Delek US (DK) 7 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Rosy Zuklic	VP, IR
Avigal Soreq	President and CEO
Joseph Israel	EVP, Operations
Mark Hobbs	EVP, Corporate Development
Reuven Spiegel	EVP and CFO
Manav Gupta	UBS
Matthew Blair	Tudor, Pickering, Holt
Nicolette Slusser	Goldman Sachs
Doug Leggate	Bank of America
Ryan Todd	Piper Sandler
Roger Read	Wells Fargo
Paul Cheng	Scotiabank
Jason Gabelman	Cowen

Call transcript

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Operator

Good morning and welcome to the Delek US Holdings Second Quarter earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded.

I would now like to turn the conference over to Rosy Zuklic, Vice President of Investor Relations. ahead. go Please

Rosy Zuklic

Spiegel, welcome conference and Avigal Delek second Development. Operations; US President Mark Financial Good EVP, Hobbs, Participants to on earnings Corporate Reuven EVP, Israel, call. CEO; include and today's quarter Chief and Officer; morning Joseph the EVP call Soreq, will

uncertainty today's that call. assumes company Today's statements included our cause statements. two to statements may materially cause Relations Safe in actual contains results statements. The These of are comments. actual presentation Harbor no found during to differ obligation differ We'll here Delek from and as the filings. could statement Investor can as the be forward-looking to well Factors be our update forward-looking that making US SEC today's material forward-looking regarding results any risk involve on section website. risk Slide

the Avigal I over will opening call now remarks. turn to for

Avigal Soreq

today. Good joining thank us for morning you and

we During results. the financial quarter, delivered second solid

our well executed team Our objectives. and focused on key stayed

what do competitive and will to a is that to to do. dividend shareholders. We continue value commitment our we sustainable. return We kept target We we said

and and the close Year-to-date, $XX of our $XXX share buyback near to further returned to the week, have program we Giving last share dividend million end reward buybacks. our to market Since million, have in year the us both the returned investors to this we give outlook, ability mid-term. June investors. of

strong value a a there balance and also We is in financial sheet recognize flexibility.

give in financial of and OpEx will with We Rosy our pleased our structure. quarter more the improve the follow. continue cost details to the will G&A section. efficiency I'm improving progress.

our improving liability safety Refining and is of to quarter. most the Turning to the during the We fundamental. system, system our of ran operation well

made we the direction. During steps in right the quarter,

We continue good make progress. to

for contribution and local demand. by market reflects businesses, wholesale Refining segment asphalt driven strong our Our

improved benchmark benefited in location US see month of from our differentials. macro our standpoint, year. these July, $X In the tax by per outlook rate the From improved continuing. higher which a for business approximately We our Gulf further addition, Coast Altus trends barrel,

story light is Crude which also XX% configuration system balanced We fully is no at our naphtha. heavy-light is us. excess as differential for to with a our see compress favorable good continue for the

with addition, production, be differential. favorable expect the growth the in In we Permian the we see in to Midland

$XX segment Our quarter. results, which Logistics delivered with million of -- EBITDA adjusted strong this

acreage year. of this prime the from QX outperforming Basin. forecast $XXX in segment is now around Our this Permian million a starting We quarter

volume, average a Retail store increased also This sales. insights quarter. supported higher margin, driven and solid fuel higher by was

our is our every to In value to continued execute advance on their closing, team successfully strategy. still contribution. for and member initiative. we as There continue to unlock want thank our strategic to I team each

provide Joseph will additional Now, over I on turn call operation. the would to who to color our like

Joseph Israel

In Thank $XXX team by the in XXX,XXX total our conditions generated of of you, second system quarter, our throughput. Supported safely favorable the Refining Avigal. processed markets, EBITDA. day barrels adjusted million per market

barrel per XX,XXX in the and the third in was XX,XXX barrels In XX,XXX the operating throughput Production margin day quarter in Tyler, the In per to range. per quarter were is throughput the Tyler barrel. approximately $XX.XX total barrels second per in expenses $X.XX was estimated day. quarter,

a third-party our shutdown. led in per throughput of In El due to short approximately mainly and which Dorado, power guidance, transformer total the related failure, outage was XX,XXX a barrels day, quarter to

