Exhibit 99.1
Delek US Holdings, Inc. Reports Net Income
Increase of 59%
BRENTWOOD, Tenn.--(BUSINESS WIRE)--Aug. 7, 2007--Delek US
Holdings, Inc. (NYSE: DK):
-- Net Sales Exceeded $1.1 Billion
-- Diluted EPS Increased 46.6% to $1.29 per Share
-- Cash & Short Term Investments Stand at $275 Million
Delek US Holdings, Inc. (NYSE: DK) today reported record net
income of $67.2 million, or $1.29 per diluted share, for the second
quarter 2007 compared to $42.2 million, or $0.88 per diluted share for
the second quarter 2006. For the first six months of 2007, Delek
reported record net income of $88.1 million, or $1.69 per diluted
share compared to $55.1 million or $1.26 per diluted share for the
first six months of 2006.
Uzi Yemin, President and Chief Executive Officer of Delek US,
remarked, "We are pleased to report strong results for the second
quarter of 2007. Our operational performance coupled with continued
success in implementing our acquisition strategy, demonstrates our
focus on sustained growth while maintaining our financial strength and
flexibility as evidenced by our $275.4 million in cash and short term
investments at quarter end."
Refining Segment: The refining segment contribution margin was
$95.1 million for the second quarter of 2007 compared to $67.6 million
for the second quarter of 2006. The refinery operating gross margin
excluding inter-company marketing fees of $0.77 per barrel was $23.94
per barrel sold. Delek exceeded the U.S. Gulf Coast 5-3-2 crack spread
of $23.10 by $0.84 per barrel sold. This compares to a 2006 second
quarter refinery operating gross margin of $16.34 per barrel sold.
Net sales for the quarter were $435.3 million on sales of 53,777
barrels per day compared to $454.0 million on the sale of 57,036
barrels per day for the same quarter last year. Net sales were
impacted by weather-related power outages during the quarter, which
was partially offset by an increase in the average sales price per
barrel. In July, we commenced operation of a new 138kV power
substation which is expected to provide a more reliable, independent
power supply for the daily operations of the refinery.
Total throughput was 57,104 barrels per day compared to 57,342
barrels for the same period a year ago. Delek continued to diversify
its crude slate. In the second quarter, Delek increased West Texas
sour crude processed to 7% and added 4% foreign blend crude to the
overall crude slate.
Retail Segment: The retail segment contribution margin was $18.4
million for the second quarter of 2007 compared to $15.3 million for
the second quarter 2006. Net sales for the quarter were $486.4
million, an increase of 33% compared to the second quarter last year.
This increase was primarily due to the addition of approximately 150
stores through the Fast and Calfee acquisitions and a 3.6% increase in
retail fuel prices.
Merchandise sales for the quarter increased 35.7% to $111.8
million compared to $82.4 million for the second quarter of 2006,
supported by a same store sales increase of 1.3%. The merchandise
margin in the second quarter was 31.6% and represented an 80 basis
point increase from the same quarter last year.
Retail fuel sales for the second quarter of 2007 increased 34.6%
to $352.4 million from $261.8 million for the same quarter of 2006,
primarily due to a 30% increase in retail gallons sold to nearly 123.8
million.
Marketing Segment: The marketing segment, which was established in
August of 2006, had a contribution margin of $9.3 million for the
second quarter of 2007. Net sales were $181.2 million, including $3.8
million of inter-company marketing fees and sales from the refinery
segment on total sales volume of 20,324 barrels per day, an increase
of nearly 20% over the first quarter of 2007.
Acquisition Update: We have completed the purchase of all 107
retail fuel and convenience stores from Calfee, increasing our
company-operated store count to 502.
In July, we entered into agreements with TransMontaigne, a wholly
owned subsidiary of Morgan Stanley Capital Group, Inc. and several
other shareholders of Lion Oil Company to acquire a minority equity
interest of approximately 28.3% in Lion Oil. The Company expects this
investment to immediately enhance earnings. The transactions are
anticipated to close during the third quarter of this year. Our strong
second quarter results do not include the impact of this transaction.
Dividend: The Board of Directors has declared a quarterly cash
dividend of $0.0375 per share, payable on September 7, 2007, to
shareholders of record on August 20, 2007.
