Delek US Holdings, Inc. (NYSE:DK) (“Delek US”) today announced
financial results for its third quarter ended September 30,
2017. Delek US reported third quarter net income of $104.4 million,
or $1.29 per diluted share, versus a net loss of $(161.7) million,
or $(2.61) per basic share, for the quarter ended
September 30, 2016. On an adjusted basis Delek US
reported net income of $65.3 million, or $0.81 per diluted share
for the quarter ended September 30, 2017, compared to a net
loss of $(17.3) million, or $(0.28) per basic share on an adjusted
basis in the prior year period. Adjusted earnings before interest
taxes, depreciation and amortization ("adjusted EBITDA") was $195.9
million compared to adjusted EBITDA of $9.2 million in the prior
year period. Reconciliations of net income (loss) reported under
U.S. GAAP to adjusted net income (loss) and adjusted EBITDA are
included in the financial tables attached to this
release.
On a year-over-year basis, during the third
quarter, improved overall results were primarily driven by the
refining segment. The refining segment contribution margin was
$180.1 million in the third quarter 2017, which was reduced by a
$30.2 million inventory fair value adjustment at Delek US related
to its acquisition of the remaining outstanding shares of Alon USA
Energy, Inc. ("Alon USA") on July 1, 2017, compared to a
contribution margin of $37.8 million in the prior year period. The
combination of a higher crack spread environment, an increased
Midland WTI to Brent crude oil discount and the contribution from
the Alon USA refineries were factors in the year-over-year
increase. The refining system continued to operate during late
August and September as Hurricane Harvey affected the Gulf Coast
region. The logistics segment contribution margin improved to $30.9
million during the quarter compared to $24.8 million in the prior
year period. The retail segment contribution margin was $13.5
million, which related to the retail business acquired on July 1,
2017 and does not have comparable period results.
Strategic Initiatives
Alon USA Partners LP
Transaction - On November 8, 2017, Delek US and Alon USA
Partners LP (NYSE:ALDW) ("Alon Partners") announced the execution
of a definitive merger agreement, under which Delek US will acquire
all of the outstanding common units representing limited partner
interests of Alon Partners that Delek US and its affiliates do not
already own in an all-stock for common units merger transaction.
Delek US and its affiliates currently own approximately 51.0
million common units of Alon Partners, or approximately 81.6
percent of the outstanding units. Under the terms of the merger
agreement, the owners of the outstanding common units in Alon
Partners that Delek US and its affiliates do not currently own will
receive a fixed exchange ratio of 0.49 shares of Delek US common
stock for each common unit of Alon Partners. Once completed, this
transaction should simplify Delek US' consolidated corporate
structure and enable Delek US to reduce corporate expenses for
public company costs, reallocate cash flow from the Alon Partners
distribution to investment in future growth, lower the cost of
capital through refinancing and access the logistics assets that
could provide future potential dropdown opportunities for Delek US'
subsidiary, Delek Logistics Partners, LP (NYSE:DKL) ("Delek
Logistics"). This transaction is expected to close in the first
quarter 2018 and is subject to customary closing conditions.
Synergies Update - Through the
third quarter 2017, Delek US captured approximately $53 million on
an annualized basis of synergies from the Alon USA acquisition.
Delek US targeted total synergies from the acquisition of Alon USA
of $85.0 million to $105.0 million with a midpoint of $95.0
million. These synergies are expected to be captured during 2018,
with 2019 being the first full year of benefit.
Krotz Springs Improvement
Initiatives - An alkylation unit is planned to be added to
the Krotz Springs refinery to improve production flexibility. The
total cost is expected to be approximately $103.0 million, of which
approximately $20.0 million has already been spent through
September 30, 2017. This project is expected to be completed in the
first quarter 2019. This unit should improve the ability to convert
low value products into gasoline, enable the refinery to produce
multiple summer gasoline grades and increase octane, allowing the
refinery to produce premium gasoline. Because of the conversion
improvement at the refinery from this project, its returns are
expected to be less dependent on the crack spread environment over
time. The expected annual net income from this project is
approximately $18.0 to $21.0 million with an expected annual EBITDA
of approximately $35.0 to $40.0 million.
In addition, initiatives are underway to reduce
the cost of transportation for crude oil to the refinery and
provide additional crude sourcing flexibility to allow Krotz
Springs the ability to reduce its overall cost of crude. Also,
commercial opportunities may exist to improve the refinery netbacks
in the future through development of a wholesale presence along the
Colonial Pipeline System.
California Initiative - Delek
US is exploring several potential initiatives relating to the
California assets acquired in the Alon USA transaction on July 1,
2017, which it considers non-core to its geographic footprint. The
Long Beach and Paramount, California assets, including the Alt Air
renewable fuels plant, have been presented as discontinued
operations in the third quarter 2017. The Bakersfield
location remains part of continuing operations at this time.
Uzi Yemin, Chairman, President and Chief
Executive Officer of Delek US, stated, "We closed the Alon USA
transaction on July 1 and had strong performance on a combined
basis in the third quarter 2017. Our team moved forward with the
integration and managed the hurricane situation in late
August/early September well, as our refineries continued to operate
near capacity during the period, as we focused on supplying our
customers. We captured approximately $53 million of
annualized synergies from the Alon transaction and are moving
toward our annualized goal of $95 million in 2018. With a refining
system crude slate that is approximately 70% Permian Basin crude
and light products priced based on a Gulf Coast basis, we benefited
from a wider discount between Midland WTI and Brent crude oil
during the third quarter that improved margins in our refining
segment."
Yemin concluded, "We are making progress to
unlock sustainable value from the combined company. The Krotz
Springs improvement initiatives are moving forward, as we work to
lower the crude oil transportation cost and construct the
alkylation unit project that should add approximately $35 to 40
million of annual EBITDA. We had a strong performance for logistics
in the third quarter, and there is approximately $78 million of
logistics EBITDA for future potential dropdowns. We are working
toward dropping the asphalt terminals during the fourth quarter.
Our corporate simplification is underway, with the agreement to
purchase the remaining Alon Partners units, and the team is working
to derive value from the California assets. We ended the quarter
with approximately $832 million of cash and continue to evaluate
opportunities to create long-term shareholder value."
Regular Quarterly DividendDelek
US announced today that its Board of Directors had declared its
regular quarterly cash dividend of $0.15 per share. Shareholders of
record on November 22, 2017 will receive this cash dividend
payable on December 15, 2017.
LiquidityAs of
September 30, 2017, Delek US had a cash balance of $831.7
million and total consolidated debt of $1,427.8 million, resulting
in net debt of $596.1 million. As of September 30, 2017,
Delek US' subsidiary, Delek Logistics, had $401.3 million of total
debt and $5.3 million of cash, which is included in the
consolidated amounts on Delek US' balance sheet. Excluding Delek
Logistics, Delek US had approximately $826.4 million in cash and
$1,026.5 million of debt, or a $200.1 million net debt
position.
Refining SegmentRefining
segment contribution margin was $180.1 million in the third quarter
2017 compared to $37.8 million in the third quarter 2016. The
refining segment contribution margin in the third quarter 2017 was
reduced by a $30.2 million charge for inventory fair value
adjustment at Delek US related to its acquisition of Alon USA on
July 1, 2017, which affected the Krotz Springs and Big Spring
refineries. On a year-over-year basis, results benefited from a
higher crack spread environment, wider discount between Midland WTI
crude oil and Brent crude oil and the addition of the Big Spring
and Krotz Springs refineries acquired in the Alon USA transaction
that closed on July 1, 2017. The Gulf Coast 5-3-2 crack
spread increased to $15.92 per barrel for the third quarter 2017,
compared to $9.85 per barrel for the same period in 2016. During
the late August/early September period when Hurricane Harvey
affected the U.S. Gulf Coast and reduced industry refining
utilization in that region, the Delek US refining system continued
to operate near capacity.
RINs expense related to renewable fuels blending
obligations increased to approximately $29.3 million in the third
quarter 2017, compared to $7.9 million in the prior year period.
The increase is primarily due to the addition of the Krotz Springs
and Big Spring refineries in the third quarter 2017.
During the third quarter the Midland WTI crude
oil differential to Brent crude oil was an average discount of
$4.84 per barrel compared to $2.36 per barrel in the prior year
period. The Midland WTI crude oil differential to Cushing WTI was
an average discount of $0.79 per barrel in third quarter 2017
compared to an average discount of $0.31 per barrel in the third
quarter 2016. Contango in the oil futures market decreased to
$0.24 per barrel in the third quarter 2017, compared to contango of
$0.88 per barrel in the third quarter 2016.
