Yahoo Finance Delek US Holdings Inc (DK) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...
Adjusted EBITDA: $159 million, showing improvement from previous quarter.
Dividends: Paid $16 million, with a $0.05 per share increase to the regular dividend, now $0.25 per share.
Liquidity: Increased from approximately $300 million to $800 million.
Leverage Ratio: Reduced from 4.34 to 4.1.
Midstream EBITDA: Approximately $400 million annual run rate.
Net Loss: $33 million or $0.51 per share.
Adjusted Net Loss: $26 million or $0.41 per share.
Cash Flow from Operations: $167 million.
Capital Expenditures: $46 million in Q1, with an estimated $330 million for full-year 2024.
Net Debt: Ended the quarter with a net debt position of $152 million.
Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Adjusted EBITDA for Q1 2024 was $159 million, showing an improvement from the previous quarter.
The logistics segment delivered another strong quarter, with significant contributions from operations in the Midland and Delaware Basins.
Delek US Holdings Inc increased liquidity from approximately $300 million to $800 million and reduced its leverage ratio.
The company paid $16 million in dividends during the quarter and approved a $0.05 per share increase to the regular dividend.
Delek US Holdings Inc is making progress in unlocking the value of its retail business by engaging investment bankers to review strategic opportunities.
Negative Points
Delek US Holdings Inc reported a net loss of $33 million or $0.51 per share for Q1 2024.
The company faced operational challenges including weather-related interruptions that impacted refinery throughput and efficiency.
Supply and marketing segment reported a $65 million loss for the quarter, influenced by adverse weather conditions and rising price environments.
There are ongoing challenges in optimizing the crude and product slates to enhance overall company EBITDA