Delek US (DK) 27 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

Keith Johnson	Vice President of Investor Relations
Kevin Kremke	Executive Vice President and Chief Financial Officer
Frederec Green	Executive Vice President and Chief Operating Officer
Ezra Uzi Yemin	Chairman, President and Chief Executive Officer
Neil Mehta	Goldman Sachs
Paul Cheng	Barclays
Prashant Rao	Citi Group
Brad Heffern	RBC Capital Markets
Blake Fernandez	Howard Weil
Phil Gresh	JPMorgan
Ryan Todd	Deutsche Bank
Matthew Blair	Tudor, Pickering, Holt
Roger Read	Wells Fargo
Kalei Akamine	Bank of America

Call transcript

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Operator

Good morning, my name is Tasha, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Delek US Holdings Q4 and Full Year 2017 Earnings Call. [Operator Instructions] Thank you. I’d now like to turn the call over to your host, Mr. Keith Johnson. ahead. go Please

Keith Johnson

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

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

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

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

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

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

financial non-GAAP reporting Kevin. closing of With comparable the results, key to offer of to I’ll encouraged Relations non-GAAP website. our strategic press few performance the Fred will some update which On begin posted the review generally over of the financial an be call is are on that, Uzi initiatives. on today's accordance of results. review in call, we quarter to Investor comments. will to turn a report it section addition for In certain accepted before accounting with financial a reconciliation the the And in found turning over to financial Kevin Investors with measures these principles, results can GAAP release, which

Kevin Kremke

Thanks Keith.

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

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

as of certain Act. excluding rate, tax Jobs in associated income liabilities related and net income million $XX a a benefit deferred with are $XXX.X the tax from Cuts income Our Tax result and tax fourth a USA of Alon noncontrolling with Partners Delek of the Logistics million quarter benefit included This remeasuring interest XXX% rate XXXX.

XX.X%. and Act Excluding rate the impact, approximately the tax Tax was Cuts Jobs income

effective to the combined expect we range be in XX%. annual XXXX, full-year tax approximately XX% For of a rate to

quarter in million, compared period the XXXX. capital $XX.X to were to fourth the now approximately capital spending, of our Turning million expenditures $XX.X during

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

$XX forecast our our in in at refining of logistics XXXX Permian was Basin. segment, of the with XXXX $XX.X does and not Our to segment, of million debt. retail This approximately CapEx approximately projects million XXXX, enhance segment, million million consolidated our total. a our quarter $XXX.X Midstream million. million ended $XXX position includes in corporate. amount million for $XXX.X $XXX million include right fourth amount on at $XX $XX.X cash This is in CapEx $XXX.X the net million We In and basis

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

combined XXXX, per of of segment, refineries fourth primarily like barrel fourth Coast of due the million $X.XX would quarter the Dorado by contribution I per a to conditions period margin XXXX. Gulf Big conditions is to for in $XX.XX we basis Tyler year-over-year compared margin with barrel Springs same Krotz spread and transaction. quarter our contribution the the million, on Next, compared increased discuss contribution Alon to for of market The XXXX. segment. addition El improved year-over-year a the of Spring and refining $XXX.X [indiscernible] reported measured as our to $XX.X the In by from Market to results increase crack in in X-X-X

compared discount to the In RINs $X.XX This expense refineries. differential compared period. to period. the to year million barrel addition, of refining per the in Krotz Springs segment, the addition ago and refining crude Midland an prior was system from the Spring to in per million Big Brent year primarily $XX that benefited average in $X.XX is Crude of was WTI the increase $XX.X due barrel,

approximately these transaction negative $XX.X with retail in was was retail margin fuel approximately margin the to million it the in average sold gallon. Contribution and pipeline. Alon as of amount $XX.X XXXX, period. million segment Contribution prior of of Texas results the was at wholesale for margin XX.X%, margin to the On compared in average in of of year-over-year no $XX.X sales compared this $X.X to of quarter gallons logistics Our $X.XX were segment compared on million basis, of Included merchandise prior negative per loss represents fourth segment this year hedging in specific an $XX.X is year hedging a Paline improved This $XX.X West in loss net systemwide million, $XX.X hedges the the was million primarily million the the XXXX, an to There corporate/other a million was in year applicable million business period. for year-over-year contribution segment was period. are fourth JulyX. $XX.X refinery. performance due margin million the the fourth prior a in to the quarter in $XX.X acquired that for quarter comparison year, not

turn Fred. to call Now, the over I will

Frederec Green

like update initiatives. some an I’d you give of Kevin. Thanks, to our on

first First of from our remains spent refinery be XXXX. and we total we EBITDA we forward spend million and million expect December XXXX be $XX expect is alkylation on million Through project to unit project $XX at the approximately cost annual $XXX to XXXX. in to crop million The the and schedule to completed $XX $XX springs quarter expected this in million. moving

some our Long Beach February gasoline divest reminder, convert this assets. On Coast. sell for West project should XX, million. as provide Paramount, production asphalt terminals to Work low gasoline. value We’ve continues Coast we progress to summer a low and California ability made improves RVP premium an West the into As additional the on higher assets $XX non-core grades of entered and agreement to isobutane it into such flexibility value products as the divest to

