Delek US Holdings, Inc. (NYSE:DK) Q2 2023 Earnings Conference Call August 7, 2023 11:00 AM ET Company Participants Rosy Zuklic - VP, IR Avigal Soreq - President and CEO Joseph Israel - EVP, Operations Mark Hobbs - EVP, Corporate Development Reuven Spiegel - EVP and CFO Conference Call Participants Manav Gupta - UBS Matthew Blair - Tudor, Pickering, Holt Nicolette Slusser - Goldman Sachs Doug Leggate - Bank of America Ryan Todd - Piper Sandler Roger Read - Wells Fargo Paul Cheng - Scotiabank Jason Gabelman - ...

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |-----------------------------|---------|---------|---------|---------|---------|---------|---------|---------| | Updated Reporting | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | | 2-1-1: 50% Argus 50% Platts | $23.81 | $25.63 | $36.23 | $17.40 | $11.75 | $11.53 | $8.87 | $7.63 | | 50/50 KSR Capture Rate (1) | 56% | 55% | 77% | 63% | 73% | 63% | 31% | 82% | Capital Expenditures 8 B Net Debt | --- | --- | --- | --- | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Registrant's telephone number, including area code) Not Applicable For the transition period from to Commission file number 001-38142 DELEK US HOLDINGS, INC. (Exact name of registrant as s ...

Delek US Holdings, Inc. (NYSE:DK) Q4 2022 Earnings Conference Call February 28, 2023 3:00 PM ET Company Participants Rosy Zuklic - VP, IR Avigal Soreq - President and CEO Todd O'Malley - EVP and COO Reuven Spiegel - EVP and CFO Mark Hobbs - EVP Corporate Development Robert Wright - Chief Accounting Officer Conference Call Participants John Royall - JPMorgan Neil Mehta - Goldman Sachs Kalei Akamine - Bank of America Merrill Lynch Paul Cheng - Scotiabank Jason Gabelman - Cowen Roger Read - Wells Fargo Matthe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 18 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38142 DELEK US HOLDINGS, INC. (Exact name of registrant as specified in its charter) (I.R.S. Employer Identification No.) (State or o ...

Financial Data and Key Metrics Changes - Net income for Q3 2022 was $7.4 million or $0.10 per share, with adjusted net income of $1.1 million or $0.02 per share, down from $3.6 million or $0.05 per share in the prior year [11] - Adjusted EBITDA for Q3 2022 was $136 million, impacted by $225 million of inventory headwinds due to FIFO accounting [11][12] - The company ended Q3 2022 with $1.15 billion in cash and $1.58 billion in net debt, with $146 million of net debt at DK after excluding Delek Logistics [13] Business Line Data and Key Metrics Changes - The total refining system crude oil throughput reached a record of approximately 300,000 barrels per day in Q3 2022, with expectations of 280,000 to 290,000 barrels per day in Q4 2022 [18] - Capital expenditures in Q3 2022 were $81 million, with a full-year expectation of approximately $300 million [19] Market Data and Key Metrics Changes - Same-store fuel sales increased by 7% year-on-year, indicating strong demand in the retail footprint [25] - The company noted robust product markets in the New York Harbor and Chicago areas, with demand remaining strong across the U.S. [65] Company Strategy and Development Direction - The company plans to repurchase $75 million to $100 million of outstanding shares in Q4 2022 and has increased the regular quarterly dividend to $0.21 per share [8] - A focus on capital allocation includes retiring $100 million to $150 million of debt in Q4 2022 [9] - The company is exploring strategic options to unlock the sum of the parts value of its assets, having engaged a banker for advice [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the downstream energy industry's outlook and the company's operational performance [7] - The CEO highlighted the importance of safety and reliability in operations and the potential for delivering additional value to shareholders [10] - Management noted that the refining assets are profitable and expected to demonstrate strong cash flow, which should improve investor confidence over time [32] Other Important Information - The company is conducting an analysis of its cost structure to ensure competitiveness with peers [15] - A sustainability report is expected to be issued later in the month, reflecting ongoing ESG efforts [19] Q&A Session Summary Question: Capital allocation and share repurchase guidance - Management confirmed a commitment to prioritizing shareholder returns, with plans for aggressive buybacks into 2023 [22][23] Question: Operational performance and sales comparisons - Same-store fuel sales are up 7% year-on-year, indicating strong demand [25][26] Question: Addressing the sum-of-the-parts discount - Management acknowledged the perception of over-leverage and the lack of liquidity at DKL as contributing factors to the stock discount [30][31] Question: Capital expenditures for 2023 - Anticipated capital expenditures for 2023 may be marginally higher than $300 million, with a turnaround scheduled for the Tyler plant [36] Question: Cost structure initiatives - The company is evaluating both G&A and OpEx as part of a zero-based budgeting process [38] Question: Biodiesel facilities profitability - The three biodiesel facilities are profitable and expected to remain so, although not materially impacting overall results [60] Question: Hedging strategy - The company plans to minimize hedging exposure going forward [58] Question: Demand outlook and mid-cycle EBITDA - Management remains optimistic about demand and expects mid-cycle EBITDA to be higher than previously thought [68]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements, along with management's discussion and analysis of financial condition, results of operations, and market risk disclosures [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents unaudited consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | September 30, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :------------------------------- | :------------------------------ | | Total Assets | $8,396.8 | $6,812.6 | | Total Liabilities | $7,113.8 | $5,798.6 | | Total Stockholders' Equity | $1,283.0 | $1,014.0 | | Cash and cash equivalents | $1,153.8 | $856.5 | | Inventories, net | $1,634.2 | $1,260.7 | | Long-term debt, net of current portion | $2,670.6 | $2,125.8 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the company's revenues, expenses, and net income over specific reporting periods | Metric | Three Months Ended Sep 30, 2022 (in millions) | Three Months Ended Sep 30, 2021 (in millions) | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net revenues | $5,324.9 | $2,956.5 | $15,766.6 | $7,540.2 | | Net income (loss) attributable to Delek | $7.4 | $11.8 | $375.8 | $(114.9) | | Basic income (loss) per share | $0.11 | $0.16 | $5.26 | $(1.55) | | Diluted income (loss) per share | $0.10 | $0.16 | $5.21 | $(1.55) | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details comprehensive income, including net income and other comprehensive income components | Metric | Three Months Ended Sep 30, 2022 (in millions) | Three Months Ended Sep 30, 2021 (in millions) | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Comprehensive income (loss) attributable to Delek | $7.3 | $11.8 | $375.6 | $(115.1) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines changes in stockholders' equity from net income, dividends, and stock transactions | Metric | Nine Months Ended Sep 30, 2022 (in millions) | | :-------------------------------------------------- | :------------------------------------------- | | Total Stockholders' Equity (Balance at Sep 30, 2022) | $1,283.0 | | Total Stockholders' Equity (Balance at Dec 31, 2021) | $1,014.0 | | Net income | $400.2 | | Common stock dividends | $(28.3) | | Repurchase of common stock | $(40.0) | | Purchase of Delek common stock from IEP Energy Holding LLC | $(64.0) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $716.1 | $210.2 | | Net cash used in investing activities | $(819.9) | $(143.2) | | Net cash provided by (used in) financing activities | $401.1 | $(23.9) | | Acquisition of 3 Bear | $(625.4) | — | | Purchases of property, plant and equipment | $(192.8) | $(163.1) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the financial statements [Note 1 - Organization and Basis of Presentation](index=11&type=section&id=Note%201%20-%20Organization%20and%20Basis%20of%20Presentation) This note describes the company's operations and the accounting principles used in financial statement preparation - Delek US Holdings, Inc. operates through consolidated subsidiaries in refining, logistics, and retail[31](index=31&type=chunk) - Effective January 1, 2022, the company changed its inventory accounting method for the Tyler Refinery from LIFO to FIFO, applied retrospectively, to improve consistency and transparency[32](index=32&type=chunk) - Total inventories accounted for using LIFO, prior to the accounting method change, comprised **28.0%** of the Company's total inventories as of December 31, 2021[32](index=32&type=chunk) [Note 2 - Acquisitions](index=12&type=section&id=Note%202%20-%20Acquisitions) This note details significant business acquisitions, including purchase price allocation and strategic rationale - Delek Logistics acquired 3 Bear Delaware Holding – NM, LLC on June 1, 2022, for **$628.1 million**, expanding crude oil and natural gas gathering, processing, transportation, and water disposal/recycling operations in the Delaware Basin[38](index=38&type=chunk) | Metric | Nine Months Ended Sep 30, 2022 (in millions) | | :-------------------------------- | :------------------------------------------- | | Revenue from 3 Bear Acquisition | $81.5 | | Net income from 3 Bear Acquisition | $9.8 | - The acquisition included identified intangible assets: customer relationship (**$210.0 million**, 11.6-year useful life) and rights-of-way (**$13.5 million**, 25.4-year useful life)[43](index=43&type=chunk) - Goodwill recognized is primarily attributable to enhancing third-party revenues, diversifying customer/product mix, expanding into the Delaware basin, and bolstering ESG optionality[44](index=44&type=chunk) [Note 3 - Segment Data](index=14&type=section&id=Note%203%20-%20Segment%20Data) This note provides financial information for the company's operating segments, including revenues and contribution margins - Delek operates in three reportable segments: Refining, Logistics, and Retail[49](index=49&type=chunk) - The Refining segment has a combined nameplate capacity of **302,000 barrels per day** as of September 30, 2022[50](index=50&type=chunk) | Segment | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :------------------------ | :------------------------------------------- | :------------------------------------------- | | Refining Segment Contribution Margin | $821.2 | $106.6 | | Logistics Segment Contribution Margin | $222.1 | $188.0 | | Retail Segment Contribution Margin | $49.4 | $56.5 | - The Retail segment consists of **248 owned and leased convenience store sites** as of September 30, 2022[55](index=55&type=chunk) [Note 4 - Earnings (Loss) Per Share](index=17&type=section&id=Note%204%20-%20Earnings%20%28Loss%29%20Per%20Share) This note presents basic and diluted earnings per share calculations and related share adjustments | EPS Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------- | :----------------------------- | :----------------------------- | | Basic income (loss) per share | $5.26 | $(1.55) | | Diluted income (loss) per share | $5.21 | $(1.55) | - Antidilutive stock-based compensation excluded from diluted EPS calculation was **2,380,376 