DK - Earnings call transcript Q3 2017 | Delek US Holdings, Inc.

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Operator

Good morning, my name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek US Holdings Q3 2017 Earnings Call. [Operator Instructions] Thank you. I will now turn the call over to Mr. Keith Johnson.

begin. may You

Keith Johnson

results. Good for Sarah. webcast would to XXXX like discuss Thank us morning. on everyone financial quarter third joining U.S. and today's thank Delek you, Holdings I conference to call

President Joining me on COO Fred Kevin call management is as and well EVP CFO; EVP members and of team. our and our Uzi Kremke, Green, CEO; Yemin, today's Chairman, and as other

under forward-looking As a statements contain Federal reminder, Securities is term may Laws. this as defined conference that call

call this be during are made limiting statements expressions any purpose, to forward-looking may anticipates, to this of are statements deemed the believes, identify fact similar statements. forward-looking that historical expects words For not Without and plans, intended foregoing, be the statements.

factors Exchange in Securities You with the and set Commission filings are earnings that by forth statements cautioned our release. and these our may in latest be important affected

operations statements, differ in obligation As results forward-looking any the a a events information, or statements. otherwise. future from discussed to We forward-looking or result, undertake no result of whether the update results new actual may as publicly materially

accepted to generally in the Investors encouraged of comparable to review reporting results transaction financial or GAAP we certain the non-GAAP principles financial measures accordance not on release, of these that financial on posted to are able to we which with results, results. section reconciliation can addition be non-GAAP to found in ALDW. Investor GAAP, are pending In the like the report everyone press with remind Relations which accounting is our I'd comment website.

will Fred some a the And an Kevin. of On begin turn call. for taking will before I result, of call our comments. we on about strategic with the today's key it offer initiatives. With to today's over the performance - Kevin on that, to a Fred only quarter call, be will over few turning financial questions As will closing a Uzi update review operation

Kevin Kremke

basis of per negative of of On to $XXX.X net quarter the share loss or or diluted quarter in Delek an an million year, loss or U.S. to or income Delek adjusted share of per prior of U.S. million net per $X.XX of XXXX, the per income net a third the $X.XX share $XX.X compared $XX.X basic compared for basic reported net year. $X.XX reported adjusted $X.XX quarter million a year negative share in the For this last third third $XXX.X period. of million adjusted

transaction in I addition operating would that due a discuss few by more of plans. pension line reported third G&A detail XXXX A Our of primarily to third XXXX. expenses, partially year-over-year addition press adjusted million of period. a the was minutes. refining the EBITDA of costs This a $XX.X the quarter release. financial was which approximately adjusted and prior results include will on and the tables is increased to in in close $X.X like included year the in Improved reconciliation to million offset results of freeze compared quarter of certain in such our as in consolidated following million did July to On the increase X $XXX.X of conditions million in the $X expenses I G&A interest items in of Alon. the the to approximately earnings the were assets the basis, of segment transaction drivers primary market note Alon on a basis, related the gain of

million the USA included Logistics write-off interest a this $XX and was Our income XXXX. deferred XX.X% year. associated third the partners Alon income tax rate This rate, Delek excluding net tax in in with of the third $XX.X of million, noncontrolling quarter quarter tax

income the was amount, XX.X%. tax rate this Excluding

to spending. capital now Turning

third $XX.X year. quarter million during expenditures period capital in approximately the were of to last million Our the compared $XX.X

and the quarter million in XXXX, at our in retail $XX.X our segment, logistics segment million million in million third our segment, $X.X $XX.X we During $X.X of spent refining corporate.

a capital XXXX. This in $XX.X second the basis million our level. reduction segment, ended our the a $XXX consolidated includes XXXX refining cash million net be our approximately in million at We Our expenditures million corporate and This previous $XXX and amount of million are year. in in is $XX.X of compares estimate retail million of forecast $XX from million with $XXX.X which $XXX.X $XX.X for segment logistics on full debt. the million to $XXX quarter million, segment, our to

right net of at million, net we $XXX debt Logistics September had at $XXX XXXX. at of million debt XX, Excluding Delek

