Delek US Holdings Reports Third Quarter 2024 Results

• Net loss of $76.8 million or $(1.20) per share, adjusted net loss of $93.0 million or $(1.45) per share, adjusted EBITDA of $70.6 million
• During 3Q’ 2024, we successfully closed previously announced transactions to further our SOTP strategy:
  • Sold our retail assets for proceeds of $390 million
  • DK & Delek Logistics(DKL) executed the intercompany amendments and extensions
  • Completed the drop-down of Wink to Webster (“W2W”) pipeline into DKL
  • DKL closed the acquisition of H2O Midstream, further adding to its third party cash flows
• Announced the Enterprise Optimization Plan (“EOP”) expected to increase overall profitability by at least $100 million
• DKL announced another record quarterly EBITDA of $106.1 million
• Paid $16.4 million of dividends and announced regular quarterly dividend of $0.255 per share in October

BRENTWOOD, Tenn.–(BUSINESS WIRE)–Delek US Holdings, Inc. (NYSE: DK) (“Delek US”, “Company”) today announced financial results for its third quarter ended September 30, 2024.

“We are excited about the significant progress we have made on i. our ‘Sum of the Parts’ efforts, ii. Operational improvements & iii. Cost reductions,” said Avigal Soreq, President and Chief Executive Officer of Delek US. “After closing the transactions we announced with our last earnings call, we are currently focused on maximizing the value of the third party businesses at Delek Logistics as a next step in our ‘Sum of the Parts’ efforts. We are also working hard to increase the overall profitability and free cash flow generation power of our company through our Enterprise Optimization Plan (EOP).”

“Looking ahead, we will continue to execute on our priorities of running safe and reliable operations, and making further progress on midstream deconsolidation, our EOP efforts, and delivering shareholder value while maintaining our financial strength and flexibility,” Soreq concluded.

Delek US Results

		Three Months Ended September 30,								Nine Months Ended September 30,
($ in millions, except per share data)		2024				2023				2024				2023
Net (loss) income attributable to Delek US		$	(76.8	)		$	128.7			$	(146.6	)		$	184.7
Total diluted (loss) income per share		$	(1.20	)		$	1.97			$	(2.29	)		$	2.78
Adjusted net (loss) income		$	(93.0	)		$	131.9			$	(178.5	)		$	289.8
Adjusted net (loss) income per share		$	(1.45	)		$	2.02			$	(2.78	)		$	4.37
Adjusted EBITDA		$	70.6			$	345.1			$	336.8			$	889.1

Refining Segment

The refining segment Adjusted EBITDA was $10.2 million in the third quarter 2024 compared with $296.1 million in the same quarter last year, which reflects other inventory impacts of $25.8 million and $(28.2) million for third quarter 2024 and 2023, respectively. The decrease over 2023 is primarily due to lower refining crack spreads. During the third quarter 2024, Delek US’s benchmark crack spreads were down an average of 49.1% from prior-year levels.

Logistics Segment

The logistics segment Adjusted EBITDA in the third quarter 2024 was $106.1 million compared with $96.5 million in the prior year quarter. The increase over last year’s third quarter was driven by strong contributions from Delaware Gathering systems, annual rate increases and the impact of the W2W dropdown.

Corporate and Other Activity

Adjusted EBITDA from Corporate, Other and Eliminations was a loss of $(53.9) million in the third quarter 2024 compared with a loss of $(63.9) million in the prior-year period. The decreased losses were driven by lower employee related expenses, partially offset by the impact of the W2W dropdown.

Shareholder Distributions

On October 30, 2024, the Board of Directors approved the regular quarterly dividend of $0.255 per share that will be paid on November 18, 2024 to shareholders of record on November 12, 2024.

Liquidity

As of September 30, 2024, Delek US had a cash balance of $1,037.6 million and total consolidated long-term debt of $2,789.4 million, resulting in net debt of $1,751.8 million. As of September 30, 2024, Delek Logistics Partners, LP (NYSE: DKL) (“Delek Logistics”) had $7.3 million of cash and $1,894.3 million of total long-term debt, which are included in the consolidated amounts on Delek US’ balance sheet. Excluding Delek Logistics, Delek US had $1,030.3 million in cash and $895.1 million of long-term debt, or a $135.2 million net cash position.

Third Quarter 2024 Results | Conference Call Information

Delek US will hold a conference call to discuss its third quarter 2024 results on Wednesday, November 6, 2024 at 9:00 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekUS.com and clicking on the Investor Relations tab. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. Presentation materials accompanying the call will be available on the investor relations tab of the Delek US website approximately ten minutes prior to the start of the call. For those who cannot listen to the live broadcast, the online replay will be available on the website for 90 days.