Conference Call: The Company will hold a conference call to
discuss this release today at 9:30 a.m. eastern time. Investors will
have the opportunity to listen to the conference call live over the
Internet by going to www.delekus.com and clicking Investor Relations,
or by going to www.earnings.com, at least 15 minutes early to
register, download and install any necessary audio software. For those
who cannot listen to the live broadcast, a telephonic replay will be
available for one week at (706) 645-9291, code 10407354, and the
replay will also be available on Delek's website for 90 days.
About the Company: Delek US Holdings, Inc. is a diversified energy
business focused on petroleum refining, marketing and supply of
refined products, and retail marketing of fuel and general
merchandise. The refining segment operates a high conversion,
independent refinery, with a design crude distillation capacity of
60,000 barrels per day, in Tyler, Texas. The marketing and supply
segment markets refined products through its terminals in Abilene,
Texas and San Angelo, Texas as well as other third party terminals.
The retail segment markets gasoline, diesel and other refined
petroleum products and convenience merchandise through a network of
company-operated retail fuel and convenience stores, operated under
the MAPCO Express(R), MAPCO Mart(TM), East Coast(R), Discount Food
Mart(TM) , Fast Food and Fuel(TM) and Favorite Markets(R) brand names.
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 our current estimates, expectations and
projections about our future results, performance, prospects and
opportunities 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.
Investors are cautioned that the following important factors,
among others, may affect these forward-looking statements. These
factors include but are not limited to: our competitive position and
the effects of competition; the projected growth of the industry in
which we operate; changes in the scope, costs, and/or timing of
capital projects; management's ability to execute its strategy of
growth through acquisitions and transactional risks in acquisitions;
general economic and business conditions, particularly levels of
spending relating to travel and tourism or conditions affecting the
southeastern United States; risks and uncertainties with the respect
to the quantities and costs of refined petroleum products supplied to
our pipelines and/or held in our terminals; potential conflicts of
interest between our majority stockholder and other stockholders; and
other risks contained in our filings with the Securities and Exchange
Commission.
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.
Delek US Holdings, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
Three Months Ended June Six Months Ended June 30,
30,
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Net Sales $ 1,103.0 $ 819.6 $ 1,908.6 $ 1,479.4
Operating costs
and expenses:
Cost of goods
sold 924.3 693.3 1,630.6 1,276.6
Operating
expenses 55.9 43.4 101.5 84.1
General and
administrative
expenses 13.8 10.2 26.0 17.1
Depreciation and
amortization 8.0 4.7 15.0 9.1
Losses on forward
contract
activities - - - 0.1
------------ ------------ ------------ ------------
1,002.0 751.6 1,773.1 1,387.0
------------ ------------ ------------ ------------
Operating income 101.0 68.0 135.5 92.4
------------ ------------ ------------ ------------
Interest expense 8.3 5.7 15.5 11.6
Interest income (3.2) (1.6) (5.2) (2.5)
Interest expense
to related
parties - 0.3 - 1.0
Other expenses,
net (0.4) (0.5) 0.2 (1.3)
------------ ------------ ------------ ------------
4.7 3.9 10.5 8.8
------------ ------------ ------------ ------------
Income before
income tax
expense 96.3 64.1 125.0 83.6
Income tax expense 29.1 21.9 36.9 28.5
------------ ------------ ------------ ------------
Net income $ 67.2 $ 42.2 $ 88.1 $ 55.1
============ ============ ============ ============
Basic earnings per
share $ 1.31 $ 0.90 $ 1.72 $ 1.27
============ ============ ============ ============
Diluted earnings
per share $ 1.29 $ 0.88 $ 1.69 $ 1.26
============ ============ ============ ============
Weighted average
common shares
outstanding:
Basic 51,176,711 47,056,536 51,158,392 43,223,202