XX,XXX $X range. Operating barrels expenses including was the were power per unfavorable margin $X.XX XX,XXX per of due production $X.XX throughput impact Our per in for barrel day the the Estimated quarter outage. barrel. an third per approximately is to barrel, to

unit diesel quarter the maintenance. hydrotreater under due X,XXX barrels our and guidance, day, per day barrels Spring, throughput approximately unplanned mostly vacuum per total XX,XXX for Big to In was catalyst approximately change

approximately barrel, was $X.XX events. $X.XX barrel barrel expenses barrel, an from Spring maintenance margin impact including the activities. unfavorable $XX.XX were per Production in per including Big unplanned per Operating $X.XX per the of estimated unplanned

safe investing year the and of items. per integrity second mechanical reliable related expense are Spring, approximately were that barrel quarter, important this support in to reported regulatory sustaining we Big in and To $X.XX In operations operating initiative. our

day planned in going quarter this Spring and the $X to the is Our estimated quarter range. Big XX,XXX cost approximately third through forward per barrels is in of The XX,XXX fourth throughput third barrel per year.

approximately In XX,XXX Cross day. was barrels per Springs, total throughput

margin was were XX,XXX is $X.XX range. the operating to quarter and in barrels per third XX,XXX per Planned production day $X.XX expenses Our in the per barrel. barrel throughput

system Compared jet with while some the fuel provided improved reduced quarter, spreads crack and RVO and spreads crack first evidence. gasoline in the second NGL quarter, the the benefited from mainly cost

asphalt by refineries driven value $XX was Krotz the of in high Strong sulfur earnings. million to added generated second of and segment capture sales. diesel, Refining reported their added Springs, our and margins marketing light-cycle quarter and our million of rates, alkylate approximately Outside $XX that at each oil, wholesale associated

El both generated were and to generated by million Dorado, million driven Approximately marketing. whole $XX $XX asphalt by wholesale marketing. million close in and in $XX Tyler was Big Spring,

throughput Overall, XXX,XXX per day the in quarter range. estimated XXX,XXX systems in the third to is barrels

environmental capture and to follow. margin on continue we cost We as focus to and and safety, our compliance expect priorities, performance reliability, top

clearly financial has also beneficiaries to growth DKN, than doubled Basin are more we Logistics strong the well of The and Avigal, which year at Permian from solid the and operations a ago regards System mentioned Gathering Midland With team have our demonstrated in are volumes business as growth, by results. the level. reflected

the to over call the financial variance. turn now Rosy for will I

Rosy Zuklic

Thanks our Joseph. presentation of slide start material. five on I'll

a adjusted quarter from XXXX, or million. share. per million or second net operations was loss income and flow had million. $XX $XX was of of $X.XX Adjusted net per was Delek US $X $X share, the $XXX For Cash million EBITDA

crack primarily slide quarter. Gulf from in Coast by was from down averaged segment waterfall quarter, reflecting in decrease lower the EBITDA Refining, our spreads. the $XX.XX of from On we The XXXX. quarter of the crack to provide XXX the results largely a in The six, for adjusted the decrease $XX.XX quarter second first first

on and businesses offset well fell, retail as quarter inventory cracks. wholesale improved at draws as partly performance from versus improving level. Retail prices end, crude asphalt pricing our as the lower the Strong quarter last at

with were In consistent higher, the addition, season. Volumes

seven cash. slide cash for in inventory to drew in executed activities $XX in the to flow. quarter We cash approximately quarter, Moving draws of $XX discuss includes the $XXX second outflows $XX the million late in million operating million the ending million quarter. during cash with The