Investors may also wish to listen to Delek Logistics’ (NYSE: DKL) third quarter 2024 earnings conference call that will be held on Wednesday, November 6, 2024 at 10:30 a.m. Central Time and review Delek Logistics’ earnings press release. Market trends and information disclosed by Delek Logistics may be relevant to the logistics segment reported by Delek US. Both a replay of the conference call and press release for Delek Logistics will be available online at www.deleklogistics.com.

About Delek US Holdings, Inc.

Delek US Holdings, Inc. is a diversified downstream energy company with assets in petroleum refining, logistics, pipelines, and renewable fuels. The refining assets consist primarily of refineries operated in Tyler and Big Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a combined nameplate crude throughput capacity of 302,000 barrels per day. Pipeline assets include an ownership interest in the 650-mile Wink to Webster long-haul crude oil pipeline.

The logistics operations include Delek Logistics Partners, LP (NYSE: DKL). Delek Logistics Partners, LP is a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets. Delek US Holdings, Inc. and its subsidiaries owned approximately 70.4% (including the general partner interest) of Delek Logistics Partners, LP at September 30, 2024.

Safe Harbor Provisions Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. These statements contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if”, “potential,” “expect” or similar expressions, as well as statements in the future tense. These forward-looking statements include, but are not limited to, statements regarding throughput at the Company’s refineries; crude oil prices, discounts and quality and our ability to benefit therefrom; cost reductions; growth; scheduled turnaround activity; projected capital expenditures and investments into our business; liquidity and EBITDA impacts from strategic and intercompany transactions; the performance and execution of our midstream growth initiatives, including the Permian Gathering System, the Red River joint venture and the Wink to Webster long-haul crude oil pipeline, and the flexibility, benefits and the expected returns therefrom; projected benefits of the Delaware Gathering Acquisition, renewable identification numbers (“RINs”) waivers and tax credits and the value and benefit therefrom; cash and liquidity; emissions reductions; opportunities and anticipated performance and financial position.

Investors are cautioned that the following important factors, among others, may affect these forward-looking statements. These factors include, but are not limited to: uncertainty related to timing and amount of future share repurchases and dividend payments; risks and uncertainties with respect to the quantities and costs of crude oil we are able to obtain and the price of the refined petroleum products we ultimately sell, uncertainties regarding future decisions by the Organization of Petroleum Exporting Countries (“OPEC”) regarding production and pricing disputes between OPEC members and Russia; risks and uncertainties related to the integration by Delek Logistics of the Delaware Gathering business following its acquisition; Delek US’ ability to realize cost reductions; risks related to Delek US’ exposure to Permian Basin crude oil, such as supply, pricing, gathering, production and transportation capacity; gains and losses from derivative instruments; risks associated with acquisitions and dispositions; risks and uncertainties with respect to the possible benefits of the retail and H20 Midstream transactions; acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment in carrying value of the asset; the possibility of litigation challenging renewable fuel standard waivers; changes in the scope, costs, and/or timing of capital and maintenance projects; the ability to grow the Permian Gathering System; the ability of the Red River joint venture to complete the expansion project to increase the Red River pipeline capacity; operating hazards inherent in transporting, storing and processing crude oil and intermediate and finished petroleum products; our competitive position and the effects of competition; the projected growth of the industries in which we operate; general economic and business conditions affecting the geographic areas in which we operate; and other risks described in Delek US’ filings with the United States Securities and Exchange Commission (the “SEC”), including risks disclosed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings and reports with the SEC.

Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek US undertakes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which Delek US becomes aware of, after the date hereof, except as required by applicable law or regulation.

Non-GAAP Disclosures:

Our management uses certain “non-GAAP” operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our financial information presented in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”). These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

• Adjusting items – certain identified infrequently occurring items, non-cash items, and items that are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends;
• Adjusted net income (loss) – calculated as net income (loss) attributable to Delek US adjusted for relevant Adjusting items recorded during the period;
• Adjusted net income (loss) per share – calculated as Adjusted net income (loss) divided by weighted average shares outstanding, assuming dilution, as adjusted for any anti-dilutive instruments that may not be permitted for consideration in GAAP earnings per share calculations but that nonetheless favorably impact dilution;
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) – calculated as net income (loss) attributable to Delek US adjusted to add back interest expense, income tax expense, depreciation and amortization;
• Adjusted EBITDA – calculated as EBITDA adjusted for the relevant identified Adjusting items in Adjusted net income (loss) that do not relate to interest expense, income tax expense, depreciation or amortization, and adjusted to include income (loss) attributable to non-controlling interests;
• Refining margin – calculated as gross margin (which we define as sales minus cost of sales) adjusted for operating expenses and depreciation and amortization included in cost of sales;
• Adjusted refining margin – calculated as refining margin adjusted for other inventory impacts, net inventory LCM valuation loss (benefit), unrealized hedging (gain) loss and intercompany lease impacts;
• Refining production margin – calculated based on the regional market sales price of refined products produced, less allocated transportation, Renewable Fuel Standard volume obligation and associated feedstock costs. This measure reflects the economics of each refinery exclusive of the financial impact of inventory price risk mitigation programs and marketing uplift strategies;
• Refining production margin per throughput barrel – calculated as refining production margin divided by our average refining throughput in barrels per day (excluding purchased barrels) multiplied by 1,000 and multiplied by the number of days in the period; and
• Net debt – calculated as long-term debt including both current and non-current portions (the most comparable GAAP measure) less cash and cash equivalents as of a specific balance sheet date.

