DK - Earnings call 1 2021 | Delek US Holdings, Inc.

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Operator

Good day and welcome to the Delek 2021 First Quarter Conference Call. [Operator Instructions] Please note that today's event is being recorded. I would like to turn the conference call over to Mr. Blake Fernandez. Mr. yours, is floor the sir. Fernandez,

Blake Fernandez

Financial to I on Holdings' for XXXX us everyone conference would First call of US like today's Delek and joining discuss thank webcast Results. Quarter to

the used is be of Joining me CEO; Relations Spiegel, website. The our Investor as and management and EVP well Yemin, found EVP materials Chairman, and Labella, of President team. Reuven Louis the Uzi during CFO; President of on can Delek and our as on today's call call today's Refining, section other presentation members US

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

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

turn Our that release and first assuming reviewed press the been less capitalization call incorporated review today's offer CapEx, will will the are and With over will On a Reuven comments. and Uzi to is are call, prepared release. few covering than has and will performance, we being segment quarter earnings into market the remarks information financial made cover I I cover that, will Louis Reuven. guidance, operations and closing strategic

Reuven Spiegel

share the loss or of basis loss per compared period. $XXX loss per XXXX, a US net Delek an year $X.XX of a million Thank share of $X.XX $XXX.X net you, a reported or Blake. for in loss the to adjusted quarter prior first of On million a of

period. of Our adjusted year of of in $XX first loss million a million compared the quarter $XX prior EBITDA a the to XXXX loss in was

provides adjusted $X.XX included share The press of of after-tax quarter. second or million in the release hedging results. in of impacts provides inventory the the $XX release Page Page headwinds impacts per inventory paragraph other XX of X items highlights and

tax by was due I the driven the tax was highlight internal full This focusing upward primarily estimated XXXX. performance and to would year. revision rates of like in than to the lower for the changes expected of benefit in year quarter

created this the that share, to is the the story improved headwind While macro relative was backdrop a previous earnings our in per underlying to first outlook. quarter,

flow which million quarter of I On over Slide cash had a approximately With in includes X, quarter operation, to approximately were Cash a turn will XXXX, of first capital $XX working million. from of cash continuing capital a $XX the Blake. that, expenditure waterfall. we we the provide million. detriment negative In it flow $XX

Blake Fernandez

cash and $XXX of Thanks, highlights quarter We ended on our Reuven. $X.XX Slide X with net the of debt. a long-term million consolidated billion basis first capitalization.

to tax Excluding you net which March debt net a long-term collected $XXX expect of million we federal approximately we remind debt would that expected approximately at in of Delek Logistics $XXX million be XXXX. had I of XX, refund of $XXX is million, $XXX of million, XXXX.

for March, in second and Springs Krotz in guidance. both which Slide has to restart reflected to modeling. quarter cost X, we decided improved the guidance provide we conditions, Refinery to Moving been market Due throughput

reflects of El Springs Second post million $XXX energy-related and ongoing $XXX Krotz freeze-related costs. forecasted expenses, and and be turnaround the quarter costs are at range elevated restart operating Dorado, in costs to repairs to This million.

compared of half lower the expect first expenses We second in the year the half. trend to to

that, our will CapEx. turn With the discuss over call operations and to I Louis to

Louis Labella

Thanks, Blake.

to the per throughput expect was XXXX, system day. throughputs XXX,XXX crude average total XXX,XXX second approximately refining barrels our the we to at During per oil quarter March Krotz turnaround between We're utilization X the first In Springs the oil barrels April. midpoint. and normal quarter, turnaround in crude in of of completed El day, We've back or XXX,XXX the at to currently our XX% all Dorado refineries. operations approximately

major year. activities of planned no rest for the We the turnaround have

the fire The plan new budget restart. The X, increase were original freeze-related of $XX El Krotz the capitalized at lower from million, El turnarounds program of during costs quarter the million, capital actual damages, expenditures and the to than at The million is to both the insurance and Slide reflecting On first XX% capital reflects turnarounds expected is from $XXX combination capital be a XXXX Dorado. and the including Krotz Springs net the Dorado, $XXX XXXX estimated spend. proceeds. Springs

to will I Uzi. Next, turn the over call

Uzi Yemin

Louis you, out This quarter. complete, refining With plant optimistic Krotz everybody. to opportunity second margins into for and Springs the good We're provided the run the the Refinery. in major about now the morning, to we're Thank an maintenance utilization restart year rate. positioned us improvement elevated

we logistics, call an Our to specs now to Blake. Hughes, technology continues quarter announce meet back first will well Baker record over with agreement blending are retail to IMO segment product performing the exclusive turn to results. utilizing I pleased In capabilities. with

