DK - Earnings call transcript Q4 2024 | Delek US Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. My name is JL, and I'll be your conference operator today. At this time, I would like to welcome everyone to the DK Fourth Quarter 2024 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Robert Wright, Deputy Chief Financial Officer.

begin. may You

Robert Wright

Operations; welcome Conference and will Delek Fourth Hobbs, Israel, US Avigal Financial and Good and Officer; Participants to joining Earnings Mark EVP, Joseph CEO; Call. President Corporate call Spiegel, me Quarter EVP Soreq, Chief Development. morning, EVP, and the Reuven on include today's

information US call regarding be contains our X involve can material Investor forward-looking presentation uncertainties cause Slide Any on the that today's today's Relations actual differ harbor website. statement shared section risks and Today's results found comments. of will materially comments. forward-looking the during Delek may safe from to

forward-looking cause could SEC that as The well differ with actual Factors any are filings. included obligation here statements. results to no company our in assumes as update to

the for Avigal turn now opening to over call Avigal? remarks. I'll

Avigal Soreq

refining Robert. joining thank XXXX. Good the mid-cycle in and today. QX Despite transformational around for below XXXX margin a morning, which you, $X you environment, of us year Thank for was we was believe us. challenging

vastly the improved increase some and to plans operational progress our implemented key past on made of company. our significant profitability efforts, have of overall We performance, our

would made on we like progress have to priorities. key I our highlight the

operations, operations and we great safe improving made the reliable First, in towards progress company. our have

completed We quarter. KSR major a have in successfully at turnaround the fourth

is of a strong to forward improved out KSR is the operational XXXX. and refinery the look we running showing contribution Coming turnaround, performance. well, The asset in from

have Spring, significantly we its in Big XXXX, Moving to improved reliability.

consistently per have day. We running over been barrels XX,XXX

in our journey. planned to our in system, XXXX, and major expect forward, we continue turnaround Looking we improvement no have

great the assets. value strategy. to the like inherent in the sum discuss of of would parts part Now, unlocking In made XXXX, we in sum progress our I our

to the environment. our a In continue we and for allowed value our the retail received. and timing we initiative are September, us tough million, timely to The refining extremely progress has in happy with sale we $XXX sold asset

independent strong to growth Logistics, great making the Basin. made in progress midstream We've in company the Delek a also Permian levered

and In executed refineries swap by XXXX, time, successfully will improve the we cash economic extension going X-years. DK up to profitability the the swap our to certainty of the forward. through At contract flow same assets DKL. The between more brings DKL swap of

from Our to at DK million to received the separation $XXX DKL accretive EBITDA. is economic same add X grow. time, around acquisitions and DKL the also increasing, from announced in distribution DKL third-party continues

has complete complex its half in After is of DKL the come DKL to as DKL ownership expansion acquisition Midstream, previously and in to capacity expect expansion the Gravity processing communicated. gas Libby progressing DK XX.X%. XXXX, first in down the of

in announced This in growth Delek DKL Logistics December. gas has acid Permian an gas highlight attractive, benefiting Additionally, DKL's high-growth, from FID the company, today. guidance is in the complex provided Libby natural at injection reflected in progress the becoming steps mid-frame These on mid-sized, Basin. strong an the that

trade Despite in discount if this this limited, continues very reflected its and peers move, is value DKL great of DK versus to any shares. at

in million taking process of price $XXX fully in share the DKL reflected additional of unit DK the steps, DKL that greater EBITDA third-party in value are such than price. in We is and

that, methodical value and a DKL create in for We are and both complete confident we'll manner unitholder. deconsolidation shareholder the

around initiative, our in We progress budget we improving to us system. cost million In zero-based our allowed of which XXXX, $XXX have made company. save profitability the completed in overall to

quarter program XXXX. of target second of this end in our completion the completed We original the by of ahead of XXXX

starting Plan, half our to or for effort aims of second in million Enterprise improve cash Optimization laid the EOP. foundation DK XXXX. to $XXX EOP million year, flow by delivery Our $XX per the

initial through cash with our we power year. made success, flow have we end progress be to closer Despite not expect top generation we that, EOP announce to and our to still improve our as further and the we look for the pleased forward am are great of cash I progress improvement standing now guidance.