the Investing this inventory draws capital of for $XX received is increased the reason debt We net mainly for of timing quarter. The million these cash the is expenditures. in July. activities primary sales

payments. of in million This buybacks, Financing $XX million includes and million to reflects in activities shareholders. returns in primarily distribution $XX $XX $XX million dividends,

show On million. slide have spent the Year-to-date, capital $XXX remain We eight, we estimate million. full year we expenditures. approximately $XXX at to

broken Delek nine. on Logistics out between Net Delek slide and is debt

net consolidated million. the by quarter, During increased debt $XX

outlook last slide for The third the quarter covers items of XXXX.

In mechanical we Big expect addition be the million and provided, million includes the expenses integrity $XXX throughput to Spring related $XX This $XXX operating guidance, work to Joseph million. between to the at refinery. million to $XX

$XX net between million and interest million. $XX G&A $XX million million. D&A million, expect be between between $XX to we $XX expense and $XX million to be to and be

question, line the comment open cost for our we efforts. initiative on a Before

Second This million. restructuring of G&A includes costs. $X.X statement million reflected quarter as $X.X on income is the

G&A with expense, first in adjusted one-time Excluding of quarter the second XXXX. for quarter line was this

third be the provided lower to As range approximately XXXX in of expect million million. guidance, million quarter the now $XX D&A $XX we and to in expect $XX be quarter to fourth

run rate annual our meet to million track $XXX to million cost exit on XXXX. are we We of $XX savings as

for line the open questions. now will We

Operator

will now question-and-answer We [Operator session. the Instructions] begin

Our first go with from ahead. question Gupta UBS. comes Manav Please

Manav Gupta

a $XX you help components morning, million. question you. that us Good guys. is $XX into Thank other the big about number understand inventory here all Can only inventory went impacts that My number? million other was the

Avigal Soreq

Avigal. It's Hey, How Manav. today. joining us morning. Good Thanks for are you?

Manav Gupta

sir. Thank you,

Avigal Soreq

are at know, the you LIFO. back and to inventory whole is FIFO we us the point to of Manav, bring working that

that's EBITDA showing So, peers. compare the way adjusted us to to at are $XXX million, the we when our

We simple to here, is back what actually easy. that's the LIFO the headline are and That's be go to to FIFO. we want on did The headline adjustment, comparable. So, we right?

Manav Gupta

So, adjustments clear, no just FIFO from LIFO. just to other to be

Avigal Soreq

Right.

Manav Gupta

so much taking question. Thank you my for

Operator

Matthew is with Blair ahead. question Tudor, Pickering, from Holt. Please go next The

Matthew Blair

of off the debt all Is do Hey, in is some to efforts, any morning. there DKL on this? of to there timing smaller can update any on balance Are update some parts is the sheet? the the good DK the the goal the and get there you things meantime? still

Avigal Soreq

But level to aware are retail, you thank start of our who's I'm parts. and the to some we Matt, us of sitting we me -- and value with the you going for And a to of we let just inherent Mark on WXW going kind but to for extremely focused very to also some give comments, Yes, are high I'm here plant compensation of today. Hobbs follow. parts logistics, of, mainly some the have. biodiesel well the management the related asset, joining

to plan, would execute actively the working but to I -- to are then -- We like Mark

Mark Hobbs

Sure sure. and question, Matt. Avigal the Yes, thanks for

to there's not path we our the in do of at actions on are share plan. clear said does the us and parts, options we evaluating the and business are respective that need fully still sum price we've the analyzed to hard and the case, take reflect value we we've working execute to we believe that and continue segments the As that our all and of in to that current available that past this the believe a on is

as of our we've doing committed can going that complicated. we're time. we position committed a business about We're any across of -- I We're on all takes to interest rush unlocking anything the our not value into to and of We're But what's anything in you initiative at the the time, are value. not in working past. tell across the It this segments but best hard announce to in unlocking it's stakeholders. talked the

the we've And clear are you that. said, Retail, all we about and so of leave I discussed we're that on. across things things past, it to all when those Midstream, working have Wink a I'll forward the evaluating as that that path in Webster, at whether do think we're things it's

