Delek US(DK) - 2024 Q1 - Quarterly Results

Overview and Strategic Highlights Delek US reported Q1 2024 results in line with guidance, strengthening Delek Logistics' liquidity to $800 million, initiating a retail business value unlock, and increasing its quarterly dividend - The company navigated regional demand headwinds to deliver solid operational performance, with results in line with guidance[2] - Delek Logistics (DKL) successfully executed debt and equity offerings, improving liquidity to approximately $800 million and reducing the leverage ratio to 4.01x[2][4] - A process was initiated to unlock the value inherent in the retail business as part of a 'sum of the parts' initiative[2] - The regular quarterly dividend was increased to $0.250 per share in May, following $15.7 million in dividends paid during the quarter[4] Consolidated Financial Performance Delek US reported a consolidated net loss of $32.6 million for Q1 2024, a reversal from prior-year net income, with Adjusted EBITDA decreasing to $158.7 million Q1 2024 Consolidated Financial Results (in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to Delek US | $(32.6) | $64.3 | | Diluted (loss) income per share | $(0.51) | $0.95 | | Adjusted net (loss) income | $(26.2) | $92.7 | | Adjusted net (loss) income per share | $(0.41) | $1.37 | | Adjusted EBITDA | $158.7 | $284.6 | Segment Performance Q1 2024 segment performance was mixed, with Refining Adjusted EBITDA declining due to lower crack spreads, Logistics growing from Delaware Gathering, Retail remaining stable, and Corporate losses increasing Refining Segment The Refining segment's Adjusted EBITDA declined to $106.1 million in Q1 2024, primarily due to a 22.2% decrease in benchmark crack spreads Refining Segment Adjusted EBITDA (in millions) | Period | Adjusted EBITDA (in millions) | | :--- | :--- | | Q1 2024 | $106.1 | | Q1 2023 | $230.2 | - The primary driver for lower performance was a 22.2% average decrease in benchmark crack spreads compared to prior-year levels[4] Logistics Segment The Logistics segment's Adjusted EBITDA increased to $99.7 million in Q1 2024, driven by strong contributions from Delaware Gathering systems and annual rate increases Logistics Segment Adjusted EBITDA (in millions) | Period | Adjusted EBITDA (in millions) | | :--- | :--- | | Q1 2024 | $99.7 | | Q1 2023 | $91.4 | Retail Segment The Retail segment maintained stable performance, with Adjusted EBITDA of $6.5 million in Q1 2024, nearly flat year-over-year Retail Segment Adjusted EBITDA (in millions) | Period | Adjusted EBITDA (in millions) | | :--- | :--- | | Q1 2024 | $6.5 | | Q1 2023 | $6.4 | Corporate and Other Activity Adjusted EBITDA from Corporate, Other and Eliminations widened to a $53.6 million loss in Q1 2024, driven by higher employee-related expenses Corporate & Other Adjusted EBITDA (in millions) | Period | Adjusted EBITDA Loss (in millions) | | :--- | :--- | | Q1 2024 | $(53.6) | | Q1 2023 | $(43.4) | Shareholder Returns and Capital Structure Delek US continues to return capital to shareholders with a $0.25 per share quarterly dividend, maintaining a consolidated net debt of $1.74 billion as of March 31, 2024 Shareholder Distributions The Board of Directors approved a regular quarterly dividend of $0.25 per share on May 2, 2024 - A regular quarterly dividend of $0.25 per share was approved by the Board of Directors[8] Liquidity and Net Debt As of March 31, 2024, Delek US reported a consolidated cash balance of $753.4 million and net debt of $1.74 billion, with $152.0 million net debt excluding DKL Liquidity and Debt Position as of March 31, 2024 (in millions) | Metric | Consolidated (in millions) | Delek US (ex-DKL) (in millions) | | :--- | :--- | :--- | | Cash Balance | $753.4 | $743.7 | | Long-Term Debt | $2,496.9 | $895.7 | | Net Debt | $1,743.5 | $152.0 | Financial Statements (Unaudited) Unaudited Q1 2024 financial statements show total assets of $7.18 billion, a net loss of $25.2 million on $3.23 billion net revenues, and $166.7 million in operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2024, Delek US reported total assets of $7.18 billion, total liabilities of $6.15 