Final is piece and of our strategy sheet. being balance shareholder having friendly strong

During our a and disciplined back dividend shares. million $XX bought committed the approach allocation. million to of remain quarter, in We and capital $XX to we paid balanced

Now, I make would exemptions. comment to about small like refinery the

of overturned know, denial you under D.C. the RFS As the of small in petition Circuit the refinery Court our EPA exemption July XXXX.

grant back revise us Our for EPA the its the ruling will petitions SREs. were that the EPA to court approach optimistic reconsideration. following We're sent and

review. ruling deference petition We will Court along with ruling to on predictable the SREs, reduce case, approach on recent bureaucracy allow Supreme for hope Chevron unneeded SRE the and

In work entire their closing, our like to I team hard for thank would and dedication.

about prospects DK XXXX excited are the and beyond. in of We

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

Joseph Israel

you, Avigal. Thank

congratulate like to I'd environmentally team another year. on First, and compliant safe, our reliable,

and in the reflected in to hiring and good grow progress business. developing people, our right well Our field proactively giving and managing optimize equipment the processes us a our foundation is strong perform, is

was per the margin was quarter day. XX,XXX total approximately expenses throughput barrel. quarter barrel $X.XX Tyler, fourth Production were per per the operating In in and in $X.XX barrels

quarter, executing plant allow will upgrade barrels maintenance XXX the our products in first per which Alky we us increase to by the scoop, approximately During an day. production of are unit, including high-value

to was throughput fourth day total total per throughput day. is quarter barrels For XX,XXX per Tyler In approximately quarter, in in Dorado, barrels range. XX,XXX the XX,XXX first our El the in estimated the

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

we $XX will annual support The making Dorado Dorado El approximately integrated of with progress per generation $X El rate system. by the run On through margin flow net good the strategic cash the in EOP expected incremental of initiatives, barrel are front, our EBITDA midyear which add cycles. are million to

for approximately barrels In Big total throughput Spring, the was XX,XXX per day. quarter

$X.XX was special $X.XX production per winterization activities. barrel $X.XX per approximately expenses barrel Our of barrel, and including and operating were per margin maintenance

over XXXX Progress XX% in compared in to in Big Spring reliability. the improved increased to throughput is XXXX numbers. well due reflected Total

by it now proactive driven rather And Cost reactive. and agenda structure as a mostly is our than routine important, is approaching target.

In replacing catalysts in we the first quarter, diesel reformer and hydrotreater plan. are our per

XX,XXX first is the in barrels the result, to range. XX,XXX quarter a estimated day throughput As per for

the team successfully turnaround. mix consistent product we Springs, liquid plans. capacity, Since demonstrated recovery startup, with major and crude our improved Krotz capabilities, completed planned yield the In have

quarter in was XX,XXX the day. throughput Total barrels per fourth approximately

Our quarter production margin per was $X.XX and per barrel $X.XX expenses barrel. were in operating the

Our planned first in is XX,XXX XX,XXX the throughput per day for the range. quarter barrels to

XXX,XXX target first barrels for is implied Our the system day in per XXX,XXX range. the throughput to quarter

the marketing seasonal around low contributed by negative our generated supply, system was a and trends $XX to driven and Moving front. commercial million. million that, wholesale attributed marketing, generated asphalt. $XX on demand racks. loss by was Of million loss contribution quarter, was the approximately fourth In $XX.X loss of million supply $X.X a to by

as we and on the summary, our initiatives on commercial well fundamentals optimization to the operational continue addressing coming position season reliability In cycles. continue ourselves of After business. execute teams for excellence the gasoline gaps, focus to we successfully our future and

call now Robert will variances. financial turn I the to for the over

Robert Wright

Thank by referring Slide I XX. you, will Joseph. to start

goodwill negative For quarter, within the a fourth is of per net of or impairment loss million. this partial Delek $XXX of $XXX balance our $X.XX had Included share. a million,

adjusted and $XX loss net per million. was million, was share, $XXX Adjusted loss a EBITDA $X.XX negative or of

contribution. to decline to is is third lower from fourth adjusted to The of that quarter environment waterfall because EBITDA refining XXXX margin third quarter. the a XX, primarily primarily of decrease Slide quarter of quarter $XX refining the in the lower in fourth the relative of On million the attributable shows the XXXX

quarter, EBITDA. $XXX As Logistics another million in for have adjusted strong the to delivering segment, we continue

is flow. movements, our agreement. cash the discuss $XXX to XX operations to the a of million outflow Cash inventory Slide in of loss to capital net approximately $XX impacts was include for the of use Moving this flow working which Within period timing-related amount addition intermediation from of an million.

