- Reported first quarter net income of $6.6 million or $0.09 per share and Adjusted EBITDA of
$172.8 million
- Completed $64 million share
acquisition from the Icahn Group at $18.30/share, reducing shares outstanding by
~5%
- Planned acquisition of 3Bear places us well on-track to
achieve midstream EBITDA target of $365 - $395
million
- Accelerating Permian Gathering activity provides growth
opportunities and potential for attractive crude discounts
- Positioned to capture robust energy environment with no
major turnaround activity planned in 2022
- Retrospectively transitioned Tyler, TX refinery from LIFO to FIFO inventory
accounting methodology
- Maintained strong balance sheet with $854 million of cash as of March 31, 2022
BRENTWOOD, Tenn., May 3, 2022
/PRNewswire/ -- Delek US Holdings, Inc. (NYSE: DK) ("Delek US")
today announced financial results for its first quarter ended
March 31, 2022. Delek US reported a
first quarter 2022 net income of $6.6
million, or $0.09 per share,
versus net loss of $(70.0) million,
or $(0.95) per share, for the quarter
ended March 31, 2021. On an adjusted
basis, Delek US reported Adjusted net income of $42.9 million, or $0.58 per share, for the first quarter 2022. This
compares to Adjusted net loss of $(80.2)
million, or $(1.08) per share,
in the prior year. Adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA") was $172.8 million for the first quarter compared to
Adjusted EBITDA of $12.6 million in
the prior year.
Uzi Yemin, Chairman, President
and Chief Executive Officer of Delek US, stated, "The refining
landscape has improved dramatically from the pandemic driven
downturn over the past couple of years and our team is optimistic
on the outlook for 2022. Our refining portfolio has no major
planned maintenance this year, positioning us well to capture
elevated margins. The robust macro environment provided us with
confidence to repurchase ~5% of Delek stock from the Icahn Group in
March. We will continue to look for opportunities to enhance our
balance sheet and return cash to shareholders throughout the
year."
Mr. Yemin continued, "Permian Gathering activity at Delek
Logistics Partners is reflecting a significant ramp-up sequentially
and we expect volumes to approximately double from the fourth
quarter of last year to the fourth quarter of this year. Strong
producer demand and increasing drilling activity paves the way for
attractive crude discounts into the future and also helps underpin
DKL's planned acquisition of 3Bear Delaware Holding – NM, LLC. This
transaction puts DK on pace to achieve its consolidated midstream
EBITDA target of $365 - $395 million, increases DKL third-party revenue,
helps DKL become a larger, more scalable entity, diversifies its
geography within the Permian Basin and expands the company's
product mix. Delek's assets are performing well and we are back to
a position of pursuing growth through both organic and inorganic
opportunities."
Liquidity
As of March 31, 2022, Delek US had
a cash balance of $854.1 million and
total consolidated long-term debt of $2,212.8 million, resulting in Net debt of
$1,358.7 million. As of
March 31, 2022, Delek Logistics
Partners, LP (NYSE: DKL) ("Delek Logistics") had $2.7 million of cash and $905.5 million of total long-term debt, which are
included in the consolidated amounts on Delek US' balance sheet.
Excluding Delek Logistics, Delek US had approximately $851.4 million in cash and $1,307.3 million of long-term debt, or a
$455.9 million Net debt position.
Consolidated Results
Net income attributable to Delek in the first quarter 2022 was
$6.6 million compared to $(70.0) million net loss in the first quarter
2021. On an adjusted basis, Adjusted net income was $42.9 million in the first quarter 2022 compared
to Adjusted net loss of $(80.2)
million in the first quarter 2021. The $123.1 million improvement in Adjusted net income
is primarily attributable to improvements in refining operating
results and contribution margins compared to the prior year
quarter, including the impact of higher refining utilization rates
during the current quarter compared to the prior period, where last
year we had outages related to turnaround activities, a fire at our
El Dorado refinery and the effects
of Winter Storm Uri, combined with
significantly improved crack spreads. See below for further
discussion of operating results and contribution margin across our
segments.
1 |
Refining Segment Results
Refining contribution margin increased to $96.9 million in the first quarter 2022 from
$10.4 million in the first quarter
2021, while Adjusted segment contribution margin was $152.9 million in the first quarter 2022 compared
to $(3.9) million in the first
quarter 2021. On a year-over-year basis, our refining segment
results were favorably impacted by increased demand, attributable
in part to low clean product inventories and continued
macroeconomic improvements around the pandemic combined with the
impact of sanctions on Russian oil supply, as well as the
corresponding improvements in crack spreads. Absent significant
outages (such as those caused by Winter
Storm Uri, the refinery fire and turnaround activities in
first quarter 2021), we experienced marked improvements in our
refining utilization rates compared to the prior year period.
Additionally, during the first quarter 2022, Delek US's
benchmark crack spreads were up an average of approximately 84.2%
from prior-year levels, though the refineries' ability to capture
crack spread increases continues to be negatively impacted by
higher RIN costs year over year and the continued burden of the RFS
program on our small refineries.
Logistics Segment Results
The logistics segment contribution margin in the first quarter
2022 was $62.3 million compared to
$56.9 million in the first quarter
2021, where Adjusted segment contribution margin was $62.1 million compared to $56.7 million in the prior year quarter. Overall
performance benefited from an increase in utilization on assets
supporting the Big Spring Refinery and increased throughput on
joint venture pipelines.
Retail Segment Results
For the first quarter 2022, contribution margin, on both a GAAP
and Adjusted basis, was $13.8 million
compared to $16.7 million and
$16.7 million on a GAAP and Adjusted
basis, respectively, in the prior-year period for the retail
segment. Merchandise sales were approximately $69.7 million with an average retail margin of
34.6% in the first quarter 2022, compared to merchandise sales of
approximately $74.6 million with an
average retail margin of 32.7% in the prior-year period.
Approximately 39.5 million retail fuel gallons were sold at an
average margin of $0.31 per gallon in
the first quarter 2022 compared to 39.8 million retail fuel gallons
sold at an average margin of $0.35
per gallon in the first quarter 2021. In the first quarter 2022,
the average merchandise store count was 248 compared to 253 in the
prior-year period. On a same-store-sales basis in the first quarter
2022, merchandise sales decreased (5.2)% and fuel gallons sold
increased 0.8% compared to the prior-year period.
Corporate and Other Activity
Contribution margin from Corporate, Other and Eliminations was a
loss of $33.3 million in the first
quarter 2022 compared to a loss of $19.9
million in the prior-year period, where Adjusted
contribution margin was a $30.9
million loss compared to a $19.7 million loss in the same quarter of 2021,
and where these amounts include inter-segment eliminations.
The Wink-to-Webster crude oil pipeline, currently flowing
through the consolidated equity method investment line, is expected
to ratably increase throughout the year. The 36-inch diameter
pipeline, which is fully contracted with minimum volume commitments
("MVCs"), will originate in the Permian Basin and have destination
points in the Houston market.
First Quarter 2022 Results | Conference Call
Information
Delek US will hold a conference call to discuss its first
quarter 2022 results on Tuesday, May 3,
2022 at 11:00 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. Presentation materials accompanying the call will be
available on the investor relations tab of the Delek US website
approximately ten minutes prior to the start of the call. For those
who cannot listen to the live broadcast, the online replay will be
available on the website for 90 days.