El Krotz fair a spread from sales prices compared this year. from XXXX Now and to and of In Alon a the Krotz in in refineries. of Also, improved contribution primarily third basis segment. refineries same in per Market year. year-over-year product at higher as of million combined charge to $XXX.X a Tyler to we margin and for value I incurred of quarter to per the Gulf to Dorado, the reduced compared $XX.XX the conditions in the segment, charge higher $X.XX barrel quarter. of adjustment increased refining a contribution the at by Coast of like the barrel volume its to year last in affected third margin inventory crack the Delek The transaction. an partly quarter X-X-X $XX.X market contribution would Alon and improved increase $XX.X for for last related year-over-year conditions on contribution our period The on Springs quarter Big El July is million third XXXX, by due Big discuss reported U.S, the we Spring of X, Springs due inventory of million which was increase our $XX.X acquisition margin other to margin Dorado, additions Spring results million

year $X.XX average barrel to the benefited crude prior barrel differential the per of period. $X.XX In was compared crude to discount system refined that per addition, from WTI Midland in the Brent an

capacity the to This compared late of system by $XX.X Spring $X.X and Harvey. the Big in increase the million August is RINs in affected September segment near the million was due year-ago primarily Hurricane Krotz and refining period. the all expense of period Springs to addition Our operated refineries. refining during in

million of segment X year, the in in includes of the in U.S. retail to in acquired was year-over-year gallons on for $XX.X corporate/other year transaction in segments. asphalt the This year business retail business of Our was were for contribution year negative Contribution of financial no a this the an million structure per third segment our acquired quarter composition Paline resulted prior year-over-year segment the compared million margin comparison There's revised gallon. Merchandise On in sales fuel segment Texas effective of information, $XX.X pipeline. $XX.X Alon period. - the July this was were negative internal $X.X performance period. in XX.X of the now our million, reportable $XX.X the margin in West this year change logistics a to Also, to an as of basis, $XX.X at The improved quarter margin margin million. wholesale margin third was primarily X. the million due contribution and sold this approximately average resulted with the approximately was XX.X% Alon the the Delek $X.XXX July in compared average million it segment in transaction. which prior

of the previously a these segment. other location of now that result changes, a our included and corporate reported As not was activity results refinery specific refining is hedging in in elimination to

prior million of hedging reported this hedging in in change, we to $XX.X of period. year million compared XXXX loss of segment realized. in $X.X quarter loss net the of for the million this was third Approximately year third quarter Following the this the $X.X

light prices in light were strategies third shut to at net in This increased change hedging a as of quarter for of products on time compared Harvey. half primary latter basis. our Gulf period down factor refineries product change the of to price was the place Hurricane for loss the time XXXX, During the the year-over-year a the in hedging related Coast

have our strategic initiatives over we discuss will I to to Fred turn the some Now call underway. of

Frederec Green

Kevin. Thanks,

an I'd This as RVP be to approximately to $XX the on refinery it To million the with improves to to give we isobutane expected XX gasoline it provide prices first benefit million. $X.XX complete flexibility to example EBITDA the and further Springs such expect create and our low-value are higher-value gallon. million of to Coast with moving the After spent into expect year, currently XXXX, in expected capital Krotz XXXX. annual forward approximately initiatives that gasoline from is you like should million, the this products low grades premium to summer compare and project ability gasoline. of as convert $XX isobutane. of discuss $XXX we we of for the X.X-pound Through quarter is production improved The project, to prices we additional per we be conversion, you the expect this cost project. project spread this $XX that the evaluation, could unit the First, has averaged Gulf at - Since refinery. alkylation by total September

should refinery. mid-$X.XX Our value we at economics enhance a are believe long-term this on spread, the project based and

option is Springs and price able into are ship to is Midland also to pipeline flexibility, oil We on attractive flexibility. crude Paline to time. reduce ways LLS. increase more By Midland to oil access crude Krotz over transportation our cost be to One we exploring crude relative WTI the should sourcing adding the point crude increase when

the that geographic evaluating from including remains footprint, assets, a value the are Long operations. to continuing do From part Beach Regarding we now I and of At our locations and California discontinued not we part assets. of reduce current want Both and our and to of fit the standpoint, discuss strategic exploring we're Paramount, items. cost a derive ways to over AltAir, those they couple time, options think operations. modeling Bakersfield, it are

mid-cycle quarter account, it I'll Uzi We're we're complete crude be of comments. expecting unit. his the regeneration Taking this Springs the XX,XXX approximately to our Krotz in reform in fourth per With heater the closing crude we a Krotz into turn fourth Springs. and barrels quarter on replace that, to catalysts for taking a also at to During XXXX, the expect of to XXXX advantage day. perform throughput the opportunity decoke isomerization at over

