Financial Data and Key Metrics Changes - Delek Logistics reported approximately $107 million in quarterly adjusted EBITDA, an increase from $100.9 million in the same period of 2023, representing a growth of about 1.3% [6][16] - Distributable cash flow as adjusted was $69.5 million, with a DCF coverage ratio of approximately 1.2 times, expected to return to a long-term objective of 1.3 times in the second half of 2025 [16][11] - The company initiated a strong 2025 EBITDA guidance of $480 to $520 million, indicating around 20% growth over 2024 adjusted EBITDA [11][12] Business Line Data and Key Metrics Changes - In the gathering and processing segment, adjusted EBITDA for the quarter was $66 million, up from $53.3 million in Q4 2023, driven by higher throughput from Permian Basin assets [17] - Wholesale marketing and terminalling adjusted EBITDA decreased to $21.2 million from $28.4 million in the prior year, primarily due to lower wholesale margins [18] - Storage and transportation adjusted EBITDA increased slightly to $17.8 million compared to $17.5 million in Q4 2023, attributed to higher storage and transportation rates [18] - Investments in pipeline joint ventures contributed $11.3 million this quarter, up from $8.5 million in Q4 2023, mainly due to contributions from the Wink to Webster drop down [19] Market Data and Key Metrics Changes - The company emphasized its strong position in the Permian Basin and highlighted the successful acquisitions in the Midland Basin, which enhance its competitive position [9][10] - The expansion of the processing plant in the Delaware Basin is on track to complete in the first half of 2025, which is expected to further strengthen market presence [10] Company Strategy and Development Direction - Delek US Holdings is focused on becoming a premier full-service crude, natural gas, and water provider in the Permian Basin, with plans for continued growth in 2025 [7] - The company is enhancing its economic separation from Delek US Holdings, with a $150 million buyback program authorized to enhance value for unit holders [12][13] - The board approved the 48th consecutive increase in the quarterly distribution to $1.10 per unit, reflecting a commitment to value creation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the guidance provided, highlighting the company's growth trajectory and the importance of economic separation from its sponsor [27][32] - The management noted strong demand in the Delaware area and the comprehensive offering of crude, gas, and water as key factors driving future growth [44] Other Important Information - The capital program for Q4 was $49.4 million, with $42.1 million allocated to the new gas processing plant and the remainder for growth projects [20] - For 2025, the company expects to spend approximately $75 million on completing the Lindy processing plant expansion and about $160 million on growth and maintenance projects [20] Q&A Session Summary Question: EBITDA guidance and high-end drivers - Management acknowledged the conservative guidance and discussed the potential drivers for the high end of the EBITDA range, emphasizing the company's growth and economic separation efforts [25][26] Question: Buyback program execution and funding - Management indicated that the buyback program would be executed over two years, with funding likely from free cash flow, considering the cost of capital advantages [29][33] Question: Drivers of EBITDA upside potential - Management highlighted several transactions, including the Gravity and H2O deals, as well as the Lindy plant expansion, contributing to the positive EBITDA outlook [39][40] Question: Demand and utilization of key assets - Management confirmed strong demand for assets in the Delaware area and the strategic expansion in the Midland Basin, which is expected to yield positive results [42][44]

Delek US Holdings (DK) came out with a quarterly loss of $2.54 per share versus the Zacks Consensus Estimate of a loss of $2.89. This compares to loss of $1.46 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 12.11%. A quarter ago, it was expected that this refinery operator would post a loss of $1.71 per share when it actually produced a loss of $1.45, delivering a surprise of 15.20%.Over the last four quarters, the company ha ...