acquisition, Investing activities includes which million paid a of January for million purchases XXXX. million, X, the capital asset closed of on $XX deposit $XXX $XXX and Gravity

of reflects $XX $XX payments. This DKL dividend and in the $XX equity million million offering of also activities in million share payments accruals. million and $XX timing repurchases, in includes distribution Financing

amount quarter On million. portion expenditures results successful gas from the we the a plant, was program. construction Slide KSR timing $XXX X the remaining have track actual on spend completion cost and spend of remains $XXX which to Libby were largely million Fourth capital which large in a segment, associated Refining XXXX was of of this of the the of the with related XX, turnaround. The capital the is perspective.

As million. for we to have outlook XXXX DK previously capital is announced, million stand-alone our $XXX approximately $XXX

on Our Delek Delek Slide XX. broken out and Logistics position net cash is between

$XXX growth and projects During turnaround million expenditures capital we at due approximately on KSR. drew the anticipated of to primarily quarter, the cash,

period. unfavorable EBITDA differences market overall results included conditions the timing working the Additional capital and impacting recognized our impacts for

debt. with Logistics, Delek increase year we Excluding million net an $XX the of in finished

experienced and relatively many especially the in the the increases. considering our impact the with peers, on pleased market broader are We increase whom for substantial debt conditions net have year, modest of

Moving now items. to we where cover XX, Slide outlook

In for million to be interest between to $XX between million between $XX to Joseph we and the and million. expenses quarter $XXX $XXX addition of million and D&A is guidance to XXXX, to net between be $XX first operating million. the and expected $XXX million be expect G&A and expense provided, million $XXX $XX be million.

for now questions. will call open We the

Operator

Your comes first question Instructions] Manav of UBS. line [Operator of Gupta the from

Manav Gupta

make understand, with improvements bit are I on Obviously, of lot line in wanted little least? Help Slide done at probably Dorado. here to competitive performing a what to which this something Tyler a can asset, truly can us XX. be you more a focus making El on be

Avigal Soreq

that allow question. in. Joseph big Yes. Manav, us. thank Joseph leading I lot a to you and for Dorado a talent, focus of is chime will El your for with

Joseph Israel

Yes. is focus We the make rack. fuel of mix. and the on to the through our jet beneficiary sell The most EOP El product started Dorado significant

to to in Asphalt we convert areas. on reformer, yield focused looking mainly the are products. We light are bottoms recovery, Process liquid FCC heavy efficiency, and

together new are front, we from and put netbacks. shipping to the logistics, On market optimize the away the logistics products we local more already

we out ability numbers Manav, translate $XX about to line, fruits, refinery Bottom later. the million team the our asset flexibility of this low-hanging our considering confident than there, progress strong to sooner are and

Manav Gupta

bring it quick basically try down growing it follow-up the you're like you're slowly. for to to and down looks continue Perfect, bolt-on guys. level time, ownership smaller whether look company XX%? the the grow the water, the gas DKL although at below Is A divesting crude, DKL here EBITDA, at and and it's here same strategy deals, is,

Avigal Soreq

Yes.

