Financial Data and Key Metrics Changes - Delek reported a net loss of $106 million or negative $1.76 per share for the second quarter, with an adjusted net loss of $33 million or negative $0.56 per share and adjusted EBITDA of $170.2 million [23][24] - The increase in adjusted EBITDA was driven by a $141 million increase in refining, primarily due to a higher margin environment and sequentially higher throughputs [23][24] - Cash flow provided by operations was $51 million, including a net loss and an inflow of approximately $51 million from timing-related working capital movements [24] Business Line Data and Key Metrics Changes - The logistics segment delivered approximately $120 million in adjusted EBITDA, marking a $4 million increase over the previous record [24] - Supply and marketing contributed a gain of $26 million, with wholesale marketing generating approximately $19 million [21] - The refining segment saw realized refining margins increase by $0.96 per barrel compared to the previous year, despite a decline in benchmark net margin [16] Market Data and Key Metrics Changes - The company noted a positive trend in diesel demand, with diesel inventories at five-year lows and gasoline showing a draw of 1.2 million barrels [45][48] - The outlook for the market remains optimistic, particularly for diesel, as high utilization rates continue despite low inventories [48] Company Strategy and Development Direction - Delek is focused on its enterprise optimization plan (EOP), increasing guidance on EOP improvements to a run rate of $130 million to $170 million starting in the second half of the year [4][8] - The company aims to improve cash flow generation through structural changes in operations, including cost reductions and enhanced operational efficiency [7][35] - Delek is committed to maintaining a disciplined approach to capital allocation, balancing dividends, share buybacks, and strengthening the balance sheet [12][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the small refinery exemption (SRE) petitions, indicating confidence in a favorable outcome based on legal precedents [30][31] - The company anticipates continued strong performance in refining and logistics, with expectations for increased throughput and margin improvements [16][19][66] Other Important Information - Delek paid approximately $16 million in dividends and repurchased about $13 million of its shares during the quarter [12] - The company completed a successful high-yield offering, increasing liquidity at DKL to over $1 billion, which supports its growth initiatives [9][24] Q&A Session Summary Question: Confidence around small refinery exemption (SRE) - Management expressed optimism about the SRE outcome, highlighting the economic harm caused by the pending issue and the company's compliance during the petition period [30][31] Question: EOP guidance and potential for further upside - Management confirmed that EOP is a continuous improvement initiative, with increased guidance reflecting confidence in margin improvements and operational efficiencies [35][38] Question: Allocation of cash flow and capital returns strategy - The company maintains a balanced approach to capital allocation, focusing on dividends, share buybacks, and strengthening the balance sheet [41][42] Question: Q3 demand trends and outlook - Management noted positive trends in diesel and gasoline demand, with expectations for a constructive market environment [45][48] Question: Supply and marketing performance in Q3 - The company is optimistic about supply and marketing contributions, driven by improved logistics and market access [51][53] Question: Timing for economic separation of DKL - Management indicated ongoing efforts towards economic separation, with a focus on enhancing DKL's value through strategic initiatives [57][59]

Financial Data and Key Metrics Changes - Delek reported a net loss of $173 million or negative $2.78 per share for Q1 2025, with an adjusted net loss of $144 million or negative $2.32 per share and adjusted EBITDA of $26.5 million [21][22] - The refining segment saw a $42.2 million increase in EBITDA due to a higher margin environment and increased throughput compared to Q4 2024 [21] - Logistics segment delivered $117 million in adjusted EBITDA, a $9 million increase over the previous record [22] Business Line Data and Key Metrics Changes - Total throughput in Tyler was approximately 69,000 barrels per day in Q1, with a production margin of $7.82 per barrel [14] - El Dorado's throughput was approximately 76,000 barrels per day with a production margin of $3.83 per barrel [15] - Big Spring's throughput was approximately 59,000 barrels per day, with a production margin of $4.86 per barrel [16] - Cross Springs achieved a record throughput of approximately 85,000 barrels per day, with a production margin of $6.40 per barrel [18] Market Data and Key Metrics Changes - The refining margin environment was reported to be around $4 below mid-cycle levels [5] - Supply and marketing contributed a loss of $23.7 million in Q1, driven by seasonal low demand trends [19] - Crack spreads improved to $3 to $4 in recent weeks, indicating positive market conditions [42] Company Strategy and Development Direction - The company is focused on its Enterprise Optimization Plan (EOP) aiming for cash flow improvement of $120 million annually starting in the second half of 2025 [10] - Delek is advancing its midstream deconsolidation goal, with third-party cash flow at DKL increasing to around 80% [8] - The company is committed to a disciplined capital allocation strategy, including share buybacks and dividends [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements and the potential for a strong year ahead, particularly in the context of the Permian Basin activity [32] - The company remains optimistic about the support from the EPA for small refinery exemptions, which could provide