shares** for the nine months ended September 30, 2022, compared to **3,572,995 shares** in the prior year[67](index=67&type=chunk) [Note 5 - Delek Logistics](index=18&type=section&id=Note%205%20-%20Delek%20Logistics) This note details Delek's ownership interest and transactions related to Delek Logistics Partners, LP - Delek owned a **78.9% interest** in Delek Logistics as of September 30, 2022[68](index=68&type=chunk) - Delek Logistics completed the 3 Bear Acquisition on June 1, 2022, for **$628.1 million**[68](index=68&type=chunk) - For the nine months ended September 30, 2022, Delek sold **385,522 common limited partner units** of Delek Logistics for gross proceeds of **$16.4 million**[68](index=68&type=chunk) [Note 6 - Equity Method Investments](index=19&type=section&id=Note%206%20-%20Equity%20Method%20Investments) This note provides information on investments accounted for using the equity method, including income and balances | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Income from equity method investments | $44.4 | $14.5 | | Investment | Balance as of Sep 30, 2022 (in millions) | | :-------------------------------- | :--------------------------------------- | | WWP Project Financing Joint Venture | $54.7 | | Red River Pipeline Company LLC | $143.7 | | Caddo Pipeline and Rio Pipeline Joint Ventures | $104.3 | | Other (asphalt/ethanol terminals) | $57.9 | [Note 7 - Inventory](index=20&type=section&id=Note%207%20-%20Inventory) This note describes the company's inventory valuation methods, balances, and related adjustments - Effective January 1, 2022, the company changed its inventory valuation method for the Tyler Refinery from LIFO to FIFO, applied retrospectively to all periods presented[78](index=78&type=chunk) | Metric | September 30, 2022 (in millions) | December 31, 2021 (in millions) | | :---------------- | :------------------------------- | :------------------------------ | | Total inventories | $1,634.2 | $1,260.7 | - The change to FIFO resulted in a **$37.6 million increase** in net income attributable to Delek for the nine months ended September 30, 2022, compared to if LIFO had been used[85](index=85&type=chunk) - A pre-tax inventory valuation reserve of **$28.4 million** was recorded at September 30, 2022, due to market price declines[88](index=88&type=chunk) [Note 8 - Crude Oil Supply and Inventory Purchase Agreement](index=24&type=section&id=Note%208%20-%20Crude%20Oil%20Supply%20and%20Inventory%20Purchase%20Agreement) This note details agreements for crude oil supply and inventory financing, including related obligations and fair value changes - Delek has Supply and Offtake Agreements with J. Aron & Company for its El Dorado, Big Spring, and Krotz Springs refineries, accounted for as inventory financing arrangements[89](index=89&type=chunk) - The agreements were renewed and extended to December 30, 2022; J. Aron did not provide notice to further extend to May 30, 2025[91](index=91&type=chunk) | Metric | September 30, 2022 (in millions) | | :----------------------------------------- | :------------------------------- | | Total Obligations Under Supply and Offtake Agreements | $596.2 | | Baseline Step-Out Liability | $413.0 | | Revolving over/short inventory financing liability (receivable) | $183.2 | - Gains (losses) in cost of materials and other attributable to changes in fair value due to commodity-index price totaled **$(82.6) million** for the nine months ended September 30, 2022[91](index=91&type=chunk) [Note 9 - Long-Term Obligations and Notes Payable](index=27&type=section&id=Note%209%20-%20Long-Term%20Obligations%20and%20Notes%20Payable) This note outlines the company's long-term debt instruments, credit facilities, and related financial covenants | Debt Instrument | September 30, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :------------------------------- | :------------------------------ | | Total Long-Term Debt | $2,733.6 | $2,218.0 | | Term Loan Credit Facility | $1,234.8 | $1,240.0 | | Delek Logistics Credit Facility | $806.4 | $258.0 | | Delek Logistics 2025 Notes | $247.4 | $246.7 | | Delek Logistics 2028 Notes | $395.0 | $394.3 | | United Community Bank Revolver | $50.0 | $50.0 | | Hapoalim Term Loan | — | $29.0 | - The Delek Hapoalim Term Loan was fully repaid by September 30, 2022[106](index=106&type=chunk) - As of September 30, 2022, unused credit commitments under the Revolving Credit Facility were approximately **$787.4 million**, with no principal outstanding[105](index=105&type=chunk) - As of September 30, 2022, Delek Logistics had **$193.1 million** in unused credit commitments under its Credit Facility[110](index=110&type=chunk) [Note 10 - Derivative Instruments](index=32&type=section&id=Note%2010%20-%20Derivative%20Instruments) This note describes the company's use of derivative instruments to manage market risks and their fair value - Delek uses commodity swaps, futures, forward contracts, and options to reduce operating and market risks, manage commodity price fluctuations, crack spread, and RINs obligations[117](index=117&type=chunk) | Metric | September 30, 2022 (in millions) | | :-------------------------------- | :------------------------------- | | Total gross fair value of derivatives (Assets) | $253.9 | | Total gross fair value of derivatives (Liabilities) | $(224.9) | - As of September 30, 2022, open derivative positions included **115,800,264 barrels** of crude oil and refined petroleum products, **7,785,000 MMBTU** of natural gas products, and **150,800,000 RINs**[121](index=121&type=chunk) - Gains (losses) on non-hedging derivatives recognized in cost of materials and other totaled **$(27.7) million** for the nine months ended September 30, 2022[122](index=122&type=chunk) [Note 11 - Fair Value