Delek US (DK) 5 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Blake Fernandez	Senior Vice President of Investor Relations & Market Intelligence
Uzi Yemin	Chairman, President and CEO
Assi Ginzburg	Executive Vice President and CFO
Fred Greene	Executive Vice President and COO
Avigal Soreq	Chief Commercial Officer
Louis LaBella	President of Refining
Roger Read	Wells Fargo
Manav Gupta	Credit Suisse
Benny Wong	Morgan Stanley
Prashant Rao	Citigroup
Paul Sankey	Mizuho
Brad Heffern	RBC
Neil Mehta	Goldman Sachs
Phil Gresh	JP Morgan
Paul Cheng	Scotia Bank

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter Earnings Call for Delek U.S Holdings Incorporated. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today Mr. President Relations Vice Market Senior Fernandez, of & Investor Intelligence. Blake you. Thank ahead. Please go

Blake Fernandez

and Delek and Thank financial us for call everyone you, results. on to good conference I'd Jerome [ph], morning. like quarter holdings U.S third to thank today's webcast XXXX discuss joining

Assi Greene, members Joining CEO; EVP as as call other and our President today's President management Vice on Uzi Yemin, COO, Executive me Chairman, and of team. our is and Ginzburg, CFO; Fred well

call, material, can website. found we'll Relations be of presentation today's section during The Investor be using on Delek U.S.

statements As that securities conference a X statement. reminder, call this see Please is may for federal contain under forward-looking Safe Harbor as defined the Slide term laws.

report reporting accordance Investors website. accounting is In results. can generally posted on comparable the addition are press our encouraged in Investor results in to section which result, which financial the of be measures to to non-GAAP found of financial certain the Relations these review GAAP non-GAAP financial GAAP, with we reconciliation accepted principles, the or release,

Our that release and third assuming reviewed press the been less incorporated earnings are is are prepared release. covering that has and we being segment quarter press into market remarks information made

financial performance, for today's Assi, review offer Fred strategic will On quarter; comments. will cover closing call; operations then few and the the a will Uzi,

With that, I'll turn the call over to Assi.

Assi Ginzburg

Dorado despite Midland differential lower refinery. the and Blake. you, quarter at financial had We our maintenance this Thank El result strong plant

the net period. Slide $XXX.X X, per $XX.X Delek year or $X.XX on income an million see XXXX, of to US share per the diluted million share, can you income quarter compared of diluted in $X.XX basis, net prior As on adjusted for reported third or

would a XXXX, $XXX.X El in excluding for million compressing and prior despite adjusted $XX.X by million. LCM Krotz granted EBITDA Tyler above the negative in million level, include Springs, pre-tax result that year-to-date adjusted Adjusted third impact, earnings $XXX.X differential. inventory the Our this and offset refinery from I of a benefit like refineries, however, Midland waivers, compared quarter to was RIN this to quarter year $XX.X are a ago was highlight period. Dorado million year EBITDA partially

third On cash to we of along cash approximately Slide to include continuing benefit cash generation operations, XXXX, Wink In strong significant generated $XX.X $XXX capital the X, $XXX provide a of to of million working flow us million flow This quarter of expenditure million waterfall. $XX a from we allows contribution fund cash which million. with Webster. capital

by should Wink financing early the to through We're basis. remaining for on that a and on project to as year-end nonrecurring track Webster, as contribution complete be funded vehicle

a investment reminder, Wink expect $XXX million to $XXX we for net to total million. of Webster As

approximately $XX and shareholders million cash between of returned we buybacks to Finally, dividend. our

quarter cash the with We third highlights a of basis, Slide $XXX and ended on $X capitalization. of billion X consolidated our over net debt.

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

of that $X.XX differential WTI. fourth On quarter gross margin range per in to in be realized premium We we will based our our to curve provide on differed Slide X, Midland the estimate $X.XX barrel guidance.

now will to our over With that, turn I operation. the Fred to discuss call

Fred Greene

Thanks, Assi.

at was our reflects throughput system which third oil refining El barrels per the approximately XXX,XXX day, total During crude downtime quarter, Dorado.