As Beach included discontinued are a in and the Paramount reminder, Long operations. assets

EBITDA in of million an of effective These cash. down March $XXX expected generate DKL at to drop support close are date Our in the should logistics X Spring approximately to its for million Big that should of assets March $XX.X with growth. assets

total Krotz Tyler, XX,XXX we barrels XX,XXX per day expect By per Due approximately DKL. a barrels potential oil wanted we oil From throughput $XX Spring, million average at refinery, to to a at quarter. have the at Big down at to our first Springs El the work for per per mostly refineries, XXX,XXX of planned refinery, oil logistics throughput quarter Dorado, expectations EBITDA Big the remaining and Springs XX,XXX for and We modelling standpoint, day barrels Krotz expect could day. per of the average barrels discuss drop crude that day be Spring Tyler crude XX,XXX the barrels day at throughput future at I crude XXXX. to approximately

Now, to the Uzi. over call I’ll turn

Ezra Uzi Yemin

Thank year platform. the you, of EBITDA adjusted Fred. generated With we half second operating a to $XXX XXXX, strong during the approximately of our large million finish from

progress substantial on integration teammate's Our ALJ. the of

These distribution did now million XX% believe As Board $XXX of December of $XXX annualized of range also shares ended that captured repurchasing have to since repurchase balance annual million million. costs acquire shares to return our our This and in capital on million It cash XXXX, final $XXX million synergies $XXX an We million allocate XXXX. $XXX retain million XXXX. not the exceeds and active we JulyX XXXX targeted completed of we a in all-stock approved previous a our XXXX. of our an became would approximately Alon can cash a units XX, to in basis $XXX then ability plan program. We we an support February our We ALDW for the have capture us a of $XXX in million an DK We strategic To million. December, to million to the increase was to $XX remaining On new basis structure company corporate allows in to on reduce synergies in dividend. $XX repurchased our our ALDW. company. Delek further high in simplifies transaction. initiative step the shareholders, February transaction DKL. public we X, own of investment X.X and and repurchase under to with quarterly approximately Directors

explore focused for to long-term a on that, opportunities creating call As remain the larger please With for open we by we shareholders. diverse our Tasha, continue would you company, value created questions. more

Operator

[Operator Neil from comes from Sachs. the you. Instructions] first Thank Mehta question of Goldman line Our

open. Your line is

Neil Mehta

great with will monetization all what a the HI, to come, asphalt quarter. all balance this to with Uzi players a position. the are on to monetization, do is, be dropdowns, do sheet cash, Uzi, question guys you the your and going start pic, strong still plus with team I just big in congrats wanted potential of you the

allocation here? you forward going do So, think about the between how

Ezra Uzi Yemin

year. with Obviously, we the Neil. as the very good and good quarter feel thanks feel start Well, company with very the we

a great raised question. You

modeling a point standpoint I like to For couple of things a would here. though,

sold RIN the we it in obligation, XXXX did our January. team As

around We a that we cash. all as So, of to $XXX but just it that for us would remember. sell and that million had with can about later, talk obligation, did little

increased still buyback. have we what is, that’s cash position reason we and the increased dividend did we So, the obviously good very, the a very and

less we so the in quarter, look, million a of you shares. bought If far little than $XXX

be We expect very of two-terminal that growing to of and to on of once That the So, that going million we promised was together stabilizing in want. buy is We to going GP. the and to are we with and logistics substantially Permian market shareholders the and we that see deal We around create in-light almost aggressive that Alon a DKL. allows gathering do year-over-year. think had synergies Permian integration $XXX the us that of the there especially and more the ourselves great fact all shares. the is And are the that DK the and opportunities at is assets, both buy market look the opportunities. opportunity we are we the situation an way

we and will improving if So, be situation the balance shareholders, aggressive. assets, our assets between to to that continues obviously logistics cash continue see returning the

Neil Mehta

synergy Thanks of initial driver on Uzi. what raise, was your Delta the the versus the And expectations?