Investors may also wish to listen to Delek Logistics' (NYSE:
DKL) first quarter 2022 earnings conference call that will be held
on Tuesday, May 3, 2022 at
9:30 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 will be
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, renewable
fuels and convenience store retailing. The refining assets consist
primarily 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.
The logistics operations primarily consist of Delek Logistics
Partners, LP (NYSE: DKL). Delek US Holdings, Inc. and its
affiliates own approximately 78.9% (including the general partner
interest) of Delek Logistics Partners, LP at March 31, 2022. Delek Logistics Partners, LP is a
growth-oriented master limited partnership focused on owning and
operating midstream energy infrastructure assets.
The convenience store retail segment operates approximately 248
convenience stores in West Texas
and New Mexico.
2 |
Safe Harbor Provisions Regarding Forward-Looking
Statements
This 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 statements contain words such as
"possible," "believe," "should," "could," "would," "predict,"
"plan," "estimate," "intend," "may," "anticipate," "will," "if",
"potential," "expect" or similar expressions, as well as statements
in the future tense. These forward-looking statements include,
but are not limited to, statements regarding throughput at the
Company's refineries; crude oil prices, discounts and quality and
our ability to benefit therefrom; cost reductions; growth;
scheduled turnaround activity; investments into our business; the
performance and execution of our midstream growth initiatives,
including the Permian Gathering System, the Red River joint venture
and the Wink to Webster long-haul crude oil pipeline, and the
flexibility, benefits and the expected returns therefrom; RINs
waivers and tax credits and the value and benefit therefrom; cash
and liquidity; emissions reductions; opportunities and anticipated
performance and financial position.
Investors are cautioned that the following important factors,
among others, may affect these forward-looking statements. These
factors include, but are not limited to: 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, uncertainties
regarding future decisions by OPEC regarding production and pricing
disputes between OPEC members and Russia; uncertainty relating to the impact of
the COVID-19 outbreak on the demand for crude oil, refined products
and transportation and storage services; Delek US' ability to
realize cost reductions; risks related to Delek US' exposure to
Permian Basin crude oil, such as supply, pricing, gathering,
production and transportation capacity; gains and losses from
derivative instruments; 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; the possibility of
litigation challenging renewable fuel standard waivers; changes in
the scope, costs, and/or timing of capital and maintenance
projects; the ability to grow the Permian Gathering System; the
ability of the Red River joint venture to complete the expansion
project to increase the Red River pipeline capacity; the ability of
the joint venture to construct the Wink to Webster long haul crude oil pipeline;
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 geographic areas in which we
operate; and other risks described in Delek US' filings with the
United States Securities and Exchange Commission (the "SEC"),
including risks disclosed in our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and other filings and reports with
the SEC.
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 to reflect events or circumstances that occur, or which
Delek US becomes aware of, after the date hereof, except as
required by applicable law or regulation.
3 |
Non-GAAP Disclosures:
Our management uses certain "non-GAAP" operational measures to
evaluate our operating segment performance and non-GAAP financial
measures to evaluate past performance and prospects for the future
to supplement our GAAP financial information presented in
accordance with U.S. GAAP. These financial and operational non-GAAP
measures are important factors in assessing our operating results
and profitability and include:
- Adjusting items - certain identified infrequently occurring
items, non-cash items, and items that are not attributable to or
indicative of our on-going operations or that may obscure our
underlying results and trends;
- Adjusted net income (loss) - calculated as net income
attributable to Delek US adjusted for relevant Adjusting items
recorded during the period;
- Adjusted net income (loss) per share - calculated as Adjusted
net income (loss) divided by weighted average shares outstanding,
assuming dilution, as adjusted for any anti-dilutive instruments
that may not be permitted for consideration in GAAP earnings per
share calculations but that nonetheless favorably impact
dilution;
- Earnings before interest, taxes, depreciation and amortization
("EBITDA") - calculated as net income attributable to Delek
adjusted to add back interest expense, income tax expense,
depreciation and amortization;
- Adjusted EBITDA - calculated as EBITDA adjusted for the
relevant identified Adjusting items in Adjusted net income (loss)
that do not relate to interest expense, income tax expense,
depreciation or amortization, and adjusted to include income (loss)
attributable to non-controlling interests;
- Adjusted segment contribution margin - calculated as Segment
contribution margin adjusted for the identified Adjusting Items in
Adjusted net income (loss) that impact Segment contribution
margin;
- Refining margin - calculated as the difference between total
refining revenues and total cost of materials and other;
- Adjusted refining margin - calculated as refining margin
adjusted for the relevant identified Adjusting items in Adjusted
net income (loss) that impact refining margin and that, where
applicable, can be identified and/or are measured and recognized at
the refinery level;
- Refining margin per sales barrel - calculated as refining
margin divided by our average refining sales in barrels per day
(excluding purchased barrels) multiplied by 1,000 and multiplied by
the number of days in the period;
- Adjusted refining margin per sales barrel - calculated as
adjusted refining margin divided by our average refining sales in
barrels per day (excluding purchased barrels) multiplied by 1,000
and multiplied by the number of days in the period; and
- Net debt - calculated as long-term debt including both current
and non-current portions (the most comparable GAAP measure) less
cash and cash equivalents as of a specific balance sheet date.
We believe these non-GAAP operational and financial measures are
useful to investors, lenders, ratings agencies and analysts to
assess our ongoing performance because, when reconciled to their
most comparable GAAP financial measure, they provide improved
relevant comparability between periods, to peers or to market
metrics through the inclusion of retroactive regulatory or other
adjustments as if they had occurred in the prior periods they
relate to, or through the exclusion of certain items that we
believe are not indicative of our core operating performance and
that may obscure our underlying results and trends. "Net debt,"
also a non-GAAP financial measure, is an important measure to
monitor leverage and evaluate the balance sheet.
Non-GAAP measures have important limitations as analytical
tools, because they exclude some, but not all, items that affect
net earnings and operating income. These measures should not be
considered substitutes for their most directly comparable U.S. GAAP
financial measures. Additionally, because Adjusted net income
or loss, Adjusted net income or loss per share, EBITDA and adjusted
EBITDA, and Adjusted Segment Contribution Margin or any of our
other identified non-GAAP measures 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.
4 |
Delek US Holdings,
Inc.
