管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Delek US Second Quarter 2026 Earnings Call. The operator provided instructions to participants. I will now hand the conference over to Robert Wright, EVP and CFO. Robert, go ahead.
Good morning, and welcome to the Delek US Second Quarter Earnings Conference Call. Participants joining me on today's call will include Avigal Soreq, President and CEO; Mohit Bhardwaj, EVP, New Energy, Strategy and Investor Relations; as well as other members of our management team. Today's presentation materials can be found on the Investor Relations section of the Delek US website. Slide 2 contains our safe harbor statement regarding forward-looking information. As a reminder, this conference call will contain forward-looking information as defined under the federal securities laws, including statements regarding guidance and future business outlook. Any forward-looking statements made during today's call involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks. Avigal?
Thank you, Robert. Good morning, and thank you for joining us today. I'm extremely pleased with our strong execution in the second quarter. The quarter further demonstrates our enhanced execution capabilities. First, we successfully navigated the volatility in crude and product markets caused by the event in the Middle East. Second, we made further progress in increasing our free cash flow profile and reducing our overall cost structure. This quarter reinforced the importance of discipline in maintaining safe and reliable operations and making thoughtful capital allocation decisions. This is especially important during periods of strong margins. We will continue to apply the same prudent approach across our business, capital deployment and corporate culture as we are creating sustainable long-term shareholder value. As I mentioned during the last earnings call, the events in the Middle East and Eastern Europe have created many ripple effects in the markets. We continue to see steep liquidation, swings in crude differentials and shortage of transportation fuels. In the current environment, we continue to believe that access to crude, high distillate yield and, most importantly, the ability to respond quickly to changing market conditions are critical to maintaining operational flexibility and delivering strong performance. We plan to continue navigating this environment with a measured approach by, first, mitigating risk; and second, capturing the opportunities offered by the market. Now I will cover some of our second quarter highlights and strategic initiatives in detail. Starting with refining. Our refining system operated well, demonstrated by all four refineries. Big Spring has been running to our expectations since its turnaround. Post-turnaround, we are seeing improved reliability, higher crude slate flexibility, improvement in overall product yields and higher octane and blending capabilities. We are very pleased with this improvement and are looking at finding additional opportunities to further improve this important asset in our portfolio. With no planned turnarounds for the rest of the year, our refining system is well positioned to capture the strength in the market. Moving to EOP. The enterprise optimization plan continues to drive significant value. As a reminder, our enterprise optimization plan targets increasing our cash flow by at least $220 million on an annual run rate basis. During the second quarter of 2026, we estimate approximately $60 million of EOP contribution to our P&L. We are currently working on further advancing EOP to create an additional meaningful step change to our free cash flow profile. We'll provide more details on this in the near future. Our Sum of the Parts initiative also continued to progress with raising strength of our midstream business. DKL today reaffirmed its 2026 EBITDA guidance of $520 million to $560 million. The tailwinds we have been seeing in the DKL business continue to rise, and we are working hard to capture these opportunities. DKL is close to completing its comprehensive gathering, treatment, processing and acid gas injection solution. The sour gas solution will provide DKL the ability to fully capitalize on its growth opportunities in the Delaware Basin and maintain its best-in-class EBITDA growth and yield. In 2026, on a pro forma basis, we continue to expect DKL third-party EBITDA to exceed 80%. This level of economic separation is a cornerstone of our Sum of the Parts strategy and continues to bring us closer to our deconsolidation goal. DKL is on the right path, and we continue to work hard to write the next chapter in its growth story. As mentioned last quarter, we are pursuing a proactive strategy to manage our obligation under the RFS. The SRE provision in the RFS served the important purpose of mitigating the impact felt on small refineries from the RFS burden. RVO costs remain elevated and the absence of SREs created a significant burden on small refineries like us. We expect the EPA to continue to provide relief to small refineries for the year of 2025 and beyond. Finally, we believe that the current administration, Senate, Congress and EPA realize the importance of small refinery exemptions, not only for the refineries that qualify under the program but also for the local communities they serve. The final piece of our strategy is being shareholder-friendly and having a strong balance sheet. During the quarter, we paid approximately $16 million in dividends and $20 million in buybacks. Our strong balance sheet, improved reliability, EOP and confidence in our outlook continue to support a disciplined approach to capital allocation through continued dividends and buybacks. We remain committed to a balanced and disciplined capital allocation strategy and look forward to continuing to reward our shareholders. In closing, thank you to our team for their hard work and dedication. I'm immensely proud of the progress Delek has made, and I look forward to building on the momentum for the remainder of the year and beyond. Now I will turn the call over to Robert, who will provide additional color on the quarter.