Ezra Uzi Yemin

Three areas.

of Brent-WTI. supported ending a commercial the strong to First year, delivered all,

capital, of we supply the to cost actually the goods. Second,

the and kept supplies - yet, expected, side talk in going corporate come good and we of weeks that few also what lower about don't we it matures, savings next pocket, some the finish We we our be than that. have we but other We of back the see now that of to a to to three capital hesitate cost capital. that with cost in not the couple did is

Neil Mehta

tightened is [indiscernible] pipeline had come there at no me, but up Last so least our Permian in balance of bit, XXXX, real those for was question online, the the you a for capacity numbers. little differentials

your from So, how out versus do playing Middle? you see these spreads Brent

Ezra Uzi Yemin

around or or we this or when surprised to mainly call, and next the the fourth to if a months widen, them Midland $XX expect that little Neil in-light $X.XX we today handle crude year. get than quarter at especially - now and be for wouldn't quarter expecting $XX The you $XX of fact [ph]. towards hosted are [ph] middle time is I and ago, WTI to differentials, were - us to Well, Brent $X to $X.XX back a $X, or first plus of is the more XXX we to three we $X.XX.

Neil Mehta

Okay. Thanks Uzi, again. congrats

Ezra Uzi Yemin

Thank you, Neil.

Operator

the from line Paul Your next from Cheng of question comes Barclays.

Your line is open.

Paul Cheng

good morning. Hi guys

Ezra Uzi Yemin

Cheng Mr. welcome back.

Paul Cheng

in of and maybe you. one one-off see, of the is Couple should the Springs, this of for you over any baseline aware make impressive most what be really since impressive quarter rate? item Thank Fred, took Krotz there is capture or an the there we is margin is this changed you in Alon improvement have good things, a in such category that may is to

Frederec Green

all in past us. initiative for the took Paul. of we across discussed first the Well as We major

very well. refinery is their think performing I

the in allow quarter. If and work you close look, we that as will performed us said the run to capacity fourth Fred to first quarter in

operation For well. is itself, very the doing it

between was Midland Midland, we play fourth almost we XX% that on with together the transportation business. and would Base, that and to during use utilize quarter and initiative the to Paline LLS Midland an had side the wide, as we cost the ability of of LLS pipeline and ran Second, helps

starting the we are the colonial. to work wholesale Third, along on

is which with to the in year that very the we we we million, up of project, declare and that on the that company improve, space, Krotz shift we continue again, in as colonial gate of This we well, you wouldn't refinery expect allows first colonial and as everything with Alki of WTI keep a higher. is past, that is served we not remember, that the but have Krotz that. believe quarter We i.e. with two to selling In margins Alki we If did the the refinery past that next see increase fact piece quarter continue has the we to it of and million wholesale first the towards to the that at $XX fact bare combined or a said the us on that the are progressing capture you with number had hoping the say and now, $XX the widening fact to I'm us either of give victory higher on I Project. to the well result the more now from news going price or side. market quarters trend. of used another on year end based margin component this finish to that very

leadership a Our out the goal again i.e. a were viable And the able year past Krotz versus are or of that is In X.X% to to situation point, or we to refinery. year the enjoying because some it good we last is get the of manager, operation quarter, losses year the improve cost and XXX.X bare lower the again. in numbers. refinery

to are the the refinery. these contribute factors So, the performance that of

Paul Cheng

incremental that also order crude attribute it or well? to say You Midland you Paline Krotz them Spring, the Pipeline, that some is just bode including of the

Ezra Uzi Yemin

just repeat? Paul, I not you can sorry, question I'm sure the I'm understood

Paul Cheng

been [ph] incremental of of quarter, shifts the the the the You Spring running those other crew Krotz alternative fourth able some crew pipeline from the in is railroad have benign the or also the transportation? or Midland, incrementally in them from to in the the refinery, run is to more

Ezra Uzi Yemin

own. understood the is railroad. also the I Pipeline annual designated the are, that to pipeline we There have pipes both Paline question. as we remember us and part All no

Big together Spring that to we So in with area that situation. the gather continue barrels fact the the helps

is there rail. So, no

Paul Cheng

XX% the the maximum? yes, And is

Ezra Uzi Yemin

we probably in if widen fourth to condition, number differentials good will will, Midland no coming because depends to capacity the the push that with it of quarter XX% we third The expect we margin. Well, you market fourth that try quarter optic online, higher to market to or on obviously percentage, maybe and way expect was behave the XX%.

