• Adjusted EBITDA: Approximately $71 million for the third quarter.
• Net Loss: $77 million or negative $1.20 per share.
• Adjusted Net Loss: $93 million or negative $1.45 per share.
• Refining Margin: $5 to $6 below mid-cycle.
• Dividends Paid: $16 million during the quarter.
• Share Buybacks: $20 million worth of shares repurchased.
• Cash from Operations: Use of $22 million.
• Capital Expenditures: $78 million for the third quarter.
• Logistics Segment EBITDA: $106 million in adjusted EBITDA.
• Operating Expenses: Estimated between $177 million and $188 million for Q4 2024.
• General and Administrative Expenses: Estimated between $53 million and $58 million for Q4 2024.
• Depreciation and Amortization: Expected between $95 million and $105 million for Q4 2024.
• Net Interest Expense: Expected between $75 million and $80 million for Q4 2024.

• Warning! GuruFocus has detected 4 Warning Signs with VTOL.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Delek US Holdings Inc (NYSE:DK) reported an adjusted EBITDA of approximately $71 million for the third quarter.
• The company has successfully closed a series of transactions, including the sale of retail assets to FEMSA, strengthening its balance sheet.
• Delek US Holdings Inc (NYSE:DK) is implementing a new cost reduction and margin improvement plan, targeting at least $100 million in incremental annual savings by the second half of 2025.
• The company is actively working on increasing economic separation between DK and DKL, which is expected to bring additional cash flow benefits.
• Delek US Holdings Inc (NYSE:DK) is committed to shareholder returns, having paid $16 million in dividends and repurchased $20 million of shares during the quarter.

Negative Points

• The company reported a net loss of $77 million or negative $1.20 per share for the quarter.
• Refining margins remain below mid-cycle, impacting overall financial performance.
• El Dorado refinery experienced lower-than-expected margins due to outages in key units, affecting production margins.
• Cash from operations was a use of $22 million, reflecting challenges in generating positive cash flow.
• The company faces a low margin environment, which could impact future profitability and cash flow generation.

Q & A Highlights

Q: Can you provide more details on the El Dorado refinery's performance and future improvements? A: Avigal Soreq, President and CEO, explained that El Dorado is a complex refinery with significant flexibility. Joseph Israel, EVP Operations, added that they are addressing market access gaps and implementing new processes and logistics to improve profitability. By mid-next year, they expect to achieve an additional $2 per barrel in net margins.

Q: How do you plan to approach the share repurchase program given the current market valuation? A: Avigal Soreq stated that Delek US Holdings is committed to maintaining a strong dividend and a balanced approach between buybacks and improving the balance sheet. They see significant value in their equity and have been actively buying back shares in Q3 and Q4.

Q: What is the outlook for Delek Logistics Partners (DKL) and its growth projects? A: Avigal Soreq mentioned that while they haven't provided specific guidance for 2025, they are optimistic about DKL's growth. Mohit Bhardwaj, SVP of Strategy and Growth, noted a net addition of $70 million in midstream EBITDA from ongoing investments.

Q: Can you elaborate on the $100 million cost reduction and margin improvement plan? A: Avigal Soreq explained that the Enterprise Optimization Plan (EOP) is designed to be market agnostic, focusing on G&A efficiencies, operational improvements, and margin enhancements. The plan aims to generate at least $100 million in free cash flow annually, independent of market conditions.

Q: What are the strategic options for unlocking value from Delek Logistics Partners (DKL)? A: Mark Hobbs, EVP Corporate Development, stated that deconsolidation remains a top priority. They are evaluating all options to maximize value, supported by recent favorable market transactions in the midstream sector.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.