Logistics SegmentThe logistics
segment contribution margin in the third quarter 2017 increased to
$30.9 million compared to $24.8 million in the third quarter 2016.
The primary factors that increased contribution margin were a
higher gross margin per barrel in west Texas and improved
performance from the Paline Pipeline, which were partially offset
by the effect of lower volume in the SALA Gathering System and
higher operating expenses on a year-over-year basis.
Retail SegmentAs a result of
the Alon USA transaction on July 1, 2017, Delek US acquired
approximately 300 stores operating primarily in west Texas and New
Mexico. For the third quarter 2017, net sales for the retail
segment were $213.9 million and contribution margin was $13.5
million. Merchandise sales were approximately $91.3 million with an
average retail margin of 31.4% and approximately 54.4 million
retail fuel gallons were sold at an average margin of $0.202 per
gallon. Operating expenses for the retail segment were $25.8
million in the third quarter 2017.
Corporate/Other
SegmentContribution margin from the Corporate/Other
segment was $(24.3) million in the third quarter 2017 compared to
$(9.3) million in the prior year period. This segment now includes
the asphalt business acquired in the Alon USA transaction on July
1, 2017. Also, effective July 1, 2017, Delek US revised the
structure of its internal financial information, which resulted in
a change in the composition of our reportable segments. As a result
of these changes, the results of hedging activity previously
reported in refining that was not specific to a refinery location
is now included in our corporate, other and eliminations
segment. Prior year period results include this change. The
net hedging loss in the third quarter 2017 was $17.8 million
compared to a net hedging loss of $3.3 million in the prior year
period.
Management AppointmentsAlan
Moret has been appointed President of the general partner of Delek
Logistics. He joined the company through the Alon USA transaction
and has served as an EVP of Delek Logistics since July 1,
2017. At Alon USA, Mr. Moret served as Interim CEO of Alon
USA and Alon Partners from January 2017 until July 1, 2017. Prior
to these appointments, Mr. Moret served as Senior Vice President of
Supply, Trading and Logistics at Alon since 2008 and, prior to
that, as Senior Vice President of Alon USA’s Asphalt Division where
he directed the company’s asphalt operations and marketing. Mr.
Moret joined Alon USA in August 2006 in connection with Alon USA’s
acquisition of Paramount Petroleum Corporation, where he served as
President from November 2001 to August 2006. Mr. Moret has more
than 40 years of experience with refining, crude oil and refined
product trading and marketing, petroleum logistics and asphalt
businesses.
Third Quarter 2017 Results | Conference
Call InformationDelek US will hold a conference call to
discuss its third quarter 2017 results on Thursday, November 9,
2017 at 9:30 a.m. Central Time. Investors will have the opportunity
to listen to the conference call live by going to www.DelekUS.com
and clicking on the Investor Relations tab. Participants are
encouraged to register at least 15 minutes early to download and
install any necessary software. For those who cannot listen to the
live broadcast, a telephonic replay will be available through
February 9, 2018 by dialing (855) 859-2056, passcode 99812499. An
archived version of the replay will also be available at
www.DelekUS.com for 90 days.
Investors may also wish to listen to Delek
Logistics’ (NYSE:DKL) third quarter earnings conference call that
will be held on Thursday, November 9, 2017 at 8:30 a.m. Central
Time and review Delek Logistics’ earnings press release. Market
trends and information disclosed by Delek Logistics may be relevant
to the logistics segment reported by Delek US. Both a replay of the
conference call and press release for Delek Logistics are available
online at www.deleklogistics.com.
About Delek US Holdings,
Inc.Delek US Holdings, Inc. is a diversified downstream
energy company with assets in petroleum refining, logistics,
asphalt, renewable fuels and convenience store retailing. The
refining assets consist of refineries operated in Tyler and Big
Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana
with a combined nameplate crude throughput capacity of 302,000
barrels per day. Delek US Holdings, through its subsidiaries, owns
100 percent of the general partner and 81.6 percent of the limited
partner interest in Alon USA Partners, LP (NYSE: ALDW), which owns
the crude oil refinery in Big Spring, Texas, with a crude oil
throughput capacity of 73,000 barrels per day and an integrated
wholesale marketing business.
The logistics operations primarily consist of
Delek Logistics Partners, LP. Delek US Holdings, Inc. and its
affiliates also own approximately 64 percent (including the 2
percent general partner interest) of Delek Logistics Partners,
LP. Delek Logistics Partners, LP (NYSE: DKL) is a
growth-oriented master limited partnership focused on owning and
operating midstream energy infrastructure assets.
The asphalt operations consist of owned or
operated asphalt terminals serving markets from Tennessee to the
West Coast through a combination of non-blended asphalt purchased
from third parties and production at the Big Spring, Texas and El
Dorado, Arkansas refineries. The renewables operations consist of
plants in Texas and Arkansas that produce biodiesel fuel and a
renewable diesel facility in California.
The convenience store retail business is the
largest 7-Eleven licensee in the United States and operates
approximately 300 convenience stores in central and west Texas and
New Mexico.
Safe Harbor Provisions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements that are based upon current expectations
and involve a number of risks and uncertainties. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding the integration of the combined companies
following the Alon USA transaction, including synergies relating
thereto; the potential merger with Alon Partners and impacts
thereof; improvements and projects at Krotz Springs, including the
costs, timing and benefits thereof; our ability to execute
California initiatives successfully, or at all; asphalt
transactions; crude oil slates; crude oil and product costs,
netbacks and margins; logistics throughput and performance;
dropdowns; cash and liquidity; transitions; opportunities;
anticipated performance and financial position; continued safe and
reliable operations; and other factors.
Investors are cautioned that the following
important factors, among others, may affect these forward-looking
statements. These factors include, but are not limited to: risks
and uncertainties related to the ability to successfully integrate
the businesses of Delek US and Alon USA Energy, Inc.; risks related
to disruption of management time from ongoing business operations
due to the integration implementation; the risk that any
announcements relating to the integration could have adverse
effects on the market price of Delek US' common stock; the risk
that the transaction could have an adverse effect on the ability of
Delek US and Alon to retain customers and retain and hire key
personnel and maintain relationships with their suppliers and
customers and on their operating results and businesses generally;
the risk that the combined company may be unable to achieve
cost-cutting synergies or it may take longer than expected to
achieve those synergies; uncertainty related to timing and amount
of future share repurchases and dividend payments; risks and
uncertainties with respect to the quantities and costs of crude oil
we are able to obtain and the price of the refined petroleum
products we ultimately sell; gains and losses from derivative
instruments; management's ability to execute its strategy of growth
through acquisitions and the transactional risks associated with
acquisitions and dispositions; acquired assets may suffer a
diminishment in fair value as a result of which we may need to
record a write-down or impairment in carrying value of the asset;
changes in the scope, costs, and/or timing of capital and
maintenance projects; operating hazards inherent in transporting,
storing and processing crude oil and intermediate and finished
petroleum products; our competitive position and the effects of
competition; the projected growth of the industries in which we
operate; general economic and business conditions affecting the
southern United States; and other risks described in Delek
US’ filings with the United States Securities and Exchange
Commission (the “SEC”), including risks described under the caption
“Risks Related to the Business of the Combined Company Following
the Mergers” in the Form S-4 (Registration Statement No.
333-216298) filed by Delek Holdco, Inc. (now named Delek US
Holdings, Inc.) which was declared effective by the SEC on May 26,
2017.
Forward-looking statements should not be read as
a guarantee of future performance or results and will not be
accurate indications of the times at, or by, which such performance
or results will be achieved. Forward-looking information is
based on information available at the time and/or management's good
faith belief with respect to future events, and is subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements.
Delek US undertakes no obligation to update or revise any such
forward-looking statements, except as required by applicable law or
regulation.
No Offer or Solicitation
This communication relates to a proposed
business combination between Delek US and Alon Partners. This
announcement is for informational purposes only and is neither an
offer to purchase, nor a solicitation of an offer to sell, any
securities or the solicitation of any vote in any jurisdiction
pursuant to the proposed transactions, or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to Find It
This press release does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval.