Big the be Crude plan we XXXX, Spring per our throughput barrels of a to XX,XXX range and on point should for like quarter have oil in throughput XXX,XXX oil fourth that shown I’d in at the average first first quarter to per Spring expect in the to As X, crude Separately, Slide of we Big day. turnaround refinery. XXXX, out day. XX,XXX quarter for the barrels XXX,XXX between

third million compared quarter X, expenditures of the XXXX in the during I Capital third were $XX to quarter spending. of capital Slide want XXXX. $XXX On million our highlight to

$XX Our Big forecast will XXXX level. at million capital Retail, $XXX our are our $XXX system is Refining segment, full Logistics, includes This Spring approximately $XX in gathering and Corporate million included this and the Corporate in at level comprise $XXX be year The the million. $XXX million million to amount expenditures and million year.

reminder, joint a River investments venture like Webster. to As Red CapEx and excludes Wink

While function to moved for next pulling year our of We timing above to Big come now prior January. Spring XXXX from on expect CapEx meaningfully of year-over-year spending forward forecast, mainly as basis. is to a XXXX X% a turnaround from was our expected March is in about the be lower CapEx this a

Uzi to call over Next, turn I'll for closing comments. the

Uzi Yemin

morning pleased midstream I'm of our business in Fred, of utilization was versus everybody. good and logistics third-parties. increasing generation significant with on the our progress building out own and and Cash Thanks, ambition our the asset quarter, strategic

Spring to Moving million the X, on progress acres up of expanding, EBITDA Big year. Acreage continues to more Gathering over system, from next now we Gathering, XXX,XXX expect now Slide Big $XX we have that Spring XXX,XXX dedicated $XX system acres previously. ongoing and With million at from

optionality As accessing integration refining JV gathering equity underpin our market. with Delek This a own Gulf local as into the accrued selling it continues project or capacity. is premium to to Coast among unique markets Once refiners position dynamic in decision complete, to our place offered places Webster barrels to Wink fuller grow, we the excess refineries, in to have potential. will enter at availability it of our

tower to Moving now end We're completed benefits, should strong capacity to IMO that of the a and Dorado. cracks feedstock. third increased allow at output. potential distillate distillate vacuum including Sour with run in West Texas the excited about take at product increased to quarter. improvement utilization was yield, including rates El to the Dorado improvements run increased positioned El of upgrade advantage We're substantial These

cash million on Year-to-date, priority. stock. Slide As our have repurchased we shown $XXX.X to a X remains of shareholders returned

been quarter has count of the from peak last the share XX% in by Our year. reduced second

growth. quarter XXXX. the for with Our We opportunities balances cash intend repurchase Delek in of program potential million to capital of fourth allocation $XX shareholders stocks to

since Directors our XXXX. Board This quarter of increase X.X% second in quarter of our increase consecutive our the level. first addition, quarterly a approved from regular sixth dividend the In marks XXXX

With that, for call operator, questions? could please open the you

Operator

from Wells Instructions] [Operator Fargo. of we have a question of the line Roger So Read

Your is open. line

Roger Read

Thank absolute way you. first right was the recapture pretty may or everybody this quarter that Cushing for maybe we through and premium, air of we Midland noise for especially we a morning or if cash is at you capital, and working look gave the cash think flow just slightly good, versus the how we negative as gathering number generation maybe segments Assi, about on ask ‘XX and good EBITDA? think contribution guess, about rough in apologies Good relatively modest company? the of Uzi, But any of not should the think system flow in to to processing ‘XX, port background I my I about now. as of what sort pretty Hey. even the as three wanted -- and be idea you, an a

Assi Ginzburg

– first morning. good is think I

program. make continue a XXXX think being talk decreasing more do cash about our material that also a we year for that order will base have too generate XXXX. gathering flow Wink available it's aspects early money early as is think than the to next some year. that good there on our next start we business, other case. And through of to of said, producing what much Webster we chance our our our have meaningfully we it, plan I We can contribution as below to buyback that With CapEx sure in do have XXXX growth to plan and cash dividend know a

and year, segment better distillate the quarters So yield quarter Dorado look a first our the XX%. barrels we're at very at we're our in when a of our place because call XXXX mentioned we're three the confident look a segment, we on to XX,XXX remember performance below environment, as of When our day, in Retail you of even earlier, higher much please that Logistics El distillate you looking going in our Refining number, be yield. almost every IMO the producing segment, ran at

beneficiary especially will there in the we seen El be So a in is big in something I filled, be cracks, but haven't yet much as increase to XXXX, Delek Dorado. of think distillate

Roger Read

tight one Do tweaks too into any you Krotz sort deep looks your affect Springs of a your project. get in that fully changes type similar Tyler can like is yield pretty you but is whether tweak there. short system that curious other I you have agreed. particular mean was see already, about I other order, into and everywhere. getting curious This I just or there much this Yeah, product if solid market yield. was just pretty it's better