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(In millions,
except share and per share data)
|
|
|
March 31,
2022
|
|
December 31,
2021
As
Adjusted(1)
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
854.1
|
|
$
856.5
|
Accounts receivable, net
|
|
1,405.0
|
|
776.6
|
Inventories, net of inventory valuation reserves
|
|
1,624.2
|
|
1,260.7
|
Other current assets
|
|
309.1
|
|
126.0
|
Total current assets
|
|
4,192.4
|
|
3,019.8
|
Property, plant and
equipment:
|
|
|
|
|
Property, plant and equipment
|
|
3,675.0
|
|
3,645.4
|
Less: accumulated depreciation
|
|
(1,401.0)
|
|
(1,338.1)
|
Property, plant and equipment,
net
|
|
2,274.0
|
|
2,307.3
|
Operating lease
right-of-use assets
|
|
196.0
|
|
208.5
|
Goodwill
|
|
729.4
|
|
729.7
|
Other intangibles,
net
|
|
103.7
|
|
102.7
|
Equity method
investments
|
|
347.8
|
|
344.1
|
Other non-current
assets
|
|
103.4
|
|
100.5
|
Total assets
|
|
$
7,946.7
|
|
$
6,812.6
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
|
$
2,548.1
|
|
$
1,695.3
|
Current portion of long-term debt
|
|
82.1
|
|
92.2
|
Obligation under Supply and Offtake Agreements
|
|
589.3
|
|
487.5
|
Current portion of operating lease liabilities
|
|
52.2
|
|
53.9
|
Accrued expenses and other current liabilities
|
|
1,032.3
|
|
797.8
|
Total current
liabilities
|
|
4,304.0
|
|
3,126.7
|
Non-current
liabilities:
|
|
|
|
|
Long-term debt, net of current portion
|
|
2,130.7
|
|
2,125.8
|
Obligation under Supply and Offtake Agreements
|
|
—
|
|
—
|
Environmental liabilities, net of current portion
|
|
109.2
|
|
109.5
|
Asset retirement obligations
|
|
38.5
|
|
38.3
|
Deferred tax liabilities
|
|
218.7
|
|
214.5
|
Operating lease liabilities, net of current
portion
|
|
141.0
|
|
152.0
|
Other non-current liabilities
|
|
29.9
|
|
31.8
|
Total non-current
liabilities
|
|
2,668.0
|
|
2,671.9
|
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,
88,320,612 shares and
91,772,080 shares issued at March 31, 2022 and
December 31, 2021, respectively
|
|
0.9
|
|
0.9
|
Additional paid-in capital
|
|
1,156.0
|
|
1,206.5
|
Accumulated other comprehensive loss
|
|
(3.9)
|
|
(3.8)
|
Treasury stock, 17,575,527 shares, at cost, as of March 31,
2022 and December 31, 2021
|
|
(694.1)
|
|
(694.1)
|
Retained earnings
|
|
391.3
|
|
384.7
|
Non-controlling interests in subsidiaries
|
|
124.5
|
|
119.8
|
Total stockholders'
equity
|
|
974.7
|
|
1,014.0
|
Total liabilities and
stockholders' equity
|
|
$
7,946.7
|
|
$
6,812.6
|
|
(1) Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
|
|
|
|
5 |
Delek US Holdings,
Inc.
|
Condensed
Consolidated Statements of Income (Unaudited)
|
(In millions,
except share and per share data)
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
As Adjusted(1)
(2)
|
Net revenues
|
|
$
4,459.1
|
|
$
2,392.2
|
Cost of
sales:
|
|
|
|
|
Cost of materials and other
|
|
4,152.5
|
|
2,172.8
|
Operating expenses (excluding depreciation and amortization
presented below)
|
|
139.5
|
|
129.9
|
Depreciation and amortization
|
|
62.7
|
|
62.3
|
Total cost of sales
|
|
4,354.7
|
|
2,365.0
|
Operating expenses
related to retail and wholesale business (excluding depreciation
and amortization
presented below)
|
|
27.4
|
|
25.4
|
General and
administrative expenses
|
|
53.1
|
|
41.1
|
Depreciation and
amortization
|
|
5.6
|
|
6.2
|
Impairment of
goodwill
|
|
—
|
|
—
|
Other operating
(income) expense, net
|
|
(28.4)
|
|
1.9
|
Total operating costs and
expenses
|
|
4,412.4
|
|
2,439.6
|
Operating income (loss)
|
|
46.7
|
|
(47.4)
|
Interest expense,
net
|
|
38.4
|
|
29.4
|
Income from equity
method investments
|
|
(10.9)
|
|
(4.8)
|
Other expense (income),
net
|
|
1.3
|
|
(1.0)
|
Total non-operating expense,
net
|
|
28.8
|
|
23.6
|
Income (loss) before income tax expense (benefit)
|
|
17.9
|
|
(71.0)
|
Income tax expense
(benefit)
|
|
3.1
|
|
(8.3)
|
Net income
(loss)
|
|
14.8
|
|
(62.7)
|
Net income attributed
to non-controlling interests
|
|
8.2
|
|
7.3
|
Net income (loss)
attributable to Delek
|
|
$
6.6
|
|
$
(70.0)
|
Basic income (loss) per
share
|
|
$
0.09
|
|
$
(0.95)
|
Diluted income (loss)
per share
|
|
$
0.09
|
|
$
(0.95)
|
Weighted average common
shares outstanding:
|
|
|
|
|
Basic
|
|
73,236,274
|
|
73,803,772
|
Diluted
|
|
73,649,266
|
|
73,803,772
|
|
(1) Adjusted to reflect the retrospective change in
accounting policy from LIFO to FIFO for certain
inventories.
|
(2) In the current period, we reassessed the
classification of certain expenses and made certain
reclassification adjustments to better represent the nature of
those
expenses. Accordingly, we have made
reclassifications to the prior period in order to conform to this
revised current period classification, which resulted in a
decrease
in the prior period general and administrative
expenses and an increase in the prior period operating
expenses of approximately $6 million.
|
|
|
Condensed Cash Flow
Data (Unaudited)
|
(In
millions)
|
Three Months Ended
March 31,
|
|
2022
|
|
2021
As
Adjusted(1)
|
Cash flows from
operating activities:
|
|
|
|
Net cash provided by (used in)
operating activities
|
$
26.8
|
|
$
(34.3)
|
Cash flows from
investing activities:
|
|
|
|
Net cash used in investing
activities
|
(30.2)
|
|
(46.1)
|
Cash flows from
financing activities:
|
|
|
|
Net cash (used in) provided by
financing activities
|
1.0
|
|
86.4
|
Net (decrease) increase
in cash and cash equivalents
|
(2.4)
|
|
6.0
|
Cash and cash
equivalents at the beginning of the period
|
856.5
|
|
787.5
|
Cash and cash
equivalents at the end of the period
|
$
854.1
|
|
$
793.5
|
|
(1) Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
|
6 |
Significant Transactions During the Quarter Impacting
Results:
Change in Accounting Principle
As of January 1, 2022, we changed
our method for accounting for inventory held at the Tyler Refinery
to the first-in, first-out ("FIFO") cost method from the last-in,
first-out ("LIFO") cost method. This change in accounting method
will conform the Company's refining inventory to a single method of
accounting, and will eliminate the inherent volatility in the LIFO
valuation of inventory attributable to increments and decrements in
historical LIFO layers, which can impact comparability between
periods as well as to market conditions and crack spreads. For
these reasons, we expect that the newly adopted accounting
principle will improve financial reporting by providing better
consistency, better transparency, and recognition that better
reflects the physical flow of inventory and more accurately
reflects the current value of inventory. The effects of this change
have been retrospectively applied to all periods presented with a
cumulative effect adjustment reflected in the January 1, 2021 beginning retained earnings.
Stock Purchase and Cooperation Agreement
On March 7, 2022, Delek entered
into a stock purchase and cooperation agreement (the "Agreement")
with IEP Energy Holding LLC, a Delaware limited liability company, American
Entertainment Properties Corp., a Delaware corporation, Icahn Enterprises
Holdings L.P., a Delaware limited
partnership, Icahn Enterprises G.P. Inc., a Delaware corporation, Beckton Corp., a
Delaware corporation, and
Carl C. Icahn, (collectively, the
"Icahn Group") pursuant to which the Company purchased an aggregate
of 3,497,268 shares of common stock of the Company at a price per
share of $18.30, the closing price of
a share of Company common stock on the New York Stock Exchange on
March 4, 2022, the last trading day
prior to the execution of the Agreement, which equals an aggregate
purchase price of $64.0 million. The
Company funded the transaction from cash on hand. The 3,497,268
shares were cancelled at the time of the transaction.