Measurements](index=35&type=section&id=Note%2011%20-%20Fair%20Value%20Measurements) This note explains the valuation techniques and inputs used for fair value measurements of financial instruments - Fair value measurements are categorized into Level 1, 2, or 3 based on input observability; commodity derivatives, RINs commitment contracts, and J. Aron supply and offtake obligations are primarily Level 2[127](index=127&type=chunk)[130](index=130&type=chunk) | Metric | September 30, 2022 (in millions) | | :-------------------------------- | :------------------------------- | | Environmental credits obligation deficit | $(168.7) | | J. Aron supply and offtake obligations | $(596.2) | - The 3 Bear Acquisition's fair value measurements for assets acquired and liabilities assumed were based on Level 3 inputs[135](index=135&type=chunk) [Note 12 - Commitments and Contingencies](index=39&type=section&id=Note%2012%20-%20Commitments%20and%20Contingencies) This note discloses significant commitments, environmental liabilities, and legal contingencies impacting the company - Environmental liabilities totaled approximately **$115.1 million** as of September 30, 2022, primarily for remediation costs[141](index=141&type=chunk) - The company recognized a gain of **$8.1 million** from business interruption claims related to the El Dorado Refinery Fire for the nine months ended September 30, 2022[145](index=145&type=chunk) - A gain of **$17.9 million** was recognized from business interruption claims related to Winter Storm Uri for the nine months ended September 30, 2022[146](index=146&type=chunk) - Letters of credit outstanding totaled approximately **$212.6 million** as of September 30, 2022[148](index=148&type=chunk) [Note 13 - Income Taxes](index=42&type=section&id=Note%2013%20-%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and deferred tax assets and liabilities | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Effective tax rate | 21.2% | 30.2% | | Pre-tax income (loss) | $507.7 million | $(129.2) million | [Note 14 - Related Party Transactions](index=42&type=section&id=Note%2014%20-%20Related%20Party%20Transactions) This note discloses transactions with related parties, including revenues and cost of materials | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Revenues from related parties | $81.7 | $55.3 | | Cost of materials and other | $81.8 | $37.4 | [Note 15 - Other Current Assets and Liabilities](index=43&type=section&id=Note%2015%20-%20Other%20Current%20Assets%20and%20Liabilities) This note details the components of other current assets and accrued expenses and other current liabilities | Metric | September 30, 2022 (in millions) | December 31, 2021 (in millions) | | :--------------------------------------- | :------------------------------- | :------------------------------ | | Total Other Current Assets | $206.0 | $126.0 | | Total Accrued Expenses and Other Current Liabilities | $969.8 | $797.8 | | Product financing agreements | $305.7 | $249.6 | | Crude purchase liabilities | $204.0 | $107.4 | [Note 16 - Equity-Based Compensation](index=43&type=section&id=Note%2016%20-%20Equity-Based%20Compensation) This note describes the company's equity-based compensation plans, expense, and unrecognized costs | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Equity-based compensation expense | $19.1 | $16.7 | - The Delek US Holdings, Inc. 2016 Long-Term Incentive Plan was amended to increase the number of shares available for issuance by **760,000** to **14,995,000 shares**[155](index=155&type=chunk) - As of September 30, 2022, total unrecognized compensation cost related to non-vested share-based compensation arrangements was **$49.6 million**, expected to be recognized over a weighted-average period of **1.4 years**[155](index=155&type=chunk) [Note 17 - Shareholders' Equity](index=44&type=section&id=Note%2017%20-%20Shareholders%27%20Equity) This note provides details on changes in shareholders' equity, including dividends and share repurchases - The Board of Directors reinstated a regular cash dividend of **$0.20 per share** in Q2 2022 and increased it to **$0.21 per share** on October 31, 2022[159](index=159&type=chunk)[182](index=182&type=chunk) - The share repurchase authorization was increased by approximately **$170.3 million** to **$400.0 million** on August 1, 2022[160](index=160&type=chunk)[182](index=182&type=chunk) - During the three and nine months ended September 30, 2022, **1,435,602 shares** of common stock were repurchased for **$40.0 million**[160](index=160&type=chunk) - On March 7, 2022, Delek purchased **3,497,268 shares** of common stock from the Icahn Group for **$64.0 million**[161](index=161&type=chunk) [Note 18 - Leases](index=44&type=section&id=Note%2018%20-%20Leases) This note outlines the company's lease arrangements, including operating lease costs and discount rates | Metric | Nine Months Ended Sep 30, 2022 (in millions) | | :------------------------ | :------------------------------------------- | | Operating lease costs | $52.7 | | Short-term lease costs | $26.5 | | Sublease income | $(0.2) | | Net lease costs | $79.0 | - Weighted-average remaining operating lease term was **4.3 years**, and the weighted-average operating lease discount rate was **6.0%** as of September 30, 2022[165](index=165&type=chunk) [Note 19 - Subsequent Events](index=45&type=section&id=Note%2019%20-%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, impacting financial position - On October 13, 2022, Delek Logistics amended its credit facility, increasing total commitments to **$1.2 billion** (**$900.0 million** revolving, **$300.0 million** term loan) and extending the revolving maturity to October 13, 2027[166](index=166&type=chunk) - On October 26, 2022, Delek amended its Revolving Credit Facility, increasing total credit