Uzi Yemin

other is by like in projects, something excited El Dorado. Well, require El quarter about do Dorado. always least work they We third on first, very very it at with we're excited. X% that Dorado we're El sometimes happened the downtime distillate Increasing

is the system. because just from how something So just that we to enhance that’s Dorado, big projects was sure tower of benefit sure want make days no-brainer for enormous the that. our – to between you benefit to need Obviously, make balance down downtime, in downtime its XX will to versus are the that or no-brainer I we the want return. that there El several sure, the but for with vacuum take it the balance

Operator

comes of of Manav question next the from Gupta Your Suisse. line Credit

line open. is Your

Manav Gupta

clarification. quick a Uzi, Hey,

$XXX million the to initially you Webster, when $XXX million. So announced Wink was to CapEx

of spent million, which Am more Now already secure Wink what as spend finance. is project you're understanding this there you is no $XX with is Webster to that after right? saying done, associated I

Uzi Yemin

FX. with start Let's

and of equity million. will of you in the for million, then project you XX% of project If $XXX $XX the with we project use $XX need Already QX, invested end midpoint the need the for up say use million. roughly

believe that we the the the or of that say equity And early at it of of at when I XX%. but are We project elect, outlay end potentially, will much inflow the will have the in situation when as we track because financing, have continuation there the if haven't we too close therefore, at secured look project, as the the point, that meaningfully, to we cash we of shouldn't complete actually XXXX. on you yet can investment a cash even a that we project. is in business reduce we

track yet. secured now, financing. we the right It's close not on to are So

secured, some are have We I -- are it next to and but good, would markets commitment the we good say banks. launch going from the two in weeks,

Manav Gupta

the it? think be material is would – Webster hopefully lower you that the that contribution, also So because project if but would DK at should would spend so right assume down to way to midstream the we be said about year, next year Is midstream refining next finance. Wink there no spend be

Uzi Yemin

Correct.

talk in are CapEx, not But right. we is CapEx, to Webster investment when Wink be you its clear, JV. about Now, just to a

It system. year. person, be expect free cash next is First, Wink including the even of us. we down we may it, burden have top to don't Webster go which to CapEx a [ph] DK gathering DPZ any of to On flow back generate meaningfully, do overall

Manav Gupta

Okay.

The So your uplift us quantify of look EBITDA the is $XX if you looking cracks. on question quantify are El Dorado, El change we the uplift. line next higher at you from also $XX you Can increasing million help the are more million, besides looking indicated utilization. us kind benefit? you you you diesel yield, can it the forward Dorado, of at you need in are term, made, EBITDA help if we change at the What

Uzi Yemin

million. that's was basically just year-to-date, $XX with are opportunity million a anywhere start loss average before this of was quarter, then at million using every look when to And quarter, the quarter you you the curve. look every on $XX when on that number million impact this we And year-to-date $XX new from Let's profit the $XX that. fact, to quarter,

a compared this So you be this year. can at significant just look to next when number, year

Manav Gupta

dividend, good. And quarter very we getting in are X.X% question, last increase every a Assi, is which

think dividend like was from XX% XXXX or your of end so. I

gone? is and just the trying like to Is here? dividend I'm to or it buybacks a all does yield So where does getting it how -- balancing understand competitive [indiscernible] about

Uzi Yemin

that's a great question. Manav,

to continue flow. cash We significant generate

flow first we this the told cash the even market the of told You but quarter we generated quarter, working in. range you, capital be a that reversal and this the in we there not can personally, second that see see will we that you in – and that now that's -- in happened

are million $XX spent we as need project. is Wink generate the we cash Webster we feel continuing to put after which We for even to we equity that to that So what believe flow.

standpoint performance Assi in And not fuel in of as includes at future hiking to dividend yield fuel to that El the foreseeable our said together illuminating the cash gathering, oil for we continue with are of together to shareholders. or the We will have shareholders, that in assume future. committed the modeling to the so with returning that make just we Dorado, cash stop flow the combination foreseeable the cash bear our because IMO, committed oil will eliminating the hikes fact dividend -- from just which completely from almost returning a these the