In connection with the proposed acquisition
transaction, a registration statement on Form S-4 will be filed
with the SEC that will include a consent statement of Alon
Partners. Delek US also plans to file other relevant materials with
the SEC. UNITHOLDERS OF ALON PARTNERS ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING THE CONSENT STATEMENT/PROSPECTUS THAT WILL BE
PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final
consent solicitation /prospectus will be mailed to unitholders of
Alon Partners. Investors and security holders will be able to
obtain the documents, and any other documents that Delek US has
filed with the SEC, free of charge at the SEC's website,
www.sec.gov. In addition, documents filed with the SEC by Delek US
will be available free of charge by (1) accessing Delek US’ website
at www.delekus.com under the "Investor Relations" link and then
under the heading "SEC Filings"; (2) writing Delek US at 7102
Commerce Way, Brentwood, TN 37027, Attention: Investor Relations;
or (3) writing Alon Partners at 7102 Commerce Way, Brentwood, TN
37027, Attention: Investor Relations.
Participants in the Solicitation
Delek US, Alon Partners and their respective
directors and executive officers may be deemed to be participants
in the solicitation of consents in favor of the acquisition from
the unitholders of Alon Partners. Additional information regarding
the interests of those participants and other persons who may be
deemed participants in the transaction may be obtained by reading
the consent statement/prospectus regarding the proposed acquisition
when it becomes available. Free copies of this document may be
obtained as described in the preceding paragraph.
Non-GAAP Disclosures:
This earnings release includes references to
financial measures that are not defined under U.S. generally
accepted accounting principles ("GAAP"). These non-GAAP measures
include adjusted net income (loss), adjusted net income (loss) per
share, earnings before interest, taxes, depreciation and
amortization ("EBITDA") and adjusted EBITDA. Delek US believes that
the presentation of these non-GAAP measures reflects operating
results that are more indicative of Delek US' ongoing operating
performance while improving comparability to prior periods, and, as
such, may provide investors with an enhanced understanding of the
Company's past financial performance and prospects for the
future. Adjusted income or loss, adjusted net income or loss
per share EBITDA and adjusted EBITDA should not be considered in
isolation or as alternatives to net income or loss, net income or
loss per share, or any other measure of financial performance
presented in accordance with U.S. GAAP. Additionally, because
adjusted net income or loss, adjusted net income or loss per share,
EBITDA and adjusted EBITDA may be defined differently by other
companies in its industry, Delek US' definition may not be
comparable to similarly titled measures of other companies. See the
accompanying tables in this earnings release for a reconciliation
of these non-GAAP measures to the most directly comparable GAAP
measures.
Delek US Holdings,
Inc.Consolidated Balance Sheets
(Unaudited)
|
|
September 30, 2017 |
|
December 31, 2016 |
|
(In millions, except share and per share
data) |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
831.7 |
|
|
$ |
689.2 |
|
Accounts
receivable, net |
495.5 |
|
|
265.9 |
|
Accounts
receivable from related party |
0.3 |
|
|
0.1 |
|
Inventories, net of inventory valuation reserves |
693.5 |
|
|
392.4 |
|
Assets of
discontinued operations held for sale |
167.2 |
|
|
— |
|
Other
current assets |
82.4 |
|
|
49.3 |
|
Total
current assets |
2,270.6 |
|
|
1,396.9 |
|
Property, plant and
equipment: |
|
|
|
Property,
plant and equipment |
2,732.9 |
|
|
1,587.6 |
|
Less:
accumulated depreciation |
(585.2 |
) |
|
(484.3 |
) |
Property,
plant and equipment, net |
2,147.7 |
|
|
1,103.3 |
|
Goodwill |
796.9 |
|
|
12.2 |
|
Other intangibles,
net |
91.7 |
|
|
26.7 |
|
Equity method
investments |
141.4 |
|
|
360.0 |
|
Other non-current
assets |
120.8 |
|
|
80.7 |
|
Total
assets |
$ |
5,569.1 |
|
|
$ |
2,979.8 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
803.7 |
|
|
$ |
494.6 |
|
Accounts
payable to related parties |
— |
|
|
1.8 |
|
Current
portion of long-term debt |
351.0 |
|
|
84.4 |
|
Obligation under Supply and Offtake Agreement |
386.7 |
|
|
124.6 |
|
Liabilities of discontinued operations held for sale |
103.1 |
|
|
— |
|
Accrued
expenses and other current liabilities |
439.7 |
|
|
229.8 |
|
Total
current liabilities |
2,084.2 |
|
|
935.2 |
|
Non-current
liabilities: |
|
|
|
Long-term
debt, net of current portion |
1,076.8 |
|
|
748.5 |
|
Environmental liabilities, net of current portion |
69.8 |
|
|
6.2 |
|
Asset
retirement obligations |
52.1 |
|
|
5.2 |
|
Deferred
tax liabilities |
464.5 |
|
|
76.2 |
|
Other
non-current liabilities |
38.1 |
|
|
26.0 |
|
Total
non-current liabilities |
1,701.3 |
|
|
862.1 |
|
Stockholders’
equity: |
|
|
|
Preferred
stock, $0.01 par value, 10,000,000 shares authorized, no shares
issued and outstanding |
— |
|
|
— |
|
Common
stock, $0.01 par value, 110,000,000 shares authorized, 81,450,340
shares and 67,150,352 shares issued at September 30, 2017 and
December 31, 2016, respectively |
0.8 |
|
|
0.7 |
|
Additional paid-in capital |
905.9 |
|
|
650.5 |
|
Accumulated other comprehensive income (loss) |
5.1 |
|
|
(20.8 |
) |
Treasury
stock, 5,195,791 shares, at cost, as of December 31, 2016 |
— |
|
|
(160.8 |
) |
Retained
earnings |
568.6 |
|
|
522.3 |
|
Non-controlling interest in subsidiaries |
303.2 |
|
|
190.6 |
|
Total
stockholders’ equity |
1,783.6 |
|
|
1,182.5 |
|
Total
liabilities and stockholders’ equity |
$ |
5,569.1 |
|
|
$ |
2,979.8 |
|
|
|
Delek US Holdings,
Inc.Consolidated Statements of Income
(Unaudited)
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(In millions, except share and per share
data) |
Net sales |
|
$ |
2,341.5 |
|
|
$ |
1,079.9 |
|
|
$ |
4,754.3 |
|
|
$ |
3,113.3 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
1,988.1 |
|
|
965.6 |
|
|
4,181.6 |
|
|
2,806.7 |
|
Operating
expenses |
|
153.2 |
|
|
61.0 |
|
|
276.5 |
|
|
187.8 |
|
Insurance
proceeds — business interruption |
|
— |
|
|
— |
|
|
— |
|
|
(42.4 |
) |
General
and administrative expenses |
|
61.8 |
|
|
24.9 |
|
|
115.8 |
|
|
77.5 |
|
Depreciation and amortization |
|
46.9 |
|
|
29.0 |
|
|
105.4 |
|
|
86.6 |
|
Other
operating expense, net |
|
0.7 |
|
|
2.2 |
|
|
1.0 |
|
|
2.2 |
|
Total
operating costs and expenses |
|
2,250.7 |
|
|
1,082.7 |
|
|
4,680.3 |
|
|
3,118.4 |
|
Operating
income (loss) |
|
90.8 |
|
|
(2.8 |
) |
|
74.0 |
|
|
(5.1 |
) |
Interest expense |
|
34.1 |
|
|
13.9 |
|
|
62.5 |
|
|
40.7 |
|
Interest income |
|
(0.9 |
) |
|
(0.2 |
) |
|
(2.7 |
) |
|
(0.9 |
) |
|
|
|
|
|
|
|
|
|
(Income) loss from
equity method investments |
|
(5.1 |
) |
|
5.1 |
|
|
(9.7 |
) |
|
33.7 |
|
Loss on impairment of
equity method investment |
|
— |
|
|
245.3 |
|
|
— |
|
|
245.3 |
|
Gain on remeasurement
of equity method investment |
|
(190.1 |
) |
|
— |
|
|
(190.1 |
) |
|
— |
|
Other expense, net |
|
0.8 |
|
|
0.1 |
|
|
0.9 |
|
|
0.6 |
|
Total
non-operating (income) expenses, net |
|
(161.2 |
) |
|
264.2 |
|
|
(139.1 |
) |
|
319.4 |
|
Income (loss) from
continuing operations before income tax expense (benefit) |
