DK - Earnings call transcript Q1 2018 | Delek US Holdings, Inc.

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Operator

Good morning. My name is Laura and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek US First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like the now Mr. over to would call turn to I Johnson Investor Keith Relations. of ahead. go please Sir,

Keith Johnson

Thank you, call morning. financial joining discuss Laura. Good US' results. us everyone to Delek on for thank today's quarter conference first and to I webcast XXXX would like

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

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

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

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

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

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

Kevin Kremke

Keith. Thanks

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

was is the of first quarter financial the included EBITDA prior the million $XX.X our compared period. results reconciliation $XXX.X million adjusted in to Our to press year in year results adjusted this tables A reported release. of in

included to and approximately This During we the effect to the $XX.X a first due RINs partially XXXX, million a of offset RINs mark-to-market $XX.X results adjustments price declining waiver million by a quarter related benefit of was environment. net net of benefit operating the guidance first XXXX. to performance you in throughput approximately estimated of That $XX.X profit XXXX opportunity call. quarter fourth amount crude million of oil relative quarter earnings quarter to related of first the the include during loss gave

included May. to primarily tax per million on there which West million agreement $X.XX costs of quarter $X approximately line basis, a addition, the transaction due G&A, asphalt these approximately in expenses, operating from like and this The to a a party before second loss benefit a that primarily Coast Coast was million such as of and note items to G&A sold interests combination that or share quarter. $XX.X addition after-tax. year-over-year approximately On is I'd Alon. are was operating consolidated increased basis, to expense In expected third the of items a offtake be plant expiring $XX.X in West operations,

biodiesel Act, certain tax-related $X.X and Tax the result Jobs tax tax from of Our the rate benefit income of goodwill a non-controlling income XXXX interest re-measuring effects net This tax Cuts excluding a million the from first was impairment. $XX.X million XX.X% the liabilities quarter. rate, and credit, deferred in income as included the

Excluding these tax items, approximately income was rate XX%. the

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

capital to now spending. Turning

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

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

does segment, interest approximately approximately facility is consolidated million million $XXX.X Our other on the captured retail sheet. our segment, in senior and amount Loan and number $XXX addition an structure. to to and We XXXX off billion million of at a already million cost interest and secured approximately We Permian borrowings and for the the proceeds Term consolidated of expense On a senior CapEx million this million our $XXX enhance on from we debt rate in savings $XX revolving to quarter cost credit net QX XXXX. of first forecast $XX.X expected pay series use is our our synergies corporate includes which our This capital million. projects $XXX.X March amount midstream $X an basis, B. Basin. in the step high reduce instruments segment, steps closed on ABL balance million This our ended position with debt $XX.X to of secured billion refining basis annualized The debt. the not We of on is the million through XXXX of cash $XX include logistics level. in a of $X simplify interest XXth, completed a $XX.X

of of at million, at Excluding XXXX. net logistics XXst, million $XXX $XXX March debt debt net we had Delek

of of Spring transaction, last quarter compared reported due and Now, and is RINs I the addition discuss of the by million margin refineries first the $XX.X This year. contribution refining increase Cross conditions, results Big like from biodiesel primarily segment. we margin would in the to million in our to a credit. benefit to contribution the In our year-over-year $XXX.X the waiver market margin tax segment, Alon and Spring from improved contribution

Gulf a spread $XX.XX the crack a operating per year. barrel for barrel increased this quarter series per of as Market by period factors reduced Coast that measured X-X-X earlier. were on to mentioned results $XX.XX for year-over-year year XXXX to last quarter first compared I First by same the basis conditions

In QX of reduction. that standard million a per first addition, differential for El crude year was of quarter Midland based the per of Dorado Environmental approval from the and of requirements fuel to and In discount received resulted of reduction $X.XX Protection in expense El refinery $X.XX This benefited Krotz barrel from systems renewable last year. compared an average XXXX, waiver WTI crude resulted the March exemption million Spring million waiver Krotz Dorado to El market refining the Spring. received prices, from of the XXXX, approximately small refineries a barrel the for XXXX. on RINs Brent $XX.X the Agency In in RINs to approximately $XX.X at Dorado expense in additional that value calendar $XX.X of

approximately biodiesel $XX.X first a of $X the credit XXXX, recognized segment year from calendar federal blenders that the of quarter XXXX. was of million in as for was the per business a During on retroactive XXXX renewable approved income February tax basis gallon of part refining in