Matthew Blair

Okay.

gain? Sounds side, seemed For the large, what like, loss drove especially quite $XXX QX that supply Retail contribution due about million, good. talk was that And you the to relative a in was Could better, example, fundamentals? QX. and to wholesale and that was then of the trading

due taking Could it Thank how some you. was operations, And quarter? your risk then does then or the finally, you that to in QX? asphalt crude And would price say in falling business about just side? that involve regular your the you talk trending also the contribution, on this is that's

Matthew Blair

very as comprehensive we to so I can. like question. Yes, clarity would much as possibly you give

remarks prepared actually and $XX giving his I on the outlined $XXX by some it color of of million around think stream. a business and Joseph did great job million asset by

those we All a core them of see business. assets, as

the well as well. well, Joseph. support I Refinery, that Joseph, let now very some it's that on area that will I But assets this something -- repeatable. get it's So, comments have very will him into so let Please, and

Joseph Israel

Yes, Matt. numbers per our remarks. prepared We in mentioned side the

add and you we transparency. me progress are here as information visibility some Let with, making

light around coming things we So, wholesale per Obviously, of make and a ups typical volatility million create contribution million from downs. a our a product through rack. $XX different move barrels we quarter, to XXX,XXX some $XX In the day marketing. of

the advantage good, that quarter it of million wholesale really of we the we related. $XX is location in Most This million was just really operate in. have was the markets $XX

left on a of El type do Oklahoma, of we asphalt. Arkansas, of And it [Indiscernible] per of Approximately more is XXX,XXX then type driven Big tons year is asphalt the XX% a Dorado, Spring. XX% by have in pricing, the side,

it's Did contribution. a we're The season, and it's for In million you $XX of off Matt? in $X our of the contribution. you start your are see inventories give efforts. derivative good the numbers. answer million I a numbers way million the probably quarter, all I type more hope how question, outside good price real. This obviously, transfer work, modeling $XX will the And the positive of in season, around making approximately

Matthew Blair

you it. Got much. very Thank

Joseph Israel

you. Thank

Matthew Blair

Joseph. Thank you, Yes.

Operator

from question is next with go Please Goldman The ahead. Neil Mehta Sachs.

Nicolette Slusser

Hi. for on This Neil taking the is Nicolette Thanks Mehta. for time. Slusser

side macro So, the more things. first the question here is on of

differentials you and Midland Just on share current around Thank where product trending? views and be any thoughts the any can spreads you. additional may market

Avigal Soreq

bit. doing at gasoline, pick much thanks take right, We today. low, the Nicolette, all, trend, see at joining low, of diesel demand, see see the recession so Yes, well a the five-year us five-year up. positive, that first very We the to for field we we very that close little was see you QX way. right of first -- spread are the out just see half heavy and a season you're the that as fading in we also aware. and turnaround QX, well we are That year, QX, for come improved of part not the COGS it not We

So, way. it is obviously heavy-light see going that differentials compressing, we seems which the our

refiners it continue. seems to a it's be from We card We see those that strong trends So, days. good day see -- the spreads. a

we very it. are So, positive around

the is production and up. can a coming make Midland, own and the But which in acreage, production than last coming speaking, were is see it we sure the own a what Midland that acreage market I when year. -- we'll generally some We'll We positive. obviously, Around the acreage our our see versus underestimate see production at on we widening up, to the more differentials, that the doubling think that -- we'll see movement differential point. Midland differential. I'm bit

very So, well. it's as us a for positive news

So, well-positioned. we're

good looks for being demand and inventory low. this and is looks configuration time solid Our

constructive. So, although very

Nicolette Slusser

is And That's is color. about repurchases here the thoughts return macro the Thank here be share that what of follow-up buyback and million very seen but in or wanted the the helpful to levels? to shareholder from repurchase share contributing $XX you any current quarter share unrelated, just you. Can then subsequent the you ask around either and may the end. to seeing cadence price

