Delek US Holdings Reports Fourth Quarter 2020 Results
BRENTWOOD, Tenn., Feb. 23, 2021 /PRNewswire/ -- Delek US Holdings, Inc. (NYSE: DK) ("Delek US") today announced financial results for its fourth quarter ended December 31, 2020. Delek US reported a fourth quarter 2020 net loss of $(293.2) million, or $(3.98) per share, versus net income of $32.7 million, or $0.44 per diluted share, for the quarter ended December 31, 2019. On an adjusted basis, which excludes the impact of a goodwill impairment of $126 million (pre-tax), Delek US reported an Adjusted net loss of $(204.0) million, or $(2.77) per share, for the fourth quarter 2020. This compares to Adjusted net loss of $(8.6) million, or $(0.11) per share, in the prior-year. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") was $(137.6) million for the fourth quarter compared to Adjusted EBITDA of $65.4 million in the prior year. Reconciliations of net income (loss) reported under U.S. GAAP to Adjusted net income (loss) and Adjusted EBITDA are included in the financial tables attached to this release.
Adjusted quarterly results include approximately $(38.1) million (after-tax), or $(0.52) per share, of headwinds which is comprised of the following: a net unfavorable impact of $(9.1) million pre-tax from a combination of negative "other inventory impact" partially offset by profit on the sale of purchased products. These items are outlined in the tables on page 14. There are additional inventory hedging losses in the amount of $(21.0) million pre-tax, outlined by segment in the table on page 10. Also included in results were approximately $(19.0) million pre-tax, or ($0.20) per share (after-tax) of accelerated depreciation related to asset rationalization.
Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US, stated, "Delek remains well positioned entering 2021, supported by cost and capital reduction initiatives. COVID-19 vaccinations should lead to an improving macro backdrop and Delek is positioned to benefit with no planned turnaround activity in the second half of the year. Our 80% ownership in DKL continues to perform well, with the company forecasting another 5% distribution increase in 2021. In renewable diesel, we established a 'capital light' approach by retaining a low-cost option of $13 million to acquire a one-third economic interest in GCE Holdings Acquisitions, which indirectly owns and operates the Bakersfield, CA refinery. The retail segment has offered stability but also provides strong growth potential underpinned by attractive returns relative to other areas within energy."
Mr. Yemin continued, "We are excited about the addition of Laurie Tolson to our board, who brings a strong technology background. We believe implementation of advanced technologies can further enhance efficiencies and reliability in our business over the medium to longer term, and look forward to leveraging Ms. Tolson's experience as we continue these efforts."
Liquidity
As of December 31, 2020, Delek US had a cash balance of $787.5 million and total consolidated long-term debt of $2,348.4 million, resulting in net debt of $1,560.9 million. As of December 31, 2020, Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") had $992.3 million of total debt and $4.2 million of cash, which is included in the consolidated amounts on Delek US' balance sheet. Excluding Delek Logistics, Delek US had approximately $783.3 million in cash and $1,356.1 million of debt, or a $572.8 million net debt position. We recorded a federal income tax receivable totaling $156 million as of December 31, 2020, related to the federal net operating loss carryback, of which we expect to collect approximately $136 million in the first half of 2021.
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Refining Segment
Refining contribution margin decreased to $(82.0) million in the fourth quarter 2020 from $127.8 million in the fourth quarter 2019. Adjusted refining contribution margin was $(126.9) million in the fourth quarter 2020 compared to $88.8 million in the fourth quarter 2019. The current period adjusted refining contribution margin reflects $(13.6) million of unfavorable other inventory impact, $4.5 million of gains related to the sale of purchased product, and $(24.3) million additional inventory hedging losses, coupled with a $(4.1) million loss from fixed price crude cost transactions. Other inventory impacts, aside from lower of cost or market/net realizable value ("LCM"), are outlined by refinery in the tables on page 16.
On a year-over-year basis, results were reduced primarily due to lower crude oil differentials and crack spreads as a result of decreased demand due to COVID-19. During the fourth quarter 2020, Delek US's benchmark crack spreads were down an average of approximately 48.5% from prior-year levels. Additionally, the realized Midland-Cushing crude oil premium was $0.15 per barrel compared to a realized discount of $0.37 per barrel in the prior-year period. These factors were partially offset by the crude oil futures market that was in contango of $0.35 per barrel in the fourth quarter 2020 compared to backwardation of $0.09 per barrel in the fourth quarter 2019.
Logistics Segment
The logistics segment contribution margin in the fourth quarter 2020 was $62.2 million compared to $42.5 million in the fourth quarter 2019. Results improved on a year-over-year basis primarily due to the drop down of the Big Spring Gathering System and Trucking Assets, increased crude gathering, and a reduction in operating expenses by $7.5 million due to a decrease in contract services and a lack of environmental remediation costs that were incurred in 2019. These items were partially offset by lower revenue in the West Texas wholesale business.
Retail Segment
For the fourth quarter 2020, contribution margin was $12.7 million compared to $12.1 million in the prior-year period for the retail segment. Merchandise sales were approximately $75.9 million with an average retail margin of 30.1% in the fourth quarter 2020, compared to merchandise sales of approximately $72.9 million with an average retail margin of 30.6% in the prior-year period. Approximately 41.5 million retail fuel gallons were sold at an average margin of $0.33 per gallon in the fourth quarter 2020 compared to 51.5 million retail fuel gallons sold at an average margin of $0.29 per gallon in the fourth quarter 2019. In the fourth quarter 2020, the average merchandise store count was 253 compared to 258 in the prior-year period. On a same store sales basis in the fourth quarter 2020, merchandise sales increased 2.2% and fuel gallons sold decreased 22.7% compared to the prior-year period.
Corporate/Other
Contribution margin from Corporate/Other was a loss of $25.4 million in the fourth quarter 2020 compared to a loss of $11.0 million in the prior-year period. Hedging gains (losses) related to the refining segment have been reclassified from the Corporate/Other segment to the refining segment beginning in the first quarter of 2020 and have been retrospectively reclassified in 2019 for comparison purposes.
The Wink to Webster crude oil pipeline, in which Delek US has an indirect investment stake through our 50% equity ownership in a financing joint venture with MPLX, continues progressing, with segments and assets expected to come on-line throughout 2021.The Midland-to-Webster segment of the Wink to Webster Pipeline System was commissioned in January 2021, and is now operating. The 36-inch diameter pipeline, which is underpinned by a significant volume of long-term commitments, will originate in the Permian Basin and have destination points in the Houston market.
Fourth Quarter 2020 Results | Conference Call Information
Delek US will hold a conference call to discuss its fourth quarter 2020 results on Wednesday, February 24, 2021 at 8:30 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekUS.com and clicking on the Investor Relations tab. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. Presentation materials accompanying the call will be available on the investor relations tab of the Delek US website approximately five minutes prior to the start of the call. For those who cannot listen to the live broadcast, the online replay will be available on the website for 90 days.
Investors may also wish to listen to Delek Logistics' (NYSE: DKL) fourth quarter 2020 earnings conference call that will be held on Wednesday, February 24, 2021 at 7:30 a.m. Central Time and review Delek Logistics' earnings press release. Market trends and information disclosed by Delek Logistics may be relevant to the logistics segment reported by Delek US. Both a replay of the conference call and press release for Delek Logistics are available online at www.deleklogistics.com.
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About Delek US Holdings, Inc.
Delek US Holdings, Inc. is a diversified downstream energy company with assets in petroleum refining, logistics, renewable fuels and convenience store retailing. The refining assets consist of refineries operated in Tyler and Big Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a combined nameplate crude throughput capacity of 302,000 barrels per day.
The logistics operations primarily consist of Delek Logistics Partners, LP (NYSE: DKL). Delek US Holdings, Inc. and its affiliates own approximately 80% (including the general partner interest) of Delek Logistics Partners, LP. Delek Logistics Partners, LP is a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets.
The convenience store retail operates approximately 253 convenience stores in central and West Texas and New Mexico.