Ezra Uzi Yemin

a of allowed from and EBITDA Fred, adjusted companies operate during quarter you, our combined on the capacity. the a $XXX Hurricane morning. operation good was the This Harvey near great of teamwork achieved we progress to teammate's as used substantial million us Thank the and and integration system

the not ratio ALDW in approximately During an reached ALDW already agreement of exchange LP DK an This own the hard committee our assets of growth significant of the Midland acquisition to brand synergy conditions, conference targeting on the and allocate thank to first capture is does us transaction, to unit. more to and to eliminate in of following cost from want DK distribution crude should was the subject require refinery all-equity system during discount. of XX.X% into ALJ. and It capturing initiatives The and for transaction. the sale ALDW continue simplify that capital higher efficiently the from cost a This of closing the corporate is each of acquire Delek to WTI, third U.S. public logistics We've X.XX we their is employees unlock XXXX quarter units of future well-positioned does should through DKL. Midland XX% approval structure, to synergies potential benefit ALJ. was one close pleased our this not we allow quarter, able our the expected that we're capital company. to process. purchase strategic customary shares I'm the investment the LP company our for DK the for made shareholders. Also, remaining in to ALDW progress the retake of I work of value be and

$XX way During synergies of million we the towards approximately the well $XX annual our an $XX of goal with $XXX quarter, of are midpoint million on captured on third million a to and million. basis

through of are to Also, down and focused potential logistics crude approximately logistics future we oil team the our on this support growth EBITDA through can system, unlocking In should opportunities. access million. to addition, large-product the $XX operation well million large DKL's to forward balance through with Based evaluate Krotz improve integration move us on $XXX XX, cash Springs, initiative enable financial September approximately future. support initiatives to flexibility growth our and potential the our was This in DKL.

continue to for explore remain company, As larger, focused by opportunities more created we creating on long-term we a our diverse shareholders. value

I Alan I future. my with will working DKL. and him for with call Alon would operator, the dear it turn forward for Sarah, Moret Sarah, to in to friend to questions, like joined of I Before the the you transaction, to President over his congratulate as look that, With the Alan open DK appointment the please?

Operator

Your first to a a information be question line [Operator Instructions] [Operator participant Instructions] gathered. of whose from was comes unable

Blake Fernandez

I Weil. Fernandez Howard at think Blake Scotia it's me, it's

Ezra Uzi Yemin

my is yours Blake. Well, pronounce, I read name to don't hard something now is I and to but new. learn think

Blake Fernandez

see nice here, Congrats you back the on Uzi. the It's black to results. in

So guys. good you for

Ezra Uzi Yemin

be to here. Happy

Blake Fernandez

Yes.

for question So, you.

project So, the with DKL? you I as here with now say some going from discussion are marks was fair was previously back you're it continue think to potential drops project on to operating of that to sanctioning forward now potential obviously, to track there this asset whether Krotz some this question this it. on Is at about moving with EBITDA there Springs, facility and drops

Ezra Uzi Yemin

up back way. it. answer I'll around I question. to different answer the drop-down. dance not it from I'm a want the to Let's in going

As Krotz past, in we of X all that said we it. improve we to to in look itself, aspects need - the order at

The first to refinery. crude the is transportation one the

The thought we that should that get products didn't And premium the we we selling facility get. is third, second of the the itself. the

with start initiative. first the let's So,

maybe will to quarter The As the in the in less - already December we'll now last see quarter. little fourth we Midland it know was right quarter, we spread it $X third we're LLS see at X in the but than results, or we the $X, in and $X all $X.XX. - around for a the and LLS months, close in sitting more see third it it

So, of or Krotz. the all assets to XX,XXX XX,XXX utilize barrels company need LLS. was we Midland Midland say Krotz, XX,XXX we year to that said along bring the and combined transportation running to beginning or

XX,XXX towards right the do having it Midland - working this LLS that Paline increase big that over-nominated to there going of is are XX,XXX the that and announced than December, XX,XXX by capture on instead utilized having will - us We that of pipeline, more capture to are the morning of some and DKL of now, by which and be differential. That We probably barrels in allow capacity we Paline. differential. to the

So, we're our way. working

Our eliminate base the is as that component. goal a big get Midland we cost of for as can to That's capacity and transportation. to will pricing close one on Krotz

the The operation. other one is

one. were the the that There conservative is one first The a easiest we are put $XX initiative. is we one, return on pretty, alky. million We And at. pretty It's $XX good. when the we are The to million. working third projects are looking wholesale other

a not working that, anything but the to the the market of Colonial to Colonial the we We that of the value pipeline capture along substantially are to on ready announce pipeline. example along are saw big We hurricane. some during

these that. X all So, We're with - work on Krotz. declare victory on said doing we've we and to before along need that we

to victory and question, your original So to assets say now drop premature. declaring DKL we the is back to down going are going

work I say, quarters short a So, we'll long question, the talk then us hope everything. few improve to facility That a answer more let and was that. a it and I about would covers but

Blake Fernandez

very No. guess, I'll I questions on of spend That's my both Krotz, just then. comprehensive.