Operator

you. Thank

Your comes Benny of from Morgan next Stanley. question the Wong line of

now open. line is Your

Benny Wong

a had balance sheet, cash regarding obviously, higher cash. reported like you Just you $X level generating that quick you guys have been question in your billion of a It have potentially. sounds

you more thinking that strategically targeted to more is be level kept drive like to -- Just of is of path? opportunistic? a how are as powder cushion of you the sense there thinking about about the Or are be there cash how rest

Assi Ginzburg

Benny. morning, Good

continue a There than net is even is be always a doing With Webster, more number is this to the and be flow and we $X answer no the we’re Wink it that value of to too opportunity. reason look -- able said, want cash to secret up. still of of we to and is in more we other able is investing at things, First, that to and cash we're we like we're to produce when CapEx cash positive We our proud flow one equity like need ability quarter generate to extract percentage opportunity very at. to other the billion. have every what about quarter when that being that amount always compared showed sheet your why equity the the company With balance said, being the of as probably others. or of to

Hopefully, able to continue allow our when won't Second dividend, that a investing And so the question. buyback, company the the doesn’t location that in continue to our continue quarter needed use in ability to our sheet that I three to with to capital or – cushion, be way to balance program. continue us we operate continue company. two the impact basically, their answered

Benny Wong

there. color the appreciate I did, You

Is guys we Just El yield for in it X% your increase the and, I’m as on sounds really wondering, pretty has IMO good. remember, -- you second due is just changed? your question of view distillate I you to base, different And forward go to should upgrading read mean, Dorado, going I around to previously, reconcile upgrade, to be you that? think you short-lived might had that decision it that make little IMO relatively something you're be it a a was view guys to for long-lived, seeing with I this. a how do

Blake Fernandez

Good Hey, all in. tie broader Benny, guess, it’s I obviously, address Blake. it a questions and morning. then eye on

as to we're for For we not where oil components [indiscernible] a very to in the one, two in And that so crude forced you we little know, have production, recycle and situation IMO. system.

to distillate necessarily real broader the it’s we're no IMO actually not hard for there evidence we say there know. leverage are really to is And distillate which crack where We're but Moving factors. -- right that yield you as is really seeing is driving side, dynamics this, have market some the drive market now. significant sure,

So one heavy we’ve global got maintenance.

the strike lot You a see off Saudi the rich distillate took the market. volumes of

PES We market. the And the to over seeing the we're from cold Coast. have East actually weather, the fairly send now to [indiscernible] wide Gulf off Coast arbitrage

reflecting necessarily IMO all margin So it’s is benefit. but of distillate strong, in not the our very view the

to the just tying some so but that of uplift potential IMO And from taking is also partially decisions improve forward. these fundamentals, we're going then by driven in yield distillate

Operator

Prashant from comes the of Rao question of next Citigroup. Your line

is open. Your line

Prashant Rao

Good question. for Thanks morning. Hi. taking the

Uzi Yemin

morning. good Hey,

Prashant Rao

broader and wanted sort a first gathering I of morning. projects to question. the ask on Good

how the we greater about down hearing your here you maybe play maybe fits and concerns supply bit be enhancements, where upstream us of might differentiated of base. wanted a to levels a it of as to of to they of production out shale about in maybe some U.S. most are if And will the in the us in what projects expecting rig bottoming overall the sort counts upstream? of some come in that shale have call the just could U.S. and gathering change months We sense some in as next the been talk get of your little and XX production I context from look background. declines the that nature in the the gathering gathering further remind maybe forward be

Uzi Yemin

Well, that's a great question.

different decision -- only focus let you will give to on people there's ago that years sense our a in me made starting a the We Permian. First, you And the to between difference our the if will best now counties. understand counties, gathering that perspective date.

Our Howard are they are are watch are counties XX, are counties from – These day. every that We these Midland coming APIs. and Marty County, Counties. XX

have card We a report producer. every from

lend, don't in As these last And any and political talk we on crude there have slowdown dozens price any you further light these we from talk very Also, producers. counties, moment. at the counties. for slowdown three $XX. of at would minimum in fracking zero us. three be It know, about in $XX, three given checked see these counties see is we -- impact In the producers of we

we for they of and give As year we the barrels. meet of really are -- the projections about good year, oil. what told we spoke us crude belong year method And ago. us – once a at are These they a basically end that will next come now

and we that have are will and unique Delek both So quality long will situation crude products. we be in barrels, a

these to so produce. us, especially, are counties So to good for that in us, three the position best be, for me for or