Thank you, Avigal. For the second quarter, Delek reported net income of approximately $170 million or $2.71 per share. On an adjusted basis, net income came in at approximately $344 million or $5.48 per share, with adjusted EBITDA of approximately $639 million. Turning to Slide 4, we provide the breakout of adjusted EBITDA and adjusted EPS for the quarter. When we exclude the 50% RVO adjustment, adjusted EBITDA was approximately $490 million and adjusted EPS was approximately $3.64 per share. Slide 5 walks through the bridge in adjusted EBITDA, excluding the 50% RVO adjustment from the first quarter to the second quarter. The breakdown shows that there were three main drivers for the increase in EBITDA. Quarter-over-quarter, performance was led by stronger refining margins, helped by our robust distillate yields, along with higher throughput following the successful completion of the turnaround at Big Spring. In Supply and Marketing, we saw a $60 million increase versus the prior quarter. This improvement was driven primarily by wholesale marketing, which contributed $25 million to the improved results, partially offset by a $3 million reduction in asphalt contribution with the remainder of the change coming from supply. Our Logistics segment posted its best quarterly results in our history, delivering approximately $144 million in adjusted EBITDA as momentum continued across all three of our Permian Basin offerings: crude, gas and water. Let's move to Slide 15 for a review of cash flow. Cash flow from operations was $263 million for the quarter. This reflects net income for the period adjusted for noncash items, along with $138 million net outflow from changes in working capital. Investing activities was a use of $176 million, reflecting our continued investment in growth. This includes second quarter capital purchases of $61 million at Delek Logistics, primarily for growth projects and $55 million of purchases in refining, along with a quarter-over-quarter reduction of capital accruals, primarily related to the payments on the final expenditures of the Big Spring turnaround, which we completed safely, on schedule and on budget. Financing activities was an outflow of $82 million, which reflects the paydown associated with the successful refinancing of our term loan from $920 million down to $850 million. It also includes approximately $16 million in dividend payments and approximately $22 million in DKL distribution payments to public unitholders. Slide 16 breaks out our net debt position between Delek and Delek Logistics. On a stand-alone basis, excluding Delek Logistics, Delek net debt declined by $72 million, driven primarily by the term loan paydown completed as part of the successful refinancing of that facility. Now turning to Slide 17 and our outlook for the third quarter. Our throughput guidance is as follows: Tyler, 72,000 to 77,000 barrels per day; El Dorado, 78,000 to 83,000 barrels per day; Big Spring, 68,000 to 73,000 barrels per day; and Krotz Springs, 78,000 to 83,000 barrels per day. Taken together, this implies a system throughput target of 296,000 to 316,000 barrels per day for the third quarter. In addition to the throughput guidance, for the third quarter of 2026, we expect operating expenses to be between $220 million and $230 million, G&A between $50 million and $55 million and D&A to be between $110 million and $120 million. Additionally, beginning this quarter, we will provide interest expense guidance at both the DKL and stand-alone DK levels. This added disclosure reflects our continued focus on economic separation and capital discipline and underscores the progress we have made on both fronts. We expect net interest expense between $75 million and $85 million, with DK contributing between $28 million and $33 million and DKL contributing between $47 million and $52 million. With that, we will now open the call for questions.
分析師問答
The operator provided instructions to participants. Your first question comes from the line of Doug Leggate with Wolfe Research.
This is Ayush Gupta on behalf of Doug Leggate at Wolfe Research. He sends his apologies for not making the call today. Congrats on a great quarter. I have a few questions, and I'll start off with the SREs. So can you offer any update on the current timing of 2025? And specifically, can you clarify if SREs are awarded, what are the restrictions on value? Can you sell 2025 credits at 2026 prices? And related, you recently were awarded Krotz Springs having previously been denied. Can you share the process that led to the change in decision and implications for what it might mean across the portfolio for 2026 going forward?