Avigal Soreq

will broader around Yes, give I Nicolette, capital more allocation. view

have a it consistently. the or are and opportunity the all, hold and dividend, to we future, looking upgrade see and we sustainable we in to so of we pretty So, even first -- planning something competitive to if that that, to are maintain pretty, at and that's cycle,

have Obviously, buyback between debt opportunities, the if balanced we we gave there we'll them, and guidance for -- approach buyback and are and also but absolutely dividend reduction. execute the

three in investors have allow that we to I us in ways good seeing return a constructive the to again, XXXX, are So, which mentioned. a all

Nicolette Slusser

you. Thank Great.

Operator

The next ahead. go question is Doug America. Please with Leggate from Bank of

Doug Leggate

morning. Good Thanks.

Avigal Soreq

Morning.

Doug Leggate

been who sure Avigal this, or Joe, guess but, you've -- I'm Joe, for four for you about there there I take not been you've wants now. be to now months you'd

obviously, look share might chance you wonder asset. just you level You've to had, at on operations forward? high pretty a good differently if do by your I take could the thoughts a going what

from any follow-up, please. seen have What reduction grading margin And maybe could you opportunities, your got opportunities, observations? that you high color provides I've cost opportunities, or even a offer portfolio

Avigal Soreq

He's Thanks Please Joseph. So, Doug, that's today. for excited joining it. a great us question for about Joseph.

Joseph Israel

Thank you, and Doug the take operations of angle I'll it.

So, right? the equipment. processes, three we in spoke events key the more approach fully, made about moved two much a proactive of we gears more think and we appropriate So, fully Big we quarter, But are importantly, shifted repairs Spring aspects here and the with and our reliability people, I on. have this operations; on focused we

like. With very strong sound, right? good to able looks on were the regards really really key what people foundation The fill in around to people, to build with we months positions it, couple industry to and with more of talent understand past is

the the high Most with and especially workforce. continue under the young out important, tools prepared barrel mechanical XXXX priority budget lastly, remarks, in around our racks the our with inspections of is to this plan of force really eliminations to in barrel. been equipment. really half The the -- per of spent per second of -- very of has And $X.X $X really discussed knock to approximately is risk. items XQ the In lease. training, mitigate we Procedures, scope integrity.

up the high in through you you and availability El days. really well really El a in result. has of couple Dorado Dorado with consistently. trended past case these has similar more the ranks years gone past of can look rates, When mechanical In see, Delek in program good back

know Spring Big and ran personally capable Chief the different of. I I what are company years as XX Big under ago a Operating its Spring Officer workforce and

follow. and everything take our about capture So, direction I'm will Doug, sure together, liability I'm and very here confident

Doug Leggate

already there happened color, I you what's of much. and movement. mean follow-up, Or the more -- be appreciate ask thinking try different this number about? about a -- should to do we tackle different one-off including a actually on magnitude a I and to be Just I go-forward that Rosy, about you it. for whoever here basis, going level My addressed contribution you the The wants July in supply and to nature? has do but peers. want trading forward? But, been July is be we consider how should that by Thanks trading recently, might my the Joseph. so how think

Avigal Soreq

Hey, Doug, Avigal. it's

forward the to I'm follow-up. answer, to I'm make at to and niche trying going with Rosy give sustainable sure going market, and there joint perfectly was you're Joseph look highlights will once of are over some a the if it the how will And around that it -- not, sense. Joseph most from assets So, but sure love

Joseph Israel

We and tools has Yes. going understand you XQ you to want And we support want guys forward. you able the to to them model there. all results, Rosy be to

Doug Leggate

All right.

