Delek US Holdings Reports Third Quarter 2023 Results

BRENTWOOD, Tenn., Nov. 7, 2023

"We achieved strong financial results in the third quarter by capturing favorable margins across our refining, logistics and retail businesses," said Avigal Soreq, President and Chief Executive Officer of Delek US.  "Operating safely, reliably and in an environmentally responsible manner is our top priority.  In the third quarter, we continued to build upon our solid foundation and drive results. In Refining, we ran well and achieved record total throughput. In Logistics, we are benefiting from our Permian location and investing in the continued growth of our business, which delivered record quarterly earnings once again. Our Retail business contributed the highest quarterly earnings since COVID."

"Financial strength and flexibility, as well as returning value to shareholders, remain key components of our strategy. During the quarter, we reduced debt by $175.6 million, we paid an increased dividend, and repurchased $25.0 million of stock. In the 4th quarter, the board of directors increased the quarterly dividend for the fifth consecutive quarter to $0.24 per share, and we repurchased an additional $20.0 million of stock. Year-to-date, we have paid down $415.7 million in debt and returned $130.3 million of capital to shareholders through dividends and share repurchases," Soreq continued.

"We remain focused on our long-term strategic objectives. We continued efforts to unlock value from our business and advanced our cost efficiency measures. In our operations, we have made progress at each refinery streamlining processes and improving reliability.  We are well positioned to operate under mid-cycle market conditions," Soreq concluded.

Delek US Holdings Results

		Three Months Ended September 30,				Nine Months Ended September 30, ARIVA.DE Börsen-Geflüster Kurse Delek Logistics Partners LP 39,82 $ 0,00% DELEK US HLDGS INC.DL-,01 25,80 € 0,00%
($ in millions, except per share data)		2023		2022		2023		2022
Net income attributable to Delek		$                     128.7		$                         7.4		$                     184.7		$                     375.8
Diluted income per share		$                       1.97		$                       0.10		$                       2.78		$                       5.21
Adjusted net income		$                     131.9		$                     214.8		$                     289.8		$                     461.4
Adjusted net income per share		$                       2.02		$                       3.02		$                       4.37		$                       6.38
Adjusted EBITDA		$                     345.1		$                     414.0		$                     889.1		$                     960.0

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Refining Segment

The refining segment Adjusted EBITDA was $285.5 million in the third quarter 2023 compared with $355.7 million in the same quarter last year, which reflects other inventory impacts of $(28.2) million and $279.5 million for third quarter 2023 and 2022, respectively. The decrease over 2022 is primarily due to lower refining crack spreads, partially offset by higher sales volume (including purchased product). During the third quarter 2023, Delek US's benchmark crack spreads were down an average of 8.2% from prior-year levels.

Logistics Segment

The logistics segment Adjusted EBITDA in the third quarter 2023 was $96.5 million compared with $91.5 million in the prior year quarter. The increase over last year's third quarter was driven by strong contributions from the Midland Gathering system and Delaware Gathering system in addition to annual rate increases.

Retail Segment

For the third quarter 2023, Adjusted EBITDA for the retail segment was $16.2 million compared with $13.5 million in the prior-year period. The increase was primarily driven by increased average fuel margins and increased inside store margins.

Corporate and Other Activity

Adjusted EBITDA from Corporate, Other and Eliminations was a loss of $(53.1) million in the third quarter 2023 compared with a loss of $(46.7) million in the prior-year period.  The higher losses are driven by general and administrative costs, primarily related to employee benefit expenses.

Shareholder Distributions

On November 1, 2023, the Board of Directors approved the regular quarterly dividend of $0.240 per share that will be paid on November 20, 2023 to shareholders of record on November 13, 2023.

Liquidity

As of September 30, 2023, Delek US had a cash balance of $901.7 million and total consolidated long-term debt of $2,638.0 million, resulting in net debt of $1,736.3 million. As of September 30, 2023, Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") had $4.2 million of cash and $1,741.4 million of total long-term debt, which are included in the consolidated amounts on Delek US' balance sheet. Excluding Delek Logistics, Delek US had $897.5 million in cash and $896.6 million of long-term debt, or a $0.9 million net cash position.

Third Quarter 2023 Results | Conference Call Information

Delek US will hold a conference call to discuss its third quarter 2023 results on Tuesday, November 7, 2023 at 10:00 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 ten 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 2023 earnings conference call that will be held on Tuesday November 7, 2023 at 11:30 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 will be 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, pipelines, renewable fuels and convenience store retailing. The refining assets consist primarily 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. Pipeline assets include an ownership interest in the 650-mile Wink to Webster long-haul crude oil pipeline. The convenience store retail segment operates approximately 250 convenience stores in West Texas and New Mexico.

The logistics operations include Delek Logistics Partners, LP (NYSE: DKL). Delek Logistics Partners, LP is a growth-oriented master limited partnership focused on owning and operating midstream energy infrastructure assets. Delek US Holdings, Inc. and its subsidiaries owned approximately 78.7% (including the general partner interest) of Delek Logistics Partners, LP at September 30, 2023.

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; cost reductions;  growth; scheduled turnaround activity; investments into our business; the performance and execution of our midstream growth initiatives, including the Permian 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; projected benefits of the Delaware Gathering Acquisition, renewable identification numbers ("RINs") waivers and tax credits and the value and benefit therefrom; cash and liquidity; emissions reductions; opportunities and anticipated performance and financial position.

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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, uncertainties regarding future decisions by the Organization of Petroleum Exporting Countries ("OPEC") regarding production and pricing disputes between OPEC members and Russia; risks and uncertainties related to the integration by Delek Logistics of the Delaware Gathering business following its acquisition; 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 Permian 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 financial information presented in accordance with  United States ("U.S.") Generally Accepted Accounting Principles ("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 (loss) 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 (loss) 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;
• Refining margin - calculated as gross margin (which we define as sales minus cost of sales) adjusted for operating expenses and depreciation and amortization included in cost of sales;
• Adjusted refining margin - calculated as refining margin adjusted for other inventory impacts, net inventory LCM valuation loss (benefit) and unrealized hedging (gain) loss;
• Refining production margin - calculated based on the regional market sales price of refined products produced, less allocated transportation, Renewable Fuel Standard volume obligation and associated feedstock costs. This measure reflects the economics of each refinery exclusive of the financial impact of inventory price risk mitigation programs and marketing uplift strategies;
• Refining production margin per throughput barrel - calculated as refining production margin divided by our average refining throughput in barrels per day (excluding purchased barrels) multiplied by 1,000 and multiplied by the number of days in the period; and
• Net debt - calculated as long-term debt including both current and non-current portions (the most comparable GAAP measure) less cash and cash equivalents as of a specific balance sheet date.

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. "Net debt," also a non-GAAP financial measure,  is an important measure to monitor leverage and evaluate the balance sheet.

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, Adjusted Refining Margin and Refining Production 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)
		September 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents		$                       901.7		$                       841.3
Accounts receivable, net		1,166.9		1,234.4
Inventories, net of inventory valuation reserves		1,179.2		1,518.5
Other current assets		85.6		122.7
Total current assets		3,333.4		3,716.9
Property, plant and equipment:
Property, plant and equipment		4,603.1		4,349.0
Less: accumulated depreciation		(1,768.3)		(1,572.6)
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