Delek US (DK) Q2 2024 earnings summary

Executive summary

• Reported a Q2 2024 net loss of $37.2 million ($0.58 per share) and adjusted net loss of $59.3 million ($0.92 per share), with adjusted EBITDA of $107.5 million, reflecting solid operational execution despite a challenging market environment.

• Achieved record-high throughput of 316,000 barrels per day, with Big Spring refinery progressing on throughput and opex goals.

• Announced sale of retail business for $385 million and a 10-year supply agreement with FEMSA, unlocking value for shareholders and providing a projected net cash inflow of over $500 million.

• Executed asset swaps, contract amendments, and drop-down of Wink to Webster pipeline into DKL, positioning for midstream deconsolidation and enhancing third-party EBITDA.

• Completed $100 million cost reduction program ahead of schedule, with further profitability initiatives underway.

Financial highlights

• Q2 2024 net revenues were $3.42 billion, down from $4.20 billion in Q2 2023; adjusted EBITDA fell to $107.5 million from $259.4 million year-over-year.

• Cash flow from operations was negative $48 million, impacted by net loss and working capital outflow; cash balance at June 30, 2024, was $657.9 million.

• Paid $16 million in dividends and increased the regular quarterly dividend to $0.255 per share.

• Capital expenditures for the quarter were $71 million, with a full-year forecast of $330 million, excluding $90–$100 million for a new gas plant.

• Net debt at quarter-end was $1,803.8 million, with $657.9 million in cash.

Outlook and guidance

• Full-year 2024 capital plan remains on track at $330 million, excluding new gas plant investment.

• Third quarter throughput guidance: Tyler 74,000–77,000 bpd; El Dorado 79,000–82,000 bpd; Big Spring 69,000–73,000 bpd; Krotz Springs 79,000–83,000 bpd; system target 301,000–315,000 bpd.

• Q3 operating expenses expected between $205–$250 million; G&A between $60–$65 million; net interest expense $80–$85 million.

• Management expects continued market volatility due to geopolitical instability and commodity price fluctuations, with a focus on operational efficiency and strategic transactions.

• Retail sale and H2O Midstream acquisition are expected to close by year-end 2024, with anticipated benefits to liquidity and business diversification.