Delek US Holdings Reports Third Quarter 2020 Results
BRENTWOOD, Tenn., Nov. 4, 2020 /PRNewswire/ -- Delek US Holdings, Inc. (NYSE: DK) ("Delek US") today announced financial results for its third quarter ended September 30, 2020. Delek US reported a third quarter 2020 net loss of $(88.1) million, or $(1.20) per share, versus net income of $51.3 million, or $0.68 per diluted share, for the quarter ended September 30, 2019. On an adjusted basis, Delek US reported an Adjusted net loss of $(73.9) million, or $(1.01) per share, for the third quarter 2020. This compares to Adjusted net income of $76.7 million, or $1.01 per share, in the prior-year period. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") was $21.9 million for the third quarter compared to Adjusted EBITDA of $184.2 million in the prior-year period. Reconciliations of net income reported under U.S. GAAP to Adjusted net income and Adjusted EBITDA are included in the financial tables attached to this release.
Adjusted quarterly results include approximately $30.9 million (after-tax), or $0.42 per share, of benefits which is comprised of the following: a net favorable impact of $26.1 million pre-tax from a combination of "other inventory" and the sale of purchased products, partially offset by fixed crude price transactions. The bulk of these items are outlined in the tables on page 13. Additionally, there is a realized hedging gain in the amount of $25.1 million pre-tax outlined by segment in the tables on page 10. Finally, there was a tax headwind of $8.7 million resulting from applying the revised annual estimated effective tax rate to second quarter's year-to-date results.
Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US, stated, "Decisive actions are being taken to improve the cash flow profile of our company. This includes an 8% reduction in our workforce, 40% reduction in CAPEX year-over-year and optimization of operations at the Krotz Springs refinery. The collective impact of these actions along with a contribution from other initiatives is expected to favorably impact cash flows by approximately $200 million in 2021."
Mr. Yemin continued, "During the quarter, our ownership in DKL increased to 80% as a result of the IDR simplification. Given the current market capitalization of DKL, this represents significant value within the Delek portfolio. We recently published our 2020 sustainability report with enhanced disclosure and progress on the ESG front. In renewables, our three bio diesel plants continue operating safely and reliably and we maintain an option to participate in a 33% interest in the Global Clean Energy conversion of the Bakersfield refinery into a renewable diesel plant. As of September 30th, the company had a cash balance of $808 million and is well positioned for a turbulent macro environment."
Quarterly Dividend
The Board has elected to suspend quarterly dividend payments at this time in an effort to maintain a flexible balance sheet. At this juncture, potential share repurchases would take priority over future dividends or growth capital. At September 30, 2020, there was approximately $229.7 of total available authorization to repurchase shares.
Liquidity
As of September 30, 2020, Delek US had a cash balance of $807.9 million and total consolidated long-term debt of $2,474.0 million, resulting in net debt of $1,666.1 million. As of September 30, 2020, Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") had $1,006.1 million of total debt and $6.0 million of cash, which is included in the consolidated amounts on Delek US' balance sheet. Excluding Delek Logistics, Delek US had approximately $801.9 million in cash and $1,467.9 million of debt, or a $666.0 million net debt position. We recorded a federal income tax receivable totaling $165.6 million as of September 30, 2020, related to the federal net operating loss carryback, which we expect to collect in the first half of 2021.
Refining Segment
Refining contribution margin decreased to $(17.8) million in the third quarter 2020 from $150.1 million in the third quarter 2019. On an adjusted basis, adjusted refining contribution margin was $5.4 million in the third quarter 2020 compared to $173.5 million in the third quarter 2019. The current period adjusted refining contribution margin reflects $37.8 million of favorable other inventory impact, $0.4 million of gains related to the sale of purchased product, and $35.7 million of realized hedging gains, partially offset by a $11.4 million loss from fixed price crude cost transactions. Other inventory impacts, aside from LCM, are outlined by refinery in the tables on page 13.
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 third quarter 2020, Delek US's benchmark crack spreads were down an average of approximately 58.0% from prior-year levels. Additionally, the realized Midland-Cushing crude oil premium was $0.46 per barrel compared to a realized discount of $0.94 per barrel in the prior-year period.These factors were partially offset by the crude oil futures market that was in contango of $0.27 per barrel in the third quarter 2020 compared to contango of $0.08 per barrel in the third quarter 2019.
In light of the weak macro environment, we elected to pull forward turnaround work into the fourth quarter on certain units at the Krotz Springs refinery that will be conducted on a straight-time basis. This will allow us to continue running the more profitable units of the refinery and should help improve economics toward a break-even level. The cost to perform this work is estimated at $10 million and is included in our CAPEX program. After this work is complete in the first quarter of next year and depending on market conditions, we have the flexibility to optimize operations at Krotz Springs by operating only the units that are producing favorable margins, thereby reducing unnecessary operating expenses, or moving back to full utilization at the facility, should the macro environment and margins improve.
Logistics Segment
The logistics segment contribution margin in the third quarter 2020 was $67.2 million compared to $46.6 million in the third 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 $4.2 million primarily due to a decrease in contract services.
Logistics segment contribution margin reflected an other inventory impact to earnings relating to its West Texas inventory consisting of a charge totaling $0.3 million during the third quarter 2020 compared to no charge during the third quarter 2019.
Retail Segment
For the third quarter 2020, contribution margin was $18.3 million compared to $18.6 million in the prior-year period for the retail segment. Merchandise sales were approximately $86.8 million with an average retail margin of 31.6% in the third quarter 2020, compared to merchandise sales of approximately $81.5 million with an average retail margin of 30.5% in the prior-year period. Approximately 45.1 million retail fuel gallons were sold at an average margin of $0.31 per gallon in the third quarter 2020 compared to 54.9 million retail fuel gallons sold at an average margin of $0.32 per gallon in the third quarter 2019. In the third quarter 2020, the average merchandise store count was 253 compared to 263 in the prior-year period. On a same store sales basis in the third quarter 2020, merchandise sales increased 8.7% and fuel gallons sold decreased 19.3% compared to the prior-year period.
