Delek US(DK) - 2024 Q3 - Quarterly Report

Financial Performance - Consolidated net loss for Q3 2024 was $67.5 million compared to net income of$136.1 million for Q3 2023, representing a significant decline [170]. - Net loss attributable to Delek for Q3 2024 was $76.8 million, or$(1.20) per basic share, compared to net income of $128.7 million, or$1.98 per basic share in Q3 2023 [170]. - Net revenues for Q3 2024 were $3,042.4 million, a decrease of$1,586.4 million, or 34.3%, from $4,628.8 million in Q3 2023 [172]. - Total revenues for the refining segment in Q3 2024 were$3,027.8 million, down from $4,624.5 million in Q3 2023 [165]. - Refining margin for Q3 2024 was$165.5 million, a decrease from $456.7 million in Q3 2023 [165]. - Consolidated net loss for the nine months ended September 30, 2024, was$118.8 million compared to net income of $206.8 million for the same period in 2023 [171]. - Net revenues decreased by$3,046.6 million, or 24.3%, to $9,478.5 million for the nine months ended September 30, 2024, compared to$12,525.1 million in the same period of 2023 [173]. - Operating income for Q3 2024 was $(121.9) million, a decline from$212.1 million in Q3 2023 [167]. - EBITDA decreased by $282.9 million, or 95.7$477.8 million compared to YTD 2023, mainly due to decreased refining margin and crack spreads [215]. Revenue and Sales - The average price of Gulf Coast Gasoline (CBOB) was $2.97 in Q1 2023 and decreased to$2.03 in Q3 2024 [150]. - The average Gulf Coast 5-3-2 ULSD crack spread was $32.55 in Q3 2023, dropping to$15.27 in Q2 2024 [153]. - Refining segment revenues decreased by $1,596.7 million, or 34.5$3,028.2 million, or 24.3%, driven by a 9.4% decrease in average gasoline prices and a decrease in wholesale activity [206]. - Total sales volume of refined products averaged 309,175 bpd in the three months ended September 2024, up from 307,626 bpd in the same period of 2023 [198]. Operational Highlights - The company completed the sale of its Retail Stores for proceeds of $390.2 million, which is a significant step in its value creation journey [121]. - The acquisition of H2O Midstream is expected to be immediately accretive, delivering incremental contribution margin and cash flows, although its impact on the third quarter is not significant due to the closing date [121]. - The logistics segment continues to perform strongly, driven by increased volumes from the Delaware Basin and rate increases [121]. - The company has implemented additional cost reduction measures, including reducing contract services and non-critical travel, as part of its enterprise optimization plan [121]. - The company is focused on operational excellence, financial strength, and strategic initiatives to enhance scale and diversify revenue streams [123]. - The company has realigned its reportable segments to reflect changes in financial reporting, particularly following the sale of its retail operations [120]. Capital and Investments - The company has returned$68.1 million of capital to shareholders through dividends and share buybacks in 2024 to date [123]. - The company aims to reward shareholders with a disciplined capital allocation framework, including reducing debt and opportunistic share repurchases [138]. - The company raised $132.2 million from a public offering of 3,584,416 common units at$38.50 per unit, and $165.3 million from another offering of 4,423,075 common units at$39.00 per unit [142]. - The company plans to execute a major turnaround at the Krotz Springs refinery, focusing on outage spend and optimizing downtime [137]. - Total capital spending for the nine months ended September 30, 2024, was $315 million, compared to$181.2 million in the same period of 2023 [241]. Market Conditions and Outlook - The near-term economic outlook remains uncertain due to geopolitical instability and commodity market volatility, prompting the company to progress its business transformation efforts [121]. - The company expects refining capacity to shut down and crude oil demand to rise, which may balance the market over the next 6 to 12 months [143]. - RIN prices have shown significant volatility, impacting refining margins due to regulatory and political influences [156]. Environmental Initiatives - The company is investing in carbon capture technology, with a project at the Big Spring refinery expected to capture 145,000 metric tons of carbon dioxide per year, supported by a 70% cost-share agreement with the Department of Energy [123]. - Delek Logistics was selected for a carbon capture pilot project with a 70% cost-share from the DOE, potentially receiving up to $95 million in federal funding [142]. - The company has decided to idle its biodiesel facilities while exploring sustainable alternatives [132]. Debt and Cash Flow - Total cash and cash equivalents as of September 30, 2024, were$1,037.6 million, with total long-term indebtedness of approximately $2,789.4 million [232]. - Net cash provided by operating activities from continuing operations was$78.9 million for the nine months ended September 30, 2024, a significant decrease from $891.7 million in the same period of 2023 [236]. - Net cash used in investing activities from continuing operations was$387.4 million for the nine months ended September 30, 2024, compared to $320.6 million in the comparable period of 2023, primarily due to the acquisition of H2O Midstream [238]. - The increase in total long-term principal indebtedness as of September 30, 2024, was$186.0 million compared to December 31, 2023, primarily due to the issuance of the Delek Logistics 2029 Notes [232].