I'm -- that above similar And are you hundreds to that of going hundreds just said dedicated millions of systems this than obviously, dollars to for sold sold gathering more acreage deal. we and the remind just others acres. the last being XXX,XXX to quarter we just include and we

from don’t any continue anything counties, we to we production from if So, will, there that believe hear more be produces. will best -- coming and you

hope I question. I answer, hope, So a -- long of but that your answered every was angle

Prashant Rao

to on That confirm one as of with capital to The of was capital half working it. quick that Uzi. confirmation thinking sort follow-up build reversal how just helpful. think And really further we flow more the working sort that be first benefit cash about statement. to Thanks that should very – in then the of anything was build -- and funded

XQ For that purchases year, in doesn’t upon change. not something stands, a into -- turn forward is headwind last into a sort depending that it headwind that going of reverse XQ? in XQ as doesn’t sort of -- perhaps, might it’s it that or or crude But some

Uzi Yemin

working now some more headwind you number, will we no to you see change quarter some one. prices run look when the for working QX, you tailwind We we barrels, we going have Correct. a less cash but had with QX. or cash And anticipate change, at When in any if collected of or and said, as was when flow, year-to-date don’t changes. came that fable basically basically actually there don’t see down, prices in balance gain be then this came Like we're capital. basically that that capital right to there some all and the we may inventory reported up, material QX

Operator

question next Paul from Mizuho. Your line Sankey the of comes of

Your line is open.

Paul Sankey

from Keystone Can to relative a your were you if can Thanks. the the you pipeline just from how what’s say a your and acreage. but would question, Apologies Uzi, about guys know everyone. talk the prospective, bit fetch I happening markets? winner Hi, highlights be short-term that for we

Uzi Yemin

let Avigal, will if Commercial it. one Chief watches Officer he take our that to Yes, I

Avigal Soreq

the can. – wants still long in aspect they when market use we that So opportunity, logistics question a bell. the last believe Obviously, to is present everyone is this

the we the We in have area, made upon and and optimistic reason still about very based of remained [indiscernible], may in the supply. most investment investments our firm

look very optimistic. the piece is how like of something cushion last still around So to utilize to and every would midstream we’re that’s pie, all-in-all, this, obviously that but to long bell,

Paul Sankey

obviously, would There get misguided because is a big we to the from are that or you that, how perspective not is a is suffer to of that going will user that [indiscernible] you pipeline? understanding, my Keystone

Avigal Soreq

because We cushion, that are there for it’s that pipeline, that something not of No. is of the on takes of cushion, not the obviously that. out are what there we user mostly that’s and changes but material volume another but midcontinent balance we pipeline is something do

Paul Sankey

Right. profitability slightly really which in switch distillate obviously quarter, big you’ve terms of another on very word If about talk it can Can you more given going just of surprising manage to scale that the I the a bit this market current is which gone could that conditions? it’s announcement you improving because the is important to be that. yield, to kind

Uzi Yemin

the Louis I Well, guy to of don’t everybody the constructed will our that think want I let but call. -- LaBella. seen has to welcome introduce President all market I to actually Refining, you, the that

So Louis. go ahead

Louis LaBella

Uzi. Thank you,

So, during crude IMO design potential at our the oversized yes, the take of scenario recognized El of advantage planning, Dorado opportunity refinery. that the back we've to in

as us have the predicts of our current light, what results of the whether field going and distillate trade will and So, change the depending as design we minimize to results These a more how heavy And to well we type tower. it in produce indicate it’s while above look as our crude LP we increasing yield medium increase. upgrade X%, the we speck all that after consistently to also provide The Preliminary shown at a model, slowdown flexibility or cash allowed to the test distillate the run X% on shown then, IMO. like production. in run models crudes have be off change planned hold make our in own gas vacuum design effective. tower very lift we refinery tower to asphalt vacuum QX, fuel go yield,

Paul Sankey

Got it.

a the interested that. leave view is Brent-WTI market, the will with these know the will that I Finally always is got one effect be to things. a Thanks there and on Keystone be that view you. spread. I I'll on you know

Uzi Yemin

completing are there here. obviously, Well, factors some

a that is work to is needs light coming and We're exists from crude huge for understand to that what all doing world States. crude now the United destination right absorb First, rewards.

what at shipping not going around – smart So the benchmark It’s enough, also time, we are we enough $X still the side. We other know market believe and the We still same impact that our what not X cost mode, impacting on to X trying some million up, stand. as right the obviously, or we Keystone, I'm $X that of – barrels like smart the found that. awards another but to to -- is Midland-Brent, will assume $X dump in on impact to that's pool, I see to there now million, be we always assume and