Corporate/Other
Contribution margin from Corporate/Other was a loss of $20.4 million in the third quarter 2020 compared to a loss of $12.0 million in the prior-year period. Note, hedging gains (losses) related to the refining segment have been reclassified from the corporate and other segment to the refining segment starting in the first quarter of 2020 and have been retrospectively reclassified in 2019 for comparison purposes. The decrease versus year-ago contribution margin was largely attributable to realized hedging losses as highlighted in the tables on page 10.
Corporate/Other segment contribution margin reflected an other inventory impact to earnings consisting of a detriment totaling $1.1 million during the third quarter 2020 compared to no detriment during the third quarter 2019.
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, remains on schedule, with segments and assets expected to come on-line throughout 2021.The main segment of the pipeline system started transporting Permian crude oil and condensate from Midland, Texas to Houston in October, 2020. 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.
Third Quarter 2020 Results | Conference Call Information
Delek US will hold a conference call to discuss its third quarter 2020 results on Thursday, November 5, 2020 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) third quarter 2020 earnings conference call that will be held on Thursday, November 5, 2020 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.
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.
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:
-- Adjusted net income (loss) - calculated as net income attributable to
Delek US adjusted for certain identified infrequently occurring items,
non-cash items and items that are not attributable to our on-going
operations (collectively, "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 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
certain identified infrequently occurring items, non-cash items and
items that are not attributable to our on-going refining operations
recorded during the period;
-- 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 comparability between periods 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.
Delek US Holdings, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share and per share data)
September 30, 2020 December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents $
807.9 $
955.3
Accounts receivable, net 518.7 792.6
Inventories, net of inventory valuation reserves 672.0 946.7
Other current assets 515.9 268.7
Total current assets 2,514.5 2,963.3
Property, plant and equipment:
Property, plant and equipment 3,515.7 3,362.8
Less: accumulated depreciation (1,091.8) (934.5)
Property, plant and equipment, net 2,423.9 2,428.3
Operating lease right-of-use assets 180.3 183.6
Goodwill 855.7 855.7
Other intangibles, net 109.0 110.3
Equity method investments 373.1 407.3
Other non-current assets 68.5 67.8
Total assets $
6,525.0 $
7,016.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
973.1 $
1,599.7
Current portion of long-term debt 33.4 36.4
Obligation under Supply and Offtake Agreements 102.8 332.5
Current portion of operating lease liabilities 47.8 40.5
Accrued expenses and other current liabilities 657.1 346.8
Total current liabilities 1,814.2 2,355.9
Non-current liabilities:
Long-term debt, net of current portion 2,440.6 2,030.7
Obligation under Supply and Offtake Agreements 220.4 144.8
Environmental liabilities, net of current portion 106.1 137.9
Asset retirement obligations 37.2 68.6
Deferred tax liabilities 316.2 267.9
Operating lease liabilities, net of current portion 132.6 144.3
Other non-current liabilities 37.4 30.9
Total non-current liabilities 3,290.5 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, 91,301,229 shares and 90,987,025 shares issued 0.9 0.9
at September 30, 2020 and December 31, 2019, respectively
Additional paid-in capital 1,180.1 1,151.9
Accumulated other comprehensive income 0.1
Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of September 30, 2020 and December 31, (694.1) (692.2)
2019, respectively
Retained earnings 815.3 1,205.6
Non-controlling interests in subsidiaries 118.1 169.0
Total stockholders' equity 1,420.3 1,835.3
Total liabilities and stockholders' equity $
6,525.0 $
7,016.3
Delek US Holdings, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In millions, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Net revenues $
2,062.9 $
2,334.3 $
5,419.6 $
7,014.5
Cost of sales:
Cost of materials and other 1,875.9 1,964.1 5,064.3 5,731.2
Operating expenses (excluding depreciation and amortization presented 115.7 141.7 348.3 418.4
below)
Depreciation and amortization 59.4 43.8 160.0 125.7
Total cost of sales 2,051.0 2,149.6 5,572.6 6,275.3
Operating expenses related to retail and wholesale business (excluding 24.0 25.2 73.7 77.5
depreciation and amortization presented below)
General and administrative expenses 57.0 65.6 184.4 197.3
Depreciation and amortization 5.8 6.0 17.4 21.0
Other operating loss (income), net 0.3 0.5 (14.6) (0.7)
Total operating costs and expenses 2,138.1 2,246.9 5,833.5 6,570.4
Operating (loss) income (75.2) 87.4 (413.9) 444.1
Interest expense 31.9 33.9 98.0 95.4
Interest income (0.9) (3.2) (3.1) (9.0)
Income from equity method investments (12.8) (16.5) (28.6) (28.4)
Loss (gain) on sale on non-operating refinery 0.1 (56.8)
Other (income) expense, net (1.0) (0.2) (3.4) 3.3
Total non-operating expense, net 17.3 14.0 6.1 61.3
(Loss) income before income tax (benefit) expense (92.5) 73.4 (420.0) 382.8
Income tax (benefit) expense (15.6) 13.4 (134.6) 83.8
(Loss) income from continuing operations, net of tax (76.9) 60.0 (285.4) 299.0
Discontinued operations:
Loss from discontinued operations, including loss on sale of discontinued (1.0)
operations
Income tax benefit (0.2)
Loss from discontinued operations, net of tax (0.8)
Net (loss) income (76.9) 60.0 (285.4) 298.2
Net income attributed to non-controlling interests 11.2 8.7 29.4 20.3
Net (loss) income attributable to Delek US $
(88.1) $
51.3 $
(314.8) $
277.9
Basic (loss) income per share:
(Loss) income from continuing operations $
(1.20) $
0.68 $
(4.28) $
3.64
Loss from discontinued operations
$ $
(0.01)
Basic (loss) income per share $
(1.20) $
0.68 $
(4.28) $
3.63
Diluted (loss) income per share:
(Loss) income from continuing operations $
(1.20) $
0.68 $
(4.28) $
3.61
Loss from discontinued operations
$ $
(0.01)
Diluted (loss) income per share $
(1.20) $
0.68 $
(4.28) $
3.60
Weighted average common shares outstanding:
Basic 73,669,310 75,028,562 73,551,970 76,463,435
Diluted 73,669,310 75,702,311 73,551,970 77,167,834
Dividends declared per common share outstanding $
0.31 $
0.29 $
0.93 $
0.84
Delek US Holdings, Inc.