Safe Harbor Provisions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are "forward-looking statements," as that term is defined under the federal securities laws. These statements contain words such as "possible," "believe," "should," "could," "would," "predict," "plan," "estimate," "intend," "may," "anticipate," "will," "if", "potential," "expect" or similar expressions, as well as statements in the future tense. These forward-looking statements include, but are not limited to, statements regarding throughput at the Company's refineries; crude oil prices, discounts and quality and our ability to benefit therefrom; share repurchases; cost reductions; payments of dividends; growth; investments into our business; the performance and execution of our midstream growth initiatives, including the Big Spring Gathering System, the Red River joint venture and the Wink to Webster long-haul crude oil pipeline, and the flexibility, benefits and the expected returns therefrom; RINs waivers and tax credits and the value and benefit therefrom; cash and liquidity; opportunities and anticipated performance and financial position.
Investors are cautioned that the following important factors, among others, may affect these forward-looking statements. These factors include, but are not limited to: uncertainty related to timing and amount of future share repurchases and dividend payments; risks and uncertainties with respect to the quantities and costs of crude oil we are able to obtain and the price of the refined petroleum products we ultimately sell, including uncertainties regarding future decisions by OPEC regarding production and pricing disputes between OPEC members and Russia; uncertainty relating to the impact of the COVID-19 outbreak on the demand for crude oil, refined products and transportation and storage services; Delek US' ability to realize cost reductions; risks related to Delek US' exposure to Permian Basin crude oil, such as supply, pricing, gathering, production and transportation capacity; gains and losses from derivative instruments; risks associated with acquisitions and dispositions; acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment in carrying value of the asset; the possibility of litigation challenging renewable fuel standard waivers; changes in the scope, costs, and/or timing of capital and maintenance projects; the ability to grow the Big Spring Gathering System; the ability of the Red River joint venture to complete the expansion project to increase the Red River pipeline capacity; the ability of the joint venture to construct the Wink to Webster long haul crude oil pipeline; operating hazards inherent in transporting, storing and processing crude oil and intermediate and finished petroleum products; our competitive position and the effects of competition; the projected growth of the industries in which we operate; general economic and business conditions affecting the geographic areas in which we operate; and other risks described in Delek US' filings with the United States Securities and Exchange Commission (the "SEC"), including risks disclosed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings and reports with the SEC.
Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek US undertakes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur, or which Delek US becomes aware of, after the date hereof, except as required by applicable law or regulation.
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Non-GAAP Disclosures:
Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:
-- Adjusting items - certain identified infrequently occurring items,
non-cash items, and items that are not attributable to or indicative of
our on-going operations or that may obscure our underlying results and
trends;
-- Adjusted net income (loss) - calculated as net income attributable to
Delek US adjusted for relevant Adjusting items recorded during the
period;
-- Adjusted net income (loss) per share - calculated as Adjusted net income
(loss) divided by weighted average shares outstanding, assuming
dilution, as adjusted for any anti-dilutive instruments that may not be
permitted for consideration in GAAP earnings per share calculations but
that nonetheless favorably impact dilution;
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") - calculated as net income attributable to Delek adjusted to
add back interest expense, income tax expense, depreciation and
amortization;
-- Adjusted EBITDA - calculated as EBITDA adjusted for the relevant
identified Adjusting items in Adjusted net income (loss) that do not
relate to interest expense, income tax expense, depreciation or
amortization, and adjusted to include income (loss) attributable to
non-controlling interests;
-- Adjusted segment contribution margin - calculated as Segment
contribution margin adjusted for the identified Adjusting Items in
Adjusted net income (loss) that impact Segment contribution margin;
-- Refining margin - calculated as the difference between total refining
revenues and total cost of materials and other;
-- Adjusted refining margin - calculated as refining margin adjusted for
the relevant identified Adjusting items in Adjusted net income (loss)
that impact refining margin and that, where applicable, can be
identified and/or are measured and recognized at the refinery level;
-- Refining margin per sales barrel - calculated as refining margin divided
by our average refining sales in barrels per day (excluding purchased
barrels) multiplied by 1,000 and multiplied by the number of days in the
period; and
-- Adjusted refining margin per sales barrel - calculated as adjusted
refining margin divided by our average refining sales in barrels per day
(excluding purchased barrels) multiplied by 1,000 and multiplied by the
number of days in the period;
We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved relevant comparability between periods, to peers or to market metrics through the inclusion of retroactive regulatory or other adjustments as if they had occurred in the prior periods they relate to, or through the exclusion of certain items that we believe are not indicative of our core operating performance and that may obscure our underlying results and trends.
Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. Additionally, because Adjusted net income or loss, Adjusted net income or loss per share, EBITDA and adjusted EBITDA, and Adjusted Segment Contribution Margin or any of our other identified non-GAAP measures may be defined differently by other companies in its industry, Delek US' definition may not be comparable to similarly titled measures of other companies. See the accompanying tables in this earnings release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.
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Delek US Holdings, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)
December 31, 2020 December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $
787.5 $
955.3
Accounts receivable, net 527.9 792.6
Inventories, net of inventory valuation reserves 727.7 946.7
Other current assets 256.4 268.7
Total current assets 2,299.5 2,963.3
Property, plant and equipment:
Property, plant and equipment 3,519.5 3,362.8
Less: accumulated depreciation (1,152.3) (934.5)
Property, plant and equipment, net 2,367.2 2,428.3
Operating lease right-of-use assets 182.0 183.6
Goodwill 729.7 855.7
Other intangibles, net 107.8 110.3
Equity method investments 363.6 407.3
Other non-current assets 84.3 67.8
Total assets $
6,134.1 $
7,016.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
1,144.0 $
1,599.7
Current portion of long-term debt 33.4 36.4
Obligation under Supply and Offtake Agreements 129.2 332.5
Current portion of operating lease liabilities 50.2 40.5
Accrued expenses and other current liabilities 546.4 346.8
Total current liabilities 1,903.2 2,355.9
Non-current liabilities:
Long-term debt, net of current portion 2,315.0 2,030.7
Obligation under Supply and Offtake Agreements 224.9 144.8
Environmental liabilities, net of current portion 107.4 137.9
Asset retirement obligations 37.5 68.6
Deferred tax liabilities 255.5 267.9
Operating lease liabilities, net of current portion 131.8 144.3
Other non-current liabilities 33.7 30.9
Total non-current liabilities 3,105.8 2,825.1
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, 91,356,868 shares 0.9 0.9
and 90,987,025 shares issued at December 31, 2020 and 2019, respectively
Additional paid-in capital 1,185.1 1,151.9
Accumulated other comprehensive (loss) income (7.2) 0.1
Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of December 31, 2020 and 2019, (694.1) (692.2)
respectively
Retained earnings 522.0 1,205.6
Non-controlling interests in subsidiaries 118.4 169.0
Total stockholders' equity 1,125.1 1,835.3
Total liabilities and stockholders' equity $
6,134.1 $
7,016.3
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Delek US Holdings, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except share and per share data)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Net revenues $
1,882.2 $
2,283.7 $
7,301.8 $
9,298.2
Cost of sales:
Cost of materials and other 1,776.9 1,926.0 6,841.2 7,657.2
Operating expenses (excluding depreciation and amortization presented below) 113.7 161.8 462.0 580.2
Depreciation and amortization 81.6 45.0 241.6 170.7
Total cost of sales 1,972.2 2,132.8 7,544.8 8,408.1
Operating expenses related to retail and wholesale business 24.1 24.5 97.8 102.0
(excluding depreciation and amortization presented below)
General and administrative expenses 63.9 77.4 248.3 274.7
Depreciation and amortization 8.6 2.6 26.0 23.6
Impairment of goodwill 126.0 126.0
Other operating expense (income), net 1.5 (1.8) (13.1) (2.5)
Total operating costs and expenses 2,196.3 2,235.5 8,029.8 8,805.9
Operating (loss) income (314.1) 48.2 (728.0) 492.3
Interest expense 31.0 35.7 129.0 131.1
Interest income (0.2) (2.3) (3.3) (11.3)
Income from equity method investments (1.7) (5.9) (30.3) (34.3)
Gain on sale on non-operating refinery (56.8)
Other (income) expense, net (0.1) 0.8 (3.5) 4.1
Total non-operating expense, net 29.0 28.3 35.1 89.6
(Loss) income before income tax (benefit) expense (343.1) 19.9 (763.1) 402.7
Income tax (benefit) expense (58.1) (12.1) (192.7) 71.7
(Loss) income from continuing operations, net of tax (285.0) 32.0 (570.4) 331.0
Discontinued operations:
Income from discontinued operations, including loss on sale of 7.6 6.6
discontinued operations
Income tax expense 1.6 1.4
Income from discontinued operations, net of tax 6.0 5.2
Net (loss) income (285.0) 38.0 (570.4) 336.2
Net income attributed to non-controlling interests 8.2 5.3 37.6 25.6
Net (loss) income attributable to Delek $
(293.2) $
32.7 $
(608.0) $
310.6
Basic (loss) income per share:
(Loss) income from continuing operations $
(3.98) $
0.36 $
(8.26) $
4.03
Income from discontinued operations 0.08
$ $
0.07
Basic (loss) income per share $
(3.98) $
0.44 $
(8.26) $
4.10
Diluted (loss) income per share:
(Loss) income from continuing operations $
(3.98) $
0.36 $
(8.26) $
3.99
Income from discontinued operations 0.08
$ $
0.07
Diluted (loss) income per share $
(3.98) $
0.44 $
(8.26) $
4.06
Weighted average common shares outstanding:
Basic 73,736,637 74,042,343 73,598,389 75,853,187
Diluted 73,736,637 74,700,926 73,598,389 76,574,091
Dividends declared per common share outstanding
$ $
0.30 $
0.93 $
1.14
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Delek US Holdings, Inc.