We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved relevant comparability between periods, to peers or to market metrics through the inclusion of retroactive regulatory or other adjustments as if they had occurred in the prior periods they relate to, or through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying results and trends. “Net debt,” also a non-GAAP financial measure, is an important measure to monitor leverage and evaluate the balance sheet.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. Additionally, because Adjusted net income or loss, Adjusted net income or loss per share, EBITDA and Adjusted EBITDA, Adjusted Refining Margin and Refining Production Margin or any of our other identified non-GAAP measures may be defined differently by other companies in its industry, Delek US’ definition may not be comparable to similarly titled measures of other companies. See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.

Delek US Holdings, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
($ in millions, except share and per share data)
		September 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	1,037.6			$	821.8
Accounts receivable, net			561.6				783.7
Inventories, net of inventory valuation reserves			915.0				941.2
Current assets of discontinued operations			—				41.5
Other current assets			50.6				77.8
Total current assets			2,564.8				2,666.0
Property, plant and equipment:
Property, plant and equipment			4,790.7				4,460.3
Less: accumulated depreciation			(1,961.7	)			(1,764.0	)
Property, plant and equipment, net			2,829.0				2,696.3
Operating lease right-of-use assets			98.8				121.5
Goodwill			687.5				687.5
Other intangibles, net			328.6				287.7
Equity method investments			408.7				360.7
Non-current assets of discontinued operations			—				228.1
Other non-current assets			112.9				124.0
Total assets		$	7,030.3			$	7,171.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,713.6			$	1,814.3
Current portion of long-term debt			9.5				44.5
Current portion of obligation under Inventory Intermediation Agreement			3.6				0.4
Current portion of operating lease liabilities			45.6				50.1
Current liabilities of discontinued operations			—				11.5
Accrued expenses and other current liabilities			694.7				764.3
Total current liabilities			2,467.0				2,685.1
Non-current liabilities:
Long-term debt, net of current portion			2,779.9				2,555.3
Obligation under Inventory Intermediation Agreement			385.3				407.2
Environmental liabilities, net of current portion			33.7				110.9
Asset retirement obligations			24.4				36.4
Deferred tax liabilities			243.9				264.1
Operating lease liabilities, net of current portion			63.7				85.7
Non-current liabilities of discontinued operations			—				34.3
Other non-current liabilities			87.0				33.1
Total non-current liabilities			3,617.9				3,527.0
Redeemable non-controlling interest			70.0				—
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding			—				—
Common stock, $0.01 par value, 110,000,000 shares authorized, 81,231,308 shares and 81,539,871 shares issued at September 30, 2024 and December 31, 2023, respectively			0.8				0.8
Additional paid-in capital			1,172.7				1,113.6
Accumulated other comprehensive loss			(4.8	)			(4.8	)
Treasury stock, 17,575,527 shares, at cost, at September 30, 2024 and December 31, 2023, respectively			(694.1	)			(694.1	)
Retained earnings			228.5				430.0
Non-controlling interests in subsidiaries			172.3				114.2
Total stockholders’ equity			875.4				959.7
Total liabilities, redeemable non-controlling interest and stockholders’ equity		$	7,030.3			$	7,171.8