Paul Cheng

hedging goods and contact of have question. And or gain Fred you also, so reflected that is, that loss you and total X.X in corporate? I've is that hedging also that is sold or or in is really long-term saying final that corporate One short, cost if part the to [indiscernible] hedging, included were Two refining of the your also is X.X, is some those in have that used margin? your the loss means and as presume no resale whether

Frederec Green

hedging of level, the is refinery an refineries, overall So, if [ph] is and buying almost the general is basis. happening it, with physical that it will actually is refinery, the some physical same ethanol in we're the was very into we hedging the - limited the all U.S. change Delek there but that hedging incorporated there because those NO’s there it allocate in the be that almost on to don't

Paul Cheng

on one, the is the that collapsing company refinery into final other of in something DKM look in has permanently do you guys the you sponsored capital by [indiscernible] Okay, cost logistic the change by to for the and that a the GP see LP, subsidiary? there will that the at seen idea order reduce

Frederec Green

good will the months. of project still Paul Well we should our mentioned day, - - carefully know the the come for not with matured at we had next are as that we but look very looking as very project ideas I that at over some the it very expect and that we think need you to Permian some DKL, but think that we the carefully. good obviously look to We we to end logistics peers, that are also, have that we XX growth, at of to market very, XX as at

Paul Cheng

next is two years Okay. years to three to XX going over say the old? be, not But in is it months, it

Frederec Green

Probably XXXX. in not, not

Paul Cheng

you. Okay. Bye, bye. Thank

Operator

Our Citi the Citigroup. Prashant line from comes of next from Group question Rao

Your line open. is

Prashant Rao

little a rays down synergies, drill there. bit to Wanted question. the taking guide the for on on Thanks the morning. the Good

kind how step is wanted will thinking down value that sense should there maybe get we and of cost of, but just And how see? wanted of in a get and I the more go basis? in weeks, kind the then of so detail coming a be what we low there more thinking to of understand on or bigger there, down forward to a flows picture just the of terms could On we in sense much of cost bringing about maybe capital, cash terms your capital of part, longer-term a

Kevin Kremke

Kevin. This is

things. total on the - it increased million our range On of cost synergies, to several the captured capital $XX we synergy based

is sheet savings. that one then the as of balance are is reducing the So, debt that JR portion seeing the of And kind addition million the we looking at driving balance the meaningful are of on that we’ve some interest we're kind or all of that there, annual to getting order it significant credit new we're at at considerably. looking recapitalizing opportunities in of on $X letters also our lower the level DK of expense interest but rid consolidating and that target. of recapitalizing in cost a of new some certainly in driving sheet a expense part so is the agreements the and got facility probably some million reduction in $XX [ph] credit opportunities a revise and stuff the of But, are of into savings

Prashant Rao

progress about the California, people volatility work margin That’s doing terminals on just turning Thanks. environment in. Okay. obviously how Paramount, that in figure affects questions [ph] bit we those assets that as wanted to And some we have maybe the helpful. Pad you're to maybe how made that or sort near of could Long for gotten you return really process two X here those can and you XXXX, those term much getting been Beach out sort to I and about sold in about how sale have XXXX? in the progress the the asphalt about in a talk agnostic ask on little then to good assets guys in [indiscernible] longer thinking of or

Ezra Uzi Yemin

can did not change up. below not put them reason. did and for we move obviously, think line And they we that Well, them our sell we them a were there. We in mind the back

over buying great job mid-continent the Fred continue sell So, that [ph] did terminals We two DKL the of asphalt will sale months. with together Melissa and GPIE Long that is finishing and terminal. the next to think should terminals, Beach a believe the were I the and and few happen two DK Paramount busy we will

Prashant Rao

for how get picked [indiscernible] is know towers as Q-on-Q Spring, to play there Okay. be, that just about be Spring you bit at sense are up higher Thanks just to one are you call XXXX a could is a the, what improvement you maybe and accrued and of Tyler Big that, if crude if in should using running we quick that and of sort at if as we throughput was? that you one and the a thinking anything on to little out wanted Big

Ezra Uzi Yemin

great You I explain are XXXX. behind touching a point. will

mainly First XXXX, way is, market if continue will we of stays the the all, Sweet. run it to

Big However, we XXXX and in-light run look to needed. as that both And the optimize is to the if Spring that crudes of flexibility our optionality [indiscernible]. consider [indiscernible] and IMO, our at continue El Dorado have we

Prashant Rao

Okay.

would able right than at to we that at - you - the you to deadline towards be would the up look IMO flex think So, kind in get it? of be way would as to

Ezra Uzi Yemin

Right.

Prashant Rao

turn very time I you thank much gentlemen. it will the Appreciate it. Well, over. Perfect. for

Ezra Uzi Yemin

Thank you.

Operator

Brad RBC next from Heffern Markets. comes from Capital Our question

Your line is open.