Blake Fernandez

Thanks, Uzi.

ask contest not Q&A, earnings questions with your regard the moving we and situation. all to appreciate or making you Before to shareholders the and support we would be our that like proxy business to will CVR environment. from the to keep We comments

website Shareholder the can link information for the questions. tab under You that, Delek the call US With accessing open find Communication. please Relations Investor operator, by Materials the on Proxy titled additional and

Operator

of we will question have first Credit The Instructions] Gupta come Suisse. Manav from [Operator

Manav Gupta

strong on Krotz Uzi, Spring. very recovery

I and almost the take was other margin think $X.XX adjustments that's and you if $XX.XX. adjusted into account everything, inventory

change can been of major Springs this a has you for you Refinery quarter-over-quarter, and can last all versus highlight was working what positive quarter? and at rate that the continue Krotz if improvement and what So drove

Uzi Yemin

what I'm that's we will And the and big around we take the have told did way the Well, Krotz a Krotz help agreement here, that in going quarter. past Springs, with that some Louis in but obviously underlying market to future. to Blake the the the let first the in details we of go issues. Also,

about don't Blake, if know numbers Speaking the take Louis. want themselves, to it I you or

Blake Fernandez

clear. to just sure want Manav, I'm being mean, look, make I Yes, I

set the game. Let's correct. It's a margin expectations

you can costs of throughout. well. very the as see, startup, was And was timing of the March course are So, margin the which environment then there Think were when intermediates strong. elevated the about late as selling we that

it I we've the So environment. an idea going be expectation have forward, with set margin the to restarted margin in but we're want don't terms there going to of that that a positive obviously $XX would it

I quarter that So get us behind and let think basis normalize. see us on a full you'll another quarter

Manav Gupta

we I conversation, that are Okay. RIN think don't And this the have second exposed. question, Uzi, you think had I

XX%, numbers. XX% could You're XX%, remind if exposed, probably you but RIN us the

what's refining net understand, Delek RIN point I out As of lose of time? on exposure marketing, at but you you up in this it make the but

Uzi Yemin

RINs Manav, [ are XXX as ], know. you

of in Krotz of While little exposure, Big exposure to the Taylor split wholesale RIN bit pressure cost. Dorado, in the obviously no nor was Spring in we the have some side neither there and exposure El past, unfortunately there's from

we're the discount kind not the away of XXX hard customers get RIN. giving the pretty Now [ a are to ] over but pushing some obviously,

need wholesalers exact niche are or offset to market thing of of to can Now number environment because the keep of just some dramatically, obviously of but we that the the but helps RINs we the listing talked wholesale the RINs, demanding in XXX% we -- about the remember discounts disclose that cost we this don't RIN.

that You coming how the wholesalers. because are results the the you in DKL see strong the pressure in RINs, Texas see the from results West and of the

Manav Gupta

markets In know we up, Last moves activity up, your moves question, up. Uzi. demand Okay. oil moves as the

far as concerned seeing for the in end you products refined as are demand market markets? what So end your is

Uzi Yemin

Well immediately we in Texas. getting West bare. see Texas it is West

of see up. can You coming number the rigs

up. the quarter. very a had Retail demand coming strong see You

as quarter retail. strong will well Second be very for

demand is when getting especially So $XX. crude $XX, is there $XX-something, oil

stays for will $XX, if So back. it us, demand $XX, come

helps obviously a vaccination the lot. Now

we follow the And all I numbers Manav. You through is be the the market up. should headwind of industry. the side the export us RINs a even demand, of than trying the niche we past, supply it is One year second general, bare. be in think while that thing, through but in optimistic demand better that picking in mitigate that now was will and part to also for We're these do,

Manav Gupta

on Uzi. Krotz Congrats the turnaround,

Operator

have Energy. Simmons of Next Todd Ryan we

Ryan Todd

comments Maybe on sequential retail. on now that your market local in the marketing the I of one in of deterioration some thought peers about a quarter retail? saw actually of your about factors you strength just margin. margins talk guys mean follow-up quarter. Most increased mean can drove you I fuel

So any thoughts that second the as quarter? moving about into you and sustainability think on

Uzi Yemin

are planning retail stores. over major very can our invest Yes, the of in we're without more of part improve said as still last That was And we investment. we retail. that discussion X, X quarters, new to proud