In addition to the foregoing, under the terms of the Agreement,
the Icahn Group withdrew its nomination notice for the nomination
of nominees for election to the Company's board of directors for
the Company's 2022 annual meeting of stockholders. Under the terms
of the Agreement, the Icahn Group agreed to standstill
restrictions, which requires, among other things, that until the
completion of the Company's 2023 annual meeting of stockholders,
the Icahn Group will refrain from acquiring additional shares of
the Company common stock.
Membership Interest Purchase Agreement
On April 8, 2022, DKL Delaware
Gathering, LLC (the "Purchaser"), a subsidiary of Delek Logistics,
entered into a Membership Interest Purchase Agreement with 3 Bear
Energy – New Mexico LLC (the "Seller") to purchase 100% of the
limited liability company interests in 3 Bear Delaware Holding –
NM, LLC (the "Purchased Interests"), related to Seller's crude oil
and gas gathering, processing and transportation businesses, as
well as water disposal and recycling operations, in the
Delaware Basin in New Mexico (the "Purchase Agreement"). The
purchase price for the Purchased Interests is $624.7 million, subject to customary adjustments
under the Purchase Agreement for net working capital and
indebtedness. The Purchaser paid a deposit under the Purchase
Agreement of approximately $31.2
million. The transactions contemplated by the Purchase
Agreement are expected to close around mid-year 2022.
Insurance Recoveries
During the first quarter 2022, we received insurance recoveries
related to the fire and freeze events that occurred during the
first quarter 2021, and which unfavorably impacted our results
during the first two quarters of 2021. The majority of our property
and loss claims incurred during that time period were recovered
through insurance claims recognized during the third and fourth
quarters of 2021, as were $9.9
million ($7.7 million
after-tax) of our business insurance claims. For the three months
ended March 31, 2022, we have
recognized an additional $10.0
million ($7.8 million
after-tax) of business interruption insurance recoveries, which
were recorded in other operating income on the consolidated
statement of income, and we have additional business interruption
claims that are outstanding and still pending which are expected to
be recognized in future quarters. Because business interruption
losses are economic in nature rather than recognized, the related
insurance recoveries are included as an Adjusting item in Adjusted
net income and Adjusted EBITDA.
7 |
Delek US Holdings,
Inc.
|
|
|
|
|
|
|
|
|
|
|
Segment Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2022
|
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate, Other and
Eliminations
|
|
Consolidated
|
Net revenues (excluding
intercompany fees and sales)
|
|
$
3,267.9
|
|
$
82.8
|
|
$
209.5
|
|
$
898.9
|
|
$
4,459.1
|
Inter-segment fees and revenues
|
|
225.8
|
|
123.8
|
|
—
|
|
(349.6)
|
|
—
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of materials and
other
|
|
3,276.9
|
|
126.2
|
|
173.0
|
|
576.4
|
|
4,152.5
|
Operating expenses (excluding
depreciation and amortization
presented
below)
|
|
119.9
|
|
18.1
|
|
22.7
|
|
6.2
|
|
166.9
|
Segment contribution margin
|
|
96.9
|
|
62.3
|
|
13.8
|
|
(33.3)
|
|
139.7
|
Income from equity
method investments
|
|
0.2
|
|
7.0
|
|
—
|
|
3.7
|
|
|
Segment contribution
margin and income (loss) from equity method
investments
|
|
$
97.1
|
|
$
69.3
|
|
$
13.8
|
|
$
(29.6)
|
|
|
Depreciation and amortization
|
|
$
52.8
|
|
$
10.4
|
|
$
3.5
|
|
$
1.6
|
|
68.3
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
53.1
|
Other operating income, net
|
|
|
|
|
|
|
|
|
|
(28.4)
|
Operating
income
|
|
|
|
|
|
|
|
|
|
$
46.7
|
Capital spending
(excluding business combinations)
|
|
$
14.3
|
|
$
9.1
|
|
$
3.0
|
|
$
6.5
|
|
$
32.9
|
|
|
|
Three Months Ended
March 31, 2021
As Adjusted
(1)
|
|
|
Refining
(1)
|
|
Logistics
|
|
Retail
|
|
Corporate, Other and
Eliminations
|
|
Consolidated
(1)
|
Net revenues (excluding
inter-segment fees and revenues)
|
|
$
1,584.5
|
|
$
56.7
|
|
$
174.8
|
|
$
576.2
|
|
$
2,392.2
|
Inter-segment fees and revenues
|
|
155.6
|
|
96.2
|
|
—
|
|
(251.8)
|
|
—
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of materials and
other
|
|
1,615.0
|
|
81.1
|
|
136.5
|
|
340.2
|
|
2,172.8
|
Operating expenses (excluding
depreciation and
amortization
presented below) (2)
|
|
114.7
|
|
14.9
|
|
21.6
|
|
4.1
|
|
155.3
|
Segment contribution margin (2)
|
|
10.4
|
|
56.9
|
|
16.7
|
|
(19.9)
|
|
64.1
|
Income from equity
method investments
|
|
0.2
|
|
4.0
|
|
—
|
|
0.6
|
|
|
Segment contribution
margin and income (loss) from equity
method investments
|
|
$
10.6
|
|
$
60.9
|
|
$
16.7
|
|
$
(19.3)
|
|
|
Depreciation and amortization
|
|
$
52.1
|
|
$
10.7
|
|
$
3.2
|
|
$
2.5
|
|
68.5
|
General and administrative expenses (2)
|
|
|
|
|
|
|
|
|
|
41.1
|
Other operating loss, net
|
|
|
|
|
|
|
|
|
|
1.9
|
Operating
loss
|
|
|
|
|
|
|
|
|
|
$
(47.4)
|
Capital spending
(excluding business combinations)
|
|
$
57.8
|
|
$
7.8
|
|
$
0.8
|
|
$
0.6
|
|
$
67.0
|
|
(1) Adjusted to reflect the retrospective change in
accounting policy from LIFO to FIFO for certain
inventories
|
(2) In the
current period, we reassessed the classification of certain
expenses and made certain reclassification adjustments to better
represent the nature of those
expenses. Accordingly, we have made
reclassifications to the prior period in order to conform to this
revised current period classification, which resulted in a
decrease
in the prior period general and administrative
expenses and an increase in the prior period operating expenses of
approximately $6 million.
|
|
8 |
Reconciliation of
Net Income (Loss) attributable to Delek to Adjusted Net Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
$ in millions
(unaudited)
|
|
2022
|
|
2021 As
Adjusted(1)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Reported net income
(loss) attributable to Delek
|
|
$
6.6
|
|
$
(70.0)
|
|
|
|
|
Adjusting
items (2)
|
|
|
|
|
|
|
|
|
Inventory LCM valuation
loss (benefit)
|
|
(6.5)
|
|
0.7
|
|
|
|
|
Business interruption
insurance recoveries (3)
|
|
(7.8)
|
|
—
|
|
|
|
|
El Dorado refinery fire
losses, net of related recoveries
|
|
—
|
|
3.7
|
|
|
|
|
Unrealized
hedging (gain) loss where the hedged item is not yet recognized in
the financial statements
|
|
50.6
|
|
(9.2)
|
|
|
|
|
Non-cash change in fair
value of S&O Obligation associated with hedging
activities
|
|
—
|
|
(5.4)
|
|
|
|
|
Total adjusting
items (2)
|
|
36.3
|
|
(10.2)
|
|
|
|
|
Adjusted net
income (loss)
|
|
$
42.9
|
|
$
(80.2)
|
|
|
|
|
(1) Adjusted to reflect the retrospective change in
accounting policy from LIFO to FIFO for certain
inventories.
