Delek US Holdings, Inc. Q2 FY2025 earnings call

Delek continued its transformational journey. Progress on EOP: increased guidance to $130 million to $170 million run rate starting second half of 2025, with $30 million of EOP cash flow improvement in Q2, ahead of schedule. Sum of the Parts: made progress on intercompany agreements, raised liquidity at DKL, and DKL is progressing in growth areas. Operations: strong safety, reliability, and throughput; Big Spring, Tyler, El Dorado, Krotz Springs had strong operations. Commercial: supply and marketing contributed $26 million gain in Q2. Shareholder friendly: paid dividends and bought back shares, strong balance sheet. Small refinery exemptions: confident in favorable outcome, Delek remains in compliance.

For the second quarter, Delek had a net loss of $106 million or negative $1.76 per share. Adjusted net loss was $33 million or negative $0.56 per share and adjusted EBITDA was $170.2 million. Refining saw a $141 million increase in EBITDA due to higher margins and throughputs. The Logistics segment delivered approximately $120 million in adjusted EBITDA, a $4 million increase from the first quarter. Corporate had slightly higher costs of $1 million. Cash flow provided by operations was $51 million. Investing activities were $163 million, mostly for growth projects at DKL. Financing activities were $103 million, including $13 million in share repurchases, $16 million in dividends, and $22 million in DKL distribution payments.

EOP guidance increased to $130 million to $170 million run rate starting second half of 2025. Delek Logistics on track to meet 2025 EBITDA guidance of $480 million to $520 million. Third quarter operating expenses expected between $210 million and $225 million, G&A $52 million to $57 million, D&A $100 million to $110 million, net interest expense $85 million to $95 million.

Forward-looking information involves risks and uncertainties that may cause actual results to differ materially from comments, as outlined in SEC filings.

Q: Confidence in small refinery exemption and use of proceeds?

A: Avigal Soreq stated they are very optimistic about the small refinery exemption, law and D.C. Circuit Court are in their side, and they stay in full compliance; not commenting on proceeds but Delek is in compliance.

Q: EOP upside and drivers?

A: Avigal Soreq and Mohit Bhardwaj mentioned EOP is a lifestyle, $30 million flowed through Q2, margin improvement confidence increased, guidance raised to $130M-$170M.

Q: Q3 supply and marketing trends?

A: Avigal Soreq and Mohit Bhardwaj said supply and marketing is part of EOP effort, seasonally strong, improved logistics and market access, optimistic about trends.

Q: Sum of the Parts monetization options and timing?

A: Avigal Soreq said they are working on steps, DKL making progress, intrinsic value of assets shown by recent sales.

Q: Refinery performance, Big Spring and El Dorado?

A: Joseph Israel said Big Spring had record throughput, focusing on process efficiency; Joseph Israel said El Dorado similar to Big Spring, working on liquid yield recovery and product value.

Q: Net crack metric and financing cash flows?

A: Mohit Bhardwaj defined net crack by adjusting Gulf Coast 532 on WTI basis; Mark Hobbs said financing cash flow inflow due to EOP improving free cash flow, successful high-yield offering at DKL.