XX% up indicators, also second at If X.X%, quarter. on to margins up margins -- point from are And one you X inside look going side. another from XX.X%, the margins to are now seems XX% XX% are great to the be fuel and sales same-store entire

a XXXX for be will continue. think pay I I this I step to year wrong, the it only will enhance I stores, for is dividends. in expect a that feel but be and not we the we years we coming year X be think our that won't fruition hope said And past, year I the stores, record took So X retail. retail. XXXX to ago, record to ago stores, the traditional new

Ryan Todd

kind use capital priorities of use with refining cash mean about of as on restart, use cash, think your second cash, of and the obviously last side, about rebound the strong the this your X recovering, should into allocation quarter, we or Krotz that think throughput I the how for margins, demands as we we year and we about the see think I of flow? And quarters the as guidance of into guess overall high

Uzi Yemin

we our then pay the regard. flow said, to sure is basis As debt sheet coming strong said, first returning balance cash is we we'll to shareholders. and cash let enough; then a and that as on make acting that point the start that in us priority to sustainable to in get the and dividend our is obviously, But resuming down free

Ryan Todd

Uzi. Congrats, Okay.

Uzi Yemin

you. Thank

Operator

Next we have Fargo. Roger Wells of Read

Roger Read

initial budget. Just what outlook of relative budget, at XXXX. relative you more you're to I for tax improved sort here of a the that specifics issue curious, any from the you us and wondering was the willing baseline you give surprise what to little to and your could maybe beginning see improved, mentioned call, bit if the

Reuven Spiegel

the It's concerned, Reuven. as worse margins had as a we When and we are originally far better the outlook for we the forecast year, had as entered year. obviously progressed year a

we quarter definitely the quarter. year and the than rate entire first So the better for the We see fluctuates outlook by budget. but first the can is the that don't disclose your original results for tax the anticipated really with forecast, determined margin, improved number

Uzi Yemin

That to want I that, the with to we Yes. the now be today, see of see XX%, Obviously back or XX. more XX, we to tax can back the XX% give it Roger. so use by we start the would equates some been project the and it, XX%, normal of to we profitability would as $X.XX. the If than better been started so-called what color what have -- we something company. XX%; year XX%, result instead the have

offset come that beat. at down It the become that back look margins something little profitable just The a company, the but as be currently technical, the improve, a it's the is will we you it if be it but tax will and dragged results rate works. coming bit, if quarters. then how EBITDA So in that of

Roger Read

that. or margins, that fact it the the restarted particularly was for I the Krotz you improvement Was to gas were. drivers Thanks for understand guess trying just was diesel? what maybe Just it for I Springs? of

Uzi Yemin

outlook the a the it's the we year, different outlook. year. one was and Basically a driver for is When the outlook it now started

Operator

And have America. Bank of Akamine Kalei we next of

Kaleinoheaokealaula Akamine

I want refining first. about talk to

like in get in and So And refining address we repairs a whether in the storm what made. like been you of whether obviously there could restarting can March rate winter all the profitability if cost XQ had the sense turned run quarter. help the the looked corner refinery. look was the Krotz what any also as understand Springs Wondering us

Uzi Yemin

I'm Louis of the repaired then at thing, technical and one it. of by exception unit been we sorry, which next the few the Spring, one go winter the expect not That's storm have start in -- profitability the enhances aspects All Spring, over Big obviously That's give Big Spring. one the with aspects Big Springs. of will alky days. to of Krotz Let's

in the next about Tyler is are Big rate turnaround and in full rate rate. the in we days. Krotz and completed rate. in El is few Spring Dorado just full to We in over full be full is Springs

April hope not effect behind should of saying lasted winter regret, -- pretty El I'll will that something I I So know in anything the Louis, the basically that add should that. full -- expect storm if be the you because impact month May, from be you storm in Dorado will of El rate There should Dorado, on I be turnaround don’t much be winter April, there the to in June. close but am but to want to us.

Louis Labella

No.

Operator

we will next Gresh The of question Phil have from JPMorgan. come

Phil M. Gresh

down. Springs those if up million the of and going of were saves things OpEx OpEx think to tying come XX% on was year things I be of back $XX I guidance just want to to side the it to supposed and Krotz this of follow from original

you little residual things just to a put around more with progressing detail the So how see bit savings.