|
252.0 |
|
|
(267.0 |
) |
|
213.1 |
|
|
(324.5 |
) |
Income tax expense
(benefit) |
|
133.5 |
|
|
(103.3 |
) |
|
111.5 |
|
|
(136.8 |
) |
Income (loss) from
continuing operations |
|
118.5 |
|
|
(163.7 |
) |
|
101.6 |
|
|
(187.7 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
|
(Loss)
income from discontinued operations |
|
(6.4 |
) |
|
9.2 |
|
|
(6.4 |
) |
|
8.1 |
|
Income
tax (benefit) expense |
|
(2.3 |
) |
|
3.2 |
|
|
(2.3 |
) |
|
2.6 |
|
(Loss) income from
discontinued operations, net of tax |
|
(4.1 |
) |
|
6.0 |
|
|
(4.1 |
) |
|
5.5 |
|
Net income (loss) |
|
114.4 |
|
|
(157.7 |
) |
|
97.5 |
|
|
(182.2 |
) |
Net income attributed
to non-controlling interest |
|
10.0 |
|
|
4.0 |
|
|
19.8 |
|
|
15.7 |
|
Net income (loss)
attributable to Delek |
|
$ |
104.4 |
|
|
$ |
(161.7 |
) |
|
$ |
77.7 |
|
|
$ |
(197.9 |
) |
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share: |
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations |
|
$ |
1.35 |
|
|
$ |
(2.71 |
) |
|
$ |
1.20 |
|
|
$ |
(3.28 |
) |
(Loss) income from
discontinued operations |
|
$ |
(0.05 |
) |
|
$ |
0.10 |
|
|
$ |
(0.06 |
) |
|
$ |
0.09 |
|
Total basic income
(loss) per share |
|
$ |
1.30 |
|
|
$ |
(2.61 |
) |
|
$ |
1.14 |
|
|
$ |
(3.19 |
) |
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per share: |
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations |
|
$ |
1.34 |
|
|
$ |
(2.71 |
) |
|
$ |
1.19 |
|
|
$ |
(3.28 |
) |
(Loss) income from
discontinued operations |
|
$ |
(0.05 |
) |
|
$ |
0.10 |
|
|
$ |
(0.06 |
) |
|
$ |
0.09 |
|
Total diluted income
(loss) per share |
|
$ |
1.29 |
|
|
$ |
(2.61 |
) |
|
$ |
1.13 |
|
|
$ |
(3.19 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
80,581,762 |
|
|
61,834,968 |
|
|
68,272,918 |
|
|
61,931,040 |
|
Diluted |
|
81,245,405 |
|
|
61,834,968 |
|
|
68,975,974 |
|
|
61,931,040 |
|
Dividends declared per
common share outstanding |
|
$ |
0.15 |
|
|
$ |
0.15 |
|
|
$ |
0.45 |
|
|
$ |
0.45 |
|
|
|
Delek US Holdings, Inc. |
Consolidated Statements of Cash Flows |
(In millions) |
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
Cash Flow
Data |
|
(Unaudited) |
Operating
activities |
|
$ |
83.3 |
|
|
$ |
121.5 |
|
Investing
activities |
|
95.3 |
|
|
(97.6 |
) |
Financing
activities |
|
(29.8 |
) |
|
4.2 |
|
Net
increase |
|
$ |
148.8 |
|
|
$ |
28.1 |
|
|
|
Delek US Holdings, Inc. |
Segment Data (Unaudited) |
(In millions) |
|
|
Three Months Ended September 30,
2017 |
|
|
Refining |
|
Logistics |
|
Retail |
|
Corporate, Other and Eliminations |
|
Consolidated |
Net sales
(excluding intercompany fees and sales) |
|
$ |
2,005.5 |
|
|
$ |
90.6 |
|
|
$ |
213.9 |
|
|
$ |
(59.1 |
) |
|
$ |
2,250.9 |
|
Intercompany fees and sales |
|
108.3 |
|
|
40.1 |
|
|
— |
|
|
(57.8 |
) |
|
90.6 |
|
Operating
costs and expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
1,823.2 |
|
|
89.1 |
|
|
174.6 |
|
|
(98.8 |
) |
|
1,988.1 |
|
Operating
expenses |
|
110.5 |
|
|
10.7 |
|
|
25.8 |
|
|
6.2 |
|
|
153.2 |
|
Segment
contribution margin |
|
$ |
180.1 |
|
|
$ |
30.9 |
|
|
$ |
13.5 |
|
|
$ |
(24.3 |
) |
|
200.2 |
|
General
and administrative expenses |
|
|
|
|
|
|
|
|
|
61.8 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
46.9 |
|
Other
operating expense, net |
|
|
|
|
|
|
|
|
|
0.7 |
|
Operating
income |
|
|
|
|
|
|
|
|
|
$ |
90.8 |
|
Total assets |
|
$ |
4,269.0 |
|
|
$ |
422.9 |
|
|
$ |
371.8 |
|
|
$ |
505.4 |
|
|
$ |
5.569.1 |
|
Capital spending
(excluding business combinations (3) |
|
$ |
47.6 |
|
|
$ |
3.8 |
|
|
$ |
10.6 |
|
|
$ |
6.5 |
|
|
$ |
68.5 |
|
|
|
Three Months Ended September 30,
2016 |
|
|
Refining |
|
Logistics |
|
Retail |
|
Corporate, Other and Eliminations |
|
Consolidated |
Net sales
(excluding intercompany fees and sales) |
|
$ |
935.1 |
|
|
$ |
71.2 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,006.3 |
|
Intercompany fees and sales (1) |
|
78.1 |
|
|
36.3 |
|
|
— |
|
|
(40.8 |
) |
|
73.6 |
|
Operating
costs and expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
923.7 |
|
|
73.5 |
|
|
— |
|
|
(31.6 |
) |
|
965.6 |
|
Operating
expenses |
|
51.7 |
|
|
9.2 |
|
|
— |
|
|
0.1 |
|
|
61.0 |
|
Segment
contribution margin |
|
$ |
37.8 |
|
|
$ |
24.8 |
|
|
$ |
— |
|
|
$ |
(9.3 |
) |
|
53.3 |
|
General
and administrative expenses |
|
|
|
|
|
|
|
|
|
24.9 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
29.0 |
|
Other
operating expense, net |
|
|
|
|
|
|
|
|
|
2.2 |
|
Operating
loss |
|
|
|
|
|
|
|
|
|
$ |
(2.8 |
) |
Total assets (2) |
|
$ |
1,854.3 |
|
|
$ |
393.2 |
|
|
$ |
— |
|
|
$ |
772.0 |
|
|
$ |
3,019.5 |
|
Capital spending
(excluding business combinations) (3) |
|
$ |
7.5 |
|
|
$ |
3.2 |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
$ |
10.8 |
|
|
|
Delek US Holdings, Inc. |
Segment Data (Unaudited) |
(In millions) |
|
|
Nine Months Ended September 30,
2017 |
|
|
Refining |
|
Logistics |
|
Retail |
|
Corporate, Other and Eliminations |
|
Consolidated |
Net sales
(excluding intercompany fees and sales) |
|
$ |
4,240.9 |
|
|
$ |
270.5 |
|
|
$ |
213.9 |
|
|
$ |
(61.6 |
) |
|
$ |
4,663.7 |
|
Intercompany fees and sales |
|
125.4 |
|
|
116.4 |
|
|
— |
|
|
(151.2 |
) |
|
90.6 |
|
Operating
costs and expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
3,888.5 |
|
|
266.7 |
|
|
174.6 |
|
|
(148.2 |
) |
|
4,181.6 |
|
Operating
expenses |
|
212.9 |
|
|
31.0 |
|
|
25.8 |
|
|
6.8 |
|
|
276.5 |
|
Segment
contribution margin |
|
$ |
264.9 |
|
|
$ |
89.2 |
|
|
$ |
13.5 |
|
|
$ |
(71.4 |
) |
|
$ |
296.2 |
|
General
and administrative expenses |
|
|
|
|
|
|
|
|
|
115.8 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
105.4 |
|
Other
operating income |
|
|
|
|
|
|
|
|
|
1.0 |
|
Operating
income |
|
|
|
|
|
|
|
|
|
$ |
74.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital spending
(excluding business combinations) |
|
$ |
69.6 |
|
|
$ |
8.7 |
|
|
$ |
10.6 |
|
|
$ |
9.8 |
|
|
$ |
98.7 |
|
|
|
Nine Months Ended September 30,
2016 |
|
|
Refining |
|
Logistics |
|
Retail |
|
Corporate, Other and Eliminations |
|
Consolidated |
Net sales
(excluding intercompany fees and sales) |
|
$ |
2,651.6 |
|
|
$ |
214.4 |
|
|
$ |
— |
|
|
$ |
0.5 |
|
|
$ |
2,866.5 |
|
Intercompany fees and sales (1) |
|
266.6 |
|
|
109.0 |
|
|
— |
|
|
(128.8 |
) |
|
246.8 |
|
Operating
costs and expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
2,675.1 |
|
|
213.4 |
|
|
— |
|
|
(81.8 |
) |
|
2,806.7 |
|
Operating
expenses |
|
159.6 |
|
|
28.4 |
|
|
— |
|
|
(0.2 |
) |
|
187.8 |
|
Insurance
proceeds - business interruption |
|
(42.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(42.4 |
) |
Segment
contribution margin |
|
$ |
125.9 |
|
|
$ |
81.6 |
|
|
$ |
— |
|
|
$ |
(46.3 |
) |
|
$ |
161.2 |
|
General
and administrative expenses |
|
|
|
|
|
|
|
|
|
77.5 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
86.6 |
|
Other
operating expense, net |
|
|
|
|
|
|
|
|
|
2.2 |
|
Operating
loss |
|
|
|
|
|
|
|
|
|
$ |
(5.1 |
) |
Capital spending
(excluding business combinations) (3) |
|
$ |
14.4 |
|
|
$ |
5.1 |
|
|
$ |
— |
|
|
$ |
4.7 |
|
|
$ |
24.2 |
|
(1) Intercompany fees and sales for the refining segment include
revenues from the Retail Entities of $73.6 million and $246.8
million during the three and nine months ended September 30,
2016 respectively, the operations of which are reported in
discontinued operations.