Brad Heffern

DK talked Plains that system how I a of Hi, quantification more and or wondering was in go the refining EBITDA could everyone. for little couple if of just DK? you’ve times the into any about are that it of good of morning benefit now, helps could Green of give that as anything sort JV, you to Uzi, you else detail terms

Ezra Uzi Yemin

absolutely. let all Well, best two well, The me start over. markets,

to there it capture we at third And look blamed exceeds another and do that Dorado quarter, rate both and Mexico. Tyler quarter and and out We was of one hurricanes we niche that El at it in fourth market netback. go is Tyler, the rate - Tyler, to fourth the And the the exports by quarter are now change export you capture one. allows here. reason Tyler as the for the quarter, on And third of proving send grow Let's if Mexico a is expectation. step in enjoy and to their to again.

that are a the Caddo more pipelines several is plan connect connect looking the North Dallas, we assets netback these niche to increase buying we area. be the capture will that we're we are Tyler, in area, looking basically that at have our own Now optionality and able, we which at terminal, we in to we the two

pipeline obviously we am Now Caddo the have only is full. do is sorry, now I XXX feet the Caddo the away. terminal and is full which terminal, Greenville

we the So, now connect increase and that capacity.

companies DKL and our enjoy both can So, that. DK and from

Rock, the we the North the throughput to El DK the we biggest On that Rock, both Little us will Dorado for is Little benefit know DKL. of the allow that outside trucking and North to believe all market and increase

Brad Heffern

for And couple Thanks color that for Okay. maybe all a then Uzi. Kevin.

front about So, a the whether if front and OpEx rate quarter, could the run talk what’s on this the was run I then rate was that’s you also wondering G&A refining so low pretty on there?

Ezra Uzi Yemin

Well a that we have stay are of the the hard remember on just had OpEx We the with $X. to that exception we the in need Krotz. fourth target in to always refineries quarter the very below turnaround we

minimum what per going bonuses cost. are expect you that barrel bonuses, conducting an full. as regards that sure at are G&A - the our made the we we we quarter, to in will we is is weren't an probably paid in happened current Tyler, confuse both don't exceed we if long so the the had you that And on change are am In the that I based we because the bonus should we people, much quarter, third Big may we being and during increase remind we program Spring and see that which So, year. running area situation progress only pay several in as we in target, to until target. with,

fourth to of So, third G&A. around the and we of have OpEx and was it million continue the were normalized the million year some expect We half than the million. majority don't basis. on $XX but $XX accruals strong booked and fourth to quarter bonuses $X in the on compared quarter, quarter around we Half of is last quarter booked the fourth in that bonuses is number on is the or a it this the

by to for the G&A probably quarter, normalized want OpEx and million. confuse We lower explanation have normalized putting an here. we $XX the press people in to not we want by but So, are been release, give did should it the in just

Brad Heffern

great. that is Okay

Kevin Kremke

And the quarter also cost, I transaction which included mentioned. $X.X of million

So, subtracting say the in to quarter bonus probably the rate I million run transaction G&A normalized cost million $XX would the and per $XX range.

Brad Heffern

higher cash Okay it. think rate got tax being the better the specifically, do the provisions, now the it talk guidance And the meaningful you the to at taxes same bonus market years? depreciation it been have has cash prepared Kevin can as tax, in I cash then about gave how you that than the finally, of in guys but comment, don't relates paid you couple XXXX, about you since taxes actually think a time

Kevin Kremke

Right.

rules expensing you you tax for - way the expense remind cash now standpoint, a tax service. when capital is CapEx cash the you the to and then the when the project work only actually can from effective So, account comes rate, that in

So, expense given in you of your can’t any capital all expect to year.

range to you XX% to So, capital taxes we that $XX XX% million a are in assume $XX year. can the cash expense million if

Brad Heffern

Thanks Okay. back. that. it turn for I’ll

Operator

Howard the And question from our of Weil. comes from Blake Fernandez line next

open. is line Your

Blake Fernandez

hand wanted back of just question maintain the think the what business? cash to guys kind results. to to I need order go in of the Hi kind level you do earlier, to on you congrats the operate on is that

Ezra Uzi Yemin

from million hear Great at $XXX ourselves to corporate. least want you. Good that $XXX Blake. say million the at to and another per we refinery, along, morning All we

Obviously, today the and situation where the aggressive business in operate with see will and do - mean, that. want we more quarter. So, to do point to so the especially to the that happening reason a continue. of very continue that’s That’s That’s flexibility, are on quarter, buyback on call emphasize things in Permian company, assets we the that the in area our we higher profitably. majority maintain we important what and the to first to this need are opportunities we it $XXX I side. are we are our expect the logistics do million. want the we our within I

Blake Fernandez

okay. Understood

RIN give biodiesel Secondly, can on waiver us an update both credits? the you tax and

