Delek US Holdings Q2 2024 10-Q Filed

Ticker: DK · Form: 10-Q · Filed: Aug 7, 2024 · CIK: 1694426

Sentiment: neutral

Topics: 10-Q, petroleum-refining, financials

TL;DR

Delek US Holdings filed its Q2 10-Q, check financials for oil refining biz.

AI Summary

Delek US Holdings, Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance and operational updates for the second quarter of 2024. Key financial figures and operational metrics are presented, reflecting the company's activities in the petroleum refining and energy transportation sectors.

Why It Matters

This filing provides investors with a detailed look at Delek US Holdings' financial health and operational performance during the second quarter of 2024, crucial for investment decisions.

Risk Assessment

Risk Level: medium — The company operates in the volatile petroleum refining industry, subject to commodity price fluctuations and regulatory changes.

Key Numbers

Key Players & Entities

FAQ

What were Delek US Holdings' total revenues for the six months ended June 30, 2024?

The filing does not explicitly state total revenues for the six months ended June 30, 2024, but provides detailed segment information and financial statements for the periods.

What is Delek US Holdings' primary business activity?

Delek US Holdings, Inc. is primarily involved in petroleum refining, as indicated by its SIC code 2911.

When was Delek US Holdings incorporated?

Delek US Holdings, Inc. was incorporated in Delaware (DE).

What is the fiscal year end for Delek US Holdings?

The fiscal year end for Delek US Holdings is December 31 (1231).

What was the previous name of Delek US Holdings?

The former company name was Delek Holdco, Inc., with a date of name change on January 11, 2017.

Filing Stats: 4,770 words · 19 min read · ~16 pages · Grade level 8 · Accepted 2024-08-07 15:18:21

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Comprehensive Income 5 Condensed Consolidated Statements of Changes in Stockholders' Equity 7 Condensed Consolidated Statements of Cash Flows 8 Notes to Condensed Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 28

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 64

Controls and Procedures

Item 4. Controls and Procedures 66

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 67

Risk Factors

Item 1A. Risk Factors 67

Other Information

Item 5. Other Information 68

Exhibits

Item 6. Exhibits 71

Signatures

Signatures 72 2 |

Financial Statements

Financial Statements

- FINANCIAL INFORMATION

Part I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Delek US Holdings, Inc. Condensed Consolidated Balance Sheets (unaudited) (In millions, except share and per share data) June 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 657.9 $ 822.2 Accounts receivable, net 771.4 783.7 Inventories, net of inventory valuation reserves 1,010.4 981.9 Other current assets 61.2 78.2 Total current assets 2,500.9 2,666.0 Property, plant and equipment: Property, plant and equipment 4,799.4 4,690.7 Less: accumulated depreciation ( 2,013.6 ) ( 1,845.5 ) Property, plant and equipment, net 2,785.8 2,845.2 Operating lease right-of-use assets 133.5 148.2 Goodwill 729.4 729.4 Other intangibles, net 284.3 296.2 Equity method investments 386.9 360.7 Other non-current assets 122.7 126.1 Total assets $ 6,943.5 $ 7,171.8 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,861.4 $ 1,814.3 Current portion of long-term debt 9.5 44.5 Current portion of obligation under Inventory Intermediation Agreement — 0.4 Current portion of operating lease liabilities 51.0 54.7 Accrued expenses and other current liabilities 642.9 771.2 Total current liabilities 2,564.8 2,685.1 Non-current liabilities: Long-term debt, net of current portion 2,452.2 2,555.3 Obligation under Inventory Intermediation Agreement 472.2 407.2 Environmental liabilities, net of current portion 32.8 110.9 Asset retirement obligations 26.2 43.3 Deferred tax liabilities 262.1 264.1 Operating lease liabilities, net of current portion 96.0 111.2 Other non-current liabilities 54.4 35.0 Total non-current liabilities 3,395.9 3,527.0 Stockholders' equity: Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value, 110,000,000 shares authorized, 82,085,570 shares and 81,539,871 shares issued at June 30, 2024 and December 31, 2023, respectively 0.8 0.8 Additional paid-in capital 1,175.8 1,113.6