Condensed Cash Flow Data (Unaudited)
(In millions)
Three Months Ended December 31, Year Ended December 31,
---
2020 2019 2020 2019
---
Cash flows from operating activities:
Net cash provided by (used in) operating activities $
116.9 $
126.8 $
(282.9) $
575.2
Cash flows from investing activities:
Net cash used in investing activities (28.3) (181.8) (191.3) (691.3)
Cash flows from financing activities:
Net cash (used in) provided by financing activities (109.0) 3.9 306.4 (7.9)
Net decrease in cash and cash equivalents (20.4) (51.1) (167.8) (124.0)
Cash and cash equivalents at the beginning of the period 807.9 1,006.4 955.3 1,079.3
Cash and cash equivalents at the end of the period $
787.5 $
955.3 $
787.5 $
955.3
COVID-19 Tax Legislative Changes
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was enacted into law. The Act includes several significant provisions for corporations, including the usage of net operating losses, interest deductions and payroll benefits. Pursuant to the provisions of the CARES Act, we recognized $16.8 million of current federal income tax benefit for the year ended December 31, 2020 (none of which was recognized in the fourth quarter) attributable to anticipated tax refunds from net operating loss carrybacks to prior 35% tax rate years. Additionally, we recorded a federal income tax receivable totaling $156.2 million as of December 31, 2020 related to the net operating loss carryback, which we expect to collect $135.6 million in the first half of 2021 and the remaining balance within eighteen months.
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Delek US Holdings, Inc.
Segment Data (Unaudited)
(In millions)
Three Months Ended December 31, 2020
Refining Logistics Retail Corporate, Consolidated
Other and
Eliminations
Net revenues (excluding inter-segment fees and revenues) $
1,341.4 $
50.0 $
160.0 $
330.8 $
1,882.2
Inter-segment fees and revenues 107.9 90.1 (198.0)
Operating costs and expenses:
Cost of materials and other 1,431.1 63.2 123.6 159.0 1,776.9
Operating expenses (excluding depreciation and 100.2 14.7 23.7 (0.8) 137.8
amortization presented below)
Segment contribution margin $
(82.0) $
62.2 $
12.7 $
(25.4) $
(32.5)
Depreciation and amortization $
66.0 $
11.3 $
4.1 $
8.8 90.2
Impairment of goodwill $
126.0
$
$
$ 126.0
General and administrative expenses 63.9
Other operating loss, net 1.5
Operating loss $
(314.1)
Capital spending (excluding business combinations) $
20.1 $
8.5 $
0.9 $
2.1 $
31.6
Three Months Ended December 31, 2019
Refining (1) Logistics Retail Corporate, Consolidated
Other and
Eliminations (1)
Net revenues (excluding inter-segment fees and revenues) $
1,999.1 $
68.7 $
197.8 $
18.1 $
2,283.7
Inter-segment fees and revenues 162.8 69.9 (232.7)
Operating costs and expenses:
Cost of materials and other 1,898.4 73.8 162.8 (209.0) 1,926.0
Operating expenses (excluding depreciation and 135.7 22.3 22.9 5.4 186.3
amortization presented below)
Segment contribution margin $
127.8 $
42.5 $
12.1 $
(11.0) $
171.4
Depreciation and amortization $
35.4 $
6.9 $
(0.3) $
5.6 47.6
General and administrative expenses 77.4
Other operating income, net (1.8)
Operating income $
48.2
Capital spending (excluding business combinations) $
72.8 $
3.7 $
6.2 $
20.6 $
103.3
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Delek US Holdings, Inc.
Segment Data (Unaudited)
(In millions)
Year Ended December 31, 2020
Refining Logistics Retail Corporate, Consolidated
Other and
Eliminations
Net revenues (excluding inter-segment fees and revenues) $
5,363.1 $
183.6 $
681.7 $
1,073.4 $
7,301.8
Inter-segment fees and revenues 454.6 379.8 (834.4)
Operating costs and expenses:
Cost of materials and other 5,745.5 269.1 523.6 303.0 6,841.2
Operating expenses (excluding depreciation 402.7 56.2 90.5 10.4 559.8
and amortization presented below)
Segment contribution margin $
(330.5) $
238.1 $
67.6 $
(74.4) $
(99.2)
Depreciation and amortization $
198.3 $
35.7 $
13.2 $
20.4 267.6
Impairment of goodwill $
126.0
$
$
$ 126.0
General and administrative expenses 248.3
Other operating income, net (13.1)
Operating loss $
(728.0)
Capital spending (excluding business combinations) $
201.0 $
15.8 $
9.1 $
13.7 $
239.6
Year Ended December 31, 2019
Refining (1) Logistics Retail Corporate, Consolidated
Other and
Eliminations
(1)
Net revenues (excluding inter-segment fees and revenues) $
8,095.9 $
323.0 $
838.0 $
41.3 $
9,298.2
Inter-segment fees and revenues 702.6 261.0 (963.6)
Operating costs and expenses:
Cost of materials and other 7,528.2 336.5 684.7 (892.2) 7,657.2
Operating expenses (excluding depreciation and 492.4 74.1 94.8 20.9 682.2
amortization presented below)
Segment contribution margin $
777.9 $
173.4 $
58.5 $
(51.0) $
958.8
Depreciation and amortization $
134.3 $
26.7 $
11.2 $
22.1 194.3
General and administrative expenses 274.7
Other operating income, net (2.5)
Operating income $
492.3
Capital spending (excluding business combinations) $
266.6 $
9.9 $
20.5 $
131.1 $
428.1
(1) The refining segment results of
operations for the three months
and year ended December 31,
2019, includes hedging (losses)
gains, a component of cost of
materials and other, of $(33.7)
million and $16.3 million,
respectively, which was
previously included and
reported in corporate, other
and eliminations.
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Delek US Holdings, Inc.