follow-up. Okay. Thanks guys. I'll

Operator

is question Todd Next from Sandler. Please with go Piper ahead. Ryan

Ryan Todd

Maybe million start. early, in are forward about look And on I look budget still to work, pace how to thanks. but your for CapEx like? terms CapEx question a the as but XXXX and the hit then on you turnaround know I XXXX XXXX, target to XXXX? it's takes because is know you of front-end are the thinking may a of Hey, $XXX loaded you little what put

Avigal Soreq

Yes.

that the it's a just therefore, that to million early budget about we're thanks $XXX it, the is numbers, number now. for bit talk starting obviously So, We And question. XXXX the said at. season we're

disclose to the data able that So, we the be on process. I'm sure will in

question. great the for thanks So,

Ryan Todd

corporate talk you saw directionally this this I than your efficiency you talked Okay. expected context of of going end are the within the one in goals? G&A second operating quarter, a the the hitting operating the forward fits how and and were expense trends side, back those on on on mean, we I in the far some Thanks. reduction expenses quarter. both I XQ. expense up of what all OpEx targets? know guidance cost can little about on you about along you trend How lower and higher guess year. expense And to expected

Avigal Soreq

Yes, absolutely.

around will So, maybe Reuven -- around the budget here, and we some let CFO, comments some give call Joseph internally Please highlights the zero-based Reuven. will what then OpEx.

Reuven Spiegel

Thank question. you for the and you thank

the and and and we at can organization system maintenance the challenged we -- functions, during DK DKL, By organization improvement, health, initiatives heater discovery them. looked too So, technology operation structure streamline and Stream many various process, reliability. and such as structures, and how implementation, using

In on impact executed the with more was And X half three the optimizing execution and We're some working X the execution Phase most Phase divided transportation fourth of quarter and as specifically. we the in preparation in G&A. on that, to addition the XXXX. first our June worked stages, we and projects on on trucking of in the Phase of execution X technology segment, require time. implementation, to

half we Rosy us initiatives remarks, as XX% to G&A her cost achieve in of the $XXX for rate said XXXX, track first those expect between For savings, million a And prepared savings. run XX% operations. planned put approximately one will to approximately million for XXXX $XX plus on the of and of in split

Joseph Israel

not per range level, when to us. closer look the of competitive from be, our We barrel $X.XX it's but entire barrel per it rate system. sites acceptable type take the and our peers, I'll $X.XX $X you to for for really find the run Great. OpEx might into

$X.XX to is to I XQ, Big sure know for a room elephant per barrel Spring. related model to we how outage in going that the was the in non-recurring. all Obviously, the the want make

per to integrity, And then $X.XX non-recurring. related the the barrel mechanical

low the we really still those around a Most is inefficiencies efficiently. take Big down is that approximately than as barrel cannot the You $X variable it cost we $X.XX in it, per are and throughput of higher and run reported, just at, bring rate from right? You $X $X. a the Spring.

down You cannot turn cetera. heaters, et

Big $X run So, in barrel Spring rate. per

the of type good outage the a range. run per approximately KSR $X was with works had the barrel also Dorado higher Tyler rate. and in quarter than El

Ryan Todd

you the And quarter there? those that there elevated is guidance, or the in the OpEx are as else think relatively are about XQ anything third guidance still implying -- driving that you is

Joseph Israel

mentioned per for we Spring Yes, $X Big in the less half. barrel second

add a So, run to -- And so of probably the the be $X, in take go. the $X $X system, there a yes, the good is in Big way rest should Spring, rate.

Ryan Todd

Okay. Thank you.

Joseph Israel

Thank you.