billion, and total stockholders' equity of $1.04 billion Balance Sheet Summary (in millions) | Account | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $2,708.1 | $2,666.0 | | Total Assets | $7,180.3 | $7,171.8 | | Total Current Liabilities | $2,606.5 | $2,685.1 | | Total Liabilities | $6,145.2 | $6,212.1 | | Total Stockholders' Equity | $1,035.1 | $959.7 | Condensed Consolidated Statements of Income For Q1 2024, Delek US reported net revenues of $3.23 billion and a net loss attributable to Delek of $32.6 million, a reversal from prior-year net income Income Statement Summary (in millions, except per share data) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Revenues | $3,227.6 | $3,924.3 | | Operating Income | $32.7 | $142.8 | | Net (loss) income | $(25.2) | $72.2 | | Net (loss) income attributable to Delek | $(32.6) | $64.3 | | Diluted (loss) income per share | $(0.51) | $0.95 | Condensed Cash Flow Data Q1 2024 net cash provided by operating activities decreased to $166.7 million, with net cash used in investing and financing activities leading to a $68.8 million net decrease in cash Cash Flow Summary (in millions) | Activity | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $166.7 | $395.1 | | Net cash used in investing activities | $(41.6) | $(222.1) | | Net cash used in financing activities | $(193.9) | $(149.3) | | Net (decrease) increase in cash | $(68.8) | $23.7 | Non-GAAP Financial Measures and Reconciliations Delek US uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to clarify core operating performance, with Q1 2024 adjusted net loss at $26.2 million and Adjusted EBITDA at $158.7 million - The company uses non-GAAP measures such as Adjusted EBITDA, Adjusted Net Income, and Net Debt to assess ongoing performance, improve comparability, and monitor leverage[19][20] Reconciliation of Net Loss to Adjusted EBITDA (in millions) | Description | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Reported net (loss) income | $(32.6) | $64.3 | | Interest, Tax, D&A | $175.7 | $175.7 | | EBITDA attributable to Delek US | $143.1 | $240.0 | | Adjusting items | $15.6 | $44.6 | | Adjusted EBITDA | $158.7 | $284.6 | Reconciliation of Net Loss to Adjusted Net Loss (in millions) | Description | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Reported net (loss) income | $(32.6) | $64.3 | | Total adjusting items | $6.4 | $28.4 | | Adjusted net (loss) income | $(26.2) | $92.7 | Supplemental Information and Operating Data This section details operational metrics, showing increased Refining throughput to 296,652 bpd, higher Logistics volumes, and a Retail fuel margin increase to $0.29 per gallon despite lower sales Refining Segment Selected Financial Information Q1 2024 refining throughput increased to 296,652 bpd with crude utilization at 90.9%, though production margin per barrel decreased to $12.55 Refining Segment Key Operating Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total throughput (avg bpd) | 296,652 | 268,535 | | Total refining production margin per bbl | $12.55 | $16.44 | | Total refining operating expenses per bbl | $5.90 | $5.60 | | Crude utilization (%) | 90.9% | 82.2% | Logistics Segment Selected Information The Logistics segment experienced increased Q1 2024 activity, with Delaware Gathering crude oil rising to 123,509 bpd and Plains Connection System throughput averaging 256,844 bpd Logistics Segment Key Throughputs (avg bpd) | System | Q1 2024 (avg bpd) | Q1 2023 (avg bpd) | | :--- | :--- | :--- | | Plains Connection System | 256,844 | 240,597 | | Delaware Gathering - Crude oil | 123,509 | 103,725 | | Delaware Gathering - Water disposal | 120,269 | 88,182 | Retail Segment Selected Information The Retail segment ended Q1 2024 with 250 stores, improving fuel margin to $0.29 per gallon despite a 4.1% decline in same-store merchandise sales Retail Segment Key Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Number of stores (end of period) | 250 | 249 | | Retail fuel margin ($ per gallon) | $0.29 | $0.27 | | Merchandise sales (in millions) | $70.7 | $73.9 | | Merchandise margin % | 33.5% | 33.0% | | Change in same-store merchandise sales | (4.1)% | 5.3% |