million. segment Corporate/Other a $XX.X no sales There average Contribution comparison margin This performance system-wide and in period. prior approximately quarter was applicable primarily first Included prior for period. loss in in year is amount $XX.X month compared to $X.X that one hedging contribution year represents with of compared in year in segment July million margin of Our was this this improved of hedges retail million was specific wholesale negative million to the margin the $XX.X year $X.XX margin million the Spring are of business, quarter acquired quarter due West it in million year-over-year the for per of loss basis, logistics the retail year-over-year Merchandise the a in the fuel to Alon was first drop approximately Big refinery. the of the segment these as down. of in prior were period. million from XXXX gallon. XX.X% million a the sold to hedging the Paline was On Pipeline, transaction $XX.X $XX.X was net Texas a margin gallons Contribution for first XXXX. average that $XX.X to of Xst, year compared $X.X segment benefit and retail not negative were results million $XX.X an in the the

the will turn Now over to call I Uzi.

Ezra Uzi Yemin

you, and morning. Kevin Thank good

imagine, oil barrel to per and are and Permian Permian the As discount to you discount the Midland in $X.XX second crude and activity Delek Xth, curve oil is of is has barrel can at the take the been to we $XX second for the crude access widened built wider very about averaging of well-positioned has per barrel Based in May excited the XXXX. Cushing. on Basin $XX forward we're model between of operating a advantage per around half Midland The currently quarter. in XXXX as the discount of XXXX, Basin.

As or to annually of crude per our crude Midland oil, million approximately than we little XX% a barrels accounts have fleet. approximately which day a access of XX reminder, XXX,XXX barrels more for

Our progress the substantial team of on continues to make integration Alon.

basis with the low we annualized $XXX million basis of captured of As Xst, an This balance cash XXXX can on believe on closed range since $XXX that reaches approximately of million previously XXXX. billion. have synergies July of end our to March $XXX we Alon million million to March, when We annual range. we synergies million $XXX ended now an the We in $XXX $X capture transaction. targeted of of

further increase ability remaining to increase to XXXX. quarter, our During Board as of XX% authorization the February total would returning of our on have we dividend. that we open a quarterly questions? stage return million in the for We balance $XX our the develop the To was shareholders to creating explore XX% call our approved investing $XXX Directors Laura, to opportunities stock approved support purchased cash focused growth. our shareholders, follows our value of our This you With in approximately our first that, in business shareholders, million. and for cash of remain next long-term and

Operator

question [Operator Gupta Yes Suisse. comes sir. Instructions] Credit Manav our And first from of

Manav Gupta

in the they back-to-back are very rate Uzi, energy the universe. on dividend congrats hikes,

So, assets Uzi, does do. the downturn using no acquiring than turning job you one of better then a them around and

the mean art. to given primarily market going there? stay can out that above if IMO change is You out of margins question are good a have deal My M&A strategy you that will remain mastered tailwinds, there's if or does DK mid-cycle

Ezra Uzi Yemin

billion will your their a I'd be rapid said, say low. to models way continue way. that morning And $X they like first, believe Midland sheet. we have we the are, that And we Manav. too Good as at for are cash Thanks pile differential words. in the our balance kind to that everybody's with

one. And is acquisition, sure are -- we So, Midland our to that make company enjoy equity other make day areas goal there our an of to can if we at aspects need be other this situation. that

the Let's call the side. midstream it logistics side,

think in more gathering are in million Kevin midstream $XX Permian. million now I the we mentioned or or investing assets $XX

look we the that of improve a we all M&A MLP out of we and situation the are midstream favor. that areas think It So, side trying now of see there's attract can we will doesn't these out -- it. at we huge is on day mean stay If for to that investments see not that there the attractive. opportunity operation as we'll in that is now opportunity a one, But other market are the then refining. an arena

Manav Gupta

discount. the those. and flowing Cushing. is, Keystone gone, there's Midland Thanks quick is from now mean benefit restrictions my what Cushing with I very you we're is into that well-positioned Cushing building follow-up And for discount seeing pressure crude and are also more to

that. $X of is that or a will to So, if possibility that have guidance area, which added understand tailwind $XX an $X in you top you're color the there any on to WTI seeing Brent on Midland I'm trying be $XX, itself the

Ezra Uzi Yemin

little The a a surprised the the combination we're -- now surprised, almost Brent $XX. TI is combination actually that -- to little $XX, is getting I'm

think the Brent-TI bit. to a pressure will I then few If little will that accelerate. exports close it next does, months for mountain the over

ways have and United I refineries margins. looking the offset at outside we to they're that get think see some of States margins that

go it think don't while eventually, may higher, when $XX, temporary, quarter, Midland is it at So, that can I today, hold fourth $XX.