Schedule of Inventory/Commodity Hedging Gains (Losses)
$ in millions
Three Months Ended December 31, 2020
---
Inventory/Commodity Hedging Gains (Losses) Refining Logistics Retail Corporate, Consolidated
Included in Segment Contribution Margin Other and
Eliminations
---
Inventory/Commodity unrealized hedging gain (loss)
Unrealized inventory/commodity hedging gain (loss) $
(4.8)
$
$
$ $
(4.8)
where the hedged item is currently recognized in
the financial statements
Unrealized inventory/commodity hedging gain (loss) 19.6 (0.4) (0.5) 18.7
where the hedged item is not yet recognized in the
financial statements (1)
Total inventory/commodity unrealized hedging gain (loss) 14.8 (0.4) (0.5) 13.9
Total inventory/commodity realized hedging gain (loss) (19.5) 3.3 (16.2)
Total inventory/commodity hedging gain (loss) $
(4.7) $
(0.4)
$ $
2.8 $
(2.3)
Delek US Holdings, Inc.
Schedule of Inventory/Commodity Hedging Gains (Losses)
$ in millions
Three Months Ended December 31, 2019
---
Inventory/Commodity Hedging Gains (Losses) Refining Logistics Retail Corporate, Consolidated
Included in Segment Contribution Margin Other and
Eliminations
---
Inventory/Commodity unrealized hedging gain (loss)
Unrealized inventory/commodity hedging gain (loss) $
5.7
$
$
$ $
5.7
where the hedged item is currently recognized in the
financial statements
Unrealized inventory/commodity hedging gain (loss) (17.8) (0.1) 1.4 (16.5)
where the hedged item is not yet recognized in the
financial statements (1)
Total inventory/commodity unrealized hedging gain (loss) (12.1) (0.1) 1.4 (10.8)
Total inventory/commodity realized hedging gain (loss) (19.5) (0.2) (6.6) (26.3)
Total inventory/commodity hedging gain (loss) $
(31.6) $
(0.3)
$ $
(5.2) $
(37.1)
10|
Delek US Holdings, Inc.
Schedule of Inventory/Commodity Hedging Gains (Losses)
$ in millions
Year Ended December 31, 2020
---
Inventory/Commodity Hedging Gains (Losses) Refining Logistics Retail Corporate, Consolidated
Included in Segment Contribution Margin Other and
Eliminations
---
Inventory/Commodity unrealized hedging gain (loss)
Unrealized inventory/commodity hedging gain (loss) $
2.2
$
$
$ $
2.2
where the hedged item is currently recognized in the
financial statements
Unrealized inventory/commodity hedging gain (loss) 18.7 (0.1) 1.9 20.5
where the hedged item is not yet recognized in the
financial statements (1)
Total inventory/commodity unrealized hedging gain (loss) 20.9 (0.1) 1.9 22.7
Total inventory/commodity realized hedging gain (loss) (89.0) 1.8 (23.0) (110.2)
Total inventory/commodity hedging gain (loss) $
(68.1) $
1.7
$ $
(21.1) $
(87.5)
Delek US Holdings, Inc.
Schedule of Inventory/Commodity Hedging Gains (Losses)
$ in millions
Year Ended December 31, 2019
---
Inventory/Commodity Hedging Gains (Losses) Refining Logistics Retail Corporate, Consolidated
Included in Segment Contribution Margin Other and
Eliminations
Unrealized inventory/commodity hedging gain (loss) $
(9.2)
$
$
$ $
(9.2)
where the hedged item is currently recognized in the
financial statements
Unrealized inventory/commodity hedging gain (loss) (18.7) (0.4) (3.5) (22.6)
where the hedged item is not yet recognized in the
financial statements (1)
Total inventory/commodity unrealized hedging gain (loss) (27.9) (0.4) (3.5) (31.8)
Total inventory/commodity realized hedging gain (loss) 60.6 (0.4) (8.9) 51.3
Total inventory/commodity hedging gain (loss) $
32.7 $
(0.8)
$ $
(12.4) $
19.5
(1) Represents an Adjusted item in
certain of our non-GAAP
measures.
11|
Refining Segment Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Tyler, TX Refinery
(Unaudited)
(Unaudited)
---
Days in period 92 92 366 365
Total sales volume - refined product (average barrels per day)(1) 74,152 75,931 74,075 76,178
Products manufactured (average barrels per day):
Gasoline 42,444 42,347 40,031 40,801
Diesel/Jet 29,935 30,635 29,220 30,673
Petrochemicals, LPG, NGLs 2,114 1,816 2,794 2,798
Other 1,516 1,537 1,461 1,554
Total production 76,009 76,335 73,506 75,826
Throughput (average barrels per day):
Crude oil 68,388 70,284 51,854 70,516
Other feedstocks 7,876 6,355 22,126 5,873
Total throughput 76,264 76,639 73,980 76,389
Total refining revenue ( $ in millions) $
377.3 $
552.8 $
1,432.2 $
2,209.2
Cost of materials and other ($ in millions) 328.9 475.3 1,331.7 1,817.5
Total refining margin ($ in millions) (2) $
48.4 $
77.5 $
100.5 $
391.7
Per barrel of refined product sales:
Tyler refining margin (2) $
7.08 $
11.09 $
3.71 $
14.09
Tyler adjusted refining margin (2) $
1.99 $
9.68 $
4.78 $
12.42
Operating expenses $
3.75 $
4.33 $
3.45 $
3.91
Crude Slate: (% based on amount received in period)
WTI crude oil 92.0 90.3 92.0 89.0
% % % %
East Texas crude oil 8.0 9.7 8.0
% 11.0
% % %
El Dorado, AR Refinery
---
Days in period 92 92 366 365
Total sales volume - refined product (average barrels per day)(1) 70,781 74,617 75,992 62,420
Products manufactured (average barrels per day):
Gasoline 34,364 37,551 35,480 27,712
Diesel 25,320 27,263 28,429 20,753
Petrochemicals, LPG, NGLs 1,291 1,290 1,772 872
Asphalt 6,781 4,461 6,687 5,533
Other 753 903 789 735
Total production 68,509 71,468 73,157 55,605
Throughput (average barrels per day):
Crude oil 64,301 69,913 70,385 54,420
Other feedstocks 4,078 2,007 2,979 1,576
Total throughput 68,379 71,920 73,364 55,996
Total refining revenue ( $ in millions) $
381.1 $
911.6 $
1,788.8 $
3,291.1
Cost of materials and other ($ in millions) 410.2 876.2 $
1,809.3 3,123.0
Total refining margin ($ in millions) (2) $
(29.1) $
35.4 $
(20.5) $
168.1
Per barrel of refined product sales:
El Dorado refining margin (2) $
(4.47) $
5.15 $
(0.74) $
7.38
El Dorado adjusted refining margin (2) $
(4.63) $
4.24 $
(0.74) $
6.89
Operating expenses $
4.09 $
5.37 $
3.81 $
5.73
Crude Slate: (% based on amount received in period)
WTI crude oil 63.2 41.4 52.3 39.3
% % % %
Local Arkansas crude oil 19.4 17.7 17.8 23.1
% % % %
Other 17.4 40.9 29.9 37.6
% % % %
12|
Refining Segment (continued) Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Big Spring, TX Refinery
(Unaudited)
(Unaudited)
---
Days in period - based on date acquired 92 92 366 365
Total sales volume - refined product (average barrels per day) (1) 78,387 72,559 65,508 76,413
Products manufactured (average barrels per day):
Gasoline 40,702 36,578 32,340 36,352
Diesel/Jet 26,539 27,025 23,283 27,602
Petrochemicals, LPG, NGLs 3,849 3,705 3,183 3,746
Asphalt 1,594 2,036 1,685 1,870
Other 1,383 1,292 1,119 1,327
Total production 74,067 70,636 61,610 70,897
Throughput (average barrels per day):
Crude oil 72,454 72,338 61,428 72,039
Other feedstocks 2,067 (1,790) 1,078 (453)
Total throughput 74,521 70,548 62,506 71,586
Total refining revenue ( $ in millions) $
427.3 $
555.3 $
1,531.7 $
2,366.5
Cost of materials and other ($ in millions) 427.8 487.0 1,497.2 1,984.6
Total refining margin ($ in millions) (2) $
(0.5) $
68.3 $
34.5 $
381.9
Per barrel of refined product sales:
Big Spring refining margin (2) $
(0.07) $
10.23 $
1.44 $
13.69
Big Spring adjusted refining margin (2) $
(0.08) $
10.06 $
1.47 $
13.56
Operating expenses $
3.95 $
5.54 $
4.33 $
4.35
Crude Slate: (% based on amount received in period)
WTI crude oil 58.9 74.0 67.0 75.5
% % % %
WTS crude oil 41.1 26.0 33.0 24.5
% % % %
Krotz Springs, LA Refinery
---
Days in period - based on date acquired 92 92 366 365
Total sales volume - refined product (average barrels per day) (1) 36,219 56,576 61,302 70,511
Products manufactured (average barrels per day):
Gasoline 1,980 32,848 20,615 35,026
Diesel/Jet 5,455 24,823 20,422 28,049
Heavy oils 1,198 418 1,131
Petrochemicals, LPG, NGLs 1,647 3,296 2,223 4,647
Other 20,645 13,512 26
Total production 29,727 62,165 57,190 68,879
Throughput (average barrels per day):
Crude oil 23,665 59,594 53,875 67,943
Other feedstocks 9,222 317 4,126 (366)
Total throughput 32,887 59,911 58,001 67,577
Total refining revenue ( $ in millions) $
267.5 $
458.0 $
1,266.6 $
2,175.7
Cost of materials and other ($ in millions) 279.5 412.6 1,296.3 1,914.2
Total refining margin ($ in millions) $
(12.0) $
45.4 $
(29.7) $
261.5
Per barrel of refined product sales:
Krotz Springs refining margin (2) $
(3.61) $
8.72 $
(1.32) $
10.16
Krotz Springs adjusted refining margin (2) $
(3.80) $
7.98 $
(1.32) $
9.70
Operating expenses $
5.30 $
5.55 $
3.97 $
4.46
Crude Slate: (% based on amount received in period)
WTI Crude 77.0 65.4 70.1 72.0
% % % %
Gulf Coast Sweet Crude 23.0 34.6 29.1 28.0
% % % %
Other % % 0.8
% %
(1)
Includes inter-refinery sales and sales to other segments which are eliminated in consolidation.