Financial Statements

Financial Statements Delek US Holdings, Inc. Condensed Consolidated Statements of Income (unaudited) (In millions, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net revenues $ 3,421.7 $ 4,195.6 $ 6,649.3 $ 8,119.9 Cost of sales: Cost of materials and other 3,099.4 3,766.6 5,896.7 7,206.2 Operating expenses (excluding depreciation and amortization presented below) 185.1 188.7 398.9 359.5 Depreciation and amortization 80.7 82.6 167.1 159.4 Total cost of sales 3,365.2 4,037.9 6,462.7 7,725.1 Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below) 26.3 31.1 52.1 58.1 General and administrative expenses 63.1 75.8 127.5 147.3 Depreciation and amortization 11.4 6.8 20.2 13.4 Asset impairment 22.1 — 22.1 — Other operating income, net ( 79.9 ) ( 6.1 ) ( 81.5 ) ( 16.9 ) Total operating costs and expenses 3,408.2 4,145.5 6,603.1 7,927.0 Operating income 13.5 50.1 46.2 192.9 Interest expense, net 77.7 80.4 165.4 156.9 Income from equity method investments ( 30.4 ) ( 25.5 ) ( 52.3 ) ( 40.1 ) Other expense (income), net — 0.5 ( 0.7 ) ( 6.6 ) Total non-operating expense, net 47.3 55.4 112.4 110.2 (Loss) income before income tax (benefit) expense ( 33.8 ) ( 5.3 ) ( 66.2 ) 82.7 Income tax (benefit) expense ( 7.7 ) ( 3.8 ) ( 14.9 ) 12.0 Net (loss) income ( 26.1 ) ( 1.5 ) ( 51.3 ) 70.7 Net income attributed to non-controlling interests 11.1 6.8 18.5 14.7 Net (loss) income attributable to Delek $ ( 37.2 ) $ ( 8.3 ) $ ( 69.8 ) $ 56.0 Basic (loss) income per share $ ( 0.58 ) $ ( 0.13 ) $ ( 1.09 ) $ 0.84 Diluted (loss) income per share $ ( 0.58 ) $ ( 0.13 ) $ ( 1.09 ) $ 0.84 Weighted average common shares outstanding: Basic 64,213,899 65,773,609 64,117,943 66,359,537 Diluted 64,213,899 65,773,609 64,117,943 66,835,322 See accompanying notes to the condensed consolidated financial statements 4 |

Financial Statements

Financial Statements Delek US Holdings, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) (In millions) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net (loss) income $ ( 26.1 ) $ ( 1.5 ) $ ( 51.3 ) $ 70.7 Other comprehensive (loss) income: Other loss, net of taxes — ( 0.1 ) — ( 0.1 ) Total other comprehensive loss — ( 0.1 ) — ( 0.1 ) Comprehensive (loss) income $ ( 26.1 ) $ ( 1.6 ) $ ( 51.3 ) $ 70.6 Comprehensive income attributable to non-controlling interest 11.1 6.8 18.5 14.7 Comprehensive (loss) income attributable to Delek $ ( 37.2 ) $ ( 8.4 ) $ ( 69.8 ) $ 55.9 See accompanying notes to the condensed consolidated financial statements 5 |