Blake Fernandez

I'll Blake. it's that. take Phil,

know, beginning restarts the year, of course, there's winter at And terms El terms the in lot of impact at part some And residual of the post of fire we then, Dorado, moving as of the El then, Krotz of in pieces turnaround So in XQ in have storm winter. and you XQ. impacts in the a course, Dorado.

at of for XQ a $XXX-some-odd was the see Krotz suggest last of running. to quarter you you guidance suggest with something would per if quarter $XXX You what the year, million, would back to about on look per $XXX of XQ is million in which guidance, basis that original million I

kind we bit. second we're a I up ZIP Technically the $XXX that high speaking, code, gas think probably maybe prices million of into of in as half toward move year, think the the have natural I moved still range.

contracts We have up for renegotiation, coming et electricity some cetera.

we're guidance. I that of So think within still about original X%

million again running. in from quarter hard think I'm something range guidance, the per modeling Krotz right perspective, So you, but $XXX Phil, this if just feels isn't about I a upper with

second think year looking half were little a year. what first at lower of compared bit I half again, we So of in the to the the

Phil M. Gresh

helpful. That's great. Okay,

just do the retail of delivering question, that up for about thought to get today? retail. importance so you think versus one just again. quarter, the obviously on cash company could you last I'd you I very second company, the The externally think the is follow this Uzi, the I value asked strong I How flow overall

Uzi Yemin

value. measured Everything have be Phil, our is not should changed we mind. -- in of terms

call Now, on retail it, XXx see being one the market hand, XX, still multiple. at, we

On to other and EBITDA continues hand, the our grow to continues improve.

either We are not shy being in the market for way. retail

remember, you XXx. we As sold Mapco at

that it. -- grow, gives to to then if If probably believe, us we more bit that. of the it We believe, we offer was want for else, that to the I even an growth, somebody that probably and should we little then there value reflect not future a probably, and consider value continues have

not continue for then to to we're shy So the at to this growth, the confident willing if somebody is point, pay EBITDA we will in that market. grow. that are very And be

Phil M. Gresh

be thinking there the future clear. sneak to normalized this If of light spend any could would Just about detail in of one would I bottoms-up CapEx be year? What the Very be one. last Okay. kind helpful. higher

Uzi Yemin

we've in is refining around past sustainable is DKL about rest -- Yes, retail. is million, and should that million, the $XX corporate $XXX the talked the around be $XX CapEx around million, that

then build to is every $X retail million. store stores, Sustainable to is $XX CapEx for million. more Now, if million decide we build that we $XX

Operator

Next one Goldman of Sachs. Neil Mehta

Carly Davenport

Neil. This is Carly on for

update and when to Just could the start Webster to see on on there? kind ramp around of side, the we the progress us logistics you contribution should Wink

Uzi Yemin

it's our operation, starting to but of up subscribed end ramp a ramp subscribed. up. the mentioned projects It's period, couple we starting early Wink fully by And, in of be as will to this know, to XX% close quarter. but Yes. pipeline, already fourth to a the year, is Webster ramp-up it's a all

as 'XX we of close for So in and utilization. sure -- terms XXX% 'XX cash and XXXX, in strong flow cash flow, get to XXX% starting

Carly Davenport

And there is part term, on And that's operations Are about strategy? talk view you if follow-up lower bit guess diesel, energy the elsewhere? longer portfolio? I the updates a the just fuel any core biodiesel current a of at of then great. the around transition. or renewable Bakersfield Can considerations as kind little whether the carbon That's you around then

Blake Fernandez

on and that, in. Carly, Blake, it's I'll start to Uzi if follow wants

So on generating Hydrogen for of nice in the it's biodiesel at lot a the small of day the at Council. the the RINs the some portfolio, of member exploring And us. part a day, of it, different end of it's part look we're of a of opportunities. the terms We're end but

that's We have constantly internally a Committee evaluating opportunities. Decarbonization

have option. diesel the renewable Bakersfield We

end participate has where the well. which have explore want return committed At we'll to in at served of the amount we going to we think to of this anything, I the the us day, So continue be. substantial of best capital point, rate transition. we is the global not And think to

Operator

Paul Next of Sankey we Research. Sankey have

Paul Sankey

could of you lost forward. heard going you're the your CapEx. top-down on just where the gathering this, CapEx kind I we're outlook you've Uzi, for outlook. but do maintenance placement with a you the various heard and at addressed going I've slightly I you of on projects track looking that the projects. on

next sort see layer where years, just top would couple additional on of that of could helpful. you over be of If you that the spending

Uzi Yemin

back. Paul, something or just growth about the great to you question I sure to answer asking about want are asking -- projects to your have else? make you you are