============ ============ ============ ============
Diluted 52,255,690 48,144,592 52,206,022 43,767,230
============ ============ ============ ============
Dividends declared
and paid per
common share
outstanding $ - $ - $ 0.2725 $ -
============ ============ ============ ============
Delek US Holdings, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)
June 30, December 31,
2007 2006
--------- ------------
Assets
Current assets:
Cash and cash equivalents $ 61.0 $101.6
Short-term investments 214.4 73.2
Accounts receivable 108.3 83.7
Inventory 135.5 120.8
Other current assets 21.9 31.3
--------- ------------
Total current assets 541.1 410.6
--------- ------------
Property, plant and equipment:
Property, plant and equipment 581.6 493.1
Less: accumulated depreciation (82.9) (68.4)
--------- ------------
Property, plant and equipment, net 498.7 424.7
--------- ------------
Goodwill 80.7 80.7
Other intangibles, net 11.7 12.2
Other non-current assets 20.3 21.2
--------- ------------
Total assets $1,152.5 $949.4
========= ============
Liabilities and shareholders' equity
Current liabilities:
Accounts Payable $ 193.5 $175.5
Current portion of long-term debt and capital
lease obligations 1.7 1.8
Note payable 27.0 19.2
Accrued expenses and other current
liabilities 60.0 34.4
--------- ------------
Total current liabilities 282.2 230.9
Non-current liabilities:
Long-term debt and capital lease obligations,
net of current portion 335.7 265.6
Environmental liabilities, net of current
portion 8.2 9.3
Asset retirement obligations 3.2 3.3
Deferred tax liabilities 55.5 50.5
Other non-current liabilities 7.9 7.6
--------- ------------
Total non-current liabilities 410.5 336.3
Shareholders' equity:
Preferred stock, $0.01 par value, 10,000,000
shares authorized, 0 shares issued and
outstanding - -
Common stock, $0.01 par value, 110,000,000
shares authorized, 51,265,006 and 51,139,869
shares issued and outstanding, respectively 0.5 0.5
Additional paid-in capital 215.4 211.9
Retained earnings 243.9 169.8
--------- ------------
Total shareholders' equity 459.8 382.2
--------- ------------
Total liabilities and shareholders'
equity $1,152.5 $949.4
========= ============
Delek US Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Six Months Ended
June 30,
-----------------
2007 2006
-------- --------
Cash flows from operating activities:
Net income $ 88.1 $ 55.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15.0 9.1
Amortization of deferred financing costs 2.6 1.8
Accretion of asset retirement obligations 0.2 0.2
Deferred income taxes 5.3 1.5
Loss (gain) on interest rate derivative
instruments 0.2 (1.5)
Unrealized gain on short-term investments - (0.1)
Stock-based compensation expense 1.5 0.9
Income tax benefit of stock-based compensation (0.2) -
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable, net (24.6) (34.6)
Inventories and other current assets 1.1 (15.7)
Accounts payable and other current liabilities 43.6 26.5
Non-current assets and liabilities, net 2.4 (2.7)
-------- --------
Net cash provided by (used in) operating
activities 135.2 40.5
-------- --------
Cash flows from investing activities:
Purchases of short-term investments (600.9) (285.1)
Sales of short-term investments 459.7 203.6
Return of escrow deposit made with Escrow Agent - 5.0
Business combinations, net of cash acquired (72.2) (0.2)
Purchase of property, plant and equipment (27.0) (43.4)
-------- --------
Net cash provided by investing activities: (240.4) (120.1)
-------- --------
Cash flows from financing activities:
Net proceeds from long-term revolver 13.8 3.0
Proceeds from other debt instruments 65.0 30.0
Payments on debt and capital lease obligations (1.0) (46.3)
Payments on note payable to related parties - (42.5)
Repayment of note receivable from related party - 0.2
Proceeds from issuance of common stock - 167.9
Proceeds from exercise of stock options 1.8 -
Income tax benefit of stock-based compensation 0.2 -
Dividends paid (13.9) -
Deferred financing costs paid (1.3) (0.2)
-------- --------
Net cash provided by (used in) investing
activities 64.6 112.1
-------- --------
Net increase in cash and cash equivalents (40.6) 32.5
Cash and cash equivalents at the beginning of the
period 101.6 62.6
-------- --------