So Manav, we of to the that efforts that a I are will some would I give bigger question. answer you about than part take like doing. And

parts strategic have the right? the of some And year, with most for EOP this together are initiative we

make it crystal want as happening I will clear, is deconsolidation, speak. And happen we to and

to right? So that, take around we we we very it's reflect clear. retail did on XXXX And want wanted. in So very, as to a I action XXXX, that moment sold

ownership the us to below took We deconsolidation, from continue of in make to We progress the right? XX% today. XX%

We another guidance to not over XXXX, all third-party EBITDA, of while year, doing we grew XX% $XXX $XXX that the $XXX for step. ago from which million million is from to are XX%. long XXXX million we EBITDA to And increased the very this

DK that, that we were we while increased gets doing Manav, distribution from the DKL. also all of

many, allow basically for efficient it's efficient the So another I checking don't back you that DKL. announced today, sell our many know, tool tax we we way And to to on. to box boxes in units DK noticed, their are if toolbox

today $XXX So to up for it million. million we announced -- $XXX

are and that's it's flow, of benefit you because way, So efficient and or right? DKL, for benefit the You're the -- cash X% X% for a for and avoiding cost other XX%. XX% avoiding avoiding free a -- you're at of at also DK

both that's beneficial very companies. for So

allow want And both allow is it DKL deconsolidation fulfill to point, last companies, in because to time to to grow the the then get make DK the will and over the -- value whole of that I goal the asset.

going said, this the all busy Mark plan very in as had. was was that, to year he we that well. busy very the deals XXXX with is be With And

So chime I'll let Mark in.

Mark Hobbs

we look synergistic Avigal. in efforts. Thanks, leverage provider, And efforts do there very very look, to Gravity what with our HXO improved deconsolidation we're all our Basin what acquisitions, in and with ratio. year immediately strategic and highly advancing trying Both and operations and highly our at for active Yes. the a of coverage full-service accretive the Midland parts happy boxes, as sum cash XXXX, Manav, our increased we're and our we're free in to out the midstream flow, checked and

and is third-party Webster. DKL, which add organic critical initiated to add about. DKL capacity capabilities. XX% this Delaware driving growth we're And Wink between in to also that in and processing also the And Webster, interest all gas Wink when to economic our gas our those separation We take you we're of DK down dropped to adding to projects sour combined, EBITDA finally, to significant talking

If also companies to as the paid the months. Basin, tied see of past over the to you you private by DKL know, continue midstream in of our valuations few core top layer premium those that, the particular, assets Permian we midstream in for on markets And which, operations. is

is And value focus to and our and DK as Avigal continue that, maximizing for our measured both is approach deconsolidation going to enhancing shareholders and focus on the we're said, going to DKL unitholders. continue

Operator

Your comes of next line of question the Blair Matthew from TPH.

Matthew Blair

more far are to into so these does in need was but first understand, And and in to understand just structural marketing us outright quarter? I dynamics there? bit could dynamics how And there's hoping the you and changes the marketing seasonality help any I be EBITDA that some fourth trending then with supply negative there why an contribution? go supply quarter. a the little wholesale, is

Avigal Soreq

Matt, thank for question. the you

First doing. that very on I'm DKTS all, of progress the happy are

to quarter. If the back quarter last $XX comparing market better million versus this DKTS then better are achieved versus you condition that of last fourth the quarter, but quarter this was year,

and on Chief Commercial good Reilly, let answer the Officer, to chime And give color. very a that's into I step direction. will So in some our you right Pat that

Patrick Reilly

Fourth primarily onetime by weakness the demand said, our impacted significant with you, quarter XXXX by made progress inland Thank performance DKTS on seasonal led group was a major And and across. initiatives. turnaround that Avigal. DKTS

market time conditions in relative significantly QX XXXX. mentioned, supply period was weaker same As Avigal the just to trading and in

So example, year-on-year. $X.XX gallon, barrel group $X by weakened an that's a per as diesel almost

$XX our thereby further XXXX strategy Now, headwinds, the DKTS operations, To in by nearly optimization costs, assets actually despite We're product fourth of role lean on challenge. intelligently delivery EOP, reducing a is and XXXX our play and our will back market partnership reach. and these to the into outperformed newfound crucial quarter streamline million. our the for simple. expanded of DKTS and increase the flex margins commitment and supply further DKTS' our trading, with broader offering of mature excited the

Matthew Blair

RD whether invest Sounds decision on good. in diesel have the Bakersfield And made plant? on you to the renewable then a side,

Avigal Soreq

If it's change, in we'll you on but distant let not our Mohit, something table and That's to -- second. on chime want do definitely not you maybe, know, that?