Yes. First of all, thank you for joining us, and please send our regards to Doug. So let's start with a bigger discussion about small refinery exemptions. First, the small refinery exemption related to 2025 is not only a Delek situation. It's an industry issue; it probably impacts around 40 refineries across the nation and likely impacts half of the industry. So it's well beyond us. The issue of small refinery exemptions, and I want you to remember one line here is 'disproportionate economic harm.' The idea is to maintain high-paying jobs, support local communities and ensure affordable fuels. It supports the administration's energy priorities; the administration understands it very well, and we believe the Senate, Congress and EPA understand that it needs to be resolved in a timely manner to allow us to comply as needed. Mohit, I'll let you chime in to give more color around this.
Yes. Thanks, Avigal, and thanks, Ayush, for joining the call. Avigal is absolutely right. The SRE issue is about disproportionate economic harm. And you rightly pointed out in your question, the grant for Krotz Springs reflects that. Our petition was strong and both EPA and the DOE agreed that we have disproportionate economic harm because of the RFS, and that's why our petition was overturned. As far as we are concerned, we are very excited about our 2025 petitions as well in terms of the strength of them, and we are looking forward to that announcement.
Perfect. And I have a follow-up. Your refining profitability is generally higher cost versus peers and the cost allocated to DKL: can DKL hedge margin spreads? And what could that really look like?
Thank you for that question. Generally speaking, some of our investors view DKL as getting exposure to refining margin or crack spread. We do not hedge crack spreads in any meaningful way. We prefer to let investors capture that exposure through ownership of the stock or units. While we may use limited hedging in certain circumstances, it is not a material or ongoing strategy for DKL. We want to make sure our investors are well rewarded for investing in our securities through our disciplined capital allocation. I hope that clarifies our approach.
The operator provided instructions to participants. Your next question comes from Alexa Breno with Goldman Sachs.
We wanted to ask first, could you just talk a little bit more about your capital allocation strategy? You've got a good amount of tailwinds coming in from a cash perspective. So how should we think about that, whether that be buybacks, a dividend or any other M&A consideration or any other allocation considerations? That's helpful. And then just on a follow-up, can you talk a little bit more about EOP? Any places that it's surprising to the upside? And as you kind of think about — you always talk about it being ongoing in the next leg — where are areas for further improvement?
Yes, absolutely. Alexa, first of all, thank you for joining the call, and thank you for your support. I will be very clear around that. We have a very clear capital allocation strategy that is working very well for us. We maintain the dividend through the cycle. We follow a balanced approach between taking care of our balance sheet and buybacks. We need to put things in perspective: we bought around 10% of our company since the beginning of 2025, and we are one of the leading companies among our peers in returning capital to our investors. We believe that being shareholder-friendly and giving a good return to our investors is a cornerstone of our strategy, and we'll keep doing that going forward. Regarding EOP, it's a big deal for us. We have spoken about it many times and are proud that the entire organization is behind it and showing very good results. EOP is not a project; it's a lifestyle. We push the entire organization and the organization comes up with more ideas and initiatives as we speak. The whole point of EOP is to create free cash flow in all market conditions at Delek. As we showed in our presentation, we illustrated what happened in terms of EBITDA and free cash flow in a similar market condition and how well it positions us going forward. We started the program with around $100 million and have more than doubled that as we stand now. We are not stopping here. We are working on more exciting initiatives for EOP, and you should stay tuned and expect more good news in the near term.
Alexa, Avigal is absolutely right. From an upside standpoint, our confidence in our free cash flow profile on a mid-cycle basis is increasing. We show in our slide deck around $650 million to $700 million in free cash flow, including DKL distributions, and our confidence in that free cash flow — which is roughly a 15% to 20% free cash flow yield at current prices — is increasing. We are very happy about EOP and excited about the next phase of it and the free cash flow it will deliver post-EOP.
The operator provided instructions to participants. Your next question comes from Manav Gupta with UBS.
I'll pivot a little bit to midstream. You have a very strong sour gas presence. Can you give us an update in terms of completion of the Libby gas complex, when do you expect it to be completed? And then should we expect a ramp into the fourth quarter and year-end? And how does that further increase your position in the Permian sour gas opportunity?
Manav, thank you for joining us. It's a great question. We are very excited about the progress at DKL. DKL today on a pro forma basis is roughly 80% third-party. We have a clear strategy of being a premier provider of crude, water and gas in the most prolific areas of the Permian Basin. We have a strong growing engine in gas as you mentioned. We are very close to completing it and we see increases quarter-over-quarter in gas reprocessing. Recently, Mark took on the responsibility of leading DKL together with Chris, as I mentioned in my prepared remarks. That's a very good story for us and we are excited about the generation, which is showing up in both DK and the DKL unit and share. Mark, why don't you take it from here?