Financial Performance - Delek US reported a net loss of $413.8 million or $(6.55) per share for Q4 2024, with an adjusted net loss of $160.5 million or $(2.54) per share[4]. - The company reported a net loss of $402.1 million for Q4 2024, compared to a net loss of $160.1 million in Q4 2023, indicating a worsening of 151.5%[22]. - Adjusted net income attributable to Delek was $(413.8) million for Q4 2024, compared to $(164.9) million in Q4 2023, reflecting a significant increase in losses[22]. - Basic loss per share for continuing operations was $(6.53) in Q4 2024, compared to $(2.62) in Q4 2023, marking an increase of 148.5%[22]. - For the three months ended December 31, 2024, Delek US Holdings reported a net loss attributable to the company of $413.8 million, compared to a net loss of $164.9 million for the same period in 2023[28]. - Adjusted net loss for the three months ended December 31, 2024, was $160.5 million, compared to an adjusted net loss of $93.2 million in the same period of 2023[28]. - The company reported a significant goodwill impairment of $212.2 million during the quarter, impacting overall financial results[28]. - The company’s total stockholders' equity decreased to $575.2 million as of December 31, 2024, down from $959.7 million as of December 31, 2023, a decline of 40.0%[20]. Revenue and EBITDA - Net revenues for Q4 2024 were $2,373.7 million, a decrease of 39.7% compared to $3,942.1 million in Q4 2023[22]. - Adjusted EBITDA for the year ended December 31, 2024, was $313.7 million, down from $949.7 million in 2023[30]. - Adjusted EBITDA from continuing operations for the year ended December 31, 2024, was $286.3 million, down from $902.2 million in 2023[32]. - The logistics segment achieved an EBITDA of $342.7 million for the year ended December 31, 2024, up from $363.0 million in 2023, indicating relative stability[36]. - The refining segment reported an EBITDA of $(158.0) million for the year ended December 31, 2024, a stark contrast to $560.7 million in 2023[36]. Operational Metrics - The refining segment reported an Adjusted EBITDA of $(69.6) million for Q4 2024, a decrease from $(4.4) million in the same quarter last year, primarily due to lower refining crack spreads[5]. - Total sales volume of refined products decreased to 271,333 bpd in Q4 2024 from 308,932 bpd in Q4 2023, a decline of approximately 12%[37]. - Total refining production margin fell to $3.71 per barrel in Q4 2024 compared to $6.86 per barrel in Q4 2023, representing a decrease of about 46%[37]. - Total adjusted refining margin decreased to $56.3 million in Q4 2024 from $149.9 million in Q4 2023, a decline of approximately 62%[37]. - Crude utilization based on nameplate capacity was 83.5% in Q4 2024, down from 95.0% in Q4 2023[37]. Cash Flow and Debt - Delek US had a cash balance of $735.6 million and total consolidated long-term debt of $2,765.2 million as of December 31, 2024, resulting in a net debt of $2,029.6 million[9]. - Cash flows from operating activities for continuing operations were negative $162.6 million for the three months ended December 31, 2024, compared to positive cash flow of $87.3 million in the same period of 2023[23]. - The company recorded a net decrease in cash and cash equivalents of $302.0 million for the quarter, compared to a decrease of $79.5 million in the same period of 2023[23]. - The company incurred restructuring costs of $62.8 million for the year ended December 31, 2024, reflecting ongoing operational adjustments[36]. - The total long-term debt increased to $2,765.2 million in 2024 from $2,599.8 million in 2023, representing a rise of 6.4%[46]. Asset Management - Total assets decreased to $6,665.8 million as of December 31, 2024, down from $7,171.8 million as of December 31, 2023, representing a decline of 7.1%[20]. - Total current liabilities decreased to $2,516.0 million as of December 31, 2024, from $2,685.1 million as of December 31, 2023, a reduction of 6.3%[20]. - The company’s long-term debt, net of current portion, increased to $2,755.7 million as of December 31, 2024, from $2,555.3 million as of December 31, 2023, an increase of 7.8%[20]. Strategic Initiatives - The Enterprise Optimization Plan (EOP) is expected to increase overall profitability by at least $120 million, with a $100 million cost reduction run rate achieved through zero-based budgeting[3]. - Delek US sold retail assets for proceeds of $390 million and reduced its interest in Delek Logistics from 78.7% to 63.6%[3]. - The company completed the acquisition of H2O Midstream and Gravity Water Midstream, further enhancing its third-party cash flows[3]. - The company repurchased approximately $42 million in shares during 2024[3]. - The company paid $16.1 million in dividends and announced a regular quarterly dividend of $0.255 per share[8].