Ezra Uzi Yemin

our start two weeks let’s company ones. biodiesel credits the and benefit The the quarter. assure will was that with good Well, easy ago, for passed obviously in first

discontinued the will our it of pocket will. question. the some go the to the there. in of it of is if ultra-situation, benefit partners, to because their gone sack - into you will ops easy That’s or go in Some It is but

Blake Fernandez

Can real I is or can our amount [indiscernible]? dollar you is you it that quantify quick, stop there

Ezra Uzi Yemin

capacity? that supports Yes, other the million The but one a that to around around Ultra you rent it can are is we we two, looking and because the $XX two that $XX Ultra, and capacity have loss is the Dorado, remember not So, is now special El as you the their do item obviously Tyler gallon the million. located refineries, DK we that. as to are we will the see plans

these do on we of be have and over some XX% However, it partner will the that of get there will ops a discontinued wins.

partner out For of is but take XX or if altogether XX. XX, the the that is impact XX% you of portion

Blake Fernandez

it. Got

Ezra Uzi Yemin

waiver, by way. is yet. there which that Good is optimism. update The is the is our another - already of good no inclusive That catch, catch

or administration However, do XXXX some and that only XXXX. it about XXXX will something the believe of is for the waver we first in

to will market. get and a if will So, get, the we we update work administration it. Obviously, fair continue continue with get that we chance we we if get to we is and one believe get there we we once that or the

Blake Fernandez

your Okay, some in barrels just fair you I one I’m enough. those for in totally of us, those I given kind access The system? the of release and the there there just is some maybe last in facilities you. some your blowout maybe press then railing slate the to get and any know to down can the but were all, remind mistaken, WCS to past of of differentials, of some WCS discussion you Crude outlined down to thought and

Ezra Uzi Yemin

get to some Absolutely, that. we at looking have flexibility El Dorado. We're to

with blended done use the We haven't now we not so but WCS also, to El bring Midland may barrel Dorado. Cushing pipeline, continuing we’re it of and and rail, connected yet, it much to is some - even to of

Blake Fernandez

Okay. Thank it turn over. you, guys. I’ll

Operator

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

open. line Your is

Phil Gresh

morning. Hi good

just discounts? in to that or question, said on net the your net Blake's goes you clarify that the discounts million of $XX to biodiesel credit, guys is before question of answer to you to some First

Ezra Uzi Yemin

go No, discounts. will some it of to

Phil Gresh

got Okay, Thank it. you.

whether to can in that would dividend you but you increase I guess you count about some the actually quarter, pretty of terms flow look big relative percent the when cash peers, agree the of looks with In CFO or as how dividend, of numbers, hike in this still I do the of a on pretty your free longer-term context the the dividend at or not, this dividend think conservative view?

Ezra Uzi Yemin

or confident find that If will we look we at decisions, first quarter. And don't XXX the hiking that quarter buying should market, program the we to are a the then grows is familiar we than fact another continue of we point be compare dividend felt first but that different buyback, in this market almost sufficient investors. buyback shares, in terms and and first still as to obviously to make that at in by that our percentage, million the peers quarter, will more obviously, repurchase shares our in for that the share little our market want as company below was $X bought balance obviously, very our we're any much hiking the between part of it dividend with I the That’s there the cap. Phil

Phil Gresh

been Understood. types is seen of basis dividend The understand question since while should if more have we since to ongoing expect these a annual kind little increase. increases just a of should we it’s we dividend

Ezra Uzi Yemin

bring you great up will point. absolutely to a at You we right and are continue that look

Phil Gresh

Okay.

other Second the up it an do flow cash net was guess to what the kind balance the question, the leverage I on get relates or balance before kind the to buybacks on you the you target ability or asked or M&A do see you opportunities? for maintain would the would of of point to other that in sheet, flexibility to on to sheet additional like buybacks of cash

Ezra Uzi Yemin

shareholders Phil for domestic past XX what market not years some pass. the return at logistic At we to assets, tried find logistics many all for not the over assets shareholders balance to in that assets for time, to available needs it and obviously want said are creates and we assets same going us. assets that know to to be will than trying not mindful we we we to would multiples nimble so the refining the the in is for, are to on pay And dividend. acquisitions, if for times to and the days you overpay and get are cash and it have ready in the look we pay ample logistic well, buyback more for ready than the very leaving past, We the that liquidity. be not sheet there be between want and don't aggressive in balance able Obviously, said on I obviously ready it high be the

Phil Gresh

rest like running And year have if any for of Okay. more because should think or outs a the be of be these on half about second should of last half for second lower kind throughput perspective, you the the of obviously year we effects wondering first other one XXXX than from we you just turn you how throughput the color expecting of last any maintenance there the mentioned, the year? the one quarter, just just