Condensed Cash Flow Data (Unaudited)
(In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2020 2019 2020 2019
---
Cash flows from operating activities:
Net cash (used in) provided by operating activities $
(76.7) $
213.0 $
(399.8) $
448.4
Cash flows from investing activities:
Net cash used in investing activities (7.1) (180.1) (163.0) (509.5)
Cash flows from financing activities:
Net cash provided by (used in) financing activities 42.7 22.1 415.4 (11.8)
Net increase (decrease) in cash and cash equivalents (41.1) 55.0 (147.4) (72.9)
Cash and cash equivalents at the beginning of the period 849.0 951.4 955.3 1,079.3
Cash and cash equivalents at the end of the period $
807.9 $
1,006.4 $
807.9 $
1,006.4
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 $0.0 million and $16.8 million of current federal income tax benefit for the three and nine months ended September 30, 2020, respectively, 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 $165.6 million as of September 30, 2020 related to the net operating loss carryback, which we expect to collect in the first half of 2021. Finally, we deferred $7.7 million of payroll tax payments under the provisions of the CARES Act during the nine months ended September 30, 2020, which will be payable in equal installments in December 2021 and December 2022.
Delek US Holdings, Inc.
Segment Data (Unaudited)
(In millions)
Three Months Ended September 30, 2020
Refining Logistics Retail Corporate, Consolidated
Other and
Eliminations
Net revenues (excluding inter-segment fees and $
1,450.8 $
49.4 $
177.7 $
385.0 $
2,062.9
revenues)
Inter-segment fees and revenues 112.7 92.8 (205.5)
Operating costs and expenses:
Cost of materials and other 1,479.2 60.7 136.3 199.7 1,875.9
Operating expenses (excluding depreciation and 102.1 14.3 23.1 0.2 139.7
amortization presented below)
Segment contribution margin $
(17.8) $
67.2 $
18.3 $
(20.4) $
47.3
Depreciation and amortization $
50.3 $
9.4 $
2.9 $
2.6 65.2
General and administrative expenses 57.0
Loss on disposal of assets
Other operating loss, net 0.3
Operating loss $
(75.2)
Capital spending (excluding business combinations) $
0.6 $
3.2 $
0.7 $
0.2 $
4.7
Three Months Ended September 30, 2019
Refining (1) Logistics Retail Corporate, Consolidated
Other and
Eliminations (1)
Net revenues (excluding inter-segment fees and $
2,036.9 $
71.4 $
218.5 $
7.5 $
2,334.3
revenues)
Inter-segment fees and revenues 139.9 66.2 (206.1)
Operating costs and expenses:
Cost of materials and other 1,906.0 72.6 176.4 (190.9) 1,964.1
Operating expenses (excluding depreciation and 120.7 18.4 23.5 4.3 166.9
amortization presented below)
Segment contribution margin $
150.1 $
46.6 $
18.6 $
(12.0) $
203.3
Depreciation and amortization $
34.6 $
6.6 $
3.0 $
5.6 49.8
General and administrative expenses 65.6
Other operating loss, net 0.5
Operating income $
87.4
Capital spending (excluding business combinations) $
63.3 $
4.0 $
3.8 $
39.4 $
110.5
Delek US Holdings, Inc.
Segment Data (Unaudited)
(In millions)
Nine Months Ended September 30, 2020
Refining Logistics Retail Corporate, Consolidated
Other and
Eliminations
Net revenues (excluding inter-segment fees and $
4,021.9 $
133.4 $
521.7 $
742.6 $
5,419.6
revenues)
Inter-segment fees and revenues 346.5 289.9 (636.4)
Operating costs and expenses:
Cost of materials and other 4,314.4 205.9 400.0 144.0 5,064.3
Operating expenses (excluding depreciation and 302.5 41.5 66.8 11.2 422.0
amortization presented below)
Segment contribution margin $
(248.5) $
175.9 $
54.9 $
(49.0) $
(66.7)
Depreciation and amortization $
132.3 $
24.4 $
9.1 $
11.6 177.4
General and administrative expenses 184.4
Other operating income, net (14.6)
Operating loss $
(413.9)
Capital spending (excluding business combinations) $
180.9 $
6.9 $
8.2 $
12.0 $
208.0
Nine Months Ended September 30, 2019
Refining (1) Logistics Retail Corporate, Consolidated
Other and
Eliminations (1)
Net revenues (excluding inter-segment fees and $
6,096.7 $
254.3 $
640.2 $
23.3 $
7,014.5
revenues)
Inter-segment fees and revenues 539.9 191.1 (731.0)
Operating costs and expenses:
Cost of materials and other 5,629.8 262.7 521.9 (683.2) 5,731.2
Operating expenses (excluding depreciation and 356.7 51.8 71.9 15.5 495.9
amortization presented below)
Segment contribution margin $
650.1 $
130.9 $
46.4 $
(40.0) $
787.4
Depreciation and amortization $
98.9 $
19.8 $
11.5 16.5 146.7
General and administrative expenses 197.3
Other operating income, net (0.7)
Operating income $
444.1
Capital spending (excluding business combinations) $
193.8 $
6.2 $
14.3 $
110.5 $
324.8
(1) The refining segment results of
operations for the three and
nine months ended September 30,
2019, includes hedging gains, a
component of cost of materials
and other, of $22.6 million and
$50.0 million, respectively,
which was previously included
and reported in corporate,
other and eliminations.