(2) Assets held for sale of $167.2 million and $471.5 million
are included in the corporate, other and eliminations segment as of
September 30, 2017 and September 30, 2016,
respectively.
(3) Capital spending excludes capital spending associated with
the California Discontinued Entities of $0.4 million and the asset
acquisition of pipeline assets totaling $12.1 million for the three
and nine months ended September 30, 2017. Capital
spending excludes capital spending associated with the Retail
Entities of $6.0 million and $12.2 million during the three and
nine months ended September 30, 2016, respectively.
|
|
|
|
|
|
|
|
|
|
Refining
Segment |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Tyler, TX
Refinery |
|
(Unaudited) |
|
(Unaudited) |
Days in period |
|
92 |
|
|
92 |
|
|
273 |
|
|
274 |
|
Total sales volume
(average barrels per day)(1) |
|
77,719 |
|
|
72,456 |
|
|
73,865 |
|
|
73,055 |
|
Products manufactured
(average barrels per day): |
|
|
|
|
|
|
|
|
Gasoline |
|
42,448 |
|
|
38,909 |
|
|
39,313 |
|
|
38,192 |
|
Diesel/Jet |
|
30,192 |
|
|
27,215 |
|
|
28,474 |
|
|
27,836 |
|
Petrochemicals, LPG, NGLs |
|
2,052 |
|
|
3,195 |
|
|
2,422 |
|
|
2,760 |
|
Other |
|
1,797 |
|
|
1,483 |
|
|
1,668 |
|
|
1,561 |
|
Total
production |
|
76,489 |
|
|
70,802 |
|
|
71,877 |
|
|
70,349 |
|
Throughput (average
barrels per day): |
|
|
|
|
|
|
|
|
Crude
Oil |
|
71,898 |
|
|
68,954 |
|
|
67,157 |
|
|
67,462 |
|
Other
feedstocks |
|
6,750 |
|
|
2,945 |
|
|
6,108 |
|
|
3,723 |
|
Total
throughput |
|
78,648 |
|
|
71,899 |
|
|
73,265 |
|
|
71,185 |
|
Per barrel of
sales: |
|
|
|
|
|
|
|
|
Tyler
refining margin |
|
$ |
13.63 |
|
|
$ |
8.10 |
|
|
$ |
8.07 |
|
|
$ |
7.56 |
|
Direct
operating expenses |
|
$ |
3.39 |
|
|
$ |
3.56 |
|
|
$ |
3.62 |
|
|
$ |
3.69 |
|
Crude Slate: (% based
on amount received in period) |
|
|
|
|
|
|
|
|
WTI crude
oil |
|
83 |
% |
|
85 |
% |
|
82 |
% |
|
82 |
% |
East
Texas crude oil |
|
17 |
% |
|
15 |
% |
|
18 |
% |
|
18 |
% |
|
|
|
|
|
|
|
|
|
El Dorado, AR
Refinery |
|
|
|
|
|
|
|
|
Days in period |
|
92 |
|
|
92 |
|
|
273 |
|
|
274 |
|
Total sales volume
(average barrels per day)(2) |
|
84,610 |
|
|
76,893 |
|
|
81,679 |
|
|
78,863 |
|
Products manufactured
(average barrels per day): |
|
|
|
|
|
|
|
|
Gasoline |
|
37,267 |
|
|
39,120 |
|
|
37,853 |
|
|
40,545 |
|
Diesel |
|
28,610 |
|
|
27,367 |
|
|
27,373 |
|
|
27,046 |
|
Petrochemicals, LPG, NGLs |
|
1,776 |
|
|
1,325 |
|
|
1,728 |
|
|
957 |
|
Asphalt |
|
6,741 |
|
|
5,836 |
|
|
6,671 |
|
|
4,744 |
|
Other |
|
1,255 |
|
|
1,298 |
|
|
1,087 |
|
|
1,039 |
|
Total
production |
|
75,649 |
|
|
74,946 |
|
|
74,712 |
|
|
74,331 |
|
Throughput (average
barrels per day): |
|
|
|
|
|
|
|
|
Crude
Oil |
|
74,733 |
|
|
72,578 |
|
|
74,098 |
|
|
72,652 |
|
Other
feedstocks |
|
2,734 |
|
|
3,639 |
|
|
1,908 |
|
|
3,261 |
|
Total
throughput |
|
77,467 |
|
|
76,217 |
|
|
76,006 |
|
|
75,913 |
|
Per barrel of
sales: |
|
|
|
|
|
|
|
|
El Dorado
refining margin |
|
$ |
7.48 |
|
|
$ |
4.26 |
|
|
$ |
7.94 |
|
|
$ |
3.77 |
|
Direct
operating expenses |
|
$ |
3.68 |
|
|
$ |
3.73 |
|
|
$ |
3.58 |
|
|
$ |
3.75 |
|
Crude Slate: (% based
on amount received in period) |
|
|
|
|
|
|
|
|
WTI crude
oil |
|
62 |
% |
|
64 |
% |
|
63 |
% |
|
67 |
% |
Local
Arkansas crude oil |
|
11 |
% |
|
21 |
% |
|
11 |
% |
|
21 |
% |
Other |
|
27 |
% |
|
15 |
% |
|
26 |
% |
|
12 |
% |
Refining
Segment |
|
|
Three Months Ended September 30, |
|
|
|
|
2017 |
|
Big Spring, TX
Refinery (acquired on July 1, 2017) |
|
|
(Unaudited) |
|
Days in period |
|
|
92 |
|
Total sales volume
(average barrels per day) (3) |
|
|
74,357 |
|
Products manufactured
(average barrels per day): |
|
|
|
|
Gasoline |
|
|
35,990 |
|
Diesel/Jet |
|
|
27,001 |
|
Petrochemicals, LPG, NGLs |
|
|
2,956 |
|
Asphalt |
|
|
1,213 |
|
Other |
|
|
2,196 |
|
Total
production |
|
|
69,356 |
|
Throughput (average
barrels per day): |
|
|
|
|
Crude
Oil |
|
|
69,117 |
|
Other
feedstocks |
|
|
605 |
|
Total
throughput |
|
|
69,722 |
|
Per barrel of
sales: |
|
|
|
|
Big
Spring refining margin |
|
$ |
11.71 |
|
Direct
operating expenses |
|
$ |
3.88 |
|
Crude Slate: (% based
on amount received in period) |
|
|
|
|
WTI crude
oil |
|
|
75 |
% |
WTS crude
oil |
|
|
25 |
% |
|
|
|
|
|
Krotz Springs,
LA Refinery (acquired on July 1, 2017) |
|
|
|
|
Days in period |
|
|
92 |
|
Total sales volume
(average barrels per day) |
|
|
71,129 |
|
Products manufactured
(average barrels per day): |
|
|
|
|
Gasoline |
|
|
32,383 |
|
Diesel/Jet |
|
|
21,792 |
|
Heavy
Oils |
|
|
6,202 |
|
Other |
|
|
7,743 |
|
Total
production |
|
|
68,120 |
|
Throughput (average
barrels per day): |
|
|
|
|
Crude
Oil |
|
|
68,998 |
|
Other
feedstocks |
|
|
(706 |
) |
Total
throughput |
|
|
68,292 |
|
Per barrel of
sales: |
|
|
|
|
Krotz
Springs refining margin |
|
$ |
8.18 |
|
Direct
operating expenses |
|
$ |
4.08 |
|
Crude Slate: (% based
on amount received in period) |
|
|
|
|
WTI
Crude |
|
|
46 |
% |
Gulf
Coast Sweet Crude |
|
|
54 |
% |
|
|
|
|
|
Pricing
statistics (average for the period presented): |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
WTI — Cushing crude oil
(per barrel) |
|
$ |
48.16 |
|
|
$ |
44.88 |
|
|
$ |
49.31 |
|
|
$ |
41.40 |
|
WTI — Midland crude oil
(per barrel) |
|
$ |
47.37 |
|
|
$ |
45.17 |
|
|
$ |
48.78 |
|
|
$ |
41.21 |
|
WTS -- Midland crude
oil (per barrel) (4) |
|
$ |
47.19 |
|
|
$ |
43.41 |
|
|
$ |
48.16 |
|
|
$ |
40.57 |
|
LLS crude oil (per
barrel) (4) |
|
$ |
51.62 |
|
|
$ |
46.52 |
|
|
$ |
51.72 |
|
|
$ |
43.19 |
|
Brent crude oil (per
barrel) |
|
$ |
52.21 |
|
|
$ |
46.93 |
|
|
$ |
52.49 |
|
|
$ |
43.21 |
|
|
|
|
|
|
|
|
|
|
US Gulf Coast 5-3-2
crack spread (per barrel) (4) |
|
$ |
15.92 |
|
|
$ |
9.85 |
|
|
$ |
12.46 |
|
|
$ |
9.15 |
|
US Gulf Coast 3-2-1
crack spread (per barrel) (4) |
|
$ |
20.16 |
|
|
$ |
13.16 |
|
|
$ |
16.20 |
|
|
$ |
12.25 |
|
US Gulf Coast 2-1-1
crack spread (per barrel) (4) |
|
$ |
13.63 |
|
|
$ |
9.21 |
|
|
$ |
11.30 |
|
|
$ |
8.28 |
|
|
|
|
|
|
|
|
|
|
US Gulf Coast Unleaded
Gasoline (per gallon) |
|
$ |