Operator

Your line RBC. next Heffern of of question comes from Brad the

open. Your line is

Brad Heffern

Hey, everyone. Yeah.

but Sorry further questions, to just the Dorado on on the yield. harp one one El

when look outside refinery, and the at that, yield X% it’s like petchem, yield and like So, X% something of structure other. X% I maybe the

taking So give of yield some can -- is is refinery Just coming accounted out it that going category? you going forward? is asphalt that any some X% where from? that's up going for be me the the productions Is or how color to of overall

Louis LaBella

for So, -- unit crude the this design. looking barrels at tower for design backed Louis medium is the design again, a XXX,XXX

new make to fuel. are the have actually So choice to we tower, with not the upgrades

So as hold as we drive the well product into making of everything gas asphalt. yield spec

drive to get straight up yield tower. up – splitting really it’s to the distillate capture the to the So get off tower tower the

Brad Heffern

Okay. for Thanks that.

give have. all could capital quarter? Assi number you for exact And working Thanks. missed I this, I the but the sorry, That's if

Assi Ginzburg

Brad? benefit million. was of a $XX It Yeah.

Brad Heffern

Thanks. from me. it That’s

Operator

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

is line Your open.

Neil Mehta

there, businesses. is to quantify and provide sort probably switching lot trying get path shifting accomplish non-refining just in that the to most you're There being of big you three heavily of to talked that what perspective kind the how but you guys. I of business, we want over about is? question non-refining the it’s five One with is strategic refining away increasingly from of for you the levered transformation how to guys your of important things think next the you you're and picture lately into years Can big and a

Uzi Yemin

questions your usual, As Neil, on. are spot

expect middle of the And see We year probably around to the going our trend And gathering more assets or more versus was in – we this out and we evolve will higher as assets. and our see positive a is we we a Blake more to of picking already give said, get to only we are next extending up midstream million, from steam to next very we million guidance to we want together, commitment We have nicely. on basis. quarter. return declared had gathering monthly logistics to $XX we be gathering. to And million our and We integrated continue year as $XX now, third-party we and in three third-party. of obviously, enjoy as assets model. more on or million, our right record business get look four $XXX -- So this -- rely quarter, need creating which $XX

any in are involved project only doesn’t speak. we hope we number of So head in the we that $XXX account XXXX. take three answered And that I question, our million we -- end that other around years that have your by have the ideas the I as is Neil. into

Neil Mehta

less now. understand, right is to is look in avenue to think, that couple company years? was played you going helpful. that's now guys like trying Delek what But or look that’s focus to in a sort I a again, midstream at? retail, of there just growth diversification I have the core And focus Yeah, platform. on of Historically, the focus another the would Is area

Uzi Yemin

the third just dipping have bought of prospects who one. more. but knows a Obviously, have none we're what's even pretty to benefits We another Washington, one into We which Well, a two also disciplines, renewable in on include DTC, from used any ago. month good. plans, we going the two now look well numbers

develop at the integrated time, our to business model. continue renewables, at we and same we So look need

So we're acquisition should know, expensive. is making now, we look right not you that multiple around shy of but the at too wide. what And be

developing the continue will we of growth. our So organic course

Operator

Morgan. JP the next comes of Your of from Gresh question line Phil

open. is line Your

open. Your line is

Phil Gresh

differently. many the I that which was guess in in of there of they are are sort a out operate, asking, you slightly outside a refining of region maybe assets lot nonetheless. Neil which are market, to follow-up but There the of

as just at the Or guess, your your you midstream I other this you in other grow So, look midstream ruling areas, idea refining opportunities a footprint? growth? at M&A is those primarily it desire to point in grow out are of the to

Uzi Yemin

check the refineries example you you Spring, buy the the with that what the worked anybody opportunity that to gathering and with the improve read that anything, know, cost And that we or Alaska, very right asset and we over sell. we're opportunity slate other don't we write somewhere are crude opportunities the is a crude I we pipeline. refining you out much Big refinery. going Phil, love if refining big to the – and can bought, to when as acquisitions, were two the a crude buy several means both Kenai the for did as need as too the Krotz, I think We're not I we think ruling years, using multiple. and Well, going not in asset this buy other and were of along we or When I have and that thought the lowered we that's prices have a done you good right don't that to loud last that order about is came market the clear high. Kenai. in In to is cost buy of

that now operation the that, if do you Krotz, in check, be we your giving selling products. Krotz, the building you a in there And that's will running the or do just are to refinery and bear than a and be basis. EBITDA on need you Big going we, [indiscernible] big Other and need little Second, to what multiples a million yearly to to good then the bit did us you – high, improve $XX favor. like are is obviously, the able in Spring is or

day be assets that that can the that think be So as will operation the to then in want it. are in being are look will criteria acquisition we and long we don't mode, at as these met, and day are price, however, there reasonable improve not out, we we in opportunities if are there