|
(2) All adjustments have been tax effected using the
estimated marginal income tax rate, as applicable.
|
(3) See further discussion in the "Significant
Transactions During the Quarter Impacting Results" section on page
7.
|
|
|
Reconciliation of
U.S. GAAP Income (Loss) per share to Adjusted Net Income (Loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
$ in millions
(unaudited)
|
|
2022
|
|
2021 As
Adjusted(1)
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Reported diluted
income (loss) per share
|
|
$
0.09
|
|
$
(0.95)
|
|
|
|
|
Adjusting items,
after tax (per share) (2) (3)
|
|
|
|
|
|
|
|
|
Net
inventory LCM valuation loss (benefit)
|
|
(0.09)
|
|
0.01
|
|
|
|
|
Business interruption insurance recoveries
(4)
|
|
(0.11)
|
|
—
|
|
|
|
|
El
Dorado refinery fire net losses (recoveries)
|
|
—
|
|
0.05
|
|
|
|
|
Total unrealized hedging (gain) loss where the hedged
item is not yet recognized in the financial
statements
|
|
0.69
|
|
(0.12)
|
|
|
|
|
Non-cash change in fair value of S&O Obligation
associated with hedging activities
|
|
—
|
|
(0.07)
|
|
|
|
|
Total adjusting
items (2)
|
|
0.49
|
|
(0.13)
|
|
|
|
|
Adjusted net
income (loss) per share
|
|
$
0.58
|
|
$
(1.08)
|
|
|
|
|
|
|
|
|
|
(1) Adjusted
to reflect the retrospective change in accounting policy from LIFO
to FIFO for certain inventories.
|
|
|
|
|
(2) The
adjustments have been tax effected using the estimated marginal tax
rate, as applicable.
|
|
|
|
|
(3) For
periods of Adjusted net loss, Adjustments (Adjusting Items) and
Adjusted net loss per share are presented using basic weighted
average shares outstanding.
|
|
|
|
|
(4) See
further discussion in the "Significant Transactions During the
Quarter Impacting Results" section on page 7.
|
|
|
|
|
|
|
|
|
|
9 |
Reconciliation of
Net Income (Loss) attributable to Delek to Adjusted
EBITDA
|
|
|
Three Months Ended
March 31,
|
|
$ in millions
(unaudited)
|
|
2022
|
|
2021 As
Adjusted(1)
|
|
Reported net (loss)
income attributable to Delek
|
|
$
6.6
|
|
$
(70.0)
|
|
Interest expense, net
|
|
38.4
|
|
29.4
|
|
Income tax expense (benefit)
|
|
3.1
|
|
(8.3)
|
|
Depreciation and amortization
|
|
68.3
|
|
68.5
|
|
EBITDA attributable to
Delek
|
|
116.4
|
|
19.6
|
|
Adjusting
items
|
|
|
|
|
|
Net inventory LCM
valuation loss (benefit)
|
|
(8.5)
|
|
0.9
|
|
Business Interruption
insurance recoveries (2)
|
|
(10.0)
|
|
—
|
|
El Dorado refinery fire
losses, net of related insurance recoveries
|
|
—
|
|
3.8
|
|
Unrealized hedging
(gain) loss where the hedged item is not yet recognized in the
financial statements
|
|
66.7
|
|
(12.1)
|
|
Non-cash change in fair
value of S&O Obligation associated with hedging
activities
|
|
—
|
|
(6.9)
|
|
Net income attributable
to non-controlling interest
|
|
8.2
|
|
7.3
|
|
Total Adjusting
items
|
|
56.4
|
|
(7.0)
|
|
Adjusted
EBITDA
|
|
$
172.8
|
|
$
12.6
|
|
|
(1)
Adjusted to reflect the retrospective change in accounting policy
from LIFO to FIFO for certain inventories.
|
(2) See further discussion in
the "Significant Transactions During the Quarter Impacting Results"
section on page 7.
|
|
Reconciliation of
U.S. GAAP Segment Contribution Margin to Adjusted Segment
Contribution Margin:
|
|
|
Three Months Ended
March 31, 2022
|
$ in millions
(unaudited)
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate, Other
and Eliminations
|
|
Consolidated
|
Reported segment
contribution margin
|
|
$
96.9
|
|
$
62.3
|
|
$
13.8
|
|
$
(33.3)
|
|
$
139.7
|
Adjusting
items
|
|
|
|
|
|
|
|
|
|
|
Net inventory LCM
valuation (benefit) loss
|
|
(7.2)
|
|
—
|
|
—
|
|
(1.3)
|
|
(8.5)
|
Unrealized inventory/commodity hedging (gain) loss where
the
hedged item is not yet recognized in the
financial statements
|
|
61.0
|
|
(0.2)
|
|
—
|
|
3.7
|
|
64.5
|
Unrealized RINs and other hedging (gain) loss where the
hedged item is not yet recognized in the
financial statements
|
|
2.2
|
|
—
|
|
—
|
|
—
|
|
2.2
|
Total unrealized
hedging (gain) loss where the hedged item is not
yet recognized in the financial statements
|
|
63.2
|
|
(0.2)
|
|
—
|
|
3.7
|
|
66.7
|
Total Adjusting items
|
|
56.0
|
|
(0.2)
|
|
—
|
|
2.4
|
|
58.2
|
Adjusted segment
contribution margin
|
|
$
152.9
|
|
$
62.1
|
|
$
13.8
|
|
$
(30.9)
|
|
$
197.9
|
|
|
|
Three Months Ended
March 31, 2021, As Adjusted (1)
|
$ in millions
(unaudited)
|
|
Refining
(1)
|
|
Logistics
|
|
Retail
|
|
Corporate, Other
and Eliminations
|
|
Consolidated(1)
|
Reported segment
contribution margin (2)
|
|
$
10.4
|
|
$
56.9
|
|
$
16.7
|
|
$
(19.9)
|
|
64.1
|
Adjusting
items
|
|
|
|
|
|
|
|
|
|
|
Net inventory LCM
valuation (benefit) loss
|
|
0.7
|
|
—
|
|
—
|
|
0.2
|
|
0.9
|
Unrealized inventory/commodity hedging (gain) loss where the
hedged
item is not yet recognized in the financial
statements
|
|
(10.5)
|
|
(0.2)
|
|
—
|
|
—
|
|
(10.7)
|
Unrealized RINs and other hedging (gain) loss where the
hedged item
is not yet recognized in the financial
statements
|
|
(1.4)
|
|
—
|
|
—
|
|
—
|
|
(1.4)
|
Total unrealized
hedging gain where the hedged item is not yet
recognized in the financial statements
|
|
(11.9)
|
|
(0.2)
|
|
—
|
|
—
|
|
(12.1)
|
El Dorado refinery fire
- workers compensation loss and related
litigation accrual
|
|
3.8
|
|
—
|
|
—
|
|
—
|
|
3.8
|
Non-cash change in fair
value of S&O Obligation associated with
hedging activities
|
|
(6.9)
|
|
—
|
|
—
|
|
—
|
|
(6.9)
|
Total Adjusting items
|
|
(14.3)
|
|
(0.2)
|
|
—
|
|
0.2
|
|
(14.3)
|
Adjusted segment
contribution margin
|
|
$
(3.9)
|
|
$
56.7
|
|
$
16.7
|
|
$
(19.7)
|
|
$
49.8
|
|
(1) Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
(2)
Reflects the prior period conforming reclassification
adjustment between operating expenses and general and
administrative expenses.