Core Viewpoint - Delek US Holdings, Inc. has shown resilience in a challenging oil and gas market, achieving a slight increase in share price while outperforming the broader sector and key peers [1][4]. Group 1: Stock Performance - Delek US Holdings experienced a 0.1% increase in share price over the past three months, contrasting with a 3.2% decline in the broader oil and gas sector and a 2.2% decline in the refining and marketing sub-industry [1]. - Key peers such as Marathon Petroleum Corporation, RGC Resources, and PBF Energy saw share price declines of 3.8%, 5.5%, and 9.7%, respectively [1]. Group 2: Factors Supporting Performance - Strategic positioning in the Permian Basin allows Delek to benefit from long-term crude production growth, supported by investments in gathering and pipeline infrastructure [5]. - The company plans to reduce capital expenditures by $80-$100 million in 2025 compared to 2024, which is expected to enhance cash flow and strengthen the balance sheet [6]. - Delek continues to prioritize shareholder value, paying $16.4 million in dividends and repurchasing $20 million worth of shares in Q3 2024, alongside announcing a quarterly dividend of 25.5 cents per share for Q4 2024 [7][8]. - The Enterprise Optimization Plan aims to increase profitability by $100 million annually through cost reductions and operational improvements [9]. - A $390 million retail asset sale has significantly improved liquidity, raising cash reserves above $1 billion, which enhances financial flexibility for various strategic initiatives [10]. Group 3: Challenges to Monitor - Delek's refining operations are heavily concentrated in the U.S. Gulf Coast and Midcontinent regions, exposing the company to regional supply-demand imbalances and extreme weather events [11]. - The company carries a significant long-term debt of $2.79 billion and a net debt position of $1.75 billion, which may limit growth opportunities [12]. - Operational challenges, including unplanned outages at key refineries, have negatively impacted throughput and margins, particularly at the El Dorado refinery [13]. - Over-reliance on asset sales for liquidity raises concerns about long-term revenue diversification, especially in a cyclical refining business [14]. - Earnings are significantly affected by fluctuations in crude oil prices and refining margins, which can be volatile due to various external factors [15].

Core Insights - Delek is focusing on deconsolidating its midstream segment, Delek Logistics Partners, to unlock shareholder value while maintaining cash flow benefits [2] - The company is implementing a balanced capital allocation strategy that includes dividends, share buybacks, and growth investments, with a planned reduction in capital expenditures by $80-$100 million for 2025 [3] - Delek has transformed into a diversified downstream energy company with a focus on the Permian region, benefiting from lower pricing in this area [4] Factors Favoring DK Stock - The logistics segment achieved record EBITDA of $106.1 million in Q3 2024, driven by strong contributions from Delaware Gathering systems and strategic pipeline developments [5] - Delek returned $16.4 million in dividends and executed $20 million in share buybacks in Q3 2024, with a regular quarterly dividend of 25.5 cents per share announced for Q4 2024 [6] Cautionary Factors - The refining segment experienced a significant decline in adjusted EBITDA to $10.2 million in Q3 2024 from $296.1 million in Q3 2023, due to a 49.1% year-over-year drop in benchmark crack spreads [8] - The company faces earnings volatility due to fluctuations in crude oil prices and refining margins, with the logistics segment providing some stability [9] - As of September 30, 2024, Delek had consolidated long-term debt of $2.79 billion, resulting in a net debt position of $1.75 billion, which could pose risks if refining margins remain weak [10] - Limited growth in the core refining segment is evident, with throughput at key refineries falling below expectations [12]

Core Viewpoint - Delek US Holdings has experienced significant fluctuations in refining margins over the past five years, particularly during the COVID-19 pandemic and the subsequent recovery phase [1]. Group 1: Company Performance - The refining margins for Delek crashed during the COVID-19 pandemic, indicating a challenging operating environment for the company [1]. - Following the pandemic, refining margins surged, suggesting a recovery and potential growth opportunities for Delek [1].

Core Insights - Delek US Holdings, Inc. reported a third-quarter 2024 adjusted net loss of $1.45 per share, which was narrower than the Zacks Consensus Estimate of a loss of $1.71, but a decline from a profit of $2.02 per share in the same quarter last year due to weak contributions from the Refining segment [1][4] - Net revenues decreased by 35.9% year over year to $3 billion, missing the Zacks Consensus Estimate by $48 million [1] - Adjusted EBITDA for the quarter was $70.6 million, down from $345.1 million in the year-ago period [2] Financial Performance - Total operating expenses decreased by approximately 29.6% year over year to $3.1 billion, with capital expenditures of $128.5 million during the same period [7] - The company had cash and cash equivalents of $1 billion and long-term debt of $2.8 billion as of September 30, 2024, resulting in a debt to total capital ratio of about 76.1% [7] Segment Performance - Refining segment's adjusted EBITDA was $10.2 million, a significant decline from $296.1 million in the prior-year quarter, attributed to lower refining crack spreads which fell by an average of 49.1% [4] - Logistics segment reported an adjusted EBITDA