1.58 |
|
|
$ |
1.35 |
|
|
$ |
1.52 |
|
|
$ |
1.26 |
|
Gulf Coast Ultra low
sulfur diesel (per gallon) |
|
$ |
1.62 |
|
|
$ |
1.37 |
|
|
$ |
1.55 |
|
|
$ |
1.25 |
|
US Gulf Coast high
sulfur diesel (per gallon) |
|
$ |
1.44 |
|
|
$ |
1.23 |
|
|
$ |
1.40 |
|
|
$ |
1.12 |
|
Natural gas (per
MMBTU) |
|
$ |
2.95 |
|
|
$ |
2.79 |
|
|
$ |
3.05 |
|
|
$ |
2.35 |
|
(1) Total sales volume includes 869 and 851 bpd sold to the
logistics segment during the three and nine months ended
September 30, 2017, respectively, and 114 and 686 bpd during
the three and nine months ended September 30, 2016,
respectively. Total sales volume also includes sales of 350
and 121 bpd of intermediate and finished products to the El Dorado
refinery during the three and nine months ended September 30,
2017, respectively, and 885 and 659 bpd during the three and nine
months ended September 30, 2016, respectively. Total sales
volume also includes 49 bpd of produced finished product sold to
the Alon Partnership during the three months ended September 30,
2017. Total sales volume excludes 3,038 and 4,536 bpd of wholesale
activity during the three and nine months ended September 30,
2017, respectively, and 1,778 and 843 during the three and nine
months ended September 30, 2016, respectively.
(2) Total sales volume includes 460 and 674 bpd of produced
finished product sold to the Tyler refinery during the three and
nine months ended September 30, 2017, respectively, and
includes 996 bpd of produced finished product sold to Alon Asphalt
Company during the three months ended September 30, 2017.
There were no produced finished products sold to the Tyler refinery
during the three and nine months ended September 30,
2016. Total sales volume excludes 23,921 and 19,236 bpd of
wholesale activity during the three and nine months ended
September 30, 2017, respectively, and 19,671 and 21,606 bpd
during the three and nine months ended September 30, 2016,
respectively.
(3) Total sales volume includes 14,071 bpd sold to the retail
segment during the three months ended September 30, 2017.
(4) For our Tyler and El Dorado refineries, we compare our per
barrel refining product margin to the Gulf Coast 5-3-2 crack spread
consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S, Gulf
Coast Pipeline No. 2 heating oil (high sulfur diesel). For the Big
Spring refinery, we compare our per barrel refined product margin
to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing
crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low
sulfur diesel, and for our Krotz Springs refinery, we compare our
per barrel refined product margin to the Gulf Coast 2-1-1 crack
spread consisting of LLS crude oil, Gulf Coast 87 Conventional
gasoline and U.S, Gulf Coast Pipeline No. 2 heating oil (high
sulfur diesel). The Tyler refinery's crude oil input is
primarily WTI Midland and east Texas, while the El Dorado
refinery's crude input is primarily combination of WTI Midland,
local Arkansas and other domestic inland crude oil. The Big Spring
refinery’s crude oil input is primarily comprised of WTS and WTI
Midland. The Krotz Springs refinery’s crude oil input is primarily
comprised of LLS and WTI Midland. The Big Spring and Krotz
Springs refineries were acquired July 1, 2017 as part of the Delek
US Alon merger.
|
|
Delek US Holdings, Inc. |
Reconciliation of Refining Margin per barrel
to Adjusted Refining Margin per barrel (5) |
$ in millions, except per share data |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
Tyler (6) |
|
|
|
|
|
|
|
|
Reported refining
margin, $ per barrel |
|
$ |
13.63 |
|
|
$ |
8.10 |
|
|
$ |
8.07 |
|
|
$ |
7.56 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Net inventory valuation
(benefit) loss |
|
(1.77 |
) |
|
(1.18 |
) |
|
0.02 |
|
|
(1.30 |
) |
Other inventory
(benefit) loss |
|
(0.51 |
) |
|
0.66 |
|
|
0.11 |
|
|
0.24 |
|
|
|
|
|
|
|
|
|
|
Adjusted refining
margin $/bbl |
|
$ |
11.35 |
|
|
$ |
7.58 |
|
|
$ |
8.20 |
|
|
$ |
6.50 |
|
|
|
|
|
|
|
|
|
|
El Dorado (7) |
|
|
|
|
|
|
|
|
Reported refining
margin, $ per barrel |
|
$ |
7.48 |
|
|
$ |
4.26 |
|
|
$ |
7.94 |
|
|
$ |
3.77 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Net inventory valuation
loss |
|
0.11 |
|
|
— |
|
|
0.04 |
|
|
— |
|
Other inventory loss
(benefit) |
|
1.69 |
|
|
0.06 |
|
|
0.23 |
|
|
0.78 |
|
RIN waiver |
|
— |
|
|
— |
|
|
(2.13 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
Adjusted refining
margin $/bbl |
|
$ |
9.28 |
|
|
$ |
4.32 |
|
|
$ |
6.08 |
|
|
$ |
4.55 |
|
|
|
|
|
|
|
|
|
|
Big Spring (acquired July 1, 2017) (8) |
|
|
|
|
|
|
|
|
Reported refining
margin, $ per barrel |
|
$ |
11.71 |
|
|
|
|
$ |
11.71 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Net inventory valuation
loss (benefit) |
|
— |
|
|
|
|
— |
|
|
|
Inventory fair value
adjustment |
|
3.22 |
|
|
|
|
3.22 |
|
|
|
Other inventory loss
benefit |
|
(0.29 |
) |
|
|
|
(0.29 |
) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted refining
margin $/bbl |
|
$ |
14.64 |
|
|
|
|
$ |
14.64 |
|
|
|
|
|
|
|
|
|
|
|
|
Krotz Springs (acquired July1, 2017) (9) |
|
|
|
|
|
|
|
|
Reported refining
margin, $ per barrel |
|
$ |
8.18 |
|
|
|
|
$ |
8.18 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Net inventory valuation
loss |
|
— |
|
|
|
|
— |
|
|
|
Inventory fair value
adjustment |
|
1.25 |
|
|
|
|
1.25 |
|
|
|
Other inventory
loss |
|
0.29 |
|
|
|
|
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted refining
margin $/bbl |
|
$ |
9.72 |
|
|
|
|
$ |
9.72 |
|
|
|
(5) Adjusted refining margin per barrel is presented to provide
a measure to evaluate performance excluding inventory valuation
adjustments and other items at the individual refinery level. Delek
US believes that the presentation of adjusted measures provides
useful information to investors in assessing its results of
operations at each refinery. Because adjusted refining margin per
barrel may be defined differently by other companies in its
industry, Delek US' definition may not be comparable to similarly
titled measures of other companies.