Avigal Soreq

you. Thank

Operator

from is Roger Please Fargo. Read The ahead. next Wells with question go

Roger Read

Good morning.

to if go But, -- to as flexibility down I have savings, cost But next thinking well. too the maybe your obviously, premature something want look know in or started to the much a ask. it's optimization you units on and you not but given consider control, even think road continue the steps, down cost you run you to there's pipelines at cases. of side? the to inland want lot for I on feedstock-wise, not get

just extent could do anything up. of But to something the or was side? can how on curious side to the starting I yield shape you or you on that's the feedstock commerciality do sort

Avigal Soreq

Roger, Yes, about executing and obviously, we thinking once next something are the step. we announce something, we

that not but we to guys. have diligently we able up, plans are to few and So, a not in the are order have we extremely, but adjuster, share other initiatives we are you going for with timeline we working be coming numbers to give that other

of we've its and And and was, leg finished based you specific. mature, will diligent with we one numbers to it's before initiatives like, budget be that another process other the and more mature, thing, around back zero come

come add So, you Joseph, when the that? to we'll to to answer is back want yes, you it's ready. and

Joseph Israel

Yes.

reliability our is definitely So, our correcting project. best Roger

we CapEx, great bring So, we about the ideas. doing we some and are And feel for good will XX it. it

projects several return. IRR that are and and in up XX% have the We

type to and of years up next execute. do like, have optimization year line units two projects the Most them related, a liquid our refining are plans. for upside us of those a to for We prior recovery in

Roger Read

Okay. helpful. Thanks. That's

really the the dividend, to an at say, statement yet looked of necessarily -- flow question sheet this in of dividend. maybe other nest should is I it the quarter, it increase think sort me, really, if the I increasing along didn't didn't, balance we cash lines my justify

I'm I've the raise going -- got numbers the the that So, just dividend curious, here? provides behind confidence that to what on what's

Avigal Soreq

Yes.

then So, I will let will the I follow. start Reuven and

environment. well. coming So, the see performance We because cash a very our flow payable. dance we see a see flow a receivable, a We very product, bit strong -- has timing can little of of and cash just

It's tweaks on So, it's are nothing we a minor that in that just a too looking much. few days.

So, it doesn't and on business, confident need Reuven> it ability feel reason are confident view the dividend. to to change which we a very our around the the the That's isn't. business increase

Reuven Spiegel

$XX Well, $XX had in on with the cutoff the already in just couple XXth of of is quarter, one million inventory of a we date, days last add draw coming the the the June July. million

made determine change that us there of should be that any So not policy. kind in our

Roger Read

Okay.

the cash off there? are So, in flows of what look stronger they like terms cut than

Avigal Soreq

Correct.

Roger Read

you. Thank that. Appreciate Okay.

Roger Read

you, Thank Roger.

Operator

Scotiabank. is next go with Paul from Cheng question ahead. The Please

Paul Cheng

Hi, good morning.

with cost I all short, think that, questions. two initiative One, and that. reduction your we're all

looking in when that -- what as So, one out at kind should brand line? by looking will normal XXXX. assume be the adjusted we on EBITDA your way maybe that they're a of corporate we're the What

Avigal Soreq

Hey, Good for us Avigal. morning. joining Paul, today. it's you Thank

year. quarters basis, ago, remember, be exiting So, to lower or -- if on gave we like, you the guidance going that are G&A for if we're two we $XX a the looking million

to quarter tighter we you the more next probably to better back upgrade a some with come number. saying we guidance guidance for We're and are XXXX. Now, going

projects materialize a for And then to want bit In early. you give tight we terms We for we of probably are want the we're guidance that G&A, the way to it. -- lining G&A more see going up that all XXXX. see that it's are actually we

Paul Cheng

And we when with be And whether that decision designed also they they're the in saying do financing able and And Fairmont one the the on the -- because a going the you get the also to then arrangement much cost will inventory will peers, themselves. one by show cost a you're out make of to recently or is make Okay. investment that there that in you to is that, California. vendor. or second make better from Refinery have their will decision higher, your

company the So continue have the arrangement have you inventory to outside? that whether should consider from

Avigal Soreq

Yes.

answer me and the let So, first second. the

Second, and the that. renewable over there, option, we so in free it's on looking terms diesel and are of a Bakersfield obviously obviously