of $106.1 million, an increase from $96.5 million in the year-ago quarter, driven by contributions from Delaware Gathering systems and the Wink to Webster pipeline dropdown [6] Dividends and Guidance - The board approved a regular quarterly dividend of 25.5 cents per share, payable on November 18, 2024, to shareholders of record as of November 12 [2] - For 2024, the company expects capital expenditures of $330 million, with specific allocations for Refining, Logistics, Discontinued Operations, and Corporate & Other [15] Key Transactions - Delek Logistics completed the acquisition of H2O Midstream for $229.5 million, which includes water disposal and recycling operations in the Midland Basin of Texas [8][9] - The company finalized the sale of its retail operations for approximately $390.2 million in net cash proceeds before taxes, recognizing a pretax gain of $98.4 million from the transaction [10][11]

Financial Performance - Consolidated net loss for Q3 2024 was $67.5 million compared to net income of $136.1 million for Q3 2023, representing a significant decline [170]. - Net loss attributable to Delek for Q3 2024 was $76.8 million, or $(1.20) per basic share, compared to net income of $128.7 million, or $1.98 per basic share in Q3 2023 [170]. - Net revenues for Q3 2024 were $3,042.4 million, a decrease of $1,586.4 million, or 34.3%, from $4,628.8 million in Q3 2023 [172]. - Total revenues for the refining segment in Q3 2024 were $3,027.8 million, down from $4,624.5 million in Q3 2023 [165]. - Refining margin for Q3 2024 was $165.5 million, a decrease from $456.7 million in Q3 2023 [165]. - Consolidated net loss for the nine months ended September 30, 2024, was $118.8 million compared to net income of $206.8 million for the same period in 2023 [171]. - Net revenues decreased by $3,046.6 million, or 24.3%, to $9,478.5 million for the nine months ended September 30, 2024, compared to $12,525.1 million in the same period of 2023 [173]. - Operating income for Q3 2024 was $(121.9) million, a decline from $212.1 million in Q3 2023 [167]. - EBITDA decreased by $282.9 million, or 95.7%, in Q3 2024 compared to Q3 2023, primarily due to decreased refining margin and sales volume [213]. - YTD 2024 EBITDA decreased by $477.8 million compared to YTD 2023, mainly due to decreased refining margin and crack spreads [215]. Revenue and Sales - The average price of Gulf Coast Gasoline (CBOB) was $2.97 in Q1 2023 and decreased to $2.03 in Q3 2024 [150]. - The average Gulf Coast 5-3-2 ULSD crack spread was $32.55 in Q3 2023, dropping to $15.27 in Q2 2024 [153]. - Refining segment revenues decreased by $1,596.7 million, or 34.5%, in Q3 2024 compared to Q3 2023, primarily due to a decrease in average gasoline prices by 18.2% and ULSD by 24.6% [206]. - For the nine months ended September 30, 2024, revenues decreased by $3,028.2 million, or 24.3%, driven by a 9.4% decrease in average gasoline prices and a decrease in wholesale activity [206]. - Total sales volume of refined products averaged 309,175 bpd in the three months ended September 2024, up from 307,626 bpd in the same period of 2023 [198]. Operational Highlights - The company completed the sale of its Retail Stores for proceeds of $390.2 million, which is a significant step in its value creation journey [121]. - The acquisition of H2O Midstream is expected to be immediately accretive, delivering incremental contribution margin and cash flows, although its impact on the third quarter is not significant due to the closing date [121]. - The logistics segment continues to perform strongly, driven by increased volumes from the Delaware Basin and rate increases [121]. - The company has implemented additional cost reduction measures, including reducing contract services and non-critical travel, as part of its enterprise optimization plan [121]. - The company is focused on operational excellence, financial strength, and strategic initiatives to enhance scale and diversify revenue streams [123]. - The company has realigned its reportable segments to reflect changes in financial reporting, particularly following the sale of its retail operations [120]. Capital and Investments - The company has returned $68.1 million of capital to shareholders through dividends and share buybacks in 2024 to date [123]. - The company aims to reward shareholders with a disciplined capital allocation framework, including reducing debt and opportunistic share repurchases [138]. - The company raised $132.2 million from a public offering of 3,584,416 common units at $38.50 per unit, and $165.3 million from another offering of 4,423,075 common units at $39.00 per unit [142]. - The company plans to execute a major turnaround at the Krotz Springs refinery, focusing on outage spend and optimizing downtime [137]. - Total capital spending for the nine months ended September 30, 2024, was $315 million, compared to $181.2 million in the same period of 2023 [241]. Market Conditions and Outlook - The near-term economic outlook remains uncertain due to geopolitical instability and commodity market volatility, prompting the company to progress its business transformation efforts [121]. - The company expects refining capacity to shut down and crude oil demand to rise, which may balance the market over the next 6 to 12 months [143]. - RIN prices have shown significant volatility, impacting refining margins due to regulatory and political influences [156]. Environmental Initiatives - The company is investing in carbon capture technology, with a project at the Big Spring refinery expected to capture 145,000 metric tons of carbon dioxide per year, supported by a 70% cost-share agreement with the Department of Energy [123]. - Delek