Cash and cash equivalents at the end of the period $ 61.0 $ 95.1
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of capitalized interest of $0.3 $ 10.8 $ 13.2
million and $0.5 million for the three and six ======== ========
months ended June 30, 2007, respectively
Income taxes $ 1.4 $ 12.6
======== ========
DELEK US HOLDINGS, INC. AND SUBSIDIARIES
Segment Statistics
Three Months Ended June 30,
---------------------------
2007 2006
---------------------------
REFINING SEGMENT:
Days operated in period 91 91
Total sales volume (average barrels per
day) 53,777 57,036
Products manufactured (average barrels per
day):
Gasoline 29,237 29,987
Diesel/Jet 21,123 21,680
Petrochemicals, LPG, NGLs 2,320 2,575
Other 2,177 1,914
Total production 54,857 56,156
Throughput (average barrels per day):
Crude oil 55,440 55,985
Other feedstocks 1,664 1,357
Total throughput 57,104 57,342
Per barrel of sales:
Refining operating margin (1) $23.17 $16.34
Refining operating margin excluding
inter-company
Marketing service fees(2) $23.94 $16.34
Direct operating expenses $3.73 $3.31
Pricing statistics (average for the period
presented):
WTI -- Cushing crude oil (per barrel) $65.06 $70.67
US Gulf Coast 5-3-2 crack spread (per
barrel) $23.10 $15.38
US Gulf Coast Unleaded Gasoline (per
gallon) $2.23 $2.11
Low sulfur diesel (per gallon) $2.07 $2.15
Natural gas -- (per MMBTU) $7.53 $6.65
Three Months Ended June 30,
---------------------------
2007
--------------
MARKETING SEGMENT:
Days operated in period 91
Total sales volume (average barrels per
day) 20,324
Products sold (average barrels per day):
Gasoline 9,570
Diesel/Jet 10,754
Other --
Total sales 20,324
Direct Operating Expenses (per barrel of
sales) $0.16
Three Months Ended June 30,
---------------------------
2007 2006
---------------------------
RETAIL SEGMENT:
Number of stores (end of period) 502 349
Average number of stores 501 349
Retail fuel sales (thousands of gallons) 123,845 95,213
Average retail gallons per average number
of stores (in thousands) 247 273
Retail fuel margin ($ per gallon) $0.158 $0.161
Merchandise sales (in thousands) $111,812 $82,412
Merchandise margin % 31.6% 30.8%
Credit expense (% of gross margin) (3) 8.6% 7.9%
Merchandise and cash over/short (% of net
sales) (4) 0.3% 0.2%
Operating expense/merchandise sales plus
total gallons (5) 15.3% 14.0%
(1) Refining operating margin per barrel is calculated by dividing the
margin between net sales and cost of crude oil, feedstocks and
related transportation by the total barrels sold at our refinery.
Industry-wide refining results are driven and measured by the
margins between refined petroleum product prices and the prices
for crude oil, which are referred to as crack spreads: the
differential in price between a representative barrel of benchmark
refined petroleum products, such as gasoline or heating oil, and a
barrel of benchmark crude oil. The US Gulf Coast 5-3-2 crack
spread represents the differential between Platt's quotations for
3/5 of a barrel of US Gulf Coast Pipeline 87 Octane Conventional
Gasoline and 2/5 of a barrel of US Gulf Coast Pipeline No. 2
Heating Oil (high sulfur diesel) on the one hand, and the first
month futures price of 5/5 of a barrel of light sweet crude oil on
the New York Mercantile Exchange, on the other hand. We compare
our refining operating margin to these crack spreads to assess our
operating performance relative to other participants in our
industry.
(2) Excludes inter-company marketing services fees of $3.8 million for
the three months ended June 30, 2007 and $6.6 million for the six
months ending June 30, 2007, from Refining to Marketing segment.
(3) Consists of third party credit, debit and fuel card processing
fees as a percentage of gross margin.
(4) Merchandise and cash over/short as a percentage of net sales is a
measure of merchandise loss or theft, motor fuel theft and cash
shortages as a percentage of net sales.
(5) Operating expense for our retail segment divided by merchandise
sales plus total gallons sold is a ratio we use to measure store
operating performance -- especially operating expense control.
Total gallons are used rather than net fuel sales to eliminate the
volatility of fuel prices in the calculation and improve
comparability.