(6) Tyler adjusted refining margins exclude the following
items.
Net inventory valuation benefit (loss) - There
was approximately $12.7 million and $7.9 million of valuation
benefit in the third quarter 2017 and 2016, respectively. There was
approximately $(0.4) million valuation loss and $26.0 million of
valuation benefit in the nine months ended September 30, 2017 and
2016, respectively. These amounts resulted from lower of cost or
market adjustments on LIFO inventory in the respective
periods.Other inventory - A benefit of $3.6
million and a loss of $(4.4) million was recognized in the third
quarter 2017 and 2016, respectively. A loss of $(2.2) million
and $(4.9) million was recognized in the nine months ended
September 30, 2017 and 2016, respectively. These amounts consist of
the inventory valuation effect versus market prices in the
respective periods.
(7) El Dorado adjusted refining margins exclude the following
items.
Net inventory valuation benefit (loss) - There
were $(0.8) million and $0.0 million of valuation losses in the
third quarter 2017 and 2016, respectively. There were approximately
$(0.8) million and $0.0 million of valuation losses in the nine
months ended September 30, 2017 and 2016, respectively. These
amounts resulted from lower of cost or market adjustments on FIFO
inventory in the respective periods.Other
inventory - A loss of $(13.2) million and $(0.4) million
loss was recognized in the third quarter 2017 and 2016,
respectively. A loss of $(5.2) million and $(16.8) million was
recognized in the nine months ended September 30, 2017 and 2016,
respectively. These amounts consist of the inventory valuation
effect versus market prices in the respective periods.RIN
waiver - In March 2017, the El Dorado, Arkansas refinery
received approval from the Environmental Protection Agency for a
small refinery exemption from the requirements of the renewable
fuel standard for the 2016 calendar year. This waiver equated to a
benefit of approximately $47.5 million recognized in the first
quarter 2017.
(8) Big Spring adjusted refining margins exclude the following
items.
Net inventory valuation benefit
(loss) - There was no valuation benefit (loss) in the
third quarter 2017. Other inventory - A gain of
$2.0 million was recognized in the third quarter 2017. This amount
consists of the inventory valuation effect versus market prices and
reflect the period following the acquisition on July 1, 2017 by
Delek US. Inventory Fair Value Adjustment -- As a
result of the acquisition of Alon on July 1, 2017 there was a $22.0
million inventory adjustment in the third quarter 2017 that reduced
margin.
(9) Krotz Springs adjusted refining margins exclude the
following items.
Net inventory valuation benefit (loss) - There
was no valuation benefit (loss) in the third quarter
2017. Other inventory - A loss of $(1.9)
million was recognized in the third quarter 2017. This amount
consists of the inventory valuation effect versus market prices and
reflect the period following the acquisition on July 1, 2017 by
Delek US. Inventory Fair Value Adjustment --
As a result of the acquisition of Alon on July 1, 2017 there was an
$8.2 million inventory adjustment in the third quarter 2017 that
reduced margin.
Logistics
Segment |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
Pipelines &
Transportation: (average bpd) |
|
|
|
|
|
|
|
|
Lion
Pipeline System: |
|
|
|
|
|
|
|
|
Crude
pipelines (non-gathered) |
|
60,247 |
|
|
55,217 |
|
|
59,653 |
|
|
55,951 |
|
Refined
products pipelines to Enterprise Systems |
|
51,623 |
|
|
47,974 |
|
|
50,933 |
|
|
51,794 |
|
SALA
Gathering System |
|
15,997 |
|
|
17,237 |
|
|
16,160 |
|
|
18,172 |
|
East
Texas Crude Logistics System |
|
15,260 |
|
|
17,026 |
|
|
15,006 |
|
|
13,108 |
|
El Dorado
Rail Offloading Rack |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Wholesale
Marketing & Terminalling: |
|
|
|
|
|
|
|
|
East
Texas - Tyler Refinery sales volumes (average bpd) (10) |
|
74,357 |
|
|
67,812 |
|
|
71,917 |
|
|
68,137 |
|
West
Texas marketing throughputs (average bpd) |
|
12,929 |
|
|
12,162 |
|
|
13,647 |
|
|
13,039 |
|
West
Texas marketing margin per barrel |
|
$ |
4.00 |
|
|
$ |
1.16 |
|
|
$ |
3.62 |
|
|
$ |
1.24 |
|
Terminalling throughputs (average bpd) (11) |
|
127,229 |
|
|
120,099 |
|
|
123,780 |
|
|
121,791 |
|
(10) Excludes jet fuel and petroleum coke
(11) Consists of terminalling throughputs at our Tyler, Big
Sandy and Mount Pleasant, Texas, North Little Rock and El Dorado,
Arkansas, and Memphis and Nashville, Tennessee terminals.
Retail
Segment |
|
Three Months Ended September 30, |
|
(Operations
were acquired on July 1, 2017) |
|
2017 |
|
|
|
(Unaudited) |
|
Number of stores (end
of period) (12) |
|
302 |
|
Average number of
stores |
|
302 |
|
Retail fuel sales
(thousands of gallons) |
|
54,365 |
|
Average retail gallons
per average number of stores (in thousands) |
|
186 |
|
Retail fuel margin ($
per gallon) |
|
$ |
0.202 |
|
Merchandise sales (in
thousands) |
|
$ |
91,289 |
|
Merchandise sales per
average number of stores (in thousands)
|
|
$ |
302 |
|
Merchandise margin
% |
|
31.4 |
% |
(12) At September 30, 2017 there were 302 retail convenience
stores of which 293 sold fuel.
|
|
Delek US Holdings, Inc. |
Reconciliation of Amounts Reported Under U.S.