Delek US Holdings, Inc.
Condensed Consolidated Statements of Income (Unaudited)
($ in millions, except share and per share data)		Three Months Ended September 30,								Nine Months Ended September 30,
			2024				2023				2024				2023
Net revenues		$	3,042.4			$	4,628.8			$	9,478.5			$	12,525.1
Cost of sales:
Cost of materials and other			2,788.7				4,049.4				8,547.1				11,111.2
Operating expenses (excluding depreciation and amortization presented below)			181.4				217.7				580.3				577.2
Depreciation and amortization			92.5				83.7				259.6				243.1
Total cost of sales			3,062.6				4,350.8				9,387.0				11,931.5
Operating expenses related to wholesale business (excluding depreciation and amortization presented below)			3.7				(3.7	)			5.7				3.9
General and administrative expenses			70.4				67.7				191.6				208.0
Depreciation and amortization			5.6				4.0				18.6				12.1
Asset impairment			9.2				—				31.3				—
Other operating expense (income), net			12.8				(2.1	)			(67.6	)			(19.0	)
Total operating costs and expenses			3,164.3				4,416.7				9,566.6				12,136.5
Operating (loss) income			(121.9	)			212.1				(88.1	)			388.6
Interest expense, net			78.8				82.4				244.1				239.1
Income from equity method investments			(25.1	)			(27.0	)			(77.4	)			(67.1	)
Other (income) expense, net			(0.5	)			2.0				(1.1	)			(4.6	)
Total non-operating expense, net			53.2				57.4				165.6				167.4
(Loss) income from continuing operations before income tax (benefit) expense			(175.1	)			154.7				(253.7	)			221.2
Income tax (benefit) expense			(40.3	)			29.1				(56.7	)			38.3
(Loss) income from continuing operations, net of tax			(134.8	)			125.6				(197.0	)			182.9
Discontinued operations:
Income from discontinued operations, including gain on sale of discontinued operations			95.4				12.9				107.8				29.1
Income tax expense			28.1				2.4				29.6				5.2
Income from discontinued operations, net of tax			67.3				10.5				78.2				23.9
Net (loss) income			(67.5	)			136.1				(118.8	)			206.8
Net income attributable to:
Non-controlling interests			9.3				7.4				27.8				22.1
Net (loss) income attributable to Delek		$	(76.8	)		$	128.7			$	(146.6	)		$	184.7
Basic (loss) income per share:
(Loss) income from continuing operations		$	(2.25	)		$	1.82			$	(3.51	)		$	2.44
Income from discontinued operations			1.05				0.16			$	1.22			$	0.36
Total basic (loss) income per share		$	(1.20	)		$	1.98			$	(2.29	)		$	2.80
Diluted (loss) income per share:
(Loss) income from continuing operations		$	(2.25	)		$	1.81			$	(3.51	)		$	2.42
Income from discontinued operations			1.05				0.16			$	1.22			$	0.36
Total diluted (loss) income per share		$	(1.20	)		$	1.97			$	(2.29	)		$	2.78
Weighted average common shares outstanding:
Basic			64,063,609				64,889,504				64,099,700				65,864,141
Diluted			64,063,609				65,464,970				64,099,700				66,372,335

Delek US Holdings, Inc.
Condensed Cash Flow Data (Unaudited)
($ in millions)		Three Months Ended September 30,								Nine Months Ended September 30,
			2024				2023				2024				2023
Cash flows from operating activities:
Cash (used in) provided by operating activities – continuing operations		$	(22.1	)		$	420.2			$	78.9			$	891.7
Cash provided by operating activities – discontinued operations			0.5				12.4				17.8				31.1
Net cash (used in) provided by operating activities			(21.6	)			432.6				96.7				922.8
Cash flows from investing activities:
Cash used in investing activities – continuing operations			(298.4	)			(50.5	)			(387.4	)			(320.6	)
Cash provided by (used in) investing activities – discontinued operations			376.8				(8.2	)			361.7				(18.0	)
Net cash provided by (used in) investing activities			78.4				(58.7	)			(25.7	)			(338.6	)
Cash flows from financing activities:
Cash provided by (used in) financing activities – continuing operations			322.9				(293.8	)			144.4				(523.8	)
Net cash provided by (used in) financing activities			322.9				(293.8	)			144.4				(523.8	)
Net increase in cash and cash equivalents			379.7				80.1				215.4				60.4
Cash and cash equivalents at the beginning of the period			657.9				821.6				822.2				841.3
Cash and cash equivalents at the end of the period			1,037.6				901.7				1,037.6				901.7
Less cash and cash equivalents of discontinued operations at the end of the period			—				0.4				—				0.4
Cash and cash equivalents of continuing operations at the end of the period		$	1,037.6			$	901.3			$	1,037.6			$	901.3

Significant Transactions During the Quarter Impacting Results:

H20 Midstream Acquisition

On September 11, 2024, Delek Logistics completed the acquisition of 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “H2O Midstream Acquisition”) from H2O Midstream Holdings, LLC.

Contacts

Investor/Media Relations Contacts:


investor.relations@delekus.com

Information about Delek US Holdings, Inc. can be found on its website (www.delekus.com), investor relations webpage (ir.delekus.com), news webpage (www.delekus.com/news) and its X account (@DelekUSHoldings).

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