Manav Gupta

Uzi. you Thank much so Okay.

Ezra Uzi Yemin

Manav. Thanks

Operator

from comes Mehta Goldman Sachs. question next Our of Neil

Neil Mehta

good Uzi, Kevin. morning Hey,

Ezra Uzi Yemin

Neil. Hey

Kevin Kremke

Good morning Neil.

Neil Mehta

sensitivity in spread on you dollar EBITDA again an Kevin, every Brent Uzi, Midland between the can your company? or for here remind basis change us the and -- for

Ezra Uzi Yemin

and or Brent and WTI Midland Midland?

Neil Mehta

Either, whatever is--

Ezra Uzi Yemin

every And million. for about about both, we're you and we're $XXX be give dollar, Cushing -- I'll so talking -- every Midland, you'll between we're for about dollar Brent barrel talking $XX between every Cushing, and talking million.

Neil Mehta

That's EBITDA? annualized

Ezra Uzi Yemin

bottom-line, will the hard charges no That's it's no actually going directly that. correct. By you to way, and that. it's -- even to the and see it not -- moil depreciation mainly EBITDA That's obviously, because there's to

the see of this dollar You the go that our doesn't bottom-line, to that capture just will spread. through because improve of will Midland, directly fact because it rate the goes crack

Neil Mehta

it you can played higher as pretax. Midland's than out excess the of have $X at or was that billion you So, flow in a barrel first TI quarter, least annualized $XX cash

question that repurchase recognizing do what lot that with where down program? line. there's is the double that think on or share cash of XXXX you about you guess, the I XXXX, So, the flow, do how Is coming coming a excess at end early of pipes we on

Ezra Uzi Yemin

to for buy want is option the it we do. be looking them, -- the combination or We are option to have we're that combination know work. an certainly build the to That's to and hike these cash or assets certainly That's And buyback as again. dividend, them we an we between accretive excess this at. just put looking and we immediately the combination dividend

Neil Mehta

marginal this move the there Uzi, Brent don't one Texas to great a the setting you a between barrel. have marginal Do view to of or barrel? We of you Gulf the is Midland cost on at West down trucking Coast? that much how Midland. from spending being the And agree to to sufficient it a barrel Do is versus capacity do the point? about, that's keep lot a have is what coming things, back differential of that ultimately answer but time we're WTI trucking thinking

Ezra Uzi Yemin

the XXX,XXX to thing tight. Everything, -- the Well, barrels. TCQ, event. question malfunctioning. tight barrels XXX,XXX our That an happened the and -- tight which if about we'll barrels, barrels entire had market ago. a is in how that of go in, XXX,XXX was blip a that let and days for the in the going dollars. Not it refinery We to impact me day. market portion example few obviously, very we if That That's is case, use market Spring the the also the that a a XXX,XXX spooked Big SEC the with the the trucking all you is temporary market you obviously, forward, how run this rail. is. And because asked then Then, filed

to however, an four, use couple it's it companies ago. a that used So, as we years know are of about be trying five not railroad, easy to

as Some of or attuned like not the railroad four, this five receptive companies idea as were to are they years ago.

it trucking. but So, that's only, now And money cost it, truck need a we're the to okay, long talking driver. you about importantly, get more need to hold Not and the you to shot. get

is area drivers We have the operation in trucking huge a trucking and challenge. a well as as

Neil Mehta

two to isn't So, your basin then there sufficient what happens is trucking then the view capacity the -- ultimately over next that clear years?

Ezra Uzi Yemin

But I right trucking two really area. years. have the what don't in now, in drivers and shortage know we there's

Neil Mehta

right. All Uzi, it. appreciate Thanks

Ezra Uzi Yemin

Neil. Thanks

Operator

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

Brad Heffern

Hey good morning everyone.

Ezra Uzi Yemin

Hey Brad.

