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Delek Logistics (DKL) Intends to Issue Senior Notes Worth $400M

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Delek Logistics Partners, LP (DKL - Free Report) and its subsidiary Delek Logistics Finance Corp. plan to offer senior notes worth $400 million, due 2028, in a private placement to eligible purchasers, subject to market conditions. Net proceeds from the offering will be used in repaying part of the firm’s outstanding borrowings under its revolving credit facility.

Financial Position

Delek Logistics has ample liquidity to meet its near-term obligations. At the end of first-quarter 2021, its total liquidity amounted to $125.9 million, including $112.5 million in unused credit commitments and $13.4 million in cash and cash equivalents.

Also, its times interest earned ratio improved on a sequential basis. It came in at 5.10 at the end of first-quarter 2021, up from 4.72 at the end of fourth-quarter 2020. At a time when every entity is looking to strengthen its cash balance amid COVID-led unpredictability, this improving ratio boosts investor sentiment.

Its long-term debt amounted to $983.4 million as of Mar 31, 2021, down from $992.3 million at the end of 2020. Moreover, its total leverage ratio was well within its permissible limit of under the credit facility. This, in turn, lowered its net interest expenses, which fell to $9.7 million in the first three months of 2021 from $11.8 million in the comparable period of 2020.

The firm’s net cash from operating activities was $61.7 million in the first quarter of 2021, up from $34.8 million in first-quarter 2020. This reflects strength in its cash generation ability, which helps funding its capital expenditure and working capital needs along with paying quarterly cash distributions regularly.

Zacks Rank & Price Performance

Shares of this presently Zacks Rank #3 (Hold) firm have gained 81.4%, outperforming the industry’s rise of 26.8% in the past year. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Stocks to Consider

A few better-ranked stocks in the same sector are Enable Midstream Partners, LP (ENBL - Free Report) , Oasis Midstream Partners LP (OMP - Free Report) and Hess Midstream Partners LP (HESM - Free Report) , all carrying a Zacks Rank #2 (Buy), presently.

The Zacks Consensus Estimate for Enable Midstream’s 2021 earnings has been stable in the past 60 days. The current-year earnings estimates for Oasis Midstream and Hess Midstream have been revised 11.5% and 2.1% upward, respectively, in the past 60 days.

Further, Enable Midstream, Oasis Midstream and Hess Midstream delivered a trailing four-quarter earnings surprise of 33.38%, 27.75% and 2.14%, respectively, on average.

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