus Estimate of 61 cents by 21.3%.

ONEOK Partners L.P. (OKS) reported fourth-quarter 2013 earnings per unit of 67 cents, in line with the Zacks Consensus Estimate.

Our view

Delek Logistics missed our earnings estimate in the current quarter after reporting positive earnings surprises in the three preceding quarters.

The increasing demand for fossil fuels has resulted in higher exploration & production leading to higher storage and allied services. The strategic acquisitions made by Delek Logistics in fourth quarter 2013 and in the ongoing quarter will increase service capability and will boost the future performance of the partnership.

Delek Logistics Partners currently has a Zacks Rank #3 (Hold).

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