Ezra Uzi Yemin

will year not you to second we - better is there push hoping turnaround the and do the to are this all, half allows work first turnaround doing I why, us are than - We in we tell are of actually up. because further

that’s So, one thing.

we XX,XXX. Second, the XX,XXX months up to are get run last and Spring to Big running was few hoping we in are to at hoping Big Spring,

We we light the and completing we if work still capacity the that are Krotz once Tyler try as just total need fourth see have also as we the but fact push in as ourselves, anymore, and it that you do can to we are need because Tyler that to we're to much a of the margins prove guidelines got we in still need prove to run can don't work hoping quarter. had to we can and and record for there throughput any

Phil Gresh

Okay. Thanks a lot.

Ezra Uzi Yemin

Thank you, Phil.

Operator

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

Your is open. line

Ryan Todd

how characterize morning talk for acquisitions, would either mention refining markets Good deals and about or current in appetite the Maybe thanks. you one guys. you can last you about in if can Hi the your maybe midstream retail? just

Ezra Uzi Yemin

Good morning, all Ryan. great are These questions.

So, let one. me by start one

year. On side, we the all know, refining a as had we all great

in swimming We all are cash.

area, M&A I activities probability. low the in that as So, see

On comfortably. can assets the for here that still everybody part will there but picked, most not corporate is everybody be lives leaves side, be there the and their pretty

doing pressure. clear want needs side, nothing animal. different [ph] but keep be open. a opportunity but there is are ears not the to how think we of it year there that are there. this our is On need logistics to I actively to is we A is ourselves that We sustainable. it lot MLPs under ask With we today, work, business over

the that we so overpaying be to EBITDA. big to not to the we especially last last multiple just is As these growing the, are will Permian here. thing well and terminals opportunities shareholder. at need bring cautious opportunities is to we example as there value I remember on premium that The double-digit refinery the pay the we and plan will are And for growth, we picked that substantially about two is looking area do and said around very earlier, organic

Ryan Todd

congrats the is EBITDA maybe on drove maybe a range, the was even little drops, the there some I contingent you end the perhaps that at that, or we dropped the and can that of over then Krotz, above something - on that increase going that the Okay great. drop on on plays again range have asset out how announced Thanks. the mention in the dropdown probably activities on would what it complete, midstream think high And of in mean you one the out range you comments that how that just then timeline should about time? any Krotz is that’s is the have we Springs, of

Ezra Uzi Yemin

Krotz, want improvement still to continue the to In we to Krotz. see regards in

that. market lot And update let time we to drop so, want down. In doing Spring We the don't Kevin take when of feel I a over damage that. create to Big regards to it, comfortable we it will so will spent him

Kevin Kremke

driven in is the by couple things. a so increase of EBITDA Yes,

original further volume the the materialized including lower operational then expectations As minimum own the transactions, we previous the and analyzed OpEx commitments we control, to higher of our once our in-line assets kind than revenue just dug originally modeled what and EBITDA we and in president took was than out. drops, bring with

Ryan Todd

guys. Thanks Great.

Operator

from the of Tudor, Matthew from And Blair our next question comes Pickering, line Holt.

Your line open. is

Matthew Blair

going is Beach Paramount Long Paramount is you Kevin. million and Uzi provide forward much Bakersfield your XX morning follow all the how million Could up on potential cost, Air. to up on that asset plant, drag want Alt mentioned you’re an the are to in of of in how these I what a makes update Good attributable million Long the options Thanks. sell you on HI. I operating Bakersfield current about have to you Beach do looking there, believe assets so then of divestitures, and also, California that that Air? much $XX Alt XX breakout in that and

Ezra Uzi Yemin

First of do all, you'll sure I'm Matthew, good luck. great.

I was be question, long will give that color to answer long a that that. Second, it. so would with enough try with a

them be the And that’s we First, few we Paramount do next both there just line. is to on just is need California million. a million million, we drag without along to $XX The tax the tall credit. Long to the it $XX and remember $XX all will million Air Alt in it believe sold. reason months Beach below put that the that chance good $XX We was it said that

these I So, million take $XX million and California. $XX to drag your you it’s Bakersfield. million XX, XX if just the imply is million or Out around XX you tax on $XX of mentioned, credit

asked You that. some for and on Bakersfield the plans, give about plans the want I color to

people the eight six at or parties is we but we looking that, decide I for active next We to an few looking That these think us all obviously can that at it, believe below today is not do if are had quarters. over will looking, we the be, it. - assets with option monetized something line, we there have reason be interested the we can

Matthew Blair

thoughts will on guess And in you. terms Kevin, then in of the all you Thank it in Spring on tax I that it. estimate of early $XXX rate on have to the finance cash, what tax for tax will and just DK logistics Springs looks that Krotz we do again be come an you expect the sale assets, side, XXXX for maybe the million drop kind would there? so cashback Big a that like what how the should Got any should all and question kind then on expect drop, of and we Thanks.