Do Just suggestions you like initial million bulk XXXX. of going on into or given of capital roughly seems And thoughts leave obviously have that that's to there. $XX spending it the for or I spending you so, think spent, put kind modeling the I'll it? it's it the

Ezra Uzi Yemin

come million. surprised this around not $XX I'm $XX It's with million. How question?

Blake Fernandez

million. $XX

have you that just do - total? Or is And a that. Okay. add

Ezra Uzi Yemin

is remaining XXXX. And the in

Operator

a next comes question question whose line Sankey, be Instructions] the gathered. Paul whose participant [Operator line unable not next of gathered. Your of was information from company be Your Instructions] to to the able was from comes [Operator

Paul Sankey

out, be on You really front? strategically going work us. consolidation I the and just obviously you things but MLP exciting more do very with this on advancing seriously, company can previous level you anyway, was analysts do obviously yelling yelling made I Uzi, for out the Where hello, right you XX going "hello, this know it's Delek high There's at see tough the where forward? don't But call hello" how now phone. to us. now strategically there all the on a one. see for

Ezra Uzi Yemin

would for the question you, the call. we Without finish not

it's thank and Brent Midland So, with smart next And Obviously, it's saving usual, doing. very and quarters, good for Alon this. complete you what as doing very a the of will In hopefully a everybody integration from question X, the way... X by the one. we

Paul Sankey

it let I Uzi, you integration? complete, define do is me the when How that... is mean, interrupt.

Ezra Uzi Yemin

capture accounting, both synergies. HR, then and And of obviously. Complete systems IT i.e., the most the

are we end the by think I next get year. the synergies of all to hoping

is looks know to step ask our if the ourselves so way the happening continue pretty we to it continue good. to to expecting at very all good, So, balance is to is in grow company. and we this next And far, we look want Obviously, the we sheet need the then are opportunities marketplace.

ideas Alon getting that And early But that market, we something to on XXx made opportunities it that victory are marketplace. so better that already in doesn't the on integrate sense for integration. good It's there sense. our progress and doesn't feel actually multiple on have to undervalued over ability in midstream that into make But see we we pay we better assets just the too side. the declare still years. the We that obviously, assets to make think

Paul Sankey

the that of a to or you or growth concept that refining of Yes. a you Is more undervalued keep What more concept both? midstream and obviously thinking are the want about the pursuing?

Ezra Uzi Yemin

allocation. we We capital don't we sheet, all strong the very want use basically during to - same We has which - at and look future. allowed Probably maintain strategy buy to want want we to us balance in downturn to with heydays. want ALJ, so don't both. the to want We the be prudent remember the

Operator

Todd the from Deutsche comes question Ryan Bank. of next Your from line

Ryan Todd

a and So on cash cash. question maybe first use of

when had you a this whether there's else the in I about, use mentioned to think the But you talked for maintain the to of capital you think cash fund for the your return the projects cash And as bit about - priorities you cash shareholders? room have able you talked look can little reminder. about number? still being talk million past, talked The balance, to some ongoing. wanting for million about potential to balance. that Is growing to cash $XXX the you've down additional $XXX you maybe a right anything balance? In line around a I

Ezra Uzi Yemin

Yes. And thought process. the

Let clear, I me be next next next - year. week, wish week not week. next

convertible, And $XXX Next the want cash. we, with ALJ redeem convert. we These convertible to the year that were bonds have million them ALJ during the we got transaction. obviously,

debt. will prevent that the And So equity issuance lower XXXX. also for

problems. integrating at look With the then obviously, pressure be there's are way Alon obviously, that a see, as we fourth well we visit mounting these ideas. But market into quarter to what it's to dividend sense or wanted the the thought to as expecting the it to to prudent be we with third makes and doing the buyback. growing, We quarter no system sure and idea this doing, make

Ryan Todd

there year. potential on there barrel LLS? crude. running Midland about a for costs? I difference a to Krotz Just think barrels opportunities your in And a Is Midland see that mean, out swapping benefit benefit of maybe XX,XXX earlier day X running it big of the to up a the for the Midland is terms prize crude, then how dollar-for-dollar of crude to XX,XXX differential potential transport there talked out LLS Is you the on of by maybe the an in the switch out trying potential versus at Springs. the about end of you follow-up comments of is the