|
|
10 |
Refining Segment Selected Financial
Information
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
As Adjusted(1)
|
Tyler, TX Refinery
|
|
(Unaudited)
|
Days in
period
|
|
90
|
|
90
|
Total sales volume -
refined product (average barrels per day)(1)
|
|
73,569
|
|
73,224
|
Products manufactured
(average barrels per day):
|
|
|
|
|
Gasoline
|
|
37,228
|
|
39,560
|
Diesel/Jet
|
|
29,010
|
|
27,741
|
Petrochemicals, LPG, NGLs
|
|
2,251
|
|
1,724
|
Other
|
|
1,670
|
|
1,471
|
Total production
|
|
70,159
|
|
70,496
|
Throughput (average
barrels per day):
|
|
|
|
|
Crude oil
|
|
66,436
|
|
64,753
|
Other feedstocks
|
|
3,720
|
|
5,978
|
Total throughput
|
|
70,156
|
|
70,731
|
Total refining revenue
( $ in millions)
|
|
$
769.9
|
|
$
490.0
|
Cost of materials and
other ($ in millions) (3)
|
|
689.6
|
|
408.5
|
Total refining margin ($ in
millions) (2) (3)
|
|
$
80.3
|
|
$
81.5
|
Per barrel of refined
product sales:
|
|
|
|
|
Tyler refining margin (2) (3)
|
|
$
12.13
|
|
$
12.37
|
Tyler adjusted refining margin (2) (3)
|
|
$
12.06
|
|
$
12.36
|
Operating expenses (4)
|
|
$
4.30
|
|
$
3.59
|
Crude Slate: (% based
on amount received in period)
|
|
|
|
|
WTI
crude oil
|
|
86.8%
|
|
92.6%
|
East Texas crude oil
|
|
13.2%
|
|
6.8%
|
Other
|
|
—%
|
|
0.6%
|
El Dorado, AR Refinery
|
|
|
|
|
Days in
period
|
|
90
|
|
90
|
Total sales volume -
refined product (average barrels per day)(1)
|
|
81,334
|
|
49,711
|
Products manufactured
(average barrels per day):
|
|
|
|
|
Gasoline
|
|
36,875
|
|
17,553
|
Diesel
|
|
29,178
|
|
13,973
|
Petrochemicals, LPG, NGLs
|
|
1,019
|
|
751
|
Asphalt
|
|
7,123
|
|
3,670
|
Other
|
|
785
|
|
438
|
Total production
|
|
74,980
|
|
36,385
|
Throughput (average
barrels per day):
|
|
|
|
|
Crude oil
|
|
72,091
|
|
34,766
|
Other feedstocks
|
|
3,947
|
|
1,666
|
Total throughput
|
|
76,038
|
|
36,432
|
Total refining revenue
( $ in millions)
|
|
$
812.2
|
|
$
436.8
|
Cost of materials and
other ($ in millions)
|
|
772.6
|
|
450.9
|
Total refining margin
($ in millions) (2)
|
|
$
39.6
|
|
$
(14.1)
|
Per barrel of refined
product sales:
|
|
|
|
|
El
Dorado refining margin (2)
|
|
$
5.41
|
|
$
(3.16)
|
El
Dorado adjusted refining margin (2)
|
|
$
5.31
|
|
$
(3.12)
|
Operating expenses (4)
|
|
$
3.78
|
|
$
6.42
|
Crude Slate: (% based
on amount received in period)
|
|
|
|
|
WTI
crude oil
|
|
31.4%
|
|
44.0%
|
Local Arkansas crude oil
|
|
17.4%
|
|
32.2%
|
Other
|
|
51.2%
|
|
23.8%
|
|
11 |
|
|
|
|
|
|
Refining Segment Selected Financial Information
(continued)
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
As Adjusted(1)
|
Big Spring, TX Refinery
|
|
(Unaudited)
|
Days in period - based
on date acquired
|
|
90
|
|
90
|
Total sales volume -
refined product (average barrels per day) (1)
|
|
69,129
|
|
68,699
|
Products manufactured
(average barrels per day):
|
|
|
|
|
Gasoline
|
|
32,894
|
|
32,812
|
Diesel/Jet
|
|
22,688
|
|
20,935
|
Petrochemicals, LPG, NGLs
|
|
3,333
|
|
3,148
|
Asphalt
|
|
1,881
|
|
1,793
|
Other
|
|
1,280
|
|
1,404
|
Total production
|
|
62,076
|
|
60,092
|
Throughput (average
barrels per day):
|
|
|
|
|
Crude oil
|
|
60,633
|
|
59,758
|
Other feedstocks
|
|
1,739
|
|
929
|
Total throughput
|
|
62,372
|
|
60,687
|
Total refining revenue
( $ in millions)
|
|
$
825.4
|
|
$
502.0
|
Cost of materials and
other ($ in millions)
|
|
727.6
|
|
461.2
|
Total refining margin ($ in
millions) (2)
|
|
$
97.8
|
|
$
40.8
|
Per barrel of refined
product sales:
|
|
|
|
|
Big
Spring refining margin (2)
|
|
$
15.72
|
|
$
6.60
|
Big
Spring adjusted refining margin (2)
|
|
$
15.50
|
|
$
6.55
|
Operating expenses (4)
|
|
$
5.36
|
|
$
6.50
|
Crude Slate: (% based
on amount received in period)
|
|
|
|
|
WTI
crude oil
|
|
66.7%
|
|
62.8%
|
WTS
crude oil
|
|
33.3%
|
|
37.2%
|
Krotz Springs, LA Refinery
|
|
|
|
|
Days in period - based
on date acquired
|
|
90
|
|
90
|
Total sales volume -
refined product (average barrels per day) (1)
|
|
79,832
|
|
24,964
|
Products manufactured
(average barrels per day):
|
|
|
|
|
Gasoline
|
|
32,667
|
|
6,118
|
Diesel/Jet
|
|
30,994
|
|
4,003
|
Heavy oils
|
|
1,021
|
|
182
|
Petrochemicals, LPG, NGLs
|
|
6,927
|
|
1,265
|
Other
|
|
7,234
|
|
11,216
|
Total production
|
|
78,843
|
|
22,784
|
Throughput (average
barrels per day):
|
|
|
|
|
Crude oil
|
|
72,997
|
|
13,554
|
Other feedstocks
|
|
5,464
|
|
11,381
|
Total throughput
|
|
78,461
|
|
24,935
|
Total refining revenue
( $ in millions)
|
|
$
1,090.1
|
|
$
319.7
|
Cost of materials and
other ($ in millions)
|
|
1,047.9
|
|
305.6
|
Total refining margin ($ in
millions) (2)
|
|
$
42.2
|
|
$
14.1
|
Per barrel of refined
product sales:
|
|
|
|
|
Krotz Springs refining margin (2)
|
|
$
5.88
|
|
$
6.25
|
Krotz Springs adjusted refining margin
(2)
|
|
$
5.67
|
|
$
6.67
|
Operating expenses (4)
|
|
$
4.09
|
|
$
9.20
|
Crude Slate: (% based
on amount received in period)
|
|
|
|
|
WTI
Crude
|
|
64.3%
|
|
81.2%
|
Gulf Coast Sweet Crude
|
|
35.7%
|
|
18.8%
|
|
(1) Includes
inter-refinery sales and sales to other segments which are
eliminated in consolidation.