Thanks, Manav. Both our plants are running well, both Libbey 1 and Libbey 2. As we've discussed in the past, we're seeing increasingly more sour gas production from our customers versus sweet, and this trend continues. We've added Libbey 2 processing capacity, we've completed our acid gas injection (AGI) well and are now nearing completion of our sour gas gathering and compression offering, providing a much-needed and unique sour gas solution in the Northern Delaware. This capability will help our customers continue to grow their production because we're capable of handling that gas. We do see this driving a step change in our gas volumes as we move through the rest of the year, and it positions us very well for future growth in the region.
Perfect. My quick follow-up is a little bit on the refining macro. Given the amount of global capacity that's down, do you expect the product markets to remain tight? And if you could provide some commentary on how, given your high diesel yield, it really benefits you guys?
Yes, absolutely. This topic has been discussed on many calls. At a high level, about 5 million barrels per day of capacity are offline. Even after the event ends, it will likely take a few quarters for markets to normalize, so we do not expect a quick return to previous levels. We see a structural shortage of product that could last a bit longer. We have experienced steep liquidation versus historical norms and wide swings in crude differentials. Larger E&P operators are more disciplined; smaller operators are more variable. We've seen an increase in rig counts — roughly 20 rigs since the event started — which is another factor. We saw Brent time inversion widen due to country risk versus the start of the year. What does it mean for us? We have very good access to product, both on the Gulf Coast and Mid-Continent, which is positive. We have high distillate and jet yields, which is beneficial, and we are outside of turnaround cycles to capture market strength. We also have excess domestic crude, which avoids working capital supply problems, and our strong Permian midstream exposure allows stakeholders to benefit from both upstream and downstream dynamics. We are well positioned and happy with where we stand. Mohit, do you want to add?
Avigal covered a lot of ground. I just want to emphasize the points relevant to us. With the current macro environment, producers have started bringing wells online and production outlook has increased in both the Midland and Delaware Basins. That benefits our midstream business and our refining business because we have access to barrels. Flexibility is the name of the game — having high distillate yield, high jet yield and multiple sourcing patterns helps us. Also, there are product pipelines under discussion that will clear markets, which will have a positive impact beyond the current crisis; that's an important macro trend.
The operator provided instructions to participants. Your next question comes from Jason Gabelman from TD Cowen.
I wanted to go back to the SREs and specifically on Krotz Springs and the recent award: how should we think about monetizing that award and the magnitude of cash you could get from that? And where is the priority in terms of where that cash goes?
Jason, thank you for joining our call. We're going to stick to our capital framework: maintain the dividend through the cycle and take a balanced approach between the balance sheet and buybacks. As Mohit mentioned, even on a mid-cycle basis, we show $650 million to $700 million of free cash flow, which is a 15% to 20% yield. There's a lot of room for shareholder value to increase. We do not plan to hold excess cash on our balance sheet; we will deploy cash according to our capital allocation priorities. Our strategy is to remain compliant, and I'll let Mohit finish.
Jason, as Avigal pointed out, we don't have a strategy of holding excess cash on the balance sheet. You've seen our history — we have returned significant capital to shareholders and that will continue. Regarding Krotz Springs and the petition outcome, we're pleased with the result; it supports the disproportionate economic harm argument. For companies like us that stay in compliance and buy RINs, restoration of SREs effectively returns the RIN costs we've borne. It's not a new gift of cash; it's reimbursement for costs we previously incurred.
Okay. I guess I'm wondering, is there any friction or timing lag in terms of receiving those RINs and then monetizing them? Or is that a pretty immediate event?
Jason, we've gone through this before and have established processes. We have a good team that manages our RIN purchases and dispositions when required. We have a robust strategy around this and are not particularly concerned about the mechanics or timing — we will manage it effectively. But as I said, SREs are about disproportionate economic harm and we're glad EPA made the right decision in Krotz Springs' case.
Okay. And then my follow-up is just on near-term refining margin capture dynamics. In Q2 you had a steep backwardation in the curve. It seems like the curve has eased here in Q3. Should we expect that one-to-one benefit in terms of the backwardation easing flowing through to your refining margins?
Yes, that's pretty much it. You're right: a dollar of backwardation corresponds roughly to a dollar impact on crack spread, so changes in the curve will flow through to crack. We see a much flatter curve now — maybe roughly $1.50 on the front versus the $6 to $7 or more we saw in Q2 — and that is reflected in the crack spread.