Brad Heffern

the the some I if pieces talk quarter, you was the the and wondering Obviously, figure big low. downtime you the of particularly on quarter. gave through Just you capture. some in moving could capture had on LPO was but

So, be that anything that terms of in else about thinking was? I what should

Ezra Uzi Yemin

Absolutely.

some Assi need you some give some through and the more -- obviously will we'll needed take color, color. of we more if if technality

Assaf Ginzburg

Sure Brad.

across didn't we majority we run, and that actually loss Texas of January of mentioned, some We to of in parts was system. the because freeze in had we but most LPO related the some Arkansas. volume the in wasn't As the yield had

the the you And margin to when was to all to earnings, the to until a a when we El that a When The sharply $X.XX you down materially those think barrel. $X.XX impact actually reported the RIN closer at look the seen. that And Tyler, look barrel. rates you when $X went we compared the refinery. $X $X Big a to look barrel reported between $XX close waiver, Spring closer Krotz to we've at rate, Spring, barrel. capture was you affect prices, we to the at got together capture add day So, the Dorado that in

across expect we combination RINs the quarter. the the end be few almost So, reduction between impact negatively this as fact to don't the the quarters that the LPO April in prices, of the next We barrel $X.XX not since do in now, that every refineries. a impact prices as the anything yield a impactful loss or refinery small to seen $X RIN to, that right plus the have we've decline out besides in of point in system

Brad Heffern

can for around waivers their And gotten any or front, into gotten some on thoughts overturned for Okay, Spring? any your And RINs if at that's also color. XXXX refineries? get for of so from that. then Big the to I there and retroactive give that year, Tyler have that rulings Thanks guess have the great potential waivers peers chance heading

Ezra Uzi Yemin

Well, obviously, very look Brad. that at carefully,

a that Alon And El El into this we the seems that every existed eight, as now that exception, special And think did reminder. get time at doing waivers we one been remember. us, that's We've -- year, didn't won't when circumstances and and that Just with for mechanism the on call. all need Dorado from get, to one nine I that something ago. Krotz and that, got I we years submitted it, Dorado was year we it

this much So, pretty think the RINs administration mechanism control we to is cost. of the in the waiver

It that. new to Tyler. to update that we'll look And need you -- that's at However, it willingness never we at area. something happens when look we if carefully. obviously, the looks in Spring And administration's submitted Big will or that something like

Brad Heffern

lot. a Thanks Okay.

Operator

Prashant from of Rao comes question next Our Citigroup.

Prashant Rao

wanted thoughts in ask on the a M&A Delek to had topic the environment just other necessarily Not going question. my get thanks at landscaping guess, specific in and Uzi are get seems Hi, discussed where ownership? so things on. like consolidation we've that It different level week, a earlier, more first even of general. speaking opportunities of at rumors some last start cash there's region good this to for enquiry you obviously up refinery wanted market. just back building seems might way. to the Delek, because was at of about that cycle, sense one is but could wanted either question, set? I thoughts out, how be big but like the but the that's it touch of What the in the morning, more Any terms or not to other by to Where another broadly you, taking just play announced merger your seems active? around I

Ezra Uzi Yemin

I two then are there three think here. And questions or

So, let take happy a all one. I'll than me then question, be that -- more to and and them of follow-up answer to try if there's

going first we change, to great much is The it's And that the well, pretty one but will situated be XXXX piling IMO the situation, within and cash. -- is cash that not the is is XXXX or it the with all outlook refineries, even correct. Midland may with

that that the what pressure of you great are to with trying to assets assets. do we all and refining some peers And did are of dimension diversify adjacent, job to going if other So I will, different our situation buy to cash brings try think cash. that

the did. create believed to Our many want when to opportunities, to the have some and we same we is what hedge look want in years Permian. exposure at that's core at doing at for where the that. market And we to But us nobody the time, That's ago continue we we to Permian. basically other Midland that, --

And of I your one question that's component think. so

the one, market. second The overall

more see example them. companies Marathon other week, and to last will that more look it think I and I of think with people to and if sense Andeavor try saw makes at an we

paid Now, Marathon on to remember, some pressure the surprised were people there's that anything. is little but no a do and high pressure premium was no that there Andeavor

comprehensive the the in mind, refining in refining the earnings. And to -- market enough. bias my get I'm diversify into the sorry, that was basically bring, seller the in order within other hope I -- trying M&A it's within space. So, will That to market spaces