|
(2) See
the calculations of Adjusted refining margin on the following page
as well as Other Items Impacting Refining Margin discussed on page
13.
|
(3) Adjusted
to reflect the retrospective change in accounting policy from LIFO
to FIFO for certain inventories.
|
(4) Reflects
the prior period conforming reclassification adjustment between
operating expenses and general and administrative
expenses.
|
|
|
12 |
|
|
Reconciliation of Refining margin per barrel to
Adjusted Refining margin per barrel
(1)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
As Adjusted (6)
|
|
|
(Unaudited)
|
Tyler (2)
|
|
|
|
|
Reported refining
margin, $ per barrel
|
|
$
12.13
|
|
$
12.37
|
Adjusting items:
|
|
|
|
|
Net inventory LCM
valuation loss (benefit)
|
|
(0.07)
|
|
(0.01)
|
Adjusted refining
margin $/bbl
|
|
$
12.06
|
|
$
12.36
|
El Dorado (3)
|
|
|
|
|
Reported refining
margin, $ per barrel
|
|
$
5.41
|
|
$
(3.16)
|
Adjusting items:
|
|
|
|
|
Net inventory LCM
valuation loss (benefit)
|
|
(0.10)
|
|
0.04
|
Adjusted refining
margin $/bbl
|
|
$
5.31
|
|
$
(3.12)
|
Big Spring (4)
|
|
|
|
|
Reported refining
margin, $ per barrel
|
|
$
15.72
|
|
$
6.60
|
Adjusting items:
|
|
|
|
|
Net inventory LCM
valuation loss (benefit)
|
|
(0.22)
|
|
(0.05)
|
Adjusted refining
margin $/bbl
|
|
$
15.50
|
|
$
6.55
|
Krotz Springs (5)
|
|
|
|
|
Reported refining
margin, $ per barrel
|
|
$
5.88
|
|
$
6.25
|
Adjusting items:
|
|
|
|
|
Net inventory LCM
valuation loss (benefit)
|
|
(0.21)
|
|
0.42
|
Adjusted refining
margin $/bbl
|
|
$
5.67
|
|
$
6.67
|
(1)
|
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. Additionally, management evaluates other impacts
to refining margin by refinery which may not represent adjustments,
but which provide information useful for evaluating the results
compared to current crack spreads and peers. See the 'Other Items
Impacting Refining Margin' for further discussion.
|
(2)
|
Tyler adjusted refining
margins exclude the following items:
|
|
Net inventory LCM
valuation loss/benefit - There was approximately $0.5 million
and $0.1 million of net valuation benefit in the first quarter 2022
and 2021, respectively.
|
|
Tyler's refining margin
per barrel and the adjusted refining margin per barrel have been
adjusted to reflect the retrospective change in accounting policy
from LIFO to FIFO for certain inventories.
|
(3)
|
El Dorado Adjusted
refining margins exclude the following items:
|
|
Net inventory LCM
valuation loss/benefit - There was approximately $0.7 million
of net valuation benefit and $0.2 million of net valuation loss in
the first quarter 2022 and 2021, respectively.
|
(4)
|
Big Spring Adjusted
refining margins exclude the following items:
|
|
Net inventory LCM
valuation loss/benefit - There was approximately $1.4 million
and $0.3 million of net valuation benefit in the first quarter 2022
and 2021, respectively.
|
(5)
|
Krotz Springs Adjusted
refining margins exclude the following items:
|
|
Net inventory LCM
valuation loss/benefit - There was approximately $1.5 million
of net valuation benefit and $0.9 million of net valuation loss in
the first quarter 2022 and 2021, respectively.
|
(6)
|
Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
|
13 |
Logistics Segment Selected
Information
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
Pipelines & Transportation: (average
bpd)
|
|
|
|
|
Lion Pipeline System:
|
|
|
|
|
Crude pipelines
(non-gathered)
|
|
72,872
|
|
44,118
|
Refined products
pipelines
|
|
59,522
|
|
26,349
|
SALA Gathering
System
|
|
16,156
|
|
11,880
|
East Texas Crude
Logistics System
|
|
16,056
|
|
26,075
|
Permian Gathering
Assets (3)
|
|
100,325
|
|
73,724
|
Plains Connection
System
|
|
162,007
|
|
108,361
|
Trucking
Assets
|
|
9,306
|
|
10,187
|
|
|
|
|
|
Wholesale Marketing &
Terminalling:
|
|
|
|
|
East Texas - Tyler
Refinery sales volumes (average bpd) (1)
|
|
70,578
|
|
71,963
|
West Texas wholesale
marketing throughputs (average bpd)
|
|
9,913
|
|
10,138
|
West Texas wholesale
marketing margin per barrel
|
|
$
3.04
|
|
$
3.42
|
Big Spring wholesale
marketing throughputs (average bpd)
|
|
75,549
|
|
72,927
|
Terminalling
throughputs (average bpd) (2)
|
|
137,622
|
|
144,539
|
|
(1) Excludes jet fuel and petroleum coke.
|
(2) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and
Mount Pleasant, Texas terminals, El Dorado and North Little Rock,
Arkansas terminals and
Memphis and Nashville, Tennessee
terminals.
|
(3)
Formerly known as the Big Spring
Gathering System. Excludes volumes that are being temporarily
transported via trucks while connectors are under
construction.
|
|
|
Retail Segment Selected
Information
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
|
|
|
(Unaudited)
|
Number of stores (end
of period)
|
|
248
|
|
253
|
Average number of
stores
|
|
248
|
|
253
|
Average number of fuel
stores
|
|
243
|
|
248
|
Retail fuel sales
(thousands of gallons)
|
|
39,505
|
|
39,765
|
Average retail gallons
sold per average number of fuel stores (in thousands)
|
|
163
|
|
161
|
Average retail sales
price per gallon sold
|
|
$
3.54
|
|
$
2.52
|
Retail fuel margin ($
per gallon) (1)
|
|
$
0.31
|
|
$
0.35
|
Merchandise sales (in
millions)
|
|
$
69.7
|
|
$
74.6
|
Merchandise sales per
average number of stores (in millions)
|
|
$
0.3
|
|
$
0.3
|
Merchandise margin
%
|
|
34.6%
|
|
32.7%
|
|
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
|
Same-Store Comparison
(2)
|
|
(Unaudited)
|
|
|
|
|
|
Change in same-store fuel gallons sold
|
|
0.8%
|
|
(17.0)%
|
Change in same-store merchandise sales
|
|
(5.2)%
|
|
4.2%
|
|
(1) Retail fuel margin represents gross margin on fuel
sales in the retail segment, and is calculated as retail fuel sales
revenue less retail fuel cost of sales. The retail fuel
margin per gallon calculation is derived by
dividing retail fuel margin by the total retail fuel gallons sold
for the period.