commitment to **$1.1 billion** and extending the maturity date to October 26, 2027[170](index=170&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Delek's financial performance, condition, and outlook, covering segments, strategy, market trends, and liquidity [Forward-Looking Statements](index=47&type=section&id=Forward-Looking%20Statements) This section highlights statements about future expectations, risks, and factors that could cause actual results to differ - The report contains forward-looking statements regarding future results, performance, prospects, and opportunities, including the 3 Bear Acquisition, COVID-19 impact, and the Russia-Ukraine War[174](index=174&type=chunk) - Important factors that could cause actual results to differ materially include volatility in refining margins, reliability of operating assets, regulatory changes, ability to execute growth strategy, and global conflicts[174](index=174&type=chunk)[177](index=177&type=chunk) [Executive Summary](index=48&type=section&id=Executive%20Summary) This section provides a high-level overview of Delek's business, strategic priorities, and recent operational achievements - Delek is an integrated downstream energy business focused on petroleum refining, transportation, storage, wholesale distribution, and convenience store retailing[179](index=179&type=chunk) - The company achieved record refinery utilization rates and expanded logistics through the 3 Bear Acquisition in the first nine months of 2022, capitalizing on strong demand and constrained supply[179](index=179&type=chunk) - Strategic priorities include operational optimization, digital transformation, ESG-conscious investments, and enhancing shareholder value through dividends and share repurchases[182](index=182&type=chunk) [Refining Overview](index=50&type=section&id=Refining%20Overview) This section describes the Refining segment's operations, capacities, and product offerings - The Refining segment processes crude oil and other feedstocks into transportation motor fuels, asphalt, and other petroleum-based products[183](index=183&type=chunk) - Combined nameplate capacity of the four refineries (Tyler, El Dorado, Big Spring, Krotz Springs) is **302,000 barrels per day** as of September 30, 2022[183](index=183&type=chunk) - The segment also owns and operates three biodiesel facilities in Arkansas, Texas, and Mississippi[184](index=184&type=chunk) [Logistics Overview](index=51&type=section&id=Logistics%20Overview) This section details the Logistics segment's assets, operations, and recent expansion activities - The Logistics segment owns and operates crude oil, refined products, and natural gas logistics and marketing assets, as well as water disposal and recycling assets[187](index=187&type=chunk) - Delek owned a **78.9% interest** in Delek Logistics Partners, LP at September 30, 2022[187](index=187&type=chunk) - The 3 Bear Acquisition (June 1, 2022) added approximately **485 miles of pipelines**, **88 MMCf/d natural gas processing capacity**, **140 MBbl/d crude gathering capacity**, **120 MBbl crude storage capacity**, and **200 MBbl/d water disposal capacity**[187](index=187&type=chunk) [Retail Overview](index=51&type=section&id=Retail%20Overview) This section outlines the Retail segment's convenience store operations, branding, and fuel supply - The Retail segment consists of **248 owned and leased convenience store sites** as of September 30, 2022, primarily in West Texas and New Mexico[188](index=188&type=chunk) - The company is phasing out 7-Eleven branding on a store-by-store basis by December 31, 2023, with **55 stores** already de-branded as of September 30, 2022[188](index=188&type=chunk) - Substantially all motor fuel sold through the retail segment is supplied by the Big Spring refinery[188](index=188&type=chunk) [Corporate and Other Overview](index=51&type=section&id=Corporate%20and%20Other%20Overview) This section covers corporate activities, immaterial operating segments, and certain hedging activities - This category includes corporate activities, results of immaterial operating segments (e.g., Canadian crude trading), asphalt terminal operations, wholesale crude operations, and intercompany eliminations[189](index=189&type=chunk) - Certain commodity and other hedging activities are also reported within corporate, other and eliminations[189](index=189&type=chunk) [Strategic Update](index=52&type=section&id=Strategic%20Update) This section discusses the company's long-term sustainability framework, key initiatives, and shareholder value enhancements - Delek's Long-Term Sustainability Framework focuses on redirecting corporate culture, operational optimization, digital transformation, ESG-conscious investments, and redefining its business model[192](index=192&type=chunk) - Key initiatives include transforming corporate and operating culture into 'One Delek,' planning for the 'Refinery of the Future,' and developing a 'New Energy' mentality[193](index=193&type=chunk) - Shareholder value was enhanced by reinstating and increasing quarterly cash dividends (to **$0.21/share**) and expanding the share repurchase authorization to **$400.0 million**[196](index=196&type=chunk) - Operational improvements include implementing a new enterprise resource planning system (October 2022) and conforming refining inventory accounting to FIFO (January 2022)[197](index=197&type=chunk) - The company completed the 3 Bear Acquisition in June 2022 and strengthened leadership with Avigal Soreq appointed President and CEO[201](index=201&type=chunk)[202](index=202&type=chunk) [Market Trends](index=55&type=section&id=Market%20Trends) This section analyzes market factors influencing the company's results, including commodity prices and regulatory impacts - Delek's results are significantly affected