Prashant Rao

may there That have comprehensive. The want sense from you on had margin and get sort had impact could get impressive about but just I be think out, was this weather underestimation? of thinking And a margin be one very quarter much. a case, not be Thank that, other margins how just cadence sense very peers I if in quick that you follow-up we place some of expectations in be that retail and may of on retail. out refining, here may performance very was things, should wonder some to

Ezra Uzi Yemin

enough with the -- in -- we exactly or Permian. lucky area our retail in Well, Midland or the are in that

just I'll almost happening Midland the you I So there. the just can every in obviously, on and Thursday, our because you give big margins retail over budget is traffic month, last imagine, sales was exceeds both of operation as we an market. example. that have in

Some of the to going year. last amazing our what's in stores are really XX%, it's on XX%, XX%, And area. same-store sales compared

Prashant Rao

Excellent. Well, much and thank the you so the timing for franchise.

Operator

Barclays. comes question from Paul Cheng of next Our

Paul Cheng

morning. Good not to and any questions. guys. Big waiver Kevin, there Hey the Spring Tyler at submit reason, all? or for Uzi, is Several

Ezra Uzi Yemin

No.

Paul Cheng

And that now more for for that apply you there XXXX? than is do can when late you or is statutory that XXXX, apply you it, that XXXX, just too limitation apply

Ezra Uzi Yemin

to it knowledge, thing. my a To it. check to knowledge, need -- I three-year check need my to I it's

Paul Cheng

kind you XXXX? Spring that is XXXX Okay. wind and in of the and tell much Can Big cost loss XXXX, us how

Ezra Uzi Yemin

the It's about RINs. of of RINs. Paul. ballpark, as if And the number on not take, forget depends the It's used. we parts cost, you RINs it the that But of a price

of million the memory, -- million in I'm you I'm each like memory, it's ballpark. around it's by going If to of number XX similar so but run take ethanol XX Dorado, XX biodiesel. the going by RINs and to something El refinery,

Paul Cheng

Okay.

combined each one? So, is that or

Ezra Uzi Yemin

one. Each

Paul Cheng

million? XX

Ezra Uzi Yemi

X-X. biodiesel. $XX million and $XX million of

Paul Cheng

biodiesel? for X.X So,

Ezra Uzi Yemin

yes. X.X,

Paul Cheng

$XX million.

seems up Permian, to heard that you the other used from about best basin the for guess several the over say, is if is as terms you terminally capacity oil the could, oil where that in out up any? Have And to, look things we be mentioned challenge how the Okay. one a and months the the lot of holistically your of at get well next much what other.

Ezra Uzi Yemin

What clarify volume? want question, Paul. I to the

Paul Cheng

may rail locked That other in lot shipment you the Right. of and and people it sand as usage similarly mentioned heard from capacity those be Permian. have terminal for you other things. out that able We been a to what from has of

So, I'm really curious, clearly even just much oil? terminal to while the how available that's we if to actually -- is capacity, want that want but ship

Ezra Uzi Yemin

that analysis I have with terminal. every We XXX,XXX would say between our It's about talk own we and that a quite lot. day. a barrels XXX,XXX

Paul Cheng

you that how much do And is currently know shipping?

Ezra Uzi Yemin

too I all running, just facility Probably ago. get don't ship railcar, to not clean to It a started takes know. because much little. the probably Midland, them this few weeks very the time

Paul Cheng

hedging. can But whole if you strategy? just know bother historically do in [Indiscernible] think to and money. I you even becomes make quite of things, a been And and continue active and the noise that hedging? why guys you scheme we distraction

Ezra Uzi Yemin

need territory remember. honest, two the at time, be At a Paul, time, for had at two only ago. in things And that amazed, is looking big next positive to there a that and let's question. while -- we number. were we months we're all we are great a $XX here same That's the same year

thought $XX in but XXXX pretty about is Now cards. never the expecting, to that the even $X I the I spoke we was entire quick, to and for get $X,

So, not so soon.

put aside. that or of profit embedded of risk So, some think need and taking about consideration that we do carefully it to some into very

opportunity establish gives baseline not for the Now, the to it but cash substantial, it's flow.