Kevin Kremke

tax The assets pretty is expect, Spring, Sure. on the as those would low. you Big the hit basis tax on

million range. Spring Big is Krotz, So, then the in current before a estimate you that cash $XX drop taxes is happens. on away the know on of it dropdown million-$XX year the And still

of debt QX DKL in Krotz then little capacity to leverage just see the and tax low impact, I dropdown, it’s into those on goes basis so the tell of then we basis, We cash need capacity or revolver, year. whether pretty have of on we taxes determination similar to the have we early how a think that XXXX run increase issues also the cash will on make type not, for and plans will we constrain relative equity tax And assets. plenty next

Matthew Blair

Very helpful. Thank you.

Operator

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

Your line is open.

Roger Read

Hi, morning. good

Ezra Uzi Yemin

Roger. morning Good

Roger Read

broken was a Springs did I thought to really this a on the Krotz as you acquisition, that. like and at should of - performance time congratulations the treated thing the because with what Thoroughbred but was, be at on remember leg impressive quarter Got say this

Ezra Uzi Yemin

one. you, don't we this told discount [indiscernible] on Roger, we

Roger Read

point questions Jumping integration I positioning unit let’s to to the listened. opposed something, additional feel more have you acquisition on think on at refining this and here thinking acquisitions, a as No, into or meaningful as the transaction side obviously there, couple of do have job lines? capacity single say good Alon, no. along you about bolt-on you process quick the here, of do here something a a the those of

Ezra Uzi Yemin

we earlier, time, Well, look the will keep want said do knew we we and to overpay. acquisition good. were to the we want did going into the Alon our what before and or timing El overpay. with looking all the we what And not as keep eyes our Dorado that I open We was acquisition don't that we into, that - eyes we and feel we getting

So, we time all the stuff yes. do look at

is as will you that to we community investment the not commitment Our overpay.

Roger Read

Certainly, appreciate that.

the and well to potential we Next or of terms really running some at let’s locked way more on you salary of maybe and previous you to barrels what the in years. see about Dorado? locked Big it of can bringing Midland basin barrels locations to El question for capacity referring the the [ph] back you, there, El what of commentary barrels out should those do barrels in, Krotz the several going Inland that’s obviously discounted a get lot over at come middle as two more next happens more production call think take Spring pretty or Midland to incremental is in Dorado Tyler presumably,

Ezra Uzi Yemin

differential, the Well it flexibility. maintain depends on want the we to

you as Dorado. look the into said very to Midland will Krotz barrels El carefully So, probably we get increase more ability to both in

barrels will However, so the be carefully. system we to something it maintain do there as and we look we continue to opportunities do to will do gathering our tremendous that that’s the we at very that growth area, with think continue that see gather in in we want to other flexibility

Roger Read

then on that’s follow of capital. the something the the on or third we're lower cost, And financing second of sorry lower question presume improved, Okay. the up part synergies to improved to cost last shortly? going part is of debt I'm I see

Kevin Kremke

Roger. right exactly That’s

Roger Read

Okay, you, great. guys. Thank

Operator

from the question And from our Akamine line Kalei Bank of next America. of comes

is line Your open.

Kalei Akamine

touched, couple been on, a for quick got Thanks ones. I there. has me getting lot of of but it Hi a

wondering is there sold new and tax the terminal will the blenders Just quarter? at with a if leave working the a guys. bolt it I the capital facility was old in And, of much it on Thanks. years follow-up [ph], the credit at the piece facility, how sold just

Ezra Uzi Yemin

That’s XXXX the a great there, XXXX tax question. it is credit blended event, event. is Thanks for BTC not

sold the we stay being XXXX are us. if regardless, going So, with to then if

the not I working it am on sure Second, capital, is material.

know I my the of what number of that So, head don't top is.

Operator

the at back presenters. the over no call time. questions turn are There further this I to

Ezra Uzi Yemin

us. investors like as of a great was community we feel and lightly thank to our great take Directors. would investment in We list satisfy new obligated around Board the this value love the year. the employees our creating it or thank will a thank as but a and that we Board colleagues don't in would mostly trust I for quarter you, talk to for job I this to did to to my this would as employees our the great company Well, both company of the for Alon table day, a our Directors, all is, like Thank what us. making who I employees, you over year, the of have soon. here last well great as DK well creating

Operator

today's concludes This conference.

disconnect. now may You

Kevin Kremke

you, guys. Thank

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