Delek US Holdings, Inc.
Schedule of Hedging Gains (Losses)
$ in millions
Three Months Ended September 30, 2020
---
Hedging Gains (Losses) Included in Segment Refining Logistics Retail Corporate, Consolidated
Contribution Margin
Other and
Eliminations
---
Unrealized hedging gain (loss) $
(32.7) $
0.3
$ $
11.3 $
(21.1)
Realized hedging gain (loss) 35.7 (0.3) (10.3) 25.1
Total hedging gain (loss) $
3.0
$
$ $
1.0 $
4.0
Delek US Holdings, Inc.
Schedule of Hedging Gains (Losses)
$ in millions
Three Months Ended September 30, 2019
---
Hedging Gains (Losses) Included in Segment Refining Logistics Retail Corporate, Consolidated
Contribution Margin
Other and
Eliminations
---
Unrealized hedging gain (loss) $
7.4 $
(0.4)
$ $
(4.2) $
2.8
Realized hedging gain (loss) 12.6 0.4 (3.4) 9.6
Total hedging gain (loss) $
20.0
$
$ $
(7.6) $
12.4
Delek US Holdings, Inc.
Schedule of Hedging Gains (Losses)
$ in millions
Nine Months Ended September 30, 2020
---
Hedging Gains (Losses) Included in Segment Refining Logistics Retail Corporate, Consolidated
Contribution Margin
Other and
Eliminations
---
Unrealized hedging gain (loss) $
6.0 $
0.3
$ $
2.4 $
8.7
Realized hedging gain (loss) (69.5) 1.8 (26.2) (93.9)
Total hedging gain (loss) $
(63.5) $
2.1
$ $
(23.8) $
(85.2)
Delek US Holdings, Inc.
Schedule of Hedging Gains (Losses)
$ in millions
Nine Months Ended September 30, 2019
---
Hedging Gains (Losses) Included in Segment Refining Logistics Retail Corporate, Consolidated
Contribution Margin
Other and
Eliminations
---
Unrealized hedging gain (loss) $
(15.9) $
(0.4)
$ $
(4.8) $
(21.1)
Realized hedging gain (loss) 80.0 (0.2) (2.3) 77.5
Total hedging gain (loss) $
64.1 $
(0.6)
$ $
(7.1) $
56.4
Refining Segment Three Months Ended Nine Months Ended
September 30,
September 30,
2020 2019 2020 2019
Tyler, TX Refinery
(Unaudited)
(Unaudited)
---
Days in period 92 92 274 273
Total sales volume - refined product (average barrels per day)(1) 77,386 80,981 74,050 76,262
Products manufactured (average barrels per day):
Gasoline 40,383 41,480 39,221 40,281
Diesel/Jet 31,612 33,105 28,980 30,685
Petrochemicals, LPG, NGLs 3,848 3,992 3,022 3,129
Other 1,763 1,853 1,442 1,560
Total production 77,606 80,430 72,665 75,655
Throughput (average barrels per day):
Crude oil 72,651 75,266 67,693 70,594
Other feedstocks 4,975 5,565 5,422 5,710
Total throughput 77,626 80,831 73,115 76,304
Total refining revenue ( $ in millions) $
383.8 $
597.6 $
1,055.3 $
1,656.5
Cost of materials and other ($ in millions) 392.4 508.5 1,003.0 1,342.2
Total refining margin ($ in millions) (2) $
(8.6) $
89.1 $
52.3 $
314.3
Per barrel of refined product sales:
Tyler refining margin (2) $
(1.21) $
11.96 $
2.58 $
15.09
Tyler adjusted refining margin (2) $
(2.80) $
12.17 $
5.72 $
13.32
Operating expenses $
3.28 $
3.11 $
3.35 $
3.77
Crude Slate: (% based on amount received in period)
WTI crude oil 89.0 94.6 92.1 91.3
% % % %
East Texas crude oil 11.0 2.7
% % 7.9
% 8.0
%
Other % 2.8
% % 0.7
%
El Dorado, AR Refinery
---
Days in period 92 92 274 273
Total sales volume - refined product (average barrels per day)(1) 79,594 71,282 77,742 58,310
Products manufactured (average barrels per day):
Gasoline 36,801 30,766 35,855 24,396
Diesel 30,709 22,348 29,473 18,559
Petrochemicals, LPG, NGLs 1,678 834 1,933 731
Asphalt 7,268 5,886 6,655 5,894
Other 825 713 801 678
Total production 77,281 60,547 74,717 50,258
Throughput (average barrels per day):
Crude oil 74,235 58,362 72,427 49,199
Other feedstocks 2,814 1,748 2,610 1,431
Total throughput 77,049 60,110 75,037 50,630
Total refining revenue ( $ in millions) $
452.6 $
803.8 $
1,407.8 $
2,379.6
Cost of materials and other ($ in millions) 405.6 775.9 $
1,399.1 2,246.8
Total refining margin ($ in millions) (2) $
47.0 $
27.9 $
8.7 $
132.8
Per barrel of refined product sales:
El Dorado refining margin (2) $
6.42 $
4.25 $
0.41 $
8.34
El Dorado adjusted refining margin (2) $
6.56 $
4.02 $
0.45 $
8.04
Operating expenses $
3.25 $
5.27 $
3.73 $
5.88
Crude Slate: (% based on amount received in period)
WTI crude oil 69.9 72.0 52.2 53.8
% % % %
Local Arkansas crude oil 17.7 20.7 17.2 25.4
% % % %
Other 12.4 7.2 30.5 20.8
% % % %
Refining Segment (continued) Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Big Spring, TX Refinery