(2)
See Other Items Impacting Refining Margin discussed below.
13|
Other Items Impacting Refining Margin:
In addition to the items that were reflected as adjustments for deriving our Adjusted refining margin, which then was used to calculate Adjusted refining margin per barrel, there were other items that were recognized during the periods that impacted our Refining margins at the refineries. The primary items are as follows:
Other Inventory Impact: "Other inventory impact" is primarily calculated by multiplying the number of barrels sold during the period by the difference between current period weighted average NYMEX WTI purchase cost and per barrel cost of materials and other for the period recognized on a FIFO basis. It assumes no beginning or ending inventory, so that the current period average market price reflects the weighted average NYMEX WTI purchase cost for the current period only, without giving effect to any build or draw on beginning inventory. These amounts are based on management estimates using a methodology including these assumptions, and are not intended to be a true representation of results under LIFO. However, this analysis provides management with a means to compare hypothetical refining margins to current crack spreads, as well as provides a means to better compare our results to peers, the majority of which value inventory on a LIFO basis.
Purchased Product Margins: We buy and sell purchased product to optimize margins and to meet contractual demands, as needed. To the extent that we purchase product to meet contractual demands, such as during turnarounds or unit outages, we are subject to margin risk that is often out of our control. Such margins may have a favorable or unfavorable impact on our refining margins. Such margins are estimated based on accounting information available to management, and are used for management review purposes.
Summary of Other Favorable (Unfavorable) Items
Impacting Refining Margin:
$ in millions
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Tyler
Gross Estimated $ Impact
---
Purchased product margins $
2.3 $
0.3 $
1.7
$
Significant impact of fixed price crude transactions (1) (4.1) 95.5
$
(1.8) $
0.3 $
97.2
$
El Dorado
Gross Estimated $ Impact
---
Other inventory impact $
(13.5)
$ $
(65.4)
$
Purchased product margins 2.9 (3.2) 6.8 10.8
$
(10.6) $
(3.2) $
(58.6) $
10.8
Big Spring
Gross Estimated $ Impact
---
Other inventory impact $
3.1
$ $
(40.7)
$
Purchased product margins (0.6) (0.6) (7.4) 1.8
$
2.5 $
(0.6) $
(48.1) $
1.8
Krotz Springs
Gross Estimated $ Impact
---
Other inventory impact $
(3.2)
$ $
(27.7)
$
Purchased product margins (0.1) 1.1 (33.6) 5.5
$
(3.3) $
1.1 $
(61.3) $
5.5
(1) We enter into a significant number
of physical forward contracts for
crude in order to optimize our
crude cost across refineries, and
which are reflected as changes in
our cost of materials and other
when realized, under the normal
purchase normal sale provisions of
GAAP. During the optimization
process, the majority of these
crude physical contracts are
transacted at Tyler. Such physical
crude, once fully optimized and
physically delivered and available
for production, is transferred to
the appropriate refinery's
inventory at realized cost.
Additionally, we routinely hedge
our inventory positions based on
segment-wide strategies, which
are included in our refining
segment contribution margin but
are not necessarily specifically
designated to specific refineries
or identifiable trades. As a
result, the refineries recognize
actual realized inventory cost
based on the physical contracts,
whereas offsetting hedges are
reflected only in the overall
refining segment refining and
contribution margins. Typically,
such offsetting hedges are not
material to any particular
refinery, because of the segment-
wide strategies employed. However,
because of the historic volatility
in the crude market during 2020
and the fact that we transact the
majority of our optimization
transactions at Tyler, the Tyler
margins were impacted by
relatively large fixed price crude
transaction losses during 2020.
Such losses were hedged in the
refining segment but outside the
Tyler refining margins, resulting
in a corresponding realized
hedging gain of $4.1 million pre-
tax for the quarter ended December
31, 2020. On a year-to-date
basis, the impact of these fixed
price crude transactions on the
Tyler refining margin was a
benefit of $95.5 million, where
the offsetting net hedging loss
was recognized separately.
14|
Included in the refinery statistics above are the following inter-refinery and sales to other segments:
Inter-refinery Sales
Three Months Ended December 31, Year Ended December 31,
(in barrels per day) 2020 2019 2020 2019
---
(Unaudited)
(Unaudited)
Tyler refined product sales to other Delek refineries 2,598 908 2,010 894
El Dorado refined product sales to other Delek refineries 477 4,894 924 5,039
Big Spring refined product sales to other Delek refineries 830 398 1,356 990
Krotz Springs refined product sales to other Delek refineries 259 12,552 190 9,734
Refinery Sales to Other Segments
Three Months Ended December 31, Year Ended December 31,
(in barrels per day) 2020 2019 2020 2019
---
(Unaudited)
(Unaudited)
Tyler refined product sales to other Delek segments 639 429 1,623 252
El Dorado refined product sales to other Delek segments 10 11 94 83
Big Spring refined product sales to other Delek segments 21,891 24,075 22,601 25,223
Krotz Springs refined product sales to other Delek segments 439 1,030 362 462
Pricing statistics
(average for the period presented)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
WTI - Cushing crude oil (per barrel) $
42.63 $
56.88 $
39.89 $
56.99
WTI - Midland crude oil (per barrel) $
43.07 $
57.80 $
40.02 $
56.31
WTS -- Midland crude oil (per barrel) (1) $
43.16 $
57.21 $
39.96 $
56.27
LLS (per barrel) (1) $
44.14 $
60.68 $
41.56 $
62.65
Brent crude oil (per barrel) $
45.26 $
62.39 $
43.24 $
64.14
U.S. Gulf Coast 5-3-2 crack spread (per barrel) (1) $
7.83 $
14.27 $
8.18 $
15.77
U.S. Gulf Coast 3-2-1 crack spread (per barrel) (1) $
8.08 $
14.86 $
8.70 $
16.71
U.S. Gulf Coast 2-1-1 crack spread (per barrel) (1) $
4.46 $
10.40 $
4.65 $
9.90
U.S. Gulf Coast Unleaded Gasoline (per gallon) $
1.17 $
1.58 $
1.09 $
1.63
Gulf Coast Ultra low sulfur diesel (per gallon) $
1.24 $
1.87 $
1.19 $
1.88
U.S. Gulf Coast high sulfur diesel (per gallon) $
1.13 $
1.76 $
1.06 $
1.76
Natural gas (per MMBTU) $
2.76 $
2.41 $
2.13 $
2.53
(1) For our Tyler and El Dorado
refineries, we compare our per
barrel refining product margin
to the Gulf Coast 5-3-2 crack
spread consisting of WTI Cushing
crude, U.S. Gulf Coast CBOB and
U.S, Gulf Coast Pipeline No. 2
heating oil (ultra low sulfur
diesel). For our Big Spring
refinery, we compare our per
barrel refined product margin to
the Gulf Coast 3-2-1 crack
spread consisting of WTI Cushing
crude, Gulf Coast 87
Conventional gasoline and Gulf
Coast ultra-low sulfur diesel,
and for our Krotz Springs
refinery, we compare our per
barrel refined product margin to
the Gulf Coast 2-1-1 crack
spread consisting of LLS crude
oil, Gulf Coast 87 Conventional
gasoline and U.S, Gulf Coast
Pipeline No. 2 heating oil (high
sulfur diesel). The Tyler
refinery's crude oil input is
primarily WTI Midland and East
Texas, while the El Dorado
refinery's crude input is
primarily a combination of WTI
Midland, local Arkansas and
other domestic inland crude oil.
