Delek US(US:DK)2021-08-04 20:40Financial Data and Key Metrics Changes - For Q2 2021, Delek US reported an adjusted net loss of $65.2 million, or a loss of $0.88 per share, compared to a net loss of $121.7 million, or a loss of $1.66 per share in the prior year period [7] - Adjusted EBITDA was $2 million in Q2 2021, a significant improvement from a loss of $100 million in the prior year period [7] - The company ended Q2 2021 with $833 million in cash and $1.41 billion in net debt [10] Business Line Data and Key Metrics Changes - Total refining system crude oil throughput was approximately 267,000 barrels per day in Q2 2021, impacted by turnaround activities and the Colonial Pipeline outage [12] - Expected crude oil throughput for Q3 2021 is projected to average between 280,000 to 290,000 barrels per day, indicating a return to normal operations [12] Market Data and Key Metrics Changes - The company experienced operational disruptions due to the Colonial Pipeline shutdown and other incidents, which resulted in incremental costs of approximately $40 million to $45 million [8][21] - The logistics performance has recovered from depressed levels in the first quarter, with expectations for stability for the remainder of the year [14] Company Strategy and Development Direction - The company is actively pursuing small refinery exemptions (SREs) to improve the economics of its facilities, with a history of being granted such exemptions [14][17] - Plans to grow the retail segment with two new industry stores in the planning phase, complementing the existing branded portfolio [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in receiving meaningful cash benefits from insurance claims and tax refunds in the coming quarters [14] - The company anticipates a positive cash flow environment moving forward, with expectations for a strong recovery in 2022 [73] Other Important Information - Capital expenditures in Q2 2021 were $66 million, reflecting turnaround activities and fire-related repairs [13] - The company is in discussions with insurance carriers regarding property damage and business interruption claims, with expectations for recovery in the coming quarters [21] Q&A Session Summary Question: Confidence in SREs and potential benefits - Management expressed a high level of confidence in obtaining SREs for Krotz and El Dorado, estimating potential benefits in the hundreds of millions of dollars [17][19] Question: Timeline and confidence regarding insurance claims - Management indicated that the claims process is ongoing, with expectations for recovery exceeding initial estimates of $40 million to $45 million [21] Question: Retail business growth and potential sale - Management stated that while they are open to offers for the retail business, they currently see a low chance of selling it due to a strong cash position [23] Question: Operational performance and crude differentials - Management noted a deterioration in crude differentials but emphasized ongoing optimization efforts to take advantage of market conditions [30][31] Question: M&A activity and market environment - Management acknowledged the need for small refiners to consider growth through M&A, but emphasized patience in pursuing the right opportunities [34][36] Question: Mid-cycle EBITDA capacity - Management provided estimates for mid-cycle EBITDA, suggesting a potential range of $400 million to $500 million from refining under normalized conditions [78]