Paul Cheng

is do? there the any for investment And guys XXXX, going you IMO to

Ezra Uzi Yemin

flexibility. do Dorado, run We in we do Big opportunity do heavy, in to want that both at heavy if we both Spring substantially. Not we and that have can El to have --

doesn't investment. over At much We we we that blend can Krotz, in will have maintain everything be actually that compliance. flexibility, and require but there

So, -- our very exist within in system. little

Paul Cheng

cracker. receipt the is going I'm high looked standard technology the further fuel treat heard technology say a into would may through the the low project directly have at make without be company and you They Fred. to sulfur be think? a sulfur proprietary this do what for Fred, cracking may you that and XX% train. hydro only cost bunker and you that curious a be about of capital able that about, have Have

Frederec Green

Paul, I not. have

looking for think it's of technology another it's look streams Just I'll produced -- got our some work. you probably economy But bottom of the us, scale promise. wouldn't of the the off of at size if units, the take

Paul Cheng

you. do. Will Thank Okay.

Ezra Uzi Yemin

Thanks Paul. have back. you to nice It's

Operator

question Roger Read Wells Our of Fargo. next comes from

Roger Read

Yes, good morning.

Ezra Uzi Yemin

Hey Roger.

Roger Read

a agrees you just Question a of lot to what big with do been it happens of method go? be next. at a hurdle on return kind for to back pile it already Uzi, has is understand to increase direction of each -- I the guess, is there I'm the employed? going cash. of versus have it an dividend equal but the those everybody to for repos like which decision, What's you hit share making coming options? versus of you're looking trying have acquisitions. heck, big return may pile capital cash, well, Is Are

thought kind rates may are? you most of if can maybe the and opportunities you hurdle what's look your So, at process understand help the be us as

Ezra Uzi Yemin

Well, that's a question. great

wasn't continue the in was As first numbers There the and first the quarter of noise good. quarter to quarter, at lot of we first look pile. still, a cash

that And sometimes, be number in. cash to accretive and -- going day one shareholders. cash that And we have the have it's noise explain are but some in to we cash more you for said, And hard as numbers is investments if make cash that more the one will think the how to can't thing to we we our if me, dividend value we And to create is give it well continue that no back need company, fourth deploy more as we hiking will the see dividend to we reason believe just as that way hold will then the not quarter, them, to through to of cash and reason buyback. quarter, to the means third that's quarter, there's that second cash. no did. shareholders we there's coming Obviously,

the by the for me, the cash most important day, is the end So, thing. of

little and a quarter, earlier, second this we than for for is morning the EBITDA about calculate entire we the the average you quarter, we're quarter now actually saw the so more less at in this I quarter $X than that quarter, the see Looking mentioned the the $X. talking coming It's whereas second $XX. and can fourth is $XX, third $XX now second also the quarter

if no to to not non-cash -- quarter the our something that reminds to By will explain with our continue differential. can because be I deploy down, to works me Midland some earlier. be there's will adjustment again, we the will that So, There needed, differential that inventory Kevin that's of be cannot in way to don't us coming say I non-cash. cash the there adjust way, that way will because and the think But to neglected -- of accounting we second shareholders.

So, that the I back think that's low adjust your for question world to that changing too that deploy by to a cash than to going new us, just day. even more to guys. earlier, all we can We need you

Roger Read

Okay.

to you go. to dividend just could because on committed get come know, as want so And and regular all guess as I a differentials too mean a I imagine that. I follow-up we differentials don't

to right potential share as shareholders. to way is dividends special about think regular cash as the repos, well dividend returns the So,

Ezra Uzi Yemin

long don't right deployment. go. to commit change we're future in for they enough I way at But that can Well, they want anything cash still point. looks to it doing it The came, now, know hurry. We've this been $X. to bright can paying a things

Roger Read

right. leave Uzi. it there. I'll All you, Thank

Ezra Uzi Yemin

Thanks.

Operator

Blair next Tudor, Pickering, from Instructions] Matthew question Holt. of [Operator Our comes

Matthew Blair

and Kevin. morning Hey, good Uzi

Ezra Uzi Yemin

Hey Good morning. Matt.