Ezra Uzi Yemin

Midland. getting transportation number, cost questions. crude higher. transportation in I'm You're for the asking I The cost great terms not the make up a is going, is of higher will but

$X.XX, memory, don't pockets. will big the a in out of costs $X noise I my Actually, or I portion But probably in saw stay quarter. or in to can third we think it we - but later quarter, the on. the it it our numbers this start substantial giving third of want provide there coming already out was

because want full. for to need the didn't But maintain to make Krotz Just in order quarter, in clear, barges third to anything we refinery want to we it. of almost the it maintain the prices about to activity, pay hurricane allocate higher

in there's forward So, noise noise to disappear in the down. in going will going third the quarter, first the fourth level That numbers. And it's quarter quarter.

Now see we pipeline are to was that's of big being a performing future. And and what we said the portion expectation already Paline reason the are the DKL. the this again, we expanding in that paid is actually

of So, it, a our through portion it ownership. big we'd get DKL

Operator

Wells Read comes line question next Your Roger from from the of Fargo.

Roger Read

out Anyway, I'm operating you. turns question It not for quick here. incognito

Ezra Uzi Yemin

what confused and are there the with with we we somebody hear when is do name so We now to know a don't question.

Roger Read

You making don't know, at be investment altogether. somebody it Springs. Krotz Understand else the you're could

you there? the make the maybe other the an correctly, at how I One barrel XXXX ULSD. side past through in other talked alkylation process, does thought the if remember of the on you But outlet. once would know to providing address IMO items be get location, what about of I that the not

Ezra Uzi Yemin

you the let are one, since Fred, take here. expert DHT for you that I'll

Frederec Green

at into and we're it's so looking we that spare facility. we have Roger, some that also hydrotreating other at options But Tyler. integrate capacity given have diesel take hydrotreating El what going to Dorado to both

shipping by on Mexico As to products working you we've know, been rail.

be may operation. fold that into that So can we something that

Roger Read

right. All

years, for still of So, if I optionality anyway? get a couple

Frederec Green

running We're Yes. numbers. the still

As you can full. got we've imagine, hands our

Roger Read

a often than maybe Definitely. I level. the at mean positive Hedging. about drag it, then, don't be event. to to be corporate it Uzi, mean but seems a And more

whether a part larger X, here? Hedging of all. on a you is remain do? what strategy assets rethink instead there units still the a sense a X as of and makes retail to company, Or do As key not or going that

Ezra Uzi Yemin

September In this obviously, we the the place sulfur to the ultra-low be for clear, hurricanes only. Without quarter. hedging time. obviously, Absolutely, which The the with number. at want time, jumping win because the we month from would We check year, have much. much it big all didn't it in been sense. to last let's of hedging benefited win place time, X same the - and came X is But all the higher obviously, hurricane, of us black diesel the makes jumping

was, operation. I would benefit said from "We hate and I didn't to So, while Still Keith, to the need million that." that people time. the we $X come highlight So, from see I it the hurricane big

So, we this maintain want to toolbox.

Roger Read

of lot for A by that's hurricane, Yes. sure. the people got flooded

Operator

question next Neil Your line from Sachs. Mehta from comes Goldman the of

Neil Mehta

Uzi, had the just differentials. I was question Midland first on

One to think up of versus guys what fair are thinking PI Midland there, that some the be prices do Is that for the to Brent, probably local about profitability your point of how at we of follow Or differential Midland, ultimately is, in crude? from evolving Brent the you and benchmark that then as there questions you a which also over standpoint? Brent? markets? it's it key And product you get sets those more are off say often just time about barrels priced should Midland

Ezra Uzi Yemin

This Neil. question, is great

being I past. for Unfortunately every recorded several me think about the in spoke quarter. times this we I'm

I see honestly So, lower than or the see need us Mars, $X.XX all idea the remember end that, gives time, change our almost season expecting the we is the third today, long point we to One opportunity. still starting spoke Midland take company that market $X expect more $X we'll is will it but that I I year. Midland that to think that widen on as to key or we're than this that Mars seeing. the of toward about Was expensive didn't Brent our and think. by big quarter, that benefited the as idea

yes, stay So, large-width that dictate Do will the Do to for that Brent refineries. Probably big think will But believe the is leave thing, the that with I'll What $X, obviously, $X? $X? $X, benefit I crude go we export. not. Midland that to will comment. Probably it for mainly one long-term. the is this