|
(2) Same-store comparisons include period-over-period
changes in specified metrics for stores that were in service at
both the beginning of the earliest period and the end
of the most recent period used in the
comparison.
|
|
|
|
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
Supplemental Information
|
|
|
|
|
Schedule of Inter-refinery Sales, Refinery Sales to
Other Segments, and Pricing Statistics Impacting
our Refining Segment Selected Financial
Information
|
|
|
|
|
$ in millions (unaudited)
|
|
|
|
|
|
|
|
|
|
Inter-refinery Sales
|
|
Three Months Ended March 31,
|
(in barrels per day)
|
|
2022
|
|
2021
|
Tyler refined product
sales to other Delek refineries
|
|
1,107
|
|
2,095
|
El Dorado refined
product sales to other Delek refineries
|
|
866
|
|
445
|
Big Spring refined
product sales to other Delek refineries
|
|
639
|
|
728
|
Krotz Springs refined
product sales to other Delek refineries
|
|
501
|
|
—
|
|
|
Refinery Sales to Other
Segments
|
|
Three Months Ended March 31,
|
(in barrels per day)
|
|
2022
|
|
2021
|
|
|
|
|
|
Tyler refined product
sales to other Delek segments
|
|
—
|
|
922
|
El Dorado refined
product sales to other Delek segments
|
|
7
|
|
7
|
Big Spring refined
product sales to other Delek segments
|
|
21,766
|
|
22,110
|
Krotz Springs refined
product sales to other Delek segments
|
|
—
|
|
2,007
|
|
|
Pricing Statistics
|
|
Three Months Ended March 31,
|
(average for the period
presented)
|
|
2022
|
|
2021
|
|
|
|
|
|
WTI — Cushing crude oil
(per barrel)
|
|
$
95.18
|
|
$
58.03
|
WTI — Midland crude oil
(per barrel)
|
|
$
95.01
|
|
$
58.90
|
WTS -- Midland crude
oil (per barrel)
|
|
$
94.90
|
|
$
58.77
|
LLS (per
barrel)
|
|
$
97.49
|
|
$
60.18
|
Brent crude oil (per
barrel)
|
|
$
97.92
|
|
$
61.17
|
|
|
|
|
|
U.S. Gulf Coast 5-3-2
crack spread (per barrel) (1)
|
|
$
23.68
|
|
$
13.57
|
U.S. Gulf Coast 3-2-1
crack spread (per barrel) (1)
|
|
$
24.65
|
|
$
14.33
|
U.S. Gulf Coast 2-1-1
crack spread (per barrel) (1)
|
|
$
17.14
|
|
$
7.65
|
|
|
|
|
|
U.S. Gulf Coast
Unleaded Gasoline (per gallon)
|
|
$
2.71
|
|
$
1.71
|
Gulf Coast Ultra low
sulfur diesel (per gallon)
|
|
$
3.02
|
|
$
1.71
|
U.S. Gulf Coast high
sulfur diesel (per gallon)
|
|
$
2.69
|
|
$
1.50
|
Natural gas (per
MMBTU)
|
|
$
4.59
|
|
$
2.72
|
|
(1) 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
(ultra low sulfur diesel). For our 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 a 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.
|
|
15 |
Other Reconciliation of Amounts Reported Under U.S.
GAAP
|
$ in millions (unaudited)
|
|
|
|
|
|
|
Three Months Ended March 31,
|
Reconciliation of Refining Segment Gross Margin
(Loss) to Refining Margin
|
|
2022
|
|
2021
As Adjusted(1)
|
Net revenues
|
|
$
3,493.7
|
|
$
1,740.1
|
Cost of
sales
|
|
3,449.6
|
|
1,781.8
|
Gross margin
|
|
44.1
|
|
(41.7)
|
Add back (items
included in cost of sales):
|
|
|
|
|
Operating expenses
(excluding depreciation and amortization) (2)
|
|
119.9
|
|
114.7
|
Depreciation and
amortization
|
|
52.8
|
|
52.1
|
Refining margin
|
|
$
216.8
|
|
$
125.1
|
|
(1) Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
(2) Reflects the prior period
conforming reclassification adjustment between operating
expenses and general and administrative expenses.
|
|
|
Calculation of Net Debt
|
|
March 31, 2022
|
|
December 31, 2021
|
Long-term debt -
current portion
|
|
$
82.1
|
|
$
92.2
|
Long-term debt -
non-current portion
|
|
2,130.7
|
|
2,125.8
|
Total long-term debt
|
|
2,212.8
|
|
2,218.0
|
Less: Cash and cash
equivalents
|
|
854.1
|
|
856.5
|
Net
debt - consolidated
|
|
1,358.7
|
|
1,361.5
|
Less: DKL net
debt
|
|
902.8
|
|
894.7
|
Net
debt, excluding DKL
|
|
$
455.9
|
|
$
466.8
|
|
|
Other Items
Impacting Adjusted Refining Margin:
|
|
In addition to the
items that were reflected as adjustments for deriving our Adjusted
refining margin, which then was used to calculate Adjusted
refining
margin per barrel presented on page 13, there were other items that
were recognized during the periods that impacted our Refining
margins at the
refineries. The primary items are as follows:
|
|
Other Inventory Impact:
"Other inventory impact" is primarily calculated by multiplying the
number of barrels sold during the period by the difference
between current period weighted average purchase cost per barrel
and per barrel cost of materials and other for the period
recognized on a FIFO basis.
It assumes no beginning or ending inventory, so that the current
period average purchase cost per barrel is a reasonable estimate of
our market
purchase cost for the current period, without giving effect to any
build or draw on beginning inventory. These amounts are based on
management
estimates using a methodology including these assumptions. However,
this analysis provides management with a means to compare
hypothetical
refining margins to current period average crack spreads, as well
as provides a means to better compare our results to
peers.
|
|
Summary of Other Favorable (Unfavorable) Items
Impacting Refining Margin:
|
$ in millions (unaudited)
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
As Adjusted(1)
|
Tyler
|
|
|
|
|
Other inventory impact
(2)
|
|
$
16.5
|
|
$
52.8
|
|
|
$
16.5
|
|
$
52.8
|
El Dorado
|
|
|
|
|
Other inventory
impact
|
|
$
14.8
|
|
$
(7.4)
|
|
|
$
14.8
|
|
$
(7.4)
|
Big Spring
|
|
|
|
|
Other inventory
impact
|
|
$
31.6
|
|
$
12.3
|
|
|
$
31.6
|
|
$
12.3
|
Krotz Springs
|
|
|
|
|
Other inventory
impact
|
|
$
(0.3)
|
|
$
(9.5)
|
|
|
$
(0.3)
|
|
$
(9.5)
|
|
(1) Adjusted to reflect the
retrospective change in accounting policy from LIFO to FIFO for
certain inventories.
|
(2) During the first quarter of 2022,
Tyler also had an additional $18.1 million (pre-tax) favorable
other inventory impact associated with a
strategic drawdown of
certain inventories since December 31,
2021.
|
|
16 |
Information about Delek US Holdings, Inc. can be found on its
website (www.delekus.com), investor relations webpage
(ir.delekus.com), news webpage (www.delekus.com/news) and its
Twitter account (@DelekUSHoldings).
View original content to download
multimedia:https://www.prnewswire.com/news-releases/delek-us-holdings-reports-first-quarter-2022-results-301538095.html
SOURCE Delek US Holdings, Inc.