Phil Gresh

not or path forward opportunities are path the just operate you several forward, last are come was thinking I today. don't there Sure. of in the in there obviously,

aligned that in more you was views have on footprint any the in questioning if diversification of that new So regard? that

Uzi Yemin

portfolio. need diversifying buy We our can than look grow But company right welcome there, more need as that a but to Midland And will we future the and Company. that on it serious and to the we maybe diversification the a midstream would we there Alaska. market you tremendous but the the Alaska like diversified be our understand good, you're don't benefit By will refinery. Absolutely. we me great come very with doing our me do company at -- it, to look to We're that's here at refining us just We in point as to note, look now, to the the portfolio. way, was a at it in we of but future, to if go question. perceived

Phil Gresh

Sure. Yeah.

us year, I Okay. perhaps for like to on level year it doesn't then, the of and capital a guess, year want or spending That spending. sound looks out we you this remind know over spending where but might sense. just could give And the like a of to number is frame go makes as normalized in next it I you time? given what a try

Assi Ginzburg

$XXX we at this and million. CapEx the $XXX look Refining roughly that when in the in So segment, you year, number expect these let's spend start of at million -- to Including on the big and CapEx the Retail Logistics, discretionary gathering, is where we're of about million. and $XXX which numbers, $XX between other, the then to then talking million, mostly and roughly are

over So you all spend added the stand at see gathering, on when of the with lot a refining, that will million. big that, a $XXX this you year we’re

earlier, associated look this Now includes the way RK, big the also we screen. mentioned of completion year relative in back please remember includes other the the that when from project brought and CapEx the we to at we turnaround costs XXXX that refining side,

question So year maintenance Retail $XX that should like our did summing refining Logistics, when $XXX we make and million we turnaround somewhere I around $XXX don't CapEx. included and think think, be that we're more then million, Between million, next want year. sense, we million. gathering on the this so year we less to on that spend us and And at mentioned is $XXX going gathering, than that puts much how spend to

much compared will me, XX% more not significant, for is for Uzi not in you much number even and spent this puts year. is X%, decline. that say that it’s lower I it a So we to the $XXX a when significant say And I

So we at year. a decline next looking are meaningful

Phil Gresh

in the not to possible your wondering Last Thanks. not one for maybe of Okay. the call, over years? drop about vehicle the downs, growth on next Very growth just desire as but helpful. couple here DKL DKL XXXX, but the was leverage -- just midstream and

Uzi Yemin

Well, function. we there the not all know, MLP we DKL, way want must market the functioning to market as – is be

DKL at and option is -- still to that is to still grow point. midstream at a don’t option, at continue and do it But segment just we shouldn’t are because this still looking But between combined look situation, as at with not do want to DKL. combined at as segment. We DKL the midstream DKL DKL and an to eliminate at our maybe what DK it sitting what look we a we level. segment, we want We

Phil Gresh

in? buy you it ever Would

Uzi Yemin

that Obviously, do that’s [indiscernible] it VLP done possibility. is I to it. a but possibility want a of going we're to or don’t it, say

Operator

Cheng of line the Paul from comes Bank. question Scotia next Your of

Your line is open.

Paul Cheng

the evaluation be just On that refining, important metrics or M&A will most what the you're two to you going are Uzi, use? three

Uzi Yemin

discussion so refinery. just by -- in a any let well, wouldn’t morning, refinery anybody knowledge that not we're to tomorrow buying my were engaged Evaluation, first, a with buying assume I

maybe to belongs the that to but question the belong future, the present. that’s past, doesn’t So and the to

mentioned that So to just the improving crude multiple backs. three a the pay refinery. the criteria this if the net are is that too we the when cost high Also going improving that shareholders. buy don't make and we as three crude, These we criteria improving look at sure is of I need to we be dilutive slate the our operation to or

Paul Cheng

I understand.

guess looking at? high metric, I multiple, talking evaluation will when my multiple too to you’re about what don't you question or be So that paying what is overpay that you

Uzi Yemin

knowing, don't I I that or not. think the if can a what deal give theoretical multiple we Paul, on you operation is can without improve the

that's So XX for the time, cheap. times at paid we not Krotz. -- Today really it looks

Paul Cheng

Okay.

that I the Assi, is Spring given year [indiscernible] think that this Big actually for million, assume is the $XX in Gathering, MLP. spending for you million, and $XX let's are the is next

that going assume that Big should show in So up that Spring refinery? Where show to -- the is to earning earning going we up?