Paul Sankey

stuff. Anything big. Basically pipes and

Uzi Yemin

Okay, I got it.

the of majority the organic are projects if the So in DKL already very shipper, fruition with outlook the expansion, new to already X year. first Hughes project. you These starts come River to of started with will, strong X and that growth May, the CapEx or flow continues you line will that investment. with that if this cash not projects projects will vast give Red be Baker pay the DKL, for spent all, We much will, at

much EBITDA. in the Now, we is to be the Honestly, continue We that. now that us Xx want the invest prudent would EBITDA X threshold are lower explore happening X, it. around because now, We be returns obviously based X marketplace. we in like don't of to position expansions for a to or what's to on Xx to the gathering and about need

debt opportunities. pay now Our to at look main goal right is and

we to us in expect wouldn't if that investment. they mega I the and being million stores are this $X.X investing the of EBITDA, So hundreds million, probably in way With $X.X $X to are, with or the that said, environment. resume retail stay in if and million we dollars pads millions retail we gathering invest and -- of stores, we continue are $X.X the future roughly put to million decide get will perform

Paul Sankey

the Got sort relevant it proxy, votes it. we to comments any going just this you easy of for dates know you're repeat dates the the and And but the can is that on could for when when of see not situation. deadline you, as a some to just I us, said make matter for -- make fact, resolution of

Blake Fernandez

it's Blake. Paul,

shareholder So at you so the should Time, have imminently. Central meeting's X:XX tomorrow results

Operator

Cowen. we'll And have Jason Gabelman next of

Jason Gabelman

growth stores strategy showing grow follow attractive seem on want to these term, year Can growth have moving the a desire rateable of of business? just stores or to you presentations that not slide XXXX on the format Clearly, think one I I near see going big have have a first to in to you up a you be And I returns. Is the big your to pretty -- can retail discuss the that forward. will of that that kind to follow-up. XXXX. be more understanding XX of by

Uzi Yemin

grew when we remember, went you went we X, then with X, if we to to then started and them, we build so then XX went to on. XX, we Jason, Mapco we

legs. You want to practice, you break don't want your to

want X very They NTIs. build You to learn. successful. are We

sure invest you build. each we are not store in stores take that and these make want we learn -- So to you slowly, it from

of have So, to a for of whole slowly as department you looking a and want up, properties. you sudden it then you take ramp piece good all

things we are efficient efficient we how in them. and We how build operate

it mistakes. something from So that want look I at to because ramp it look wouldn't we our as I learn ratably. at up we

Jason Gabelman

Okay. it. Got

free that discussed you of near term. achieve buyback with shareholder it Springs, restarting after And in cash helpful. call that cash free have you That's positive the the program explore secondly, Krotz returns, quarter's last on like resuming seems will Certainly you months on flow. an you flow positive a could outlook earnings few that

can timing COVID? a where could level program? dividend outlook just that if you or prior a around return prefer the discuss levels, shareholder So at these around of was Whether to buyback; you if it's dividend be it former, and the restarting

Uzi Yemin

up the debt. are the balance the So that are buyback. sure the healthy the the steps These is -- to that second make we phase then and we're going healthier to Then first to getting sheet take sure the or balance restore out steps. and and sheet make -- is dividends shore part

Jason Gabelman

What debt looking back you level get are of towards? to

Uzi Yemin

EBITDA normalized depends great. everything it do with that Obviously on think $XX crack spreads, we $XX, what is Well, is.

However, will RIN. or confidence RINS $X, higher. what $X level into then are with $X, And with then if $X, go the our need to dropping, eating, RINs then what, we the see happens that,

what Supreme at they very take see carefully, it do looking the So from there. it to what and Court says. We're let's wait we'll we see and

Operator

[Operator It this like looks we have further questions at time. no Instructions]

back like go over ahead closing team to we'll and would today's any Gentlemen. question-and-answer conclude the Now conference turn for session. to the now management I remarks.

Uzi Yemin

to thank I'd colleagues it about thank talk this run you day. each Thanks. thank and us the to to my Obviously taking should we We'll run like like company to the company of great think obviously it. make to employee the each to us. mainly that in learn to I'd you we the thank company way great confidence like Directors soon. Have the confidence is. one But the the it a I'd for company of investors time of table. giving Board like our I'd for around the

Operator

time and time, again, today. thank we care rest At the may for you you also day. you concluded. Thank conference Take call to is sir, your also, team this lines. wonderful the your of everyone. and management a now Again, have the And disconnect

Delek US (DK) 5 May 212021 Q1 Earnings call transcript