(Unaudited)
(Unaudited)
---
Days in period - based on date acquired 92 92 274 273
Total sales volume - refined product (average barrels per day) (1) 75,884 72,909 61,602 77,712
Products manufactured (average barrels per day):
Gasoline 38,106 33,561 29,532 36,276
Diesel/Jet 28,777 28,391 22,190 27,796
Petrochemicals, LPG, NGLs 3,923 3,755 2,959 3,761
Asphalt 2,235 2,027 1,715 1,815
Other 1,397 1,423 1,030 1,339
Total production 74,438 69,157 57,426 70,987
Throughput (average barrels per day):
Crude oil 72,779 70,542 57,725 71,939
Other feedstocks 2,067 (1,282) 746 (3)
Total throughput 74,846 69,260 58,471 71,936
Total refining revenue ( $ in millions) $
401.9 $
592.0 $
1,104.4 $
1,811.2
Cost of materials and other ($ in millions) 374.0 510.1 1,069.3 1,497.7
Total refining margin ($ in millions) (2) $
27.9 $
81.9 $
35.1 $
313.5
Per barrel of refined product sales:
Big Spring refining margin (2) $
4.00 $
12.21 $
2.07 $
14.78
Big Spring adjusted refining margin (2) $
4.08 $
12.30 $
2.12 $
14.67
Operating expenses $
3.88 $
4.50 $
4.47 $
3.98
Crude Slate: (% based on amount received in period)
WTI crude oil 63.7 76.4 70.3 76.4
% % % %
WTS crude oil 36.3 23.6 29.7 23.6
% % % %
Krotz Springs, LA Refinery
---
Days in period - based on date acquired 92 92 274 273
Total sales volume - refined product (average barrels per day) (1) 67,465 72,173 69,965 75,207
Products manufactured (average barrels per day):
Gasoline 32,287 34,757 26,872 35,760
Diesel/Jet 23,686 27,277 25,447 29,137
Heavy oils 729 1,125 559 1,108
Petrochemicals, LPG, NGLs 3,394 3,814 2,417 5,103
Other 4,020 11,117 35
Total production 64,116 66,973 66,412 71,143
Throughput (average barrels per day):
Crude oil 60,150 69,805 64,019 70,757
Other feedstocks 3,028 (3,553) 2,415 (596)
Total throughput 63,178 66,252 66,434 70,161
Total refining revenue ( $ in millions) $
335.9 $
559.9 $
999.1 $
1,717.7
Cost of materials and other ($ in millions) 339.1 494.4 1,016.8 1,501.6
Total refining margin ($ in millions) $
(3.2) $
65.5 $
(17.7) $
216.1
Per barrel of refined product sales:
Krotz Springs refining margin (2) $
(0.50) $
9.88 $
(0.92) $
10.53
Krotz Springs adjusted refining margin (2) $
(0.40) $
9.68 $
(0.89) $
10.14
Operating expenses $
4.25 $
4.27 $
3.72 $
4.18
Crude Slate: (% based on amount received in period)
WTI Crude 72.6 78.7 69.3 73.9
% % % %
Gulf Coast Sweet Crude 24.6 21.3 29.8 26.1
% % % %
Other 2.8
% % 0.9
% %
(1)
Includes inter-refinery sales and sales to other segments which are eliminated in consolidation.
(2) See Other Items Impacting Refining Margin discussed below.
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 Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Tyler
Gross Estimated $ Impact
---
Purchased product margins $
0.1 $
(1.0) $
(0.6) $
(0.3)
Significant impact of fixed price crude transactions (1) (11.4) 99.6
$
(11.3) $
(1.0) $
99.0 $
(0.3)
El Dorado
Gross Estimated $ Impact
---
Other inventory impact $
24.5 $
(6.9) $
(52.3) $
3.5
Purchased product margins 1.8 (0.6) 3.9 14.1
$
26.3 $
(7.5) $
(48.4) $
17.6
Big Spring
Gross Estimated $ Impact
---
Other inventory impact $
12.0 $
(0.4) $
(44.0) $
11.7
Purchased product margins (0.8) (0.1) (6.8) 2.4
$
11.2 $
(0.5) $
(50.8) $
14.1
Krotz Springs
Gross Estimated $ Impact
---
Other inventory impact $
1.6 $
3.7 $
(23.4) $
12.7
Purchased product margins (0.7) (3.0) (33.5) 4.4
$
0.9 $
0.7 $
(56.9) $
17.1
(1) As discussed in the footnotes to
the audited consolidated financial
statements in our December 31,
2019 Annual Report on Form 10-K
and in the footnotes to the
unaudited condensed consolidated
financial statements on subsequent
Quarterly Reports on Form 10-Q,
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,
during the third quarter 2020,
because of the historic volatility
in the crude market 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
totaling $(11.4) million pre-tax.
Such losses were hedged in the
refining segment but outside the
Tyler refining margins, resulting
in a corresponding realized gain
of $11.4 million pre-tax. On a
year-to-date basis, the impact
of these fixed price crude
transactions on the Tyler refining
margin was a benefit of $99.6
million, where the offsetting net
hedging loss was recognized
separately.