Kevin Kremke

Matt. Hey

Matthew Blair

you you share I wrong. into months, repurchase then on two be How repurchases to disclose And January but want come how March, spent $X to February, But I you far? it million are in morning. $XX can this? going much opportunistic on correct should we in to bought issue. And so this for Good going million. the me you if the looks read spent guess, XQ only is like back anything you buybacks in share forward? you back also and

Kevin Kremke

Kevin. It's Matt. hey, Yes,

million. $X got the the under million $XX at $XX $XX ended top the million rest and for release, with of there's in And did XXbX-X million up total post the opens the sure not So, be a the window total I'm in ended $XX But we the QX. another on program QX. once share in we the program year. buybacks us we'll we And that end February, of back versus back of to so earnings -- million XXbX-X for we market

Matthew Blair

And really? terms how Is share you forward? to a are sensitive going price in not Okay. or consideration of that much buybacks of

Ezra Uzi Yemin

we sensitivity, buys. do what involvement. I XXbX-X our or day know Zero every he without price executes just don't even the broker and execute when the No.

Matthew Blair

market increase coming there crude Southwest talk the projects historically market Sounds hoping, your but on market. Gulf good diesel capacity was in was could you good. with the about forward? lot Southwest the I on from the out But might been the talk to pipeline concerns Any I a Coast. best the a the hoping products of end U.S. going that There's products side in reason, weaken some into Southwest of the here product one Southwest That's

Ezra Uzi Yemin

not that's clear, sustainable. be Well, let's

At country. especially now have We easy of and barrels. in time, not the I'm to or with come same need that it's get some margin, we days especially will part $X.XX the that the the sure And just activity. summer to somebody with remember, with $X.XX to

cost $X.XX, that it $X.XX, X. will sometimes And us to to cost something get $X.XX,

$X.XX. may $X.XX, never So a while on bit we suffer the we little more than

about $X.XX, forward. $X.XX We talking probably going are

Matthew Blair

Thanks. Sounds good,

Operator

Kalei comes Our of of from America. Bank Akamine next question

Kalei Akamine

guys. Good Hi morning.

Ezra Uzi Yemin

January.

Kalei Akamine

products quite kind sending looking more your markets of in rather the than are a here because of Just it's to of diesel the Coast inventories refineries PADD Gulf bit, economics. at X, export fallen more attractive colonial

colonial, shipper are what to just guys so Coast? to you compared as guys far the You as know seen on Gulf netbacks are wanted

Ezra Uzi Yemin

during the same the a colonial still to that a to And see summer. And doing a Magellan We're because actually Kalei, with of people Mexico. magnitude from netbacks the healthier. netbacks the in It's us positive. line netback long but course, for refineries we colonial lot ship got positive should time, the Mexico. market little -- TEPPCO thing the of not healthier Netback being is impact getting that the or, line of two

Kalei Akamine

do the Got And once it tightness like what does in put do differentials you the Mid-Cush the and differential the this markets, look how that does? windfall just And wave Mid-Houston long last? looking at if spot it. sustainable ground? of into when both wide fading this and of And the Midland see for will next you pipelines are king forward think here in

Ezra Uzi Yemin

to think along and XXXX, think we is huge forward, export it it. $X numbers the $X.XX -- come going we some models. component our not or Well, gets never expert will think these all between Midland I for I And have XXXX, have all And we and while our we a we forget them see do now, knowledge around we in windfall here model to go was that experts and once somewhere. Cushing. between that it goal export needs the we don't Gulf, And experts, are while

Kalei Akamine

What Coast? in get currently of can do the your scope crude the think the much looks participation like markets? How you to Gulf export you

Ezra Uzi Yemin

get crude much Coast? we How the Gulf to can

Kalei Akamine

Yes.

Ezra Uzi Yemin

to area until market an prefer around the it. That's do we that but have silent announce we I stay plans, to plans are

Kalei Akamine

discuss. it. to again Got Thanks

Ezra Uzi Yemin

you. Thank

Operator

we no And at to to time. over for questions management have turn remarks. this closing like call I the would further

Ezra Uzi Yemin

company to you. make Laura. thank Thank from the I friends is thank their thank That with the I'd the the I'd like this or community of huge I'd like you, the to Thank company. to my believing is. help who We'll great and Directors us. table it to as in and analysts And we talk support to overall Board that all, next you employees for our a investment in -- get the above leadership market. thank like obviously, like here. time. around as

Operator

conference call. concludes This today's

disconnect. may You now

Delek US (DK) 8 May 182018 Q1 Earnings call transcript