by fluctuations in crude oil, gasoline, distillate fuel, biofuels, natural gas, and electricity prices, as well as regulatory factors like RINs costs[205](index=205&type=chunk) - The market outlook for the remainder of 2022 anticipates continued volatility, strong demand for refined products, and challenges from rising natural gas prices and inflation[206](index=206&type=chunk) | Metric | Q3 2022 Average | Q3 2021 Average | | :-------------------------------- | :-------------- | :-------------- | | WTI Cushing crude oil (per barrel) | $91.63 | $70.54 | | WTI Midland crude oil (per barrel) | $91.43 | $70.74 | | Gulf Coast 5-3-2 crack spread (ULSD, per barrel) | $33.65 | $18.46 | | Gulf Coast 3-2-1 crack spread (ULSD, per barrel) | $31.28 | $18.64 | | Gulf Coast 2-1-1 crack spread (HSD/LLS, per barrel) | $21.53 | $11.11 | | Ethanol RINs (per RIN) | $1.41 | $1.70 | | Biodiesel RINs (per RIN) | $1.43 | $1.71 | | Natural gas (per MMBtu) | $7.97 | $4.32 | [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) This section describes accounting policies requiring significant judgment and estimation, such as impairment and tax rates - Critical accounting policies include evaluating impairment for property, plant and equipment, definite life intangibles, goodwill, environmental expenditures, and asset retirement obligations[223](index=223&type=chunk) - The development of the estimated annual effective tax rate (AETR) involves significant judgment due to various inputs and economic uncertainties[224](index=224&type=chunk) - Business combinations require fair value estimates for acquired assets and liabilities, often using income, cost, and market approaches, which are inherently uncertain[228](index=228&type=chunk) [Non-GAAP Measures](index=60&type=section&id=Non-GAAP%20Measures) This section explains the use of non-GAAP financial measures for evaluating segment performance and comparability - Management uses non-GAAP operational measures such as Refining margin, Refining segment margin, and Refining margin per barrels sold to evaluate segment performance[232](index=232&type=chunk) - These measures are used to assess ongoing performance and provide improved comparability by excluding certain items not indicative of core operating performance[232](index=232&type=chunk) [Non-GAAP Reconciliations](index=60&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :------------------------ | :------------------------------------------- | :------------------------------------------- | | Refining segment margin | $1,278.1 | $420.5 | | Gross margin | $669.6 | $(42.4) | [Summary Financial and Other Information](index=61&type=section&id=Summary%20Financial%20and%20Other%20Information) This section presents a concise overview of key consolidated financial metrics and operational data | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net revenues | $15,766.6 | $7,540.2 | | Operating income (loss) | $593.0 | $(59.7) | | Net income (loss) attributable to Delek | $375.8 | $(114.9) | [Results of Operations](index=62&type=section&id=Results%20of%20Operations) This section analyzes the company's consolidated and segment-specific financial performance over periods [Consolidated Results of Operations — Comparison of the Three and Nine Months Ended September 30, 2022 versus the Three and Nine Months Ended September 30, 2021](index=62&type=section&id=Consolidated%20Results%20of%20Operations%20%E2%80%94%20Comparison%20of%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20versus%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202021) This section compares consolidated financial results for the three and nine months ended September 30, 2022 and 2021 | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | Change (in millions) | % Change | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | :------- | | Net income (loss) attributable to Delek | $375.8 | $(114.9) | $490.7 | N/A | | Net revenues | $15,766.6 | $7,540.2 | $8,226.4 | 109.1% | | Cost of materials and other | $14,151.1 | $6,811.4 | $7,339.7 | 107.8% | | Operating expenses | $615.8 | $450.0 | $165.8 | 36.8% | | General and administrative expenses | $242.0 | $147.6 | $94.4 | 64.0% | | Other operating income, net | $44.5 | $4.7 | $39.8 | 846.8% | | Interest expense, net | $132.7 | $100.0 | $32.7 | 32.7% | | Income from equity method investments | $44.4 | $14.5 | $29.9 | 206.2% | | Income tax expense (benefit) | $107.5 | $(39.0) | $146.5 | N/A | [Refining Segment](index=66&type=section&id=Refining%20Segment) This section analyzes the financial performance and key operational metrics of the Refining segment | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | % Change | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------- | | Refining segment contribution margin | $821.2 | $106.6 | 670.4% | | Net revenues | $12,550.3 | $6,970.4 | 80.1% | | Cost of materials and other | $11,272.2 | $6,549.9 | 72.1% | | Operating expenses | $456.9 | $313.9 | 45.6% | | Total production (average bpd) | 293,969 | 245,849 | 19.6% | | Total throughput (average bpd) | 295,582 | 248,462 | 18.9% | - Refining segment margin improved significantly due to a **110.8% improvement** in the 5-3-2 crack spread, **95.6%** in the 3-2-1 crack spread, and **157.9%** in the 2-1-1 crack spread for the nine months ended September 30, 2022[288](index=288&type=chunk)[289](index=289&type=chunk) - Increased RINs expense due to higher production partially offset the margin improvements[289](index=289&type=chunk) [Logistics Segment](index=74&type=section&id=Logistics%20Segment) This section reviews the financial results and operational drivers of the Logistics segment | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | % Change | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------- | | Logistics contribution