Mohit Bhardwaj

us. Yes, still Matt, that to is option available

operations to have past, option. have they over I the we there months, you exercise days and for and in have X around discussed the around XX then As that team to has show had healthy our

obviously option. start operations right And once that we are are making going it at to to just we the look is asked before as of team are we have and we in for now, option hoping be looking available to those our us, But at that decisions. to still order

Operator

of question JPMorgan. John next line from Your comes Royall the of

John Royall

with XQ, step-up question going first for of but to you guide is We from noticed the it's my EOP. things in So well guided context had the on OpEx a XQ. also where

should into the bridge beyond us help could OpEx XXXX you that further difference. we XQ hoping we And number about as guide? was progress I think So, that maybe how

Avigal Soreq

John. Mohit guidance let together, Absolutely, question. so was you Please, him I'll for chime the putting the Mohit. in. Thank

Mohit Bhardwaj

for thanks John, question. Yes, the

far reduction, as as a concerned, are and cost our So lot the we pride results seeing EOP. in is OpEx it. through company And of you're taking

ZBB. have You through results seen the

influencing the there around QX guidance. are X which factors As specific question far guidance so is are as concerned, your

we're The we a know, the basis. first that one on consolidated Midstream, is, closed presenting Water as and Gravity you guidance

So you're Midstream. coming OpEx from Water seeing some Gravity

quarter-over-quarter. Second, higher running we are throughput

So OpEx influencing our that's number. also

piece is Third gas. natural

a little prices gas seen, higher. natural you've have bit As gone

influencing our numbers. OpEx So also that's

reflected which guidance. in maintenance at And Spring throughput our planned in we finally, XQ, is Big have some

OpEx generation, very started story Delek. guys my that. EOP an to answer, positive overall that also flow our for how is we OpEx OpEx. So cost are look about free and reduction updating our you extremely We're But excited as impacting and more I to forward is reductions and contributing cash on

John Royall

just one guidance. guidance. on Very on Great. is another follow-up And helpful, then Maybe DKL EBITDA the my Mohit.

above Just guide million it's the that. in million $XX $XX I rate XQ think, about, that's this trying about to annually $XXX of about bridge to million from to run

walk on those side. some pieces, the gas some through there's just coming Gravity, could the you midyear, If organic on know, I of plant maybe there's us things moving obviously, other

little $XXX to on of from you a the million $XXX Just bit detail $XXX get to how million? million

Avigal Soreq

absolutely. Yes,

methodically to actions very So the between back economical first step doing have to or very, done we of That's broader months all, XX and a And and are John, shareholder we increasing the in you benefit a all companies we both talk the take is we need a so. are as by DKL speak, very about in as the we unitholder growing right? see important. DKL that that and last story. separation context, obviously, and

decided company, you understand to here. creation We guys guidance to be to allow want able model to that done because value we and everyone to right, DKL, have for was the that

we're we do good. So you there pride it can question, to of a guidance modeling taking take more solid are want doing as lot is here. the Mohit, that We you well? gave is into we chime obviously. we And offline, what and If think of

Mohit Bhardwaj

Yes.

I this. pieces we definitely through think, one-on-one after it. most can a call John, help Avigal, walk you can I covered do the But -- moving a on of you

offline. we that should maybe take So

Operator

comes Wolfe Your Doug line next Research. of Leggate from question the of

Unknown Analyst

been He first piggybacks question is This sends moment. [ had. commentary is ] Doug. the the McKinley some of his already traveling of regards. kind at on on for He's My that's

of the going value Where are assets sellable being sour few on of line the addition in options permitting? with for quite example, in forward? release DKL. potentially you kind able is EOP, process, the gas you a terms there In have from of other to guys a And sight to

Avigal Soreq

Yes.

question your EOP. the So with you started

some will around and free answer on are give will you context cash all start the period right? about So, refinery that, I we EOP broader my the with environment that So especially I are is at, EOP, today right? guidance range the obviously, of the felt end the is past. a because happy day comfortable towards to in enough that, That's story. flow, end gave we of our We take we what after, we around

for So that's a happy us. moment

improvement We months. see on on executed Pat coming signed, significant see seen the cost good fruition next and will already a that the to see mentioned, we also side few have a on the as them we margin progress we And been over EOP. progress and

But we stopping not I want are ensure here. to that, you

standing more things more and We We that have working that about options still. are initiative, very important we to very always we and are optimistic that. on adding not are and

The that I past. actions market want action the last that and are it's comment, is to to we here pretty not condition make that, are done doing the in all neutral new was

we And close Reuven on that very So are and very managing him that very let to chime and help is I in nicely, optimistic. will that.