At we definitely didn't around be If a didn't major will any that item but At this not opportunity any definitely we there make it's list. you decision, that, make this this our decision obviously once we a We decision. point, point, option we'll let on presented is know. there.

obviously we situation extensively. to agreement, allocation intermediate our looking capital the from Around improve moving the by on we one are vendor another,

have you to to. flexibility in ways that shorter, it. And and act the is choose if future we'll we'll Obviously, a allow we assume around a agreement that that that if is shorter better of the reason it's part

Paul Cheng

biggest For field you a make a your when terms all or Can that the at timeline to separate? you of you is in on the use option have option facility, us? there the decision remind

Avigal Soreq

timeline is do make and constructive to itself, no for if that we the a is more there It's beneficial presents the and versa. exist opportunity there for no it when us way option is decision. There is for that. no timeline and find Yes. shareholders, The vice we

Paul Cheng

All right. We do.

Avigal Soreq

Yes.

Joseph Israel

Thank you.

Operator

question with go Cowen. from ahead. next is Please Jason The Gabelman

Avigal Soreq

Hey Jason. Thanks.

Jason Gabelman

morning. Hey,

asset? there was option clarify Diesel once the it's to wanted and and running. Is is Bakersfield I kind of Paul's Renewable because that Is question. the thought up up something Just on running?

that. to clarify So, just

Avigal Soreq

planning. still There's not. It's No. no

Jason Gabelman

XQ guidance each negative supply one last look to back helpful, run XXXX expect. questions is quarter I the year, $XX trading the kind first All the million versus line and would $XXX I is rate the run but forward item, a My Thanks. I going and million and you of appreciate positive guess other right. all rate color was if over the

could expected in that'd elaborate half even the rate run in be Thanks. massive what what hoping the helpful. and And drove was XXXXX, between you on reported delta that you So, XQ I that first of XXXX.

Avigal Soreq

Yes.

ways. changed few we So,

and or in We the last are year showing so. a half DKTS

going the model gave forward allow is on to So, versus better I that going think that more the forward going to looking Joseph be past. guidance that you --

and of it it reasoning clear. around that's we processes, past, part different had guidance the the In that. made entities the streamline around that clear And a objective a bit when more much gave more we Joseph

the that of a feel that all big part sustainable. comfortable can around and You is asset there is it's

Jason Gabelman

Okay.

I you're extent year if longer other you the half. to what Is activities you're that that there that saying, the were within fair? So, same in over a were bucket past engaging and understand no

Avigal Soreq

fair. That's

Jason Gabelman

my for an Should then color. follow-up expectation And update the a the thanks Is the market? Thanks. end we Okay. the before Mark, should just of is strategic that reasonable reorg we on for the year? expect

Mark Hobbs

I that of has around the big my component executive earlier in that So, said parts. a some the remark compensation the

is company So, everyone and fast balance and we understand But going the right make are around that focus transaction round between to that. for the right and try that the transaction. everyone you is motivation we to

So, we're boat. on the same

we So, it. want

incentive in to We everyone have place make the it. right want

and make that's we We need want place committed what to that the have what it right work. plan we We that's just to to make in happen. sure

big a make going it So, decision. to we're it's right.

Jason Gabelman

Okay. Thanks so that.

Operator

Avigal to remarks. would turn I over session. for Soreq question-and-answer the our conference to concludes like back any closing This

Avigal Soreq

Yes, you. thank

good reliable the my here, table quarter, executive of thank and proud of So, around I all to employees very want a Delek that friends had team, very safe the operation.

the -- up shareholders, you a support. you, and journey to Thank the so Directors excited we'll next and quarter. and great soon that for doing is great reliable thank great ability be Our we Board is Delek want team very is key, I talk safe and the for the progress very proud support and for are operation I'm all and to the a much. very quarter. this of of in for

Operator

The now conference Thank you today's concluded. for presentation. is attending

You disconnect. now may

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