• Net Loss: $414 million or negative $6.55 per share.
• Adjusted Net Loss: $161 million or negative $2.54 per share.
• Adjusted EBITDA: Loss of $23 million.
• Refining Segment Contribution: Decrease of $80 million due to lower margin environment.
• Logistics Segment Adjusted EBITDA: $107 million.
• Cash Flow from Operations: Use of $164 million.
• Capital Expenditures: $198 million in Q4, with $140 million in the refining segment.
• Net Debt Increase: $82 million for the year.
• Operating Expenses Guidance (Q1 2025): $220 to $235 million.
• General and Administrative Expenses Guidance (Q1 2025): $55 to $60 million.
• Depreciation and Amortization Guidance (Q1 2025): $100 to $105 million.
• Net Interest Expenses Guidance (Q1 2025): $78 to $88 million.

• Warning! GuruFocus has detected 3 Warning Sign with DK.

Release Date: February 25, 2025

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

Positive Points

• Delek US Holdings Inc (NYSE:DK) successfully completed a major turnaround at the KSR refinery, leading to improved operational performance.
• The company sold its retail asset for $390 million, which was considered timely and valuable, allowing further progress in a challenging refining environment.
• Delek Logistics, a subsidiary, is progressing with capacity expansion and has announced an FID on acid gas injection, enhancing its growth potential.
• The company completed a zero-based budget initiative, saving around $100 million in costs, ahead of schedule.
• Delek US Holdings Inc (NYSE:DK) is committed to a disciplined capital allocation strategy, including dividends and share buybacks, demonstrating shareholder-friendly practices.

Negative Points

• Delek US Holdings Inc (NYSE:DK) reported a net loss of $414 million for the fourth quarter, including a partial impairment of goodwill.
• The refining segment experienced a significant decline in contribution due to a lower margin environment.
• Supply and marketing contributed a loss of $34.6 million in the fourth quarter, driven by seasonal low demand and other factors.
• The company faced challenges with its small refinery exemption petition, which was sent back to the EPA for reconsideration.
• Despite progress, Delek Logistics continues to trade at a discount compared to its peers, with limited value reflected in DK shares.

Q & A Highlights

Q: What improvements are being made to the El Dorado asset to make it more competitive? A: Joseph Israel, EVP Operations, explained that El Dorado is benefiting significantly from the Enterprise Optimization Plan (EOP), focusing on product mix improvements, converting heavy bottoms to light products, and enhancing process efficiency. The logistics front has also been strengthened to optimize product shipping. The team is confident in translating these improvements into financial performance soon.

Q: Is the strategy for Delek Logistics (DKL) to continue growing through acquisitions while reducing ownership below 50%? A: Avigal Soreq, President and CEO, confirmed the strategy involves deconsolidation and growing DKL through strategic acquisitions. The company has reduced its ownership from 79% to below 64% and plans to continue this trend. The focus is on maximizing value for both Delek US Holdings and DKL shareholders.

Q: Can you explain the negative contribution from supply and marketing in the fourth quarter and any structural changes needed? A: Patrick Reilly, EVP and Chief Commercial Officer, noted that the negative contribution was primarily due to seasonal demand weakness and a major turnaround. Despite these challenges, the company outperformed the previous year's fourth quarter by nearly $10 million. The strategy is to streamline operations and optimize supply and trading to improve margins.

Q: What is the timeline for the DKL repurchase program of DK units, and how will the cash be used? A: Avigal Soreq stated that the repurchase program is set to run until 2026, with timing dependent on market conditions. The cash will be used to support deconsolidation efforts and enhance free cash flow for both companies. The company maintains a balanced approach to capital allocation, including dividends and share buybacks.

Q: How should we interpret the operating expenses guidance for the first quarter of 2025, given the EOP's success? A: Mohit Bhardwaj, SVP of Strategy and Growth, explained that the guidance reflects higher throughput, natural gas price increases, and planned maintenance activities. Despite these factors, the company is committed to cost reduction and operational efficiency, contributing positively to free cash flow generation.

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