Reuven Spiegel

Avigal. you, Thank

of company, agnostic. question that that and projects the So of Each it's your X, plan for validated part, a X and to be project at specifically vetted, areas to most all about and projections. ways: goes the has Once one, execution from I sustainable; market address bank EOP DKL the into added is, will includes end. the the it

boxes. That in different we see are is we can has a quarter third it's run rates. You measuring fruition. the in green deck on provided, Slide Each the X for fourth and frame time why that project reflected

that second executing quarter. And a team around gas sour gas flow and on around whole us new budget in which expected is gives and the -- sorry. the gas, is our on have we DKL, for As dimension time, plant, in flexibility to

Operator

Cowen. Gabelman the of from comes question next Jason Your TD of line

Jason Gabelman

X, that it's wondering, that units. ask of what line cash? going repurchase wanted once DK DK gets deploy to the cash is what about buyback that cash, use for? program I the to time to And DKL I'm one,

Avigal Soreq

time until the way Yes. question. that very is it's DKL that program XXXX. all in are Obviously, that. to you for a line but we we Thank put The close the option,

that can companies and companies. toolbox our is tool But both cash appreciate flow that's that, So deconsolidation another we'll for in of time help probably do right. that you the benefit free when both

very tax many, So And boxes. efficient. many checks it's that

how to impact tax basically. I create think deconsolidation a of no can be you with creative proud very way

to around other program broader want I But to to discussion about we and part take I allocation want give that. capital a the have. talk the And

many that the said and times, maintaining saying we So throughout that, cycle. we are are dividends today we

We that. will the are we it doing and done that, do We've in future.

and the did have buyback We sheet did balanced between and buyback We we are a approach balance current very care price, At huge on it in And to the taking acting clear. price, share of in valuation are of see buybacks QX that, doing our value then buyback. we make in QX. QX, of just at and share our a we XXXX. we

-- of that's we where kind are. that's So

Jason Gabelman

the appreciate I capital on color yes, the allocation. No, Great.

inland environment, just line like other back question winter. And more of inland margin I weaker supply dynamics. see markets we've And they're seasonal in kind that become some in is X a sounds item. The the to weakness wonder, Group post-COVID, you it in weaker seen where

past So in supply better in quarter EOP we Or a guess, I this of line how that, line? the based it seasonality program? should on that maybe, the is should XQ going on expect I about supply little of in what's that was weaker think or line guess, XQ where we and kind

Avigal Soreq

Yes.

there going and summer. don't provide its for observation, different I We is in a is But we the provide winter DKTS. some to not truth weakness here. market. think in not and listen, X questions the are the So that practice do the I'm best past, there -- Market guidance in that going to in the there are strength didn't

going are to not that today. We deviate from

we that progress going Jason, that with are I about be controlling, we pleased start can we that to tell we only different that moving you, I'm and very control. you well doing moving very products are we market And well the what towards. like with to we are very are are moving things the and different need that But can know

So -- and I will that. to leave it

Operator

Soreq I for will the back now over session. remarks. concludes to Q&A That closing Avigal turn the conference

Avigal Soreq

Yes.

around year. colleagues execution and thank very table our I'm a great to employees entire our the for for my safe thank that you a to want commitment thank great and thank journey. like of and the great to our I and the Board reliable Delek with and for story in Directors to a believing would I investors company, So for pleased

in I next you. that, would the we'll Thank With quarter. and the next conclude you call, see

Operator

conference This call. concludes today's

may now disconnect. You

Delek US (DK) 25 Feb 252024 Q4 Earnings call transcript