margin | $222.1 | $188.0 | 18.1% | | Net revenues | $767.4 | $511.0 | 50.2% | | Cost of materials and other | $480.3 | $275.0 | 74.7% | | Operating expenses | $65.0 | $48.0 | 35.4% | | West Texas wholesale marketing margin per barrel | $3.84 | $3.64 | 5.5% | - Revenue increases were driven by higher average sales prices for gasoline and diesel, incremental revenues from the 3 Bear Acquisition, and increased pipeline throughputs[298](index=298&type=chunk) [Retail Segment](index=77&type=section&id=Retail%20Segment) This section examines the financial performance and key metrics of the Retail segment | Metric | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | % Change | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :------- | | Retail contribution margin | $49.4 | $56.5 | -12.6% | | Net revenues | $739.7 | $590.3 | 25.3% | | Cost of materials and other | $617.1 | $466.4 | 32.3% | | Operating expenses | $73.2 | $67.4 | 8.6% | | Average retail sales price per gallon sold | $3.89 | $2.80 | 38.9% | | Retail fuel margin ($ per gallon) | $0.330 | $0.356 | -7.3% | | Merchandise sales | $237.3 | $240.9 | -1.5% | | Merchandise margin % | 33.7% | 33.1% | 1.8% | - The decline in contribution margin was primarily due to a decrease in average fuel margin per gallon and a slight decrease in merchandise sales, coupled with increased operating expenses[326](index=326&type=chunk) [Liquidity and Capital Resources](index=79&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flows, debt, financing arrangements, and capital spending plans [Cash Flows](index=80&type=section&id=Cash%20Flows) This section analyzes cash generated from operating, investing, and financing activities | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in millions) | Nine Months Ended Sep 30, 2021 (in millions) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $716.1 | $210.2 | | Net cash used in investing activities | $(819.9) | $(143.2) | | Net cash provided by financing activities | $401.1 | $(23.9) | - The increase in cash used in investing activities was primarily due to the **$625.4 million** acquisition of 3 Bear[334](index=334&type=chunk) - Net cash provided by financing activities was driven by **$510.0 million** in net proceeds on revolvers and term debt[335](index=335&type=chunk) [Cash Position, Indebtedness and Other Financing Arrangements](index=81&type=section&id=Cash%20Position%2C%20Indebtedness%20and%20Other%20Financing%20Arrangements) This section details the company's cash balances, total debt, and available credit facilities | Metric | September 30, 2022 (in millions) | | :-------------------------------- | :------------------------------- | | Cash and cash equivalents | $1,153.8 | | Total long-term indebtedness | $2,733.6 | | Unused credit commitments | $980.5 | | Supply and offtake obligation | $596.2 | | Product financing liabilities | $305.7 | [Capital Spending](index=82&type=section&id=Capital%20Spending) This section outlines capital expenditures by segment and provides full-year forecasts | Segment | Nine Months Ended Sep 30, 2022 (in millions) | 2022 Forecast Full Year (in millions) | | :---------------- | :------------------------------------------- | :------------------------------------ | | Total capital spending | $174.1 | $300.0 | | Refining segment total | $56.0 | $113.5 | | Logistics segment total | $68.0 | $116.8 | | Retail segment total | $22.6 | $33.5 | | Other total | $27.5 | $36.2 | [Cash Requirements](index=83&type=section&id=Cash%20Requirements) This section details future contractual obligations and commitments requiring cash outlays | Contractual Obligation | Total (in millions) | | :--------------------------------- | :------------------ | | Long term debt and notes payable obligations | $2,757.1 | | Interest | $476.3 | | Operating lease commitments | $204.4 | | Finance lease commitments | $15.8 | | Purchase commitments | $697.9 | | Product financing commitments | $305.7 | | Transportation agreements | $892.5 | | J. Aron supply and offtake obligations | $428.5 | | **Total** | **$5,778.2** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=84&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details market risks, including commodity price, interest rate, and inflation, and the company's management strategies [Price Risk Management Activities](index=84&type=section&id=Price%20Risk%20Management%20Activities) This section describes the use of derivative contracts to manage commodity price and RINs obligations risk - Delek uses commodity derivative contracts (swaps, futures, options, forward physical contracts) and future RINs commitment contracts to manage market-indexed pricing risk for inventory, crude oil purchases, refined product sales, and RINs obligations[347](index=347&type=chunk) - These contracts are recorded at fair value, with changes recognized in profit and loss, or in other comprehensive income for designated cash flow hedges[347](index=347&type=chunk) - Total outstanding notional contract volume for non-trading commodity derivatives was **271,158,000 units** as of September 30, 2022[348](index=348&type=chunk) [Interest Risk Management Activities](index=84&type=section&id=Interest%20Risk%20Management%20Activities) This section outlines strategies for managing interest rate risk on floating rate borrowings - Delek had approximately **$2,107.1 million** in outstanding floating rate borrowings as of September 30, 2022[349](index=349&type=chunk) - A hypothetical **one percent change** in interest rates would impact annual interest expense by approximately **$21.1 million**[349](index=349&type=chunk) [Inflation](index=84&type=section&id=Inflation) This section discusses the impact of inflationary factors on operating results and future cost pressures - Inflationary factors, including