Logistics was selected for a carbon capture pilot project with a 70% cost-share from the DOE, potentially receiving up to $95 million in federal funding [142]. - The company has decided to idle its biodiesel facilities while exploring sustainable alternatives [132]. Debt and Cash Flow - Total cash and cash equivalents as of September 30, 2024, were $1,037.6 million, with total long-term indebtedness of approximately $2,789.4 million [232]. - Net cash provided by operating activities from continuing operations was $78.9 million for the nine months ended September 30, 2024, a significant decrease from $891.7 million in the same period of 2023 [236]. - Net cash used in investing activities from continuing operations was $387.4 million for the nine months ended September 30, 2024, compared to $320.6 million in the comparable period of 2023, primarily due to the acquisition of H2O Midstream [238]. - The increase in total long-term principal indebtedness as of September 30, 2024, was $186.0 million compared to December 31, 2023, primarily due to the issuance of the Delek Logistics 2029 Notes [232].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2024 was approximately $71 million, with a $32 million decrease in refining due to a lower-margin environment compared to Q2 2024 [6][27] - The company reported a net loss of $77 million or negative $1.20 per share for Q3 2024, with an adjusted net loss of $93 million or negative $1.45 per share [26] Business Line Data and Key Metrics Changes - In Tyler, total throughput was approximately 75,000 barrels per day with a production margin of $7.48 per barrel [17] - El Dorado's total throughput was approximately 78,000 barrels per day, with a production margin of $0.66 per barrel, impacted by outages [18] - Big Spring achieved a total throughput of approximately 73,000 barrels per day with a production margin of $6.82 per barrel [22] - Krotz Springs had a total throughput of approximately 82,000 barrels per day with a production margin of $4.80 per barrel [23] Market Data and Key Metrics Changes - The refining margin environment is currently $5 to $6 below mid-cycle, leading to expectations of more refinery capacity shutdowns [6] - The company anticipates that low refining product inventory and rising oil demand will help balance the market over the next six to twelve months [6] Company Strategy and Development Direction - The company is focused on safe and reliable operations, unlocking sum-of-the-part value, and maintaining a strong balance sheet [8] - A new cost reduction and margin improvement plan aims for at least $100 million in annual cost savings and margin increases by the second half of 2025 [13] - The Market Optionality plan will optimize product production and sales to maximize value [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the El Dorado refinery is well-positioned for operational excellence and profitability improvements [20] - The company is committed to a balanced approach to capital allocation, maintaining dividends while pursuing share buybacks [40] Other Important Information - The company closed the sale of its retail asset to FEMSA on September 30, which supports a strong balance sheet [11] - The deconsolidation of DKL is progressing, with ownership interest reduced from 79% to 66% [12] Q&A Session Summary Question: El Dorado's margin performance - Management acknowledged softer margins and highlighted ongoing operational improvements and flexibility of the El Dorado refinery [34][35] Question: Share repurchase program pace - Management confirmed a balanced approach to capital allocation, emphasizing ongoing buybacks while maintaining dividends [39][40] Question: DKL's future EBITDA - Management refrained from providing specific guidance for DKL's 2025 EBITDA but indicated positive growth potential [43][44] Question: CapEx reduction implications - Management clarified that the CapEx guidance reflects a sustainable approach in a low-margin environment [50] Question: Supply and marketing performance - Management noted improved commercial strategies and seasonal benefits contributing to better performance in supply and marketing [52][53] Question: Path to achieving mid-cycle EBITDA - Management discussed the importance of the Enterprise Optimization Plan (EOP) in achieving mid-cycle EBITDA targets [57][58] Question: Value release from DKL - Management emphasized ongoing deconsolidation efforts and the potential for value maximization in the midstream business [67][72]

Core Viewpoint - Delek US Holdings reported a quarterly loss of $1.45 per share, which was better than the Zacks Consensus Estimate of a loss of $1.71, indicating a 15.20% earnings surprise [1]. Financial Performance - The company posted revenues of $3.04 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.56%, and down from $4.75 billion a year ago [2]. - Over the last four quarters, Delek US Holdings has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2]. Stock Performance - Delek US Holdings shares have declined approximately 38.3% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3]. - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance in the near future [6]. Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$1.94 on revenues of $2.47 billion, and for the current fiscal year, it is -$4.66 on revenues of $12.12 billion [7]. - The trend for estimate revisions ahead of the earnings release has been unfavorable, which may impact future stock performance [6]. Industry Context - The Oil and Gas - Refining and Marketing industry is currently ranked in the bottom 2% of over 250 Zacks industries, suggesting a challenging environment for companies within this sector [8].