I Gulf at on the But that. this know Gulf, either are While this And barrel the point. the capacity. to better we're at export than there's increase capacity, the U.S. capacity on time, are capacity. moment, the for focused there's getting people can Over needs there's you - barrel very for Obviously, Midland or limited outside people the you that that clear Also, limited itself do working think it. I limited offtake at or

for short the next we and wide So, the it it will $X, and that, months, after towards few normalize think may $X. stay

Gulf. In terms most question. But itself. need is the our the market market on coming and a these remember are depends index, the It market, pipelines that's just will, to great of pipelines you local that the from we competing if part for

because of market are So today not as market see the or Coast that it have the used to with the the operation. they see because long situation, we shape. DKL in West terminals please of Texas, this as Gulf will refineries situation that Also, in integrated the remember crack spread good as great we as ALJ

them. we're margin continue In hope are continues that that hope the I October, extensively to was of strong. cover of pretty be see seeing margins the Neil. West So, good, to to answered so and your very we question, enough month to I $X.XX every in Texas aspect

Neil Mehta

project? made until on or look the investment big the potential and the capital Yes. just want was is That That you program. about project returning the shareholders clarification, Krotz, looking to or a at done on maybe potentially that at hold story simultaneously you A to return of both alky Is there is buyback even dividend standing thorough. back the follow-up, talked the to was at capital that good. coming I while

Ezra Uzi Yemin

project, to we The quickly. not. are then act Absolutely if does, continue going do what market the to will rather it

Neil Mehta

could underpins Uzi, underpin one EBITDA that in. last the that key unit. Can if us You sneak The million walk the just that one, alky are assumption Okay. you were to what one conservative. EBITDA the through $XX last the points number? million But from they I assumptions? $XX said

Ezra Uzi Yemin

that what was the question. the dictates that $XX to alky. to benefit going I million $XX What question repeat question? the the in Is the I'm numbers behind the million think

Neil Mehta

Exactly.

Ezra Uzi Yemin

do take you want Fred, Okay. one? that to

Frederec Green

the only which the now And a selling to isobutane right Neil, much purchase it allows than convert high isobutane, but utilizing into selling not value market. then we polymerize gasoline. Sure. butylenes a poly and what those make and gasoline, refinery has at can order and cat in us alky configuration us does isobutane unit octane stop is is that butylenes to the to lower

uplift the between gallon there an So, the we the effect isobutane. difference CBOB net a of, our X.X-pound gasoline on see is in and assumptions, $X.XX

you back gasoline volume into of go the But up be now we're CBOB production that isobutane can So, advantage talking about. differential feedstock take and of amount the that to price and X.X-pound the as sales. able we'll will our between

Operator

question next Gresh JPMorgan. line of from Phil the from comes Your

Philip Gresh

at know a thoughts First have you company for any was the said get question, maybe Blake Springs. I trying you which Do around total XXXX I bit think CapEx million to this little budget? initially. Krotz $XX

turnaround I have think you year. next a

this didn't you year. think have I one

there? could So thoughts just you provide any

Ezra Uzi Yemin

numbers but beginning as you year of have we do of a it, sense will the the We'll Board give obviously that. the approve good

from the year, we this through $XXX number, you walk numbers. announced. $XXX the million, guidance the down some the gave million Obviously, of that's previously me let you, So, the

we little than will that I per $XX on the is year look, should you the that And depends CapEx next Depends then specifically, - of that. $XX the for rule maintenance $XX or will about for on call project growth a per not more project regular the mentioned if refinery just the this less. it $XX million a million, on million million If including - million year, alky probably it thereby, million it are $XX need or more corporate just These stuff. million. $XX the and And little we integration. $XX between talk how more turnaround. numbers, much corporate DKL to on than But

Philip Gresh

Got it.

somewhere million range? $XXX So in the

Ezra Uzi Yemin

Well, a that. more probably little than

$XXX more have between maybe - million, and get million you If and little that's the then million, a then bit a $XXX to refinery than for than million. little $XXX $XXX alky, more

Philip Gresh

just a a dividend then Okay, different And maybe got way. it. slightly asking question

benefits diversification and now refineries that flow from things You you have as and like some lot well. a more core provide cash

as might there earnings to is - target? given that? of or Have So, over CFO level you a you time, or that something to a thought of hope percentage you dividend

Ezra Uzi Yemin

we're talk to want the And months. that as with about new regular after integrate declare Very Absolutely. on that these Obviously, or pleased we Absolutely, all system very we about in a continue We just what see, X. or result next need don't X we we quarter X almost basis. the continue and to remember victory that us. happy talk is we'll to with. to the to