The operator provided instructions to participants. Your next question comes from Joe Laetsch with Morgan Stanley.
I wanted to start on the Sum of the Parts side. Could you talk through how you're thinking about current deconsolidation and value unlock options here? You've done bolt-ons and organic growth at DKL and the currency at DKL has certainly strengthened this year. I'm curious about the M&A landscape as well and potential paths forward.
Joe, the objective of our Sum of the Parts strategy is to make sure the value created at DKL is reflected in the combined market values. We've made progress and there are more steps to take. Today, DKL is roughly 80% third-party on a pro forma basis. We have strong positions in both Delaware and Midland Basins. Mark mentioned the gas plant expansion and sour gas capabilities, which are unique opportunities. Our asset quality is strong across crude, gas and water businesses, and some assets we added earlier have materially improved in value. Recent market transactions have traded in the low to mid-teens multiples on sellers, suggesting significant upside to intrinsic value from today's levels. As I have said in the past, all options are on the table: we could pursue asset sales, continue bolt-on acquisitions, or do share/unit repurchases between DK and DKL — some of which have tax benefits. On M&A, the market is favorable for sellers today, and we will only pursue acquisitions that are accretive and strategically aligned with our leverage and coverage targets. We're evaluating all options and staying tuned.
That's helpful. Then shifting to refining: utilization. It looks like the system ran well across all the refineries and you've had initiatives and turnarounds in recent years to improve competitiveness. As you think about the path forward, is there more work to do across the system? Or is it now more about operational execution?
We are happy with the progress in reliability and the results from recent turnarounds — we completed the turnaround at Big Spring safely, on time and on budget. However, our work is ongoing. EOP is closely tied to operational improvements and we will continue to pursue further gains. The organization is committed to the next chapter of EOP. Don't be surprised if we come back with another level of improvement in gross margins, product mix or sales strategies. We remain focused on continuous improvement and execution.
The operator provided instructions to participants. Your next question comes from Matthew Blair with TPH.
For marketing and supply in the second quarter, do you have the breakout that includes details on wholesale marketing, asphalt and your supply activities? And then for the third quarter, do you have any general commentary on the trends you're seeing? For example, with crude prices moving back up, would that be a headwind to asphalt so far in Q3?
Matt, as we've discussed before, our Supply and Marketing line item — which we call internally DKTS — is performing well. We have new leadership in place and have made improvements in wholesale and asphalt to create more value. You saw the results in Q2 where results improved markedly versus Q1 despite volatility. Wholesale is doing very well and we are optimistic it will continue into Q3. Asphalt has seen volatility; pricing has fluctuated. There could be some catch-up in asphalt based on timing since the start of the conflict, but much depends on market volatility. Overall, the business is performing well and we expect continued improvements, although we can't fully predict short-term price swings.
Okay. Sounds good. And then on the SRE proceeds, could you clarify: for 2025, if you receive partial waivers at all four refineries, we estimate roughly $600 million; full waivers would be about $1.2 billion. Is there tax on that, given you bought RINs at a lower price and may sell at a higher price? Do you have any estimates on potential tax impact?
We are not going to provide specific guidance on tax at this time. We still need to await final outcomes on 2025 and will follow our capital allocation plan. Please stay tuned and we are optimistic about the outcomes.
Matthew, to give context, total RVO obligation in 2025 was $468.4 million, and that was calculated with a RIN price of roughly $1 per gallon, so you can make assumptions beyond that. As far as our overall tax strategy, we will manage taxes prudently but we are not going to discuss detailed tax planning on this call.
I agree with Avigal. We have a number of levers to minimize tax expense and optimize returns on any SRE proceeds, but there's nothing concrete to model or share right now. Tax minimization is an important part of our strategy and we'll employ it as appropriate.
Yes. Overall tax minimization is part of our strategy, and we are very pleased with our current cash flow situation and where we sit in the cycle.
There are no further questions at this time. I will now turn the call back to Avigal Soreq, CEO, for closing remarks.
I want to thank my colleagues here around the table for another great quarter. I want to thank the Board of Directors for trusting us, thank you to our investors for sticking with the story and supporting us, and most importantly, thank you to our employees who make this company the great company we are privileged to manage. We'll talk again next quarter, and have a safe day.
This concludes today's call. Thank you for attending. You may now disconnect.