Delek US(DK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, Delek reported an adjusted EPS of $0.44 and adjusted EBITDA of approximately $226 million, excluding SREs, indicating strong performance and momentum [3][11] - The net income for the fourth quarter was $78 million or $1.26 per share, with adjusted net income at $143 million or $2.31 per share [11] - For the full year 2025, adjusted EBITDA, excluding SREs, was approximately $763 million [11] Business Line Data and Key Metrics Changes - The refining segment saw a decline in adjusted EBITDA by $91 million due to seasonality, while supply and marketing contributed approximately $23 million, with wholesale marketing generating about $35 million [12] - The logistics segment delivered approximately $142 million in adjusted EBITDA, maintaining strong performance [12] Market Data and Key Metrics Changes - DKL achieved a record year with approximately $536 million in adjusted EBITDA and announced 2026 EBITDA guidance in the range of $520 million to $560 million [4] - DKL is expected to have over 80% of its third-party EBITDA in 2026, reflecting strong growth in the Delaware Basin [5] Company Strategy and Development Direction - The company is focused on enhancing its Enterprise Optimization Plan (EOP), raising its target to at least $200 million in annual run rate cash flow improvement [4][8] - The strategy includes a proactive approach to monetizing RINs and maintaining a strong balance sheet while being shareholder-friendly through dividends and share buybacks [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strength of the EOP and its impact on cash flow generation, emphasizing a culture of continuous improvement [3][54] - The management highlighted the importance of SREs in supporting local communities and maintaining high-paying jobs, indicating a commitment to energy dominance policies [22][23] Other Important Information - Cash flow from operations in Q4 was $503 million, with a significant improvement of $211 million compared to the previous year [13] - The company paid approximately $15 million in dividends and repurchased about $20 million of its shares during the quarter [10][14] Q&A Session Summary Question: Inquiry about cash inflow from SREs and future risks - Management discussed the cash inflow from monetizing RINs and the importance of SREs for the industry, emphasizing their critical role in energy policy [20][22] Question: Consolidation of DKL and performance improvement initiatives - Management outlined the ongoing efforts to enhance the value of DKL and the focus on improving reliability and performance at the Big Spring refinery during its turnaround [42][47] Question: Drivers of raised cash flow guidance - Management attributed the raised cash flow guidance to the success of the EOP and indicated a balanced approach to capital allocation, including dividends and buybacks [55]