Financial Statements

Financial Statements Delek US Holdings, Inc. Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) (In millions, except share and per share data) Three Months Ended June 30, 2024 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at March 31, 2024 81,626,016 $ 0.8 $ 1,171.8 $ ( 4.8 ) $ 381.5 ( 17,575,527 ) $ ( 694.1 ) $ 179.9 $ 1,035.1 Net (loss) income — — — — ( 37.2 ) — — 11.1 ( 26.1 ) Common stock dividends ($ 0.25 per share) — — — — ( 16.0 ) — — — ( 16.0 ) Distributions to non-controlling interests — — — — — — — ( 13.8 ) ( 13.8 ) Equity-based compensation expense — — 7.3 — — — — 0.3 7.6 Taxes paid due to the net settlement of equity-based compensation — — ( 3.9 ) — — — — ( 0.2 ) ( 4.1 ) Exercise of equity-based awards 402,665 — — — — — — — — Other 56,889 — 0.6 — ( 0.2 ) — — ( 0.3 ) 0.1 Balance at June 30, 2024 82,085,570 $ 0.8 $ 1,175.8 $ ( 4.8 ) $ 328.1 ( 17,575,527 ) $ ( 694.1 ) $ 177.0 $ 982.8 Three Months Ended June 30, 2023 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at March 31, 2023 84,569,103 $ 0.9 $ 1,141.2 $ ( 5.2 ) $ 557.2 ( 17,575,527 ) $ ( 694.1 ) $ 124.3 $ 1,124.3 Net (loss) income — — — — ( 8.3 ) — — 6.8 ( 1.5 ) Common stock dividends ($ 0.23 per share) — — — — ( 15.0 ) — — — ( 15.0 ) Distributions to non-controlling interests — — — — — — — ( 9.6 ) ( 9.6 ) Equity-based compensation expense — — 5.7 — — — — 0.2 5.9 Repurchase of common stock ( 1,795,335 ) ( 0.1 ) ( 24.2 ) — ( 15.7 ) — — — ( 40.0 ) Taxes paid due to the net settlement of equity-based compensation — — ( 2.9 ) — — — — ( 0.1 ) ( 3.0 ) Exercise of equity-based awards 308,196 — — — — — — — — O

Financial Statements

Financial Statements Delek US Holdings, Inc. Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) (In millions, except share and per share data) Six Months Ended June 30, 2024 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Treasury Shares Non-Controlling Interest in Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2023 81,539,871 $ 0.8 $ 1,113.6 $ ( 4.8 ) $ 430.0 ( 17,575,527 ) $ ( 694.1 ) $ 114.2 $ 959.7 Net (loss) income — — — — ( 69.8 ) — — 18.5 ( 51.3 ) Common stock dividends ($ 0.495 per share) — — — — ( 31.7 ) — — — ( 31.7 ) Distributions to non-controlling interests — — — — — — — ( 23.6 ) ( 23.6 ) Equity-based compensation expense — — 14.3 — — — — 0.5 14.8 Taxes paid due to the net settlement of equity-based compensation — — ( 4.4 ) — — — — ( 0.5 ) ( 4.9 ) Exercise of equity-based awards 447,039 — — — — — — — — Equity attributable to issuance of Delek Logistics common limited partner units, net of tax — — 50.5 — — — — 68.3 118.8 Other 98,660 — 1.8 — ( 0.4 ) — — ( 0.4 ) 1.0 Balance at June 30, 2024 82,085,570 $ 0.8 $ 1,175.8 $ ( 4.8 ) $ 328.1 ( 17,575,527 ) $ ( 694.1 ) $ 177.0 $ 982.8 Six Months Ended June 30, 2023 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity Shares Amount Shares Amount Balance at December 31, 2022 84,509,517 $ 0.9 $ 1,134.1 $ ( 5.2 ) $ 507.9 ( 17,575,527 ) $ ( 694.1 ) $ 125.9 $ 1,069.5 Net income — — — — 56.0 — — 14.7 70.7 Common stock dividends ($ 0.45 per share) — — — — ( 29.7 ) — — — ( 29.7 ) Equity-based compensation expense — — 12.0 — — — — 0.3 12.3 Distributions to non-controlling interests — — — — — — — ( 19.1 ) ( 19.1 ) Repurchase of common stock ( 1,811,627 ) ( 0.1 ) ( 24.4 ) — ( 15.9 ) — — — ( 40.4 ) Taxes paid due to the net settlement of equity-bas