The Big Spring refinery's crude
oil input is primarily comprised
of WTS and WTI Midland. The
Krotz Springs refinery's crude
oil input is primarily comprised
of LLS and WTI Midland.
15|
Delek US Holdings, Inc.
Reconciliation of Refining margin per barrel to Adjusted Refining margin per barrel (1)
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Combined Refineries
Reported refining margin, $ per barrel $
0.24 $
7.62 $
0.74 $
10.12
Adjusting items:
---
Net inventory LCM valuation loss (benefit) (1.32) (0.71) 0.26 (0.44)
RIN waiver (0.10)
Adjusted refining margin $/bbl $
(1.08) $
6.91 $
1.00 $
9.58
Tyler (2)
Reported refining margin, $ per barrel $
7.08 $
11.09 $
3.71 $
14.09
Adjusting items:
---
Net inventory LCM valuation loss (benefit) (5.09) (1.41) 1.07 (1.37)
RIN waiver (0.30)
Adjusted refining margin $/bbl $
1.99 $
9.68 $
4.78 $
12.42
El Dorado (3)
Reported refining margin, $ per barrel $
(4.47) $
5.15 $
(0.74) $
7.38
Adjusting items:
---
Net inventory LCM valuation loss (benefit) (0.16) (0.91) (0.17)
RIN waiver (0.32)
Adjusted refining margin $/bbl $
(4.63) $
4.24 $
(0.74) $
6.89
Big Spring (4)
Reported refining margin, $ per barrel $
(0.07) $
10.23 $
1.44 $
13.69
Adjusting items:
---
Net inventory LCM valuation loss (benefit) (0.01) (0.17) 0.03 (0.13)
Adjusted refining margin $/bbl $
(0.08) $
10.06 $
1.47 $
13.56
Krotz Springs (5)
Reported refining margin, $ per barrel $
(3.61) $
8.72 $
(1.32) $
10.16
Adjusting items:
---
Net inventory LCM valuation loss (benefit) (0.19) (0.74) (0.27)
RIN waiver (0.19)
Adjusted refining margin $/bbl $
(3.80) $
7.98 $
(1.32) $
9.70
(1) Adjusted refining margin per barrel is presented to
provide a measure to evaluate performance excluding
inventory valuation adjustments and other items at
the individual refinery level. Delek US believes
that the presentation of adjusted measures provides
useful information to investors in assessing its
results of operations at each refinery. Because
adjusted refining margin per barrel may be defined
differently by other companies in its industry,
Delek US' definition may not be comparable to
similarly titled measures of other companies.
Additionally, management evaluates other impacts to
refining margin by refinery which may not represent
adjustments, but which provide information useful
for evaluating the results compared to current
crack spreads and peers. See the 'Other Items
Impacting Refining Margin' for further discussion.
(2) Tyler adjusted refining margins exclude the
following items:
Net inventory LCM valuation loss/benefit
-There was a net valuation benefit of
approximately $34.7 million and $9.9 million in the
fourth quarter 2020 and 2019, respectively. There
was approximately $29.1 million of net valuation
loss and $38.2 million of net valuation benefit for
the year ended December 31, 2020 and 2019,
respectively.
RIN waiver -In August 2019, the Tyler, Texas
refinery received approval from the Environmental
Protection Agency for a small refinery exemption
from the requirements of the renewable fuel
standard for the 2018 calendar year. This waiver
equated to a benefit of approximately $8.5 million
recognized in the third quarter 2019.
Note also that Tyler's Refining margin per barrel
and the Adjusted refining margin per barrel for the
three months ended December 31, 2020 both reflect
the $(4.1) million margin impact of unfavorable
fixed price crude cost transactions during the
quarter, but exclude the offsetting realized
hedging gains of approximately $4.1 million, and
the Refining margin per barrel and the Adjusted
refining margin per barrel for the year ended
December 31, 2020 both reflect the $95.5 million
margin benefit of favorable fixed price crude cost
transactions during the quarter, but exclude the
offsetting realized hedging losses of approximately
$(95.5) million Giving effect to the related
hedging gains (losses), both the Refining margin
per barrel and the Adjusted refining margin per
barrel would have increased by $0.57 for the three
months ended December 31, 2020, and would have
decreased by $(3.34) for the year ended December
31, 2020. See further discussion in the section
'Other Items Impacting Refining Margin' previously
presented.
16|
(3) El Dorado Adjusted refining margins exclude the
following items:
Net inventory LCM valuation loss/benefit
-There was approximately $1.0 million and $6.3
million of net valuation benefit in the fourth
quarter 2020 and 2019, respectively. There was
approximately $0.1 million and $3.8 million of net
valuation benefit for the year ended December 31,
2020 and 2019, respectively.
RIN waiver -In August 2019, the El Dorado, Arkansas
refinery received approval from the Environmental
Protection Agency for a small refinery exemption
from the requirements of the renewable fuel
standard for the 2018 calendar year. This waiver
equated to a benefit of approximately $7.4 million
recognized in the third quarter 2019.
(4) Big Spring Adjusted refining margins exclude the
following items:
Net inventory LCM valuation loss/benefit
-There was approximately $0.1 million and $1.1
million of net valuation benefit in the fourth
quarter 2020 and 2019, respectively. There was
approximately $0.7 of net valuation loss and
approximately $3.5 million of net valuation benefit
for the year ended December 31, 2020 and 2019,
respectively.
(5) Krotz Springs Adjusted refining margins exclude the
following items:
Net inventory LCM valuation loss/benefit
-There was approximately $0.6 million and $3.9
million of net valuation benefit in the fourth
quarter 2020 and 2019, respectively. There was
nominal net valuation benefit and approximately
$7.0 million for the year ended December 31, 2020
and 2019, respectively.
RIN waiver -In August 2019, the Krotz Springs,
Louisiana refinery received approval from the
Environmental Protection Agency for a small
refinery exemption from the requirements of the
renewable fuel standard for the 2018 calendar year.
This waiver equated to a benefit of approximately
$4.9 million recognized in the third quarter 2019.
Logistics Segment Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Pipelines & Transportation: (average bpd)
Lion Pipeline System:
Crude pipelines (non-gathered) 66,521 69,910 74,179 49,485
Refined products pipelines 48,900 53,960 53,702 37,716
SALA Gathering System 13,308 15,919 13,466 15,325
East Texas Crude Logistics System 16,719 16,612 15,960 19,927
Big Spring Gathering System (3) 76,795 82,817
Plains Connection System (3) 120,304 104,770
Wholesale Marketing & Terminalling:
East Texas - Tyler Refinery sales volumes (average bpd) (1) 73,584 73,016 71,182 74,206
West Texas wholesale marketing throughputs (average bpd) 9,915 9,972 11,264 11,075
West Texas wholesale marketing margin per barrel $
2.36 $
3.12 $
2.37 $
4.44
Big Spring wholesale marketing throughputs (average bpd) 84,219 79,985 76,345 82,695
Terminalling throughputs (average bpd) (2) 153,243 160,298 147,251 160,075
(1) Excludes jet fuel and petroleum
coke.