Included in the refinery statistics above are the following inter-refinery and sales to other segments:
Inter-refinery Sales
Three Months Ended Nine Months Ended
September 30, September 30,
(in barrels per day) 2020 2019 2020 2019
---
(Unaudited)
(Unaudited)
Tyler refined product sales to other Delek refineries 2,479 1,543 1,813 890
El Dorado refined product sales to other Delek refineries 854 3,946 1,075 2,611
Big Spring refined product sales to other Delek refineries 2,294 1,754 1,532 1,190
Krotz Springs refined product sales to other Delek refineries 14 15,189 167 8,785
Refinery Sales to Other Segments
Three Months Ended Nine Months Ended
September 30, September 30,
(in barrels per day) 2020 2019 2020 2019
---
(Unaudited)
(Unaudited)
Tyler refined product sales to other Delek segments 1,069 18 1,953 192
El Dorado refined product sales to other Delek segments 27 11 122 106
Big Spring refined product sales to other Delek segments 22,835 24,404 22,839 25,735
Krotz Springs refined product sales to other Delek segments 1,002 408 336 271
Pricing statistics
(average for the period presented)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
WTI - Cushing crude oil (per barrel) $
40.88 $
56.40 $
38.95 $
57.03
WTI - Midland crude oil (per barrel) $
41.03 $
56.12 $
38.98 $
55.81
WTS -- Midland crude oil (per barrel) (1) $
40.99 $
55.94 $
38.84 $
55.95
LLS (per barrel) (1) $
42.46 $
60.58 $
40.67 $
63.32
Brent crude oil (per barrel) $
43.34 $
62.03 $
42.56 $
64.73
U.S. Gulf Coast 5-3-2 crack spread (per barrel) (1) $
7.49 $
16.02 $
8.30 $
15.77
U.S. Gulf Coast 3-2-1 crack spread (per barrel) (1) $
8.15 $
17.55 $
8.92 $
17.34
U.S. Gulf Coast 2-1-1 crack spread (per barrel) (1) $
3.51 $
12.03 $
4.72 $
9.73
U.S. Gulf Coast Unleaded Gasoline (per gallon) $
1.15 $
1.64 $
1.07 $
1.65
Gulf Coast Ultra low sulfur diesel (per gallon) $
1.16 $
1.85 $
1.18 $
1.89
U.S. Gulf Coast high sulfur diesel (per gallon) $
1.02 $
1.74 $
1.03 $
1.77
Natural gas (per MMBTU) $
2.12 $
2.33 $
1.92 $
2.56
(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.
Delek US Holdings, Inc.
Reconciliation of Refining margin per barrel to Adjusted Refining margin per barrel (1)
$ in millions, except per share data
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Combined Refineries
Reported refining margin, $ per barrel $
2.08 $
9.08 $
0.90 $
10.96
Adjustments:
---
Net inventory valuation loss (benefit) (0.30) 0.69 0.76 (0.35)
RIN waiver (0.42) (0.14)
Adjusted refining margin $/bbl $
1.78 $
9.35 $
1.66 $
10.47
Tyler (2)
Reported refining margin, $ per barrel $
(1.21) $
11.96 $
2.58 $
15.09
Adjustments:
---
LCM net inventory valuation loss (benefit) (1.59) 1.34 3.14 (1.36)
RIN waiver (1.13) (0.41)
Adjusted refining margin $/bbl $
(2.80) $
12.17 $
5.72 $
13.32
El Dorado (3)
Reported refining margin, $ per barrel $
6.42 $
4.25 $
0.41 $
8.34
Adjustments:
---
LCM net inventory valuation loss (benefit) 0.14 0.90 0.04 0.16
RIN waiver (1.13) (0.46)
Adjusted refining margin $/bbl $
6.56 $
4.02 $
0.45 $
8.04
Big Spring (4)
Reported refining margin, $ per barrel $
4.00 $
12.21 $
2.07 $
14.78
Adjustments:
---
LCM net inventory valuation loss (benefit) 0.08 0.09 0.05 (0.11)
Adjusted refining margin $/bbl $
4.08 $
12.30 $
2.12 $
14.67
Krotz Springs (5)
Reported refining margin, $ per barrel $
(0.50) $
9.88 $
(0.92) $
10.53
Adjustments:
---
LCM net inventory valuation loss (benefit) 0.10 0.53 0.03 (0.15)
RIN waiver (0.73) (0.24)
Adjusted refining margin $/bbl $
(0.40) $
9.68 $
(0.89) $
10.14
(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 valuation loss/
benefit
-There was
approximately $11.3 million of
valuation benefit and $10.0
million of valuation loss in the
third quarter 2020 and 2019,
respectively. There was
approximately $63.8 million of
valuation loss and $28.3 million
of valuation benefit for the nine
months ended September 30, 2020
and 2019, respectively. These
amounts resulted from lower of
cost or market adjustments on LIFO
inventory in the respective
periods.
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 $8.4
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 September
30, 2020 both
reflect the
$(11.4) million
margin impact of
unfavorable fixed
price crude cost
transactions
during the
quarter, but
exclude the
offsetting
realized hedging
gains of
approximately
$11.4 million,
and the Refining
margin per barrel
and the Adjusted
refining margin
per barrel for
the nine months
ended September
30, 2020 both
reflect the $99.6
million margin
benefit of
favorable fixed
price crude cost
transactions
during the
quarter, but
exclude the
offsetting
realized hedging
losses of
approximately
$(99.6) 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
$1.49 for the
three months
ended September
30, 2020, and
would have
decreased by
$(4.66) for the
nine months ended
September 30,
2020. See further
discussion in the
section 'Other
Items Impacting
Refining Margin'
previously
presented.
(3) El Dorado Adjusted
refining margins
exclude the
following items:
Net inventory valuation loss/
benefit -There was approximately
$1.0 million and $5.9 million of
valuation loss in the third
quarter 2020 and 2019,
respectively. There was
approximately $1.0 million and
$2.5 million of valuation loss for
the nine months ended September
30, 2020 and 2019, respectively.
These amounts resulted from lower
of cost or net realizable value
adjustments on FIFO inventory in
the respective periods.
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 valuation loss/
benefit -There was approximately
$0.6 million and $0.6 million of
valuation loss in the third
quarter 2020 and 2019,
respectively. There was
approximately $0.8 million of
valuation loss and $2.4 million of
valuation benefit for the nine
months ended September 30, 2020
and 2019, respectively. These
amounts resulted from lower of
cost or net realizable value
adjustments on FIFO inventory in
the respective periods.