significant financial relief [51][55] - Management highlighted the importance of free cash flow and the positive trajectory of operational metrics [34][68] Other Important Information - The company paid $16 million in dividends and repurchased $32 million of its shares during the quarter [10] - Capital expenditures for Q1 were $133 million, with a significant portion allocated to logistics and refining segments [23] Q&A Session Summary Question: Discussion on DKL and full year EBITDA guidance - Management reiterated confidence in DKL's performance and the positive outlook for Permian activity [30][32] Question: Capital returns strategy and sustainability of dividend yield - Management emphasized a balanced approach between share buybacks and dividends, focusing on free cash flow generation [33][38] Question: Improvement in supply and marketing for Q2 - Management noted strong demand and improving market conditions, expecting further improvements in wholesale marketing and asphalt categories [40][42] Question: Dynamics in the Southwest market - Management reported strong crack spreads in the Southwest, particularly in Arizona markets, countering concerns about sluggishness [46] Question: Small refinery exemptions (SREs) and potential retroactive claims - Management confirmed that they are pursuing both retroactive and forward-looking SREs, with significant potential value [51][55] Question: Opportunities for upside beyond EOP targets - Management acknowledged potential for exceeding the $120 million target due to ongoing operational improvements [60] Question: Intercompany transactions and their impact - Management clarified that recent intercompany transactions are aimed at optimizing asset allocation and enhancing deconsolidation efforts [72][76] Question: OpEx guidance and trends - Management explained that increased OpEx guidance is primarily due to the addition of a new natural gas plant, with expectations for further improvements [99][100]

Financial Data and Key Metrics Changes - Delek reported a net loss of $173 million or negative $2.78 per share for Q1 2025, with an adjusted net loss of $144 million or negative $2.32 per share and adjusted EBITDA of $26.5 million [19][20] - The increase in adjusted EBITDA was driven by a $42.2 million increase in refining due to a higher margin environment and sequentially higher throughputs [19] - Logistics segment delivered $117 million in adjusted EBITDA, a $9 million increase over the previous record [20] Business Line Data and Key Metrics Changes - Total throughput in Tyler was approximately 69,000 barrels per day with a production margin of $7.82 per barrel [13] - El Dorado's total throughput was approximately 76,000 barrels per day with a production margin of $3.83 per barrel [14] - Big Spring's throughput was approximately 59,000 barrels per day with a production margin of $4.86 per barrel [15] - Cross Springs achieved a record throughput of approximately 85,000 barrels per day with a production margin of $6.4 per barrel [16] Market Data and Key Metrics Changes - The refining margin environment was around $4 below mid-cycle, impacting overall performance [4] - Supply and marketing contributed a loss of $23.7 million, driven by seasonal low demand trends in wholesale marketing and asphalt [17] Company Strategy and Development Direction - The company is focused on a sum of the parts strategy and midstream deconsolidation, aiming to increase third-party cash flow at DKL to around 80% [7][8] - The Enterprise Optimization Plan (EOP) aims to improve cash flow by $120 million annually starting in the second half of 2025 [9] - The company is committed to a disciplined approach to capital allocation, including share buybacks and dividends [10] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements and the potential for a cleaner runway into the summer driving season [6] - The company remains optimistic about the prospects for 2025 and beyond, particularly in light of the support for domestic energy production [11] Other Important Information - The company paid $16 million in dividends and repurchased $32 million of its shares during the quarter [9] - The company expects operating expenses for Q2 2025 to be between $215 million and $225 million, reflecting higher throughput [22] Q&A Session Summary Question: Discussion on DKL and full year EBITDA guidance - Management reiterated guidance for DKL, highlighting strong positions in both Midland and Delaware areas, with expectations for high volumes [28] Question: Capital returns strategy and sustainability of dividend yield - Management emphasized a focus on free cash flow and a balanced approach between buybacks and dividends, indicating confidence in share price value [31][35] Question: Supply and marketing improvements in Q2 - Management noted strong demand and positive trends in RAC, with expectations for further improvements in wholesale marketing and asphalt categories [40][41] Question: Dynamics in the Southwest market - Management reported strong cracks in the Southwest, particularly in Arizona markets, countering concerns about sluggish starts [44] Question: Small refinery exemptions (SREs) - Management confirmed that SREs would be pursued retroactively from 2019, with optimism about receiving support from the EPA [49][52] Question: Opportunities for upside beyond EOP targets - Management acknowledged potential for upside beyond the $120 million target, with ongoing focus on operational improvements [57] Question: Intercompany transactions and their impact - Management clarified that recent intercompany transactions are aimed at optimizing asset allocation and enhancing deconsolidation efforts [71][72] Question: Operational expenditure guidance - Management explained that increased OpEx guidance is primarily due to the addition of a new natural gas plant, with expectations for further improvements in the second half of the year [92][93]