(2) Consists of terminalling
throughputs at our Tyler, Big
Spring, Big Sandy and Mount
Pleasant, Texas, El Dorado and
North Little Rock, Arkansas and
Memphis and Nashville, Tennessee
terminals.
(3) Throughputs for the Big Spring
Gathering System and the Plains
Connection System are for the
approximately 275 days we owned
the assets following the Big
Spring Gathering Assets
Acquisition effective March 31,
2020.
17|
Retail Segment Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Number of stores (end of period) 253 252 253 252
Average number of stores 253 258 253 266
Average number of fuel stores 248 251 248 259
Retail fuel sales (thousands of gallons) 41,453 51,518 176,924 214,094
Average retail gallons sold per average number of fuel stores (in 167 205 715 827
thousands)
Average retail sales price per gallon sold $
2.03 $
2.42 $
2.02 $
2.45
Retail fuel margin ($ per gallon) (1) $
0.33 $
0.29 $
0.35 $
0.28
Merchandise sales (in millions) $
75.9 $
72.9 $
323.8 $
313.1
Merchandise sales per average number of stores (in millions) $
0.3 $
0.3 $
1.3 $
1.2
Merchandise margin % 30.1 30.6 31.0 30.8
% % % %
Three Months Ended December 31, Year Ended December 31,
2020 2019 2020 2019
Same-Store Comparison (2)
(Unaudited)
(Unaudited)
Change in same-store fuel gallons sold (22.7) 2.4 % (17.3) 2.9
% %
%
Change in same-store merchandise sales 2.2 0.5 6.2 (1.0)
% %
% %
(1)
Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel
margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.
(2)
Same-store comparisons include period-over-period changes in specified metrics for stores that were in service at both the beginning of the earliest period and the end
of the most recent period used in the comparison.
18|
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended December 31, Year Ended December 31,
Reconciliation of Net Income (Loss) attributable to Delek to 2020 2019 2020 2019
Adjusted Net Income (Loss)
---
(Unaudited)
(Unaudited)
Reported net income (loss) attributable to Delek $
(293.2) $
32.7 $
(608.0) $
310.6
Adjusting items
---
Net inventory LCM valuation (benefit) loss (36.4) (20.8) 29.2 (52.3)
Tax effect 8.5 4.9 (6.8) 12.3
Net after-tax inventory LCM valuation (benefit) loss (27.9) (15.9) 22.4 (40.0)
Unrealized inventory/commodity hedging (gain) loss where the hedged (18.7) 16.5 (20.5) 22.6
item is not yet recognized in the financial statements
Unrealized RINs and other hedging (gain) loss where the hedged item 1.4 1.4
is not yet recognized in the financial statements
Total unrealized hedging (gain) loss where the hedged item is not yet (17.3) 16.5 (19.1) 22.6
recognized in the financial statements
Tax effect 4.1 (3.7) 4.5 (5.1)
Net after-tax unrealized hedging (gain) loss where the hedged item is not (13.2) 12.8 (14.6) 17.5
yet recognized in the financial statements
Non-cash change in fair value of Supply and Offtake ("S&O") Obligation 8.3 6.9
associated with hedging activities (1)
Tax effect (1.8) (1.5)
Net after-tax non-cash change in fair value of S&O Obligation associated 6.5 5.4
with hedging activities
Goodwill impairment expense 126.0 126.0
Tax effect (5.2) (5.2)
Net after-tax goodwill impairment expense 120.8 120.8
Gain from sale of Bakersfield non-operating refinery (56.8)
Tax effect 13.5
Net gain from sale of Bakersfield non-operating refinery (43.3)
COVID-related severance costs 3.9 8.5
Tax effect (0.9) (2.0)
Net after-tax COVID-related severance costs 3.0 6.5
Non-operating, pre-acquisition litigation contingent losses and related 6.7
legal expenses
Tax effect (1.5)
Net after-tax non-operating pre-acquisition litigation contingent losses and 5.2
related legal expenses
Retroactive biodiesel tax credit (2) (36.0) (36.0)
Tax effect 0.1 0.1
Net after-tax retroactive biodiesel tax credit (35.9) (35.9)
Non-operating write-off of pre-acquisition asset 4.8 4.8
Tax effect (1.1) (1.1)
Net after-tax of non-operating write-off of pre-acquisition asset 3.7 3.7
Discontinued operations (income) loss (7.6) (6.6)
Tax effect 1.6 1.4
Net after-tax discontinued operations (income) loss (6.0) (5.2)
Tax benefit from loss carryback provided by CARES Act (3) (16.8)
Tax adjustment to reduce deferred tax asset valuation allowance resulting (22.3)
from Big Springs Gathering Assets Acquisition
Total after tax adjusting items 89.2 (41.3) 58.1 (54.7)
Adjusted net income (loss) $
(204.0) $
(8.6) $
(549.9) $
255.9
19|
(1) Represents an adjustment to exclude
the effect of non-cash changes in
fair value related to economic
hedges that were entered into as
discrete amendments to the S&O
Obligation (i.e., not contemplated
in the April 2020 Amendment and
Restatement to the S&O
Obligation), as such fair value
changes are hedges where the
hedged item (a future fee) is not
yet recognized in the financial
statements.
(2) An adjustment for the portion of
the retroactive biodiesel tax
credit reenacted in December 2019
but that was attributable to 2018
has been adjusted out of both the
three months and year ended
December 31, 2019 for
comparability.
(3) As a result of the reinstatement of
the tax-loss carryback provisions
under the Coronavirus Aid, Relief,
and Economic Security Act (the
"CARES" Act), we recognized an
additional tax benefit during the
year ended December 31, 2020 from
applying the carryback to periods
with a 35% tax rate.
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
per share data
Three Months Ended December 31, Year Ended December 31,
Reconciliation of U.S. GAAP Income (Loss) per share to 2020 2019 2020 2019
Adjusted Net Income (Loss) per share
---
(Unaudited)
(Unaudited)
Reported diluted income (loss) per share $
(3.98) $
0.44 $
(8.26) $
4.06
Adjusting items, after tax (per share)
(1) (2)
---
Net inventory LCM valuation loss (benefit) (0.38) (0.21) 0.30 (0.52)
Total unrealized hedging (gain) loss where the hedged item is (0.18) 0.17 (0.20) 0.23
not yet recognized in the financial statements
Non-cash change in fair value of S&O Obligation associated 0.09 0.07
with hedging activities
Goodwill impairment expense 1.64 1.64
Gain from sale of Bakersfield non-operating refinery (0.59)
COVID-related severance costs 0.04 0.09
Non-operating, pre-acquisition litigation contingent losses and 0.07
related legal expenses
Retroactive biodiesel tax credit (0.48) (0.47)
Non-operating write-off of pre-acquisition asset 0.05 0.05
Discontinued operations (income) loss (0.08) (0.07)
Tax benefit from loss carryback provided by CARES Act (0.23)
Tax adjustment to reduce deferred tax asset valuation (0.30)
allowance resulting from Big Springs Gathering Assets
Acquisition
Total adjusting items 1.21 (0.55) 0.78 (0.71)
Adjusted net income (loss) per share $
(2.77) $
(0.11) $
(7.48) $
3.35
(1) The tax calculation is based on
the appropriate marginal income
tax rate related to each
adjustment and for each
respective time period, which
is applied to the adjusted
items in the calculation of
adjusted net income in all
periods.
(2) For periods of Adjusted net
loss, Adjustments (Adjusting
Items) and Adjusted net loss
per share are presented using
basic weighted average shares
outstanding.