(5) Krotz Springs
Adjusted refining
margins exclude
the following
items:
Net inventory valuation loss/
benefit -There was approximately
$0.6 million and $3.5 million of
valuation loss in the third
quarter 2020 and 2019,
respectively. There was
approximately $0.6 million of
valuation loss and $3.1 million of
valuation benefit for the nine
months ended September 30, 2020
and 2019, respectively. These
amounts resulted from lower of
cost or net realizable value
adjustments on FIFO inventory in
the respective periods.
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 Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Pipelines & Transportation: (average bpd)
Lion Pipeline System:
Crude pipelines (non-gathered) 78,244 49,477 76,750 43,446
Refined products pipelines 55,740 43,518 55,315 32,242
SALA Gathering System 13,659 21,632 13,520 21,143
East Texas Crude Logistics System 22,591 25,391 15,705 21,045
Big Spring Gathering Assets (3) 90,719 85,845
Plains Connection System 104,314 96,961
Wholesale Marketing & Terminalling:
East Texas - Tyler Refinery sales volumes (average bpd) (1) 73,417 83,953 70,376 74,607
West Texas wholesale marketing throughputs (average bpd) 9,948 9,535 11,718 11,446
West Texas wholesale marketing margin per barrel $
3.42 $
4.82 $
2.37 $
4.83
Big Spring wholesale marketing throughputs (average bpd) 78,659 80,203 73,701 83,608
Terminalling throughputs (average bpd) (2) 160,843 170,727 145,240 160,621
(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 Assets are for the
approximately 180 days we owned
the assets following the Big
Spring Gathering Assets
Acquisition effective March 31,
2020.
Retail Segment Three Months Ended Nine Months Ended
September 30,
September 30,
2020 2019 2020 2019
(Unaudited)
(Unaudited)
Number of stores (end of period) 253 263 253 263
Average number of stores 253 263 253 263
Average number of fuel stores 248 255 248 255
Retail fuel sales (thousands of gallons) 45,096 54,943 135,471 162,576
Average retail gallons sold per average number of fuel stores (in thousands) 182 215 547 638
Retail fuel margin ($ per gallon) (1) $
0.31 $
0.32 $
0.35 $
0.27
Merchandise sales (in millions) $
86.8 $
81.5 $
247.9 $
240.2
Merchandise sales per average number of stores (in millions) $
0.3 $
0.3 $
1.0 $
0.9
Merchandise margin % 31.6 30.5 31.3 30.9
% % % %
Three Months Ended Nine Months Ended
September 30,
September 30,
2020 2019 2020 2019
Same-Store Comparison (2)
(Unaudited)
(Unaudited)
Change in same-store fuel gallons sold (18.8) 3.0 (15.6) 3.1
% %
% %
Change in same-store merchandise sales 8.7 (1.5) 8.8 (1.3)
% %
% %
(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 increases
or decreases 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.
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended Nine Months Ended
September 30, September 30,
Reconciliation of Net Income (Loss) attributable to Delek to Adjusted Net Income 2020 2019 2020 2019
(Loss)
---
(Unaudited)
(Unaudited)
Reported net income (loss) attributable to Delek $
(88.1) $
51.3 $
(314.8) $
277.9
Adjustments
---
Net inventory valuation (benefit) loss (9.5) 20.0 65.6 (31.5)
Tax effect 2.2 (4.7) (15.4) 7.4
Net after-tax inventory valuation (benefit) loss (7.3) 15.3 50.2 (24.1)
Unrealized hedging (gain) loss 19.4 (0.5) (9.2) 30.1
Tax effect (4.4) 0.1 2.1 (6.8)
Net after-tax unrealized hedging (gain) loss 15.0 (0.4) (7.1) 23.3
Non-cash change in fair value of S&O Obligation associated with hedging activities (1) 8.2 (1.4)
Tax effect (1.8) 0.3
Net after-tax non-cash change in fair value of S&O Obligation associated with hedging 6.4 (1.1)
activities
Gain from sale of Bakersfield non-operating refinery 0.1 (56.8)
Tax effect 12.8
Net after-tax effect of gain from sale of Bakersfield non-operating refinery 0.1 (44.0)
Non-operating, pre-acquisition litigation contingent losses and related legal expenses 6.7
Tax effect (1.5)
Net after-tax non-operating pre-acquisition litigation contingent losses and related legal 5.2
expenses
Retroactive biodiesel tax credit (2) 10.8 31.6
Tax effect (0.3) (0.5)
Net after-tax retroactive biodiesel tax credit 10.5 31.1
Discontinued operations (income) loss 1.0
Tax effect (0.2)
Net after-tax discontinued operations (income) loss 0.8
Tax benefit from loss carryback provided by CARES Act (3) (16.8)
Tax adjustment to reduce deferred tax asset valuation allowance resulting from Big Springs (22.3)
Gathering Assets Acquisition
Total after tax adjustments 14.2 25.4 (41.1) 36.3
Adjusted net income (loss) $
(73.9) $
76.7 $
(355.9) $
314.2
(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)
but which impact the fair value of
the overall obligation, as such
fair value changes are considered
to be identical in nature to the
unrealized hedging gains and
losses recognized on derivative
instruments which are excluded
from our adjusted net income
(loss).