Philip Gresh

question. Okay. I last guess,

I drops. I converts missed based the asphalt planning parent all can cash I the whatnot. to the and still if like in to help things you're on this. at fund apologize some and assume So, that the DKL availability

Ezra Uzi Yemin

The bond months the cash Absolutely. we reason asphalt did ago. all offering is all we're the that definition. a well. That's working on few by And as

Operator

Your next Chow of TPH. question the Chi comes line from from

Chi Chow

One, together. why trading I a on the But above but follow on know think a - for Midland Neil's couple up this is think right questions. Midland is we you Midland do discussed want why now? very key do Cushing you, I spread is you to know question Brent I recently Midland.

Ezra Uzi Yemin

quality Because finished. you. you of I'm I thought I the barrels. interrupted the of sorry,

Chi Chow

lighter the would is yes. Is going I the was got seem What's the that there? premium I quality? base coming That the be comments on All since right the to Midland and with the and production guess, be issue ongoing from barrels guess, be question. getting to by we've yet an helpful. this Any and trend, there No. lighter extension,

Ezra Uzi Yemin

not for duration the but your that the again, is to works is done First, don't operation are Midland unit neat the because yield, you from and at barrel there can neat have and it the can different and way. neat the but run operation, coming the companies. well barrels, for prefer What them for itself. Cushing, know, for barrels I this that prefer blend crude our assume our we bring Cushing well or that the we types We that it's along always growing. you barrel and Fred companies hours, only small them Cushing happening of our other the and really company that Cushing When get that's and you we is something for talk refinery. improve in blended from being Midland time can about at as very take always And from

of price. quality barrel So, #X always the is best of the

Chi Chow

Will though, barrels gets start wise, - production barrel the of gets diminish, to of the incremental volume the neat the as out and lighter lighter basin there?

Ezra Uzi Yemin

Spring. money main it's I'm main looking and that other is in, more in more what mentioned and Big yet. tell at quality becoming barrel. at us neat see Big reason What crude we the We're Howard why. in of County talk we the It's bring couple the we hobby alternatives in that at rack of to to around to we that, the enjoy to just stays I'll and it to way Spring Because see But the not and offloading that we to counties concerned about side. about that continue in we're Big are Ford that are only around actually, is. stuff why for lighter that not on to Spring. earlier doing other our that's you getting the Big Spring save Eagle lighter the not the and time transportation, but counties But the - barrels building

Chi Chow

core forward Okay. talked And as the going then you site acquired do this any on have whether before, retail, company thoughts you know secondly, on about but further consider asset of a retail the here? you I

Ezra Uzi Yemin

keeper. Retail is

personally, As we we I, the believe said in in past, retail. retail. believe in

see value entire business we have now. very, with start improve. we see to the will that amount areas We that especially together in to retail to is very or created, with wholesale key strategic over with strategic In the Alon I building our in as think that well. the we in have of business. area Permian our basin, we this see We'll and be performing Alon the there, megastores to we the have continue there's locations growth Basin tremendous and that that has

Chi Chow

Okay.

quick size one. the final one Krotz? What's maybe So of the alky unit at

Ezra Uzi Yemin

Fred?

Frederec Green

barrels day per production. alkylate X,XXX roughly It's of

Operator

question of the of line Akamine your Bank Kelly And next from America. comes from

Kaleinoheaokealaula Akamine

Bank from Akamine of Kelly America.

on on the were on equity congratulations navigate sheet, the any I of balance the on ALWD. there structure. cash. thoughts you wondering to consideration. was versus MLP if all if My given offer tax the cash I'm First, is any considerations use question could With wondering

Ezra Uzi Yemin

honestly, to was great what the I'll question. ALDW to about a talk because shareholders be in DK brief enjoy ALJ, then and can't then, With we price DK behind and a That's outset a idea you happen participate remember, I'll big was company same. of allow we similar just the with the to the very it the about since say, offered ALDW ALJ. much. ALDW the portion with the of of if performance combined idea the

Kaleinoheaokealaula Akamine

Got tax you. consideration? the offer could Anything on you

Ezra Uzi Yemin

Kevin?

Kevin Kremke

the that of that Yes. to transaction. by chance have current get historically, The ALDW they've taxes otherwise are actually participate in transaction, utilize. would unitholders activity in a they virtue But received negligible not this passive to losses

the tax was So, total impact negligible.