higher natural gas costs, labor costs, and supply chain disruptions, negatively affected operating results in 2022[350](index=350&type=chunk) - These cost pressures and supply chain challenges are expected to continue into fiscal year 2023[350](index=350&type=chunk) [LIBOR Transition](index=85&type=section&id=LIBOR%20Transition) This section addresses the planned discontinuation of LIBOR and its potential impact on borrowing costs - USD LIBOR rates are expected to be discontinued after June 2023, requiring a transition to alternative reference rates[353](index=353&type=chunk) - The transition could materially impact borrowing costs on variable rate indebtedness, although a significant impact on business or operations is not expected[353](index=353&type=chunk) [Commodity Derivatives Trading Activities](index=85&type=section&id=Commodity%20Derivatives%20Trading%20Activities) This section describes the company's active trading of commodity derivatives to capitalize on market opportunities - Delek engages in active trading of commodity derivatives (forward physical contracts, swaps, futures) to capitalize on crude oil supply and pricing seasonality[354](index=354&type=chunk) - These trading activities are classified as held for trading and recognized at fair value, with changes in fair value recognized in the income statement[354](index=354&type=chunk) - Total outstanding notional contract volume for trading commodity derivatives was **2,977,263 barrels** as of September 30, 2022[354](index=354&type=chunk) [Item 4. Controls and Procedures](index=85&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2022, excluding the 3 Bear acquisition, with no other material changes - Disclosure controls and procedures were effective as of September 30, 2022[355](index=355&type=chunk) - Management's assessment of disclosure controls and procedures did not include the newly acquired 3 Bear business[355](index=355&type=chunk) - 3 Bear accounted for approximately **8.0% of total assets** and **0.5% of total revenues** for the nine months ended September 30, 2022[355](index=355&type=chunk) - No other material changes in internal control over financial reporting occurred during the third quarter of 2022[355](index=355&type=chunk) [PART II. OTHER INFORMATION](index=76&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, other information, and exhibits [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management anticipates no material adverse effect on financial condition - Delek is subject to lawsuits, investigations, and claims, including environmental and employee-related matters[358](index=358&type=chunk) - Management does not believe any currently pending legal proceeding will have a material adverse effect on the company's financial statements[358](index=358&type=chunk) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) This section details key risk factors, including acquisition integration, geopolitical events, climate change, and environmental hazards - Risks include difficulties in integrating acquired operations, such as the 3 Bear Acquisition, and the inability to realize anticipated benefits or synergies[359](index=359&type=chunk) - The Russia-Ukraine War and related sanctions may adversely impact the business, financial condition, and results of operations due to global economic effects, market volatility, and supply chain disruptions[359](index=359&type=chunk) - Physical effects of climate change and severe weather events (e.g., floods, hurricanes) present risks to operations, potentially causing disruptions and substantial costs[361](index=361&type=chunk) - Inherent environmental hazards in operations, such as spills and discharges, could lead to significant remediation costs and penalties[361](index=361&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchases and the remaining authorization under the share repurchase program | Metric | Three Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | | Total Number of Shares Purchased | 1,435,602 | | Average Price per Share | $27.86 | | Total Purchase Amount | $40.0 million | | Approximate Dollar Value of Shares that May Yet Be Purchased | $360.0 million | [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including bylaws, agreements, and officer certifications - Key exhibits include Fifth Amended and Restated Bylaws, Assignment and Assumption Agreements, and certifications from the CEO and CFO[367](index=367&type=chunk) - The financial statements are formatted in Inline XBRL (eXtensible Business Reporting Language)[367](index=367&type=chunk) [Signatures](index=79&type=section&id=Signatures) This section provides the official signatures of the company's key executives and the report's signing date - The report is signed by Avigal Soreq (President and CEO), Reuven Spiegel (EVP and CFO), and Robert Wright (SVP and CAO)[370](index=370&type=chunk) - The signing date for the report is November 8, 2022[370](index=370&type=chunk)

Delek US Holdings, Inc. (NYSE:DK) Q2 2022 Earnings Conference Call August 4, 2022 11:00 AM ET Company Participants Blake Fernandez - Senior Vice President, Investor Relations and Market Intelligence Uzi Yemin - Executive Chairman Avigal Soreq - President and CEO Todd O’Malley - EVP and Chief Operating Officer Conference Call Participants Carly Davenport - Goldman Sachs Manav Gupta - Credit Suisse Roger Read - Wells Fargo Matthew Blair - Tudor, Pickering & Holt Kalei Akamine - Bank of America Jason Gabelman ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38142 DELEK US HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 35-2581557 (State or other jurisdic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common Stock, par value $0.01 DK New York Stock Exchange ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file numbe ...