Delek US(US:DK)2019-05-08 23:27Refining Segment Performance - The refining segment has a combined nameplate capacity of 302,000 barrels per day (bpd) across four refineries[265]. - The profitability in the refining segment is largely determined by the "crack spread," which reflects the difference between crude oil costs and refined product prices[266]. - A widening of the WTI Cushing less WTI Midland spread positively influences operating margins for the refineries[274]. - The company anticipates variability in crude oil processed and products manufactured at the El Dorado refinery, which is flexible in its operations[273]. - Refining segment net revenues for Q1 2019 were $2,092.0 million, a decrease from $2,125.9 million in Q1 2018[367]. - The refining margin increased to $415.3 million in Q1 2019 from $247.9 million in Q1 2018[367]. - The refining margin per barrel for Tyler refinery increased to $22.26 in Q1 2019 from $8.33 in Q1 2018[370]. - The refining margin for Big Spring refinery improved to $18.16 per barrel in Q1 2019 from $9.58 in Q1 2018[372]. - The Krotz Springs, LA refinery's refining margin increased to $11.95 per barrel in Q1 2019 from $6.92 in Q1 2018[372]. - Refining margin increased by $167.4 million, or 67.5%, in Q1 2019, attributed to wider discounts between WTI Cushing crude oil and Brent crude oil[387]. - Refining margin per barrel increased to $22.26 in Q1 2019 from $13.09 in Q1 2018[390]. Financial Performance - Consolidated net income for Q1 2019 was $154.4 million, compared to a net loss of $25.5 million in Q1 2018, representing a significant turnaround[347]. - Net revenues decreased by $153.3 million, or 6.5%, from $2,353.2 million in Q1 2018 to $2,199.9 million in Q1 2019, primarily due to lower average prices of gasoline and diesel[348]. - Operating income for Q1 2019 was $222.4 million, a significant increase from $38.8 million in Q1 2018[342]. - Income tax expense increased by $57.3 million in Q1 2019 compared to Q1 2018, driven by pre-tax income of $200.2 million in Q1 2019 versus a pre-tax loss of $28.8 million in Q1 2018[363]. - The effective tax rate decreased to 22.9% in Q1 2019 from 39.9% in Q1 2018, primarily due to the impact of pre-tax income[363]. - Net cash provided by operating activities was $133.4 million for the three months ended March 31, 2019, compared to a net cash used of $190.7 million in the same period of 2018, reflecting a significant improvement[431]. - The company reported a net income of $154.4 million for the three months ended March 31, 2019, compared to a net loss of $25.5 million in the same period of 2018[431]. Capital Expenditures and Investments - Capital expenditures for the three months ended March 31, 2019, were $128.4 million, with $81.7 million allocated to the refining segment[437]. - The company plans to spend $394.1 million on capital expenditures for the full year 2019, with significant allocations to refining and discretionary projects[437]. - As of March 31, 2019, the company had a total outstanding notional contract volume of 313,057,000 for commodity derivative contracts[442]. Logistics Segment - The logistics segment owns or leases capacity on approximately 400 miles of crude oil transportation pipelines and approximately 450 miles of refined product pipelines[275]. - Delek Logistics Partners, LP, in which the company holds a 61.4% limited partner interest, is integral to refining and marketing operations[275]. - The logistics segment has approximately 9.6 million barrels of active shell capacity for crude oil storage[275]. - Net revenues for the logistics segment decreased by $15.4 million, or 9.2%, in Q1 2019 compared to Q1 2018, primarily due to decreases in average volumes sold and average sales prices per gallon of gasoline and diesel[404]. - Cost of materials and other for the logistics segment decreased by $22.7 million, or 19.1%, in Q1 2019 compared to Q1 2018[410]. - Operating expenses for the logistics segment increased by $3.5 million, or 27.8%, in Q1 2019 compared to Q1 2018[412]. Retail Segment - As of March 31, 2019, the retail segment operates 281 convenience store sites primarily in central and west Texas and New Mexico, acquired through the Delek/Alon Merger[276]. - Net revenues for the retail segment decreased by $12.4 million, or 5.9%, in Q1 2019 compared to Q1 2018[421]. - Retail fuel sales were $121.9 million in Q1 2019 compared to $129.1 million in Q1 2018, attributed to a $0.14 decrease in average price charged per gallon[421]. - Average retail sales price per gallon sold decreased to $2.26 in Q1 2019 from $2.40 in Q1 2018[417]. - Merchandise sales for the retail segment were $75.3 million in Q1 2019 compared to $80.5 million in Q1 2018[421]. - Average number of stores decreased from 299 in Q1 2018 to 281 in Q1 2019[417]. Shareholder Returns and Stock Activity - The quarterly cash dividend declared on April 30, 2019, is $0.28 per share, an increase from the previous range of $0.20 to $0.26 per share throughout 2018[282]. - During Q1 2019, Delek repurchased 1,291,644 shares for a total of $46.2 million, with $363.6 million remaining under the share repurchase plan approved in November 2018[283]. Market Conditions and Risks - Seasonal demand for gasoline and asphalt products is generally higher during summer months, impacting operating results[266]. - The company faces risks including volatility in refining margins and changes in government regulations that could impact financial performance[256]. - The average price of WTI Cushing crude oil fell from $62.89 per barrel in Q1 2018 to $54.87 per barrel in Q1 2019[349]. - The average discount for WTI Cushing compared to Brent increased to $8.96 in Q1 2019 from $4.32 in Q1 2018, improving refinery margins[323]. - The average discount for WTI Midland compared to WTI Cushing increased to $1.17 in Q1 2019 from $0.38 in Q1 2018, enhancing competitive advantage[323]. - A hypothetical one percent change in interest rates would impact interest expense on floating rate borrowings by approximately $14.5 million annually[446].