Kaleinoheaokealaula Akamine

Okay.

facilities pursuing wondering you any was initiatives whether you the expectations if interested maybe I down, expand shutting on timing strategic Secondly, in those and broadly parties, about may it can Perhaps that have. you're other talk California. includes

Ezra Uzi Yemin

line makes a Obviously, statement putting it the here. below

I'll are strategic now right So, where we line. the put do that, wouldn't that, to leave very have weren't we it - we with the sits comfortable on it below it if the move sheet. but balance we with comfortable

Operator

question from next comes Brad line of from the Heffern RBC. your And

Bradley Heffern

operational most one bit from? and corporate the this harvested it the out, achieved coming number guys you synergy that cost to giving little would Can at the you talk capital. of the a have I synergies most that have But of think asked. about the But of any of my or questions is been imagine you I commercial on have that's I'll point? buckets date. just guys million $XX are

Ezra Uzi Yemin

half not Well, thing corporate actually X. is already. Cost have LC obviously, still We're to capital next LC just counterparties of XX Out XX parties that on, of much. and X. questions. see in time, or Not at to did too of that yet. and the XXX are You're roughly quarter, We to everything as over working with third at or we went that used not this the looking higher. Alon One of are actually on capital other obviously, asking achieved the we of And that facilities the the will now fourth is That bonds. was much cost the great the more worked happen same the ALDW months. quarter. you

big mentioned earlier, the that. what of In Krotz. on connectivity portion terms we of between and the commercial, we're working a And facilities, Midland Paline

we West marketing that quarter. and fourth in margins, standpoint, saw the the in Obviously, working of Texas, we really we is, the and just I'll did way in a the both the operationally right quarter the And it I'll already. it terminals about feel now. of consolidation from that So, range on good some that third that. we're kept that but to say leave the range it we

Bradley Heffern

be On And assets? ask it you and that a actually. that's talk versus Bakersfield, what the see guess Okay. the just there can I about liar question, is operations as opportunity other keeping I'll continued you a second

Ezra Uzi Yemin

that operate spend evaluating a to for finishing it money. don't the way want has put refinery another. planning remember, it money We to spending have to Bakersfield, Bakersfield line just weren't one rail value may not comfortable as and you we as We the we're before situation. permit below but we still - to need or yet just

Operator

from And your comes question Chris BCMI. next line the from of [ph] Damas

Unidentified Analyst

a when $XX drill you would entries have down value fair little Alon. the on million I those inventory deal journal closed you thought made the have made? Could been would with adjusting adjustment

Ezra Uzi Yemin

Danny, do to want take you that one?

Danny Norris

of standpoint, inventory valued in an purchased inventory From fair is sure. accounting the date combination, on that acquisition. Yes, guidance business is when a

valued finished Xst from prices the market X, were at July the on that products we on of So, July. bought Alon

sold that the product. of we the for cost of that inventory, product margin realized from that goods July, in sale sold So, virtually the product, was beginning when the eliminating higher,

Unidentified Analyst

lowest off What mid-June. the the year about WTI just mean, the for rack? I in came we

So, I are unfavorable right mean, most that people now. are adjustments making FIFO

that. done haven't guys You

Ezra Uzi Yemin

that the What Well, same Danny you here. the And do the what is of And mergers of basically in we that are July. for there's the accounting regardless is. margin like basically inventory the as guidance, rack this - said, the it to as in then rack no What That's the book month you did your basically there's for what it did. price, basically for of exists on connection marketplace, at acquisition? so do, the that. that's typical or put price if month take you price these the day very we the with no

Unidentified Analyst

So, inventory this now? product a right is refined

Ezra Uzi Yemin

now, basically but Not - the right it's fair We value. refined. took

Let's for Spring that Big barrels gasoline. of XXX,XXX second say a just had

the plus on crude, at it put at of selling margin, gasoline. of it price initially instead books we the So our

there the sold the from crack we market. accounting Alon, no like this we the we the we make spread when we come million. gasoline, the way on when was did just with it similar to to standpoint, been we what to - stock, $X.XX But or Otherwise calculation earnings didn't did So, sense. was share of margin, $XX the so And the something purchase market because completed to would that. these it adjust based the X have

Operator

queue at time. this And no there further the are in questions

Ezra Uzi Yemin

is. you, and like our talk a day, you soon. mostly, we'll this investors, company what making thank around great Have the Sarah. thank the to thank for friends table, I'd you, employees my to Thank like to of I'd to Directors. But I'd like the Board it analysts.

Operator

concludes disconnect. conference participation. you your you And today's call. Thank now for may This

Delek US (DK) 12 Nov 172017 Q3 Earnings call transcript