DELEK US HOLDINGS, INC. AND SUBSIDIARIES
Segment Data
(In millions)
As of and for the Three Months Ended June 30, 2007
---------------------------------------------------
Refining Retail Marketing Corporate, Consolidated
(1) Other and
Eliminations
-------- ------ --------- -------------------------
Net sales
(excluding
intercompany
marketing fees and
sales) $439.1 $486.4 $177.4 $ 0.1 $1,103.0
Intercompany
marketing fees and
sales (3.8) - 3.8 - -
Operating costs and
expenses:
Cost of goods sold 321.9 430.8 171.6 - 924.3
Operating expenses 18.3 37.2 0.3 0.1 55.9
-------- ------ -------- ------------ ------------
Segment
contribution
margin $ 95.1 $ 18.4 $ 9.3 $ - 122.8
-------- ------ -------- ------------
General and
administrative
expense 13.8
Depreciation and
amortization 8.0
------------
Operating income $ 101.0
============
Total assets $418.1 $522.3 $ 97.2 $114.9 $1,152.5
======== ====== ======== ============ ============
Capital spending
(excluding
business
combinations) $ 13.7 $ 5.1 $ - $ - $ 18.8
======== ====== ======== ============ ============
As of and for the Three Months Ended June 30, 2006
---------------------------------------------------
Refining Retail Marketing Corporate, Consolidated
(1) Other and
Eliminations
-------- ------ --------- -------------------------
Net sales
(excluding
intercompany
marketing fees and
sales) $454.0 $365.6 $ - $ - $ 819.6
Intercompany
marketing fees and
sales - - - - -
Operating costs and
expenses:
Cost of goods sold 369.2 324.2 - (0.1) 693.3
Operating expenses 17.2 26.1 - 0.1 43.4
-------- ------ -------- ------------ ------------
Segment
contribution
margin $ 67.6 $ 15.3 $ - $ - 82.9
-------- ------ -------- ------------
General and
administrative
expense 10.2
Depreciation and
amortization 4.7
------------
Operating income $ 68.0
============
Total assets $311.4 $369.7 $ - $122.3 $ 803.4
======== ====== ======== ============ ============
Capital spending
(excluding
business
combinations) $ 24.6 $ 6.7 $ - $ - $ 31.3
======== ====== ======== ============ ============
As of and for the Six Months Ended June 30, 2007
---------------------------------------------------
Refining Retail Marketing Corporate, Consolidated
(1) Other and
Eliminations
-------- ------ --------- -------------------------
Net sales
(excluding
intercompany
marketing fees and
sales) $795.8 $817.3 $295.3 $ 0.2 $1,908.6
Intercompany
marketing fees and
sales (6.6) - 6.6 - -
Operating costs and
expenses:
Cost of goods sold 622.1 722.3 286.2 - 1,630.6
Operating expenses 36.0 64.8 0.5 0.2 101.5
-------- ------ -------- ------------ ------------
Segment
contribution
margin $131.1 $ 30.2 $ 15.2 $ - 176.5
-------- ------ -------- ------------
General and
administrative
expense 26.0
Depreciation and
amortization 15.0
------------
Operating income $ 135.5
============
Capital spending
(excluding
business
combinations) $ 19.5 $ 7.5 $ - $ - $ 27.0
======== ====== ======== ============ ============
As of and for the Six Months Ended June 30, 2006
---------------------------------------------------
Refining Retail Marketing Corporate, Consolidated
(1) Other and
Eliminations
-------- ------ --------- -------------------------
Net sales
(excluding
intercompany
marketing fees and
sales) $816.1 $663.2 $ - $ 0.1 $1,479.4
Intercompany
marketing fees and
sales - - - - -
Operating costs and
expenses:
Cost of goods sold 688.2 588.5 - (0.1) 1,276.6
Operating expenses 34.9 49.0 - 0.2 84.1
-------- ------ -------- ------------ ------------
Segment
contribution
margin $ 93.0 $ 25.7 $ - $ - 118.7
-------- ------ -------- ------------
General and
administrative
expense 17.1
Depreciation and
amortization 9.1
Losses on forward
contract
activities 0.1
------------
Operating income $ 92.4
============
Capital spending
(excluding
business
combinations) $ 32.1 $ 11.3 $ - $ - $ 43.4
======== ====== ======== ============ ============
CONTACT: Delek US Holdings, Inc.
Investor Relations Contact:
Assi Ginzburg, 615-224-1179
Vice President of Strategic Planning
or
U.S. Media Contact:
Lovell Communications Inc.
Paula Lovell, 615-297-7766 or 615-972-2964 (Cell)
or
Israel Media Contact:
Arad Communications
Lior Chorev, 011-972-3-644-0404