GAAP |
$ in millions |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted
Net Income (Loss) |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
Reported net
income (loss) attributable to Delek |
$ |
104.4 |
|
|
$ |
(161.7 |
) |
|
$ |
77.7 |
|
|
$ |
(197.9 |
) |
|
|
|
|
|
|
|
|
Adjustments (13) |
|
|
|
|
|
|
|
Net inventory valuation
(gain) loss |
(11.6 |
) |
|
(7.8 |
) |
|
1.9 |
|
|
(26.0 |
) |
Tax effect of inventory
valuation |
4.1 |
|
|
2.8 |
|
|
(0.7 |
) |
|
9.1 |
|
Net after tax inventory
valuation (gain) loss |
(7.4 |
) |
|
(5.1 |
) |
|
1.2 |
|
|
(16.8 |
) |
|
|
|
|
|
|
|
|
Asset write offs |
0.7 |
|
|
2.3 |
|
|
0.7 |
|
|
2.3 |
|
Tax effect of asset
write offs |
(0.2 |
) |
|
(0.9 |
) |
|
(0.2 |
) |
|
(0.9 |
) |
Net after tax asset
write offs |
0.4 |
|
|
1.4 |
|
|
0.4 |
|
|
1.4 |
|
|
|
|
|
|
|
|
|
Business interruption
proceeds |
— |
|
|
— |
|
|
— |
|
|
(42.4 |
) |
Tax effect of business
interruption proceeds |
— |
|
|
— |
|
|
— |
|
|
14.9 |
|
Net after tax business
interruption proceeds |
— |
|
|
— |
|
|
— |
|
|
(27.5 |
) |
|
|
|
|
|
|
|
|
Unrealized hedging loss
(gain) |
10.9 |
|
|
(2.9 |
) |
|
11.0 |
|
|
21.7 |
|
Tax effect of
unrealized hedging |
(4.0 |
) |
|
1.0 |
|
|
(3.8 |
) |
|
(7.6 |
) |
Net after tax
unrealized hedging loss (gain) |
6.9 |
|
|
(1.9 |
) |
|
7.1 |
|
|
14.1 |
|
|
|
|
|
|
|
|
|
Loss on impairment of
equity method investment in Alon |
— |
|
|
245.1 |
|
|
— |
|
|
245.1 |
|
Tax effect of loss on
equity method investment in Alon |
— |
|
|
(89.1 |
) |
|
— |
|
|
(89.1 |
) |
Net after tax loss on
impairment of equity method investment in Alon |
— |
|
|
156.0 |
|
|
— |
|
|
156.0 |
|
|
|
|
|
|
|
|
|
Inventory fair value
adjustment |
29.1 |
|
|
— |
|
|
29.1 |
|
|
— |
|
Tax effect of inventory
fair value adjustment |
(10.5 |
) |
|
— |
|
|
(10.5 |
) |
|
— |
|
Net after tax inventory
fair value adjustment |
18.6 |
|
|
— |
|
|
18.6 |
|
|
— |
|
|
|
|
|
|
|
|
|
Transaction related
expenses |
18.4 |
|
|
— |
|
|
22.4 |
|
|
$ |
— |
|
Tax effect of
transaction related expenses |
(6.5 |
) |
|
— |
|
|
(7.3 |
) |
|
$ |
— |
|
Net after tax
transaction related expenses |
11.9 |
|
|
— |
|
|
15.1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
Gain on equity method
investment in Alon |
(190.1 |
) |
|
— |
|
|
(190.1 |
) |
|
— |
|
Tax effect of gain on
equity method investment in Alon |
69.5 |
|
|
— |
|
|
69.5 |
|
|
— |
|
Net after tax gain on
equity method investment in Alon |
(120.6 |
) |
|
— |
|
|
(120.6 |
) |
|
— |
|
|
|
|
|
|
|
|
|
Deferred tax
write-off |
46.9 |
|
|
— |
|
|
46.9 |
|
|
— |
|
Tax effect of deferred
tax write-off |
— |
|
|
— |
|
|
— |
|
|
— |
|
Net after tax deferred
tax write-off |
46.9 |
|
|
— |
|
|
46.9 |
|
|
— |
|
|
|
|
|
|
|
|
|
Discontinued operations
loss (gain) |
6.4 |
|
|
(9.2 |
) |
|
6.4 |
|
|
(8.1 |
) |
Tax effect of
discontinued operations |
(2.3 |
) |
|
3.2 |
|
|
(2.3 |
) |
|
2.6 |
|
Net after tax
discontinued operations loss (gain) |
4.1 |
|
|
(6.0 |
) |
|
4.1 |
|
|
(5.5 |
) |
|
|
|
|
|
|
|
|
Total after tax
adjustments |
(39.2 |
) |
|
144.4 |
|
|
(27.2 |
) |
|
$ |
121.7 |
|
|
|
|
|
|
|
|
|
Adjusted
net income (loss) |
$ |
65.3 |
|
|
$ |
(17.3 |
) |
|
$ |
50.5 |
|
|
$ |
(76.2 |
) |
|
|
|
|
|
|
|
|
|
Delek US Holdings, Inc. |
Reconciliation of Amounts Reported Under U.S.
GAAP |
per share data |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted
Net Income (Loss) |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Reported net
income (loss) per share attributable to Delek |
$ |
1.29 |
|
|
$ |
(2.61 |
) |
|
$ |
1.13 |
|
|
$ |
(3.19 |
) |
|
|
|
|
|
|
|
|
Adjustments, after tax (per share)
(13) |
|
|
|
|
|
|
|
Net inventory valuation
(gain) loss |
(0.09 |
) |
|
(0.08 |
) |
|
0.02 |
|
|
(0.27 |
) |
Asset write offs |
0.01 |
|
|
0.02 |
|
|
0.01 |
|
|
0.02 |
|
Business interruption
proceeds |
— |
|
|
— |
|
|
— |
|
|
(0.44 |
) |
Unrealized hedging loss
(gain) |
0.09 |
|
|
(0.03 |
) |
|
0.10 |
|
|
0.23 |
|
Loss on impairment of
equity method investment |
— |
|
|
2.52 |
|
|
— |
|
|
2.52 |
|
Inventory fair value
adjustment |
0.23 |
|
|
— |
|
|
0.27 |
|
|
— |
|
Transaction related
expenses |
0.15 |
|
|
— |
|
|
0.22 |
|
|
— |
|
Gain on equity method
investment in Alon |
(1.48 |
) |
|
— |
|
|
(1.75 |
) |
|
— |
|
Deferred tax
write-off |
0.58 |
|
|
— |
|
|
0.68 |
|
|
— |
|
Discontinued operations
loss (gain) |
0.05 |
|
|
(0.10 |
) |
|
0.06 |
|
|
(0.09 |
) |
|
|
|
|
|
|
|
|
Total adjustments |
(0.48 |
) |
|
2.33 |
|
|
(0.39 |
) |
|
1.96 |
|
|
|
|
|
|
|
|
|
Adjusted
net income (loss) per share |
$ |
0.81 |
|
|
$ |
(0.28 |
) |
|
$ |
0.74 |
|
|
$ |
(1.23 |
) |
(13) The tax calculation is based on the appropriate marginal
income tax rate related to each adjustment and for each respective
time period, which is applied to the adjusted items in the
calculation of adjusted net income (loss) in all periods.
|
|
Delek US Holdings, Inc. |
Reconciliation of Amounts Reported Under U.S.
GAAP |
$ in millions |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Reconciliation
of U.S. GAAP Net Income (Loss) to Adjusted EBITDA |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
(Unaudited) |
|
(Unaudited) |
Reported net
income (loss) per share attributable to Delek |
$ |
104.4 |
|
|
$ |
(161.7 |
) |
|
$ |
77.7 |
|
|
$ |
(197.9 |
) |
|
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
|
Interest expense,
net |
33.2 |
|
|
13.7 |
|
|
59.8 |
|
|
39.8 |
|
Income tax expense |
133.5 |
|
|
(103.3 |
) |
|
111.5 |
|
|
(136.8 |
) |
Depreciation and
amortization |
46.9 |
|
|
29.0 |
|
|
105.4 |
|
|
86.6 |
|
EBITDA |
318.0 |
|
|
(222.3 |
) |
|
354.4 |
|
|
(208.3 |
) |
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
Net inventory valuation
(gain) loss |
(11.6 |
) |
|
(7.8 |
) |
|
1.9 |
|
|
(26.0 |
) |
Asset write offs |
0.7 |
|
|
2.3 |
|
|
0.7 |
|
|
2.3 |
|
Business interruption
proceeds |
— |
|
|
— |
|
|
— |
|
|
(42.4 |
) |
Unrealized hedging loss
(gain) |
10.9 |
|
|
(2.9 |
) |
|
11.0 |
|
|
21.7 |
|
Loss on impairment of
equity method investment in Alon |
— |
|
|
245.1 |
|
|
— |
|
|
245.1 |
|
Inventory fair value
adjustment |
33.2 |
|
|
— |
|
|
33.2 |
|
|
|
— |
|
Transaction related
expenses |
18.4 |
|
|
— |
|
|
22.4 |
|
|
— |
|
Gain on equity method
investment in Alon |
(190.1 |
) |
|
— |
|
|
(190.1 |
) |
|
— |
|
Non controlling
interest |
10.0 |
|
|
4.0 |
|
|
19.8 |
|
|
15.7 |
|
Discontinued operations
loss (gain) |
6.4 |
|
|
(9.2 |
) |
|
6.4 |
|
|
(8.1 |
) |
Total
adjustments |
(122.1 |
) |
|
231.5 |
|
|
(94.7 |
) |
|
208.3 |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
195.9 |
|
|
$ |
9.2 |
|
|
$ |
259.7 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Delek US Holdings, Inc. |
Reconciliation of Amounts Reported Under U.S. GAAP |
$ in millions |
|
Reconciliation of Forecast U.S. GAAP Net Income (Loss) to
Forecast EBITDA for Alkylation Project |
Forecasted Range |
Forecasted Net
Income |
$ |
17.8 |
|
$ |
21.0 |
|
Add: |
|
|
Interest Expense,
net |
— |
|
— |
|
Income tax expense |
10.3 |
|
12.1 |
|
Depreciation and
amortization |
6.9 |
|
6.9 |
|
Forecasted EBITDA |
$ |
35.0 |
|
$ |
40.0 |
|
|
|
|
U.S. Investor / Media Relations Contact:Keith
JohnsonDelek US Holdings, Inc.Vice President of Investor
Relations615-435-1366
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