Financial Statements

Financial Statements Delek US Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (In millions) Six Months Ended June 30, 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 51.3 ) $ 70.7 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 187.3 172.8 Non-cash lease expense 27.6 30.2 Deferred income taxes ( 15.9 ) 12.0 Asset impairment 22.1 — Income from equity method investments ( 52.3 ) ( 40.1 ) Dividends from equity method investments 22.7 19.5 Non-cash lower of cost or market/net realizable value adjustment ( 10.7 ) ( 9.6 ) Loss on extinguishment of debt 3.6 — Equity-based compensation expense 14.8 12.3 Other ( 19.0 ) 6.3 Changes in assets and liabilities: Accounts receivable 12.3 240.2 Inventories and other current assets ( 2.9 ) 280.6 Fair value of derivatives 7.1 ( 19.4 ) Accounts payable and other current liabilities ( 5.0 ) ( 134.9 ) Obligation under Inventory Intermediation Agreements 64.6 ( 146.3 ) Non-current assets and liabilities, net ( 86.7 ) ( 4.1 ) Net cash provided by operating activities 118.3 490.2 Cash flows from investing activities: Distributions from equity method investments 3.4 7.3 Purchases of property, plant and equipment ( 133.3 ) ( 277.6 ) Purchase of equity securities ( 0.4 ) ( 9.0 ) Purchases of intangible assets ( 1.3 ) ( 1.3 ) Proceeds from sale of property, plant and equipment 9.5 0.7 Insurance proceeds 18.0 — Net cash used in investing activities ( 104.1 ) ( 279.9 ) Cash flows from financing activities: Proceeds from long-term revolvers 3,013.1 1,547.0 Payments on long-term revolvers ( 3,463.4 ) ( 1,781.5 ) Proceeds from term debt 852.5 — Payments on term debt ( 536.1 ) ( 12.3 ) Proceeds from product and other financing agreements 259.7 656.0 Repayments of product and other financing agreements ( 361.8 ) ( 603.2 ) Proceeds from Inventory Intermediation Agreement — 32.2 Pro

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Delek US Holdings, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Organization and Basis of Presentation Delek US Holdings, Inc. operates through its consolidated subsidiaries, which include Delek US Energy, Inc. ("Delek Energy") (and its subsidiaries) and Alon USA Energy, Inc. ("Alon") (and its subsidiaries). The terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek and its consolidated subsidiaries. Delek's common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "DK." Our condensed consolidated financial statements include the accounts of Delek and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 28, 2024 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K. Our condensed consolidated financial statements include Delek Logistics Partners, LP ("Delek Logistics", NYSE:DKL), which is a variable interest entity ("VIE"). As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activiti

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements ASU 2023-09, Income Taxes(Topic 740): Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09 Income Taxes(Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). The standard is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the provisions of the amendments and the impact on its future condensed consolidated financial statements, but does not currently expect adopting this new guidance will have a material impact on our condensed consolidated financial statements and related disclosures. ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the chief decision maker ("CODM") and included within each reported measure of a segment's profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets. The ASU also requires disclosure of the title and position of the individual or group identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal yea

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Tyler, Texas refinery (the "Tyler refinery"); El Dorado, Arkansas refinery (the "El Dorado refinery"); Big Spring, Texas refinery (the "Big Spring refinery"); and Krotz Springs, Louisiana refinery (the "Krotz Springs refinery"). The refining segment also owns three biodiesel facilities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi. During the second quarter of 2024, we made the decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives. See Note 15 for further information. In addition, the refining segment includes our wholesale crude operations and our 50 % interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S. Logistics Segment Our logistics segment owns and operates crude oil, refined products and natural gas logistics and marketing assets as well as water disposal and recycling assets. The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and natural gas, marketing, distributing, transporting and storing intermediate and refined products and disposing and recycling water in select regions of the southeastern United States, the Delaware Basin in New Mexico and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market. Retail Segment Our retail segment consists of 250 owned and leased convenience st

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