20|
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended December 31, Year Ended December 31,
Reconciliation of Net Income (Loss) attributable to Delek to 2020 2019 2020 2019
Adjusted EBITDA
---
(Unaudited)
(Unaudited)
Reported net income (loss) attributable to Delek $
(293.2) $
32.7 $
(608.0) $
310.6
Add:
Interest expense, net 30.8 33.4 125.7 119.8
Income tax (benefit) expense - continuing operations (58.1) (12.1) (192.7) 71.7
Depreciation and amortization 90.2 47.6 267.6 194.3
EBITDA (230.3) 101.6 (407.4) 696.4
Adjusting items
---
Net inventory LCM valuation (benefit) loss (36.4) (20.8) 29.2 (52.3)
Unrealized inventory/commodity hedging (gain) loss where the (18.7) 16.5 (20.5) 22.6
hedged item is not yet recognized in the financial statements
Unrealized RINs and other hedging (gain) loss where the 1.4 1.4
hedged item is not yet recognized in the financial statements
Total unrealized hedging gain (loss) where the hedged item is (17.3) 16.5 (19.1) 22.6
not yet recognized in the financial statements
Non-cash change in fair value of S&O Obligation associated with 8.3 6.9
hedging activities (1)
Goodwill impairment expense 126.0 126.0
Gain from sale of Bakersfield non-operating refinery (56.8)
COVID-related severance costs 3.9 8.5
Non-operating, pre-acquisition litigation contingent losses and related legal expenses 6.7
Retroactive biodiesel tax credit (2) (36.0) (36.0)
Non-operating write-off of pre-acquisition asset 4.8 4.8
Discontinued operations (income) loss, net of tax (6.0) (5.2)
Net income attributable to non-controlling interest 8.2 5.3 37.6 25.6
Total Adjusting items 92.7 (36.2) 132.3 (33.8)
Adjusted EBITDA $
(137.6) $
65.4 $
(275.1) $
662.6
(1) Represents an adjustment to exclude
the effect of non-cash changes in
fair value related to economic
hedges that were entered into as
discrete amendments to the S&O
Obligation (i.e., not contemplated
in the April 2020 Amendment and
Restatement to the S&O
Obligation), as such fair value
changes are hedges where the
hedged item (a future fee) is not
yet recognized in the financial
statements.
(2) An adjustment for the portion of
the retroactive biodiesel tax
credit reenacted in December 2019
but that was attributable to 2018
has been adjusted out of both the
three months and year ended
December 31, 2019 for
comparability.
21|
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended December 31, 2020
---
Reconciliation of U.S. GAAP Segment Contribution Refining Logistics Retail Corporate, Consolidated
Margin to Adjusted Segment Contribution Margin Other and
Eliminations
---
Reported segment contribution margin $
(82.0) $
62.2 $
12.7 $
(25.4) $
(32.5)
Adjusting items
---
Net inventory LCM valuation (benefit) loss (36.4) (36.4)
Unrealized inventory/commodity hedging (gain) loss (19.6) 0.4 0.5 (18.7)
where the hedged item is not yet recognized in the
financial statements
Unrealized RINs and other hedging (gain) loss where 1.4 1.4
the hedged item is not yet recognized in the financial
statements
Total unrealized hedging (gain) loss where the hedged (18.2) 0.4 0.5 (17.3)
item is not yet recognized in the financial statements
COVID-related severance costs 1.4 0.3 0.3 0.2 2.2
Non-cash change in fair value of S&O Obligation 8.3 8.3
associated with hedging activities (1)
Total Adjusting items (44.9) 0.7 0.3 0.7 (43.2)
Adjusted segment contribution margin $
(126.9) $
62.9 $
13.0 $
(24.7) $
(75.7)
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended December 31, 2019
---
Reconciliation of U.S. GAAP Segment Contribution Refining Logistics Retail Corporate, Consolidated
Margin to Adjusted Segment Contribution Margin Other and
Eliminations
---
Reported segment contribution margin $
127.8 $
42.5 $
12.1 $
(11.0) $
171.4
Adjusting items
---
Net inventory LCM valuation (benefit) loss (20.8) (20.8)
Unrealized inventory/commodity hedging (gain) loss 17.8 0.1 (1.4) 16.5
where the hedged item is not yet recognized in the
financial statements
Retroactive biodiesel tax credit (2) (36.0) (36.0)
Total Adjusting items (39.0) 0.1 (1.4) (40.3)
Adjusted segment contribution margin $
88.8 $
42.6 $
12.1 $
(12.4) $
131.1
22|
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Year Ended December 31, 2020
---
Reconciliation of U.S. GAAP Segment Contribution Refining Logistics Retail Corporate, Consolidated
Margin to Adjusted Segment Contribution Margin Other and
Eliminations
---
Reported segment contribution margin $
(330.5) $
238.1 $
67.6 $
(74.4) $
(99.2)
Adjusting items
---
Net inventory LCM valuation (benefit) loss 29.4 (0.1) (0.1) 29.2
Unrealized inventory/commodity hedging (gain) loss (18.7) 0.1 (1.9) (20.5)
where the hedged item is not yet recognized in the
financial statements
Unrealized RINs and other hedging (gain) loss where 1.4 1.4
the hedged item is not yet recognized in the financial
statements
Total unrealized hedging (gain) loss where the hedged (17.3) 0.1 (1.9) (19.1)
item is not yet recognized in the financial statements
COVID-related severance costs 3.7 0.5 0.7 0.4 5.3
Non-cash change in fair value of S&O Obligation 6.9 6.9
associated with hedging activities (1)
Total Adjusting items 22.7 0.5 0.7 (1.6) 22.3
Adjusted segment contribution margin $
(307.8) $
238.6 $
68.3 $
(76.0) $
(76.9)
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Year Ended December 31, 2019
---
Reconciliation of U.S. GAAP Segment Contribution Refining Logistics Retail Corporate, Consolidated
Margin to Adjusted Segment Contribution Margin Other and
Eliminations
---
Reported segment contribution margin $
777.9 $
173.4 $
58.5 $
(51.0) $
958.8
Adjusting items
---
Net inventory LCM valuation (benefit) loss (52.2) (0.1) (52.3)
Unrealized inventory/commodity hedging (gain) loss 18.7 0.4 3.5 22.6
where the hedged item is not yet recognized in the
financial statements
Retroactive biodiesel tax credit (2) (36.0) (36.0)
Total Adjusting items (69.5) 0.3 3.5 (65.7)
Adjusted segment contribution margin $
708.4 $
173.7 $
58.5 $
(47.5) $
893.1
(1) Represents an adjustment to exclude
the effect of non-cash changes in
fair value related to economic
hedges that were entered into as
discrete amendments to the S&O
Obligation (i.e., not contemplated
in the April 2020 Amendment and
Restatement to the S&O
Obligation), as such fair value
changes are hedges where the
hedged item (a future fee) is not
yet recognized in the financial
statements.
(2) An adjustment for the portion of
the retroactive biodiesel tax
credit reenacted in December 2019
but that was attributable to 2018
has been adjusted out of both the
three months and year ended
December 31, 2019 for
comparability.
23|
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended December 31, Year Ended December 31,
Reconciliation of Refining Segment Gross Margin (Loss) to 2020 2019 2020 2019
Refining Margin
---
(Unaudited)
(Unaudited)
Net revenues $
1,449.3 $
2,161.9 $
5,817.7 $
8,798.5
Cost of sales 1,597.3 2,069.5 6,346.5 8,154.9
Gross margin (loss) (148.0) 92.4 (528.8) 643.6
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization) 100.2 135.7 402.7 492.4
Depreciation and amortization 66.0 35.4 198.3 134.3
Refining margin $
18.2 $
263.5 $
72.2 $
1,270.3
Information about Delek US Holdings, Inc. can be found on its website (www.delekus.com), investor relations webpage (ir.delekus.com), news webpage (www.delekus.com/news) and its Twitter account (@DelekUSHoldings).
24|
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SOURCE Delek US Holdings, Inc.