(2) An adjustment for the portion of
the retroactive biodiesel tax
credit reenacted in December 2019
that was attributable to 2019 has
been included in the three and
nine months ended September 30,
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 in the
second quarter 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 Nine Months Ended
September 30, September 30,
Reconciliation of U.S. GAAP Income (Loss) per share to Adjusted Net 2020 2019 2020 2019
Income (Loss) per share
---
(Unaudited)
(Unaudited)
Reported diluted income (loss) per share $
(1.20) $
0.68 $
(4.28) $
3.60
Adjustments, after tax (per share)
(1) (2)
---
Net inventory valuation loss (benefit) (0.10) 0.20 0.68 (0.31)
Unrealized hedging (gain) loss 0.20 (0.01) (0.10) 0.30
Non-cash change in fair value of S&O Obligation associated with hedging 0.09 (0.01)
activities
Gain from sale of Bakersfield non-operating refinery (0.60)
Non-operating, pre-acquisition litigation contingent losses and related legal 0.07
expenses
Retroactive biodiesel tax credit 0.14 0.41
Discontinued operations (income) loss 0.01
Tax benefit from loss carryback provided by CARES Act (0.23)
Tax adjustment to reduce deferred tax asset valuation allowance resulting from (0.30)
Big Springs Gathering Assets Acquisition
Total adjustments 0.19 0.33 (0.56) 0.48
Adjusted net income (loss) per share $
(1.01) $
1.01 $
(4.84) $
4.08
(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.
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended Nine Months Ended
September 30, September 30,
Reconciliation of Net Income (Loss) attributable to Delek to Adjusted 2020 2019 2020 2019
EBITDA
---
(Unaudited)
(Unaudited)
Reported net income (loss) attributable to Delek $
(88.1) $
51.3 $
(314.8) $
277.9
Add:
Interest expense, net 31.0 30.7 94.9 86.4
Income tax (benefit) expense - continuing operations (15.6) 13.4 (134.6) 83.8
Depreciation and amortization 65.2 49.8 177.4 146.7
EBITDA (7.5) 145.2 (177.1) 594.8
Adjustments
---
Net inventory valuation (benefit) loss (9.5) 20.0 65.6 (31.5)
Unrealized hedging (gain) loss 19.4 (0.5) (9.2) 30.1
Non-cash change in fair value of S&O Obligation associated with hedging 8.2 (1.4)
activities (1)
Gain from sale of Bakersfield non-operating refinery 0.1 (56.8)
Non-operating, pre-acquisition litigation contingent losses and related legal 6.7
expenses
Retroactive biodiesel tax credit (2) 10.8 31.6
Discontinued operations (income) loss, net of tax 0.8
Net income attributable to non-controlling interest 11.2 8.7 29.4 20.3
Total adjustments 29.4 39.0 27.6 58.0
Adjusted EBITDA $
21.9 $
184.2 $
(149.5) $
652.8
(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) but which impact
the fair value of the overall
obligation, as such fair value
changes are considered to be
identical in nature to the
unrealized hedging gains and
losses recognized on derivative
instruments which are excluded
from our adjusted net income
(loss).
(2) The portion of the retroactive
biodiesel tax credit reenacted in
December 2019 that was
attributable to 2019 has been
added to the three and nine
months ended September 30, 2019.
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended September 30, 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 $
(17.8) $
67.2 $
18.3 $
(20.4) $
47.3
Adjustments
---
Net inventory valuation (benefit) loss (9.5) (9.5)
Unrealized hedging (gain) loss 32.7 (0.3) (11.3) 21.1
Total adjustments $
23.2 $
(0.3)
$ $
(11.3) $
11.6
Adjusted segment contribution margin $
5.4 $
66.9 $
18.3 $
(31.7) $
58.9
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended September 30, 2019
---
Reconciliation of U.S. GAAP Segment Refining Logistics Retail Corporate, Consolidated
Contribution Margin to Adjusted Segment
Contribution Margin Other and
Eliminations
---
Reported segment contribution margin $
150.1 $
46.6 $
18.6 $
(12.0) $
203.3
Adjustments
---
Net inventory valuation (benefit) loss 20.0 20.0
Unrealized hedging (gain) loss (7.4) 0.4 4.2 (2.8)
Retroactive biodiesel tax credit (1) 10.8 10.8
Total adjustments $
23.4 $
0.4
$ $
4.2 $
28.0
Adjusted segment contribution margin $
173.5 $
47.0 $
18.6 $
(7.8) $
231.3
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Nine Months Ended September 30, 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 $
(248.5) $
175.9 $
54.9 $
(49.0) $
(66.7)
Adjustments
---
Net inventory valuation (benefit) loss 65.8 (0.1) (0.1) 65.6
Unrealized hedging (gain) loss (6.0) (0.3) (2.4) (8.7)
Total adjustments $
59.8 $
(0.4)
$ $
(2.5) $
56.9
Adjusted segment contribution margin $
(188.7) $
175.5 $
54.9 $
(51.5) $
(9.8)
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Nine Months Ended September 30, 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 $
650.1 $
130.9 $
46.4 $
(40.0) $
787.4
Adjustments
---
Net inventory valuation (benefit) loss (31.3) (0.2) (31.5)
Unrealized hedging (gain) loss 15.9 0.4 4.8 21.1
Retroactive biodiesel tax credit (1) 31.6 31.6
Total adjustments $
16.2 $
0.2
$ $
4.8 $
21.2
Adjusted segment contribution margin $
666.3 $
131.1 $
46.4 $
(35.2) $
808.6
(1) An adjustment for the portion of
the retroactive biodiesel tax
credit reenacted in December 2019
that was attributable to 2019 has
been included in the three and
nine months ended September 30,
2019 for comparability.
Delek US Holdings, Inc.
Reconciliation of Amounts Reported Under U.S. GAAP
$ in millions
Three Months Ended Nine Months Ended
September 30, September 30,
Reconciliation of Refining Segment Gross Margin (Loss) to Refining 2020 2019 2020 2019
Margin
---
(Unaudited)
(Unaudited)
Net revenues $
1,563.5 $
2,176.8 $
4,368.4 $
6,636.6
Cost of sales 1,631.6 2,061.3 4,749.2 6,085.4
Gross margin (loss) (68.1) 115.5 (380.8) 551.2
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization) 102.1 120.7 302.5 356.7
Depreciation and amortization 50.3 34.6 132.3 98.9
Refining margin $
84.3 $
270.8 $
54.0 $
1,006.8
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).
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SOURCE Delek US Holdings, Inc.