Assi Ginzburg

margin So incorporate million not and it’s and quarter, the Other, Gathering, material, was $X is right actually Delek Permian which a in others. quarter, and the that’s now, for Corporate this this DPG, contribution showed up in around

As you in we going to it’s be in percentage and be what Logistics. next needs grow to look meaningful, year the Big Spring will into or

spend, So XXXX, that Other. negative a we to want the at $X we this in was benefit haven't When quarter, and was decision, just it Corporate I million. when show of it that was million a made had and that Other, $X you look but a Corporate in you number and

part – looking So do be a an see in we it’s Other to or of Corporate Logistics to improvement – we the even and Spring Big were going it’s maybe and segment.

Paul Cheng

haven't project. you to going that up you're my way But made

Assi Ginzburg

we make Correct. decision. meaningful will end, Probably, by year having number, we start that when will to have

material, a part point Corporate this Other. not and in know that's $X quarter, and why of you it’s As million it's

Paul Cheng

new the And in in decided about for El all XXX. the any may crude design? [indiscernible]. it terms think that going change Dorado, that And and changes change weather slate? is years changes? of guys, unit that. to though And even to talked decided [indiscernible] you’ve operating unit does How several How costs, I is But yield into does have costs, I think have and crude business you XX fracks that one ago, you under the

Assi Ginzburg

Okay.

So same then run first got the that's can barrels more Uzi more will We've I'll Dorado, a XX,XXX, run we the take absolutely, answer actually, yield. question. technical El the than in we XX,XXX, more and tricky refining than part enjoy and can part.

there is waivers the and here gain a XX,XXX, However, are running between exemptions. refinery small RIN

waiver XX,XXX, then we're more than know, us. if for running – RINs doesn't there exist As you

need as is every that So that's excluded something year, we others that you watch both the you earnings, real watch. time same But get in know that we from we flow and our but that’s I at that know. cash to need end let to day, easily Louis, that economics. understand the this crude we that is it need and than one. will to more slate, just your We even slate question, be XX,XXX, any you than answer to running running more can we do product to take XX,XXX got I easy. And something

Louis LaBella

up our that crude minimizing fuel it So, the flexibility we’ll opens run, we really can yes, make. it drafts out and of

the – make, So as the of hold the actually we of sale. date we draw we actually fuel minimize the into will and the can we tower gas vaccum tower diesel yield

of to would to up tell range the run. us it crude market opens So what which wide

Paul Cheng

position, for don’t is for your you cash is deal? I it that balance that you or [indiscernible] bigger me. think the still flow that have become and one better deal your have Why still mean, and Final that as sheet deal company advantageous? is we stronger.

Assi Ginzburg

question. great So

debt in hand, those do from capital the including being deal XXXX. said other can be alternative of allocated our that on on the is reduce the will all we we flow we not that able basically million to inventory on and of the materially it and cost of in ignoring, $XXX the terminate deal, therefore, overall, means targeting the for put of as costs. it’s QX, hope that balance early that, the we have actually to will same leverage such something reduce not question First, our not renew and just another deck, move that being prospective, costs. to the the of a we’re sheet, as the [indiscernible] our net of all We're deal to cots, hand, materially a With benefits cost that cash level, market in as we one having it to deck. And part in next [indiscernible] have

Operator

Please today. your turn ahead. I presenters and gentlemen. call Okay. now to back the ladies like to go Thank over you, would And

Uzi Yemin

for to of I of table that and –that Thank friends here great investors mainly, your employees Board day. in Thank one listened of belief today. together, trust this great company. Obviously, thank in hard the everybody for joined Okay. us. that Directors my their around you. us. put to the the all appreciate they the like this And everything, would morning, you. would think everybody like for trust call each work to a I took Have the this I

Operator

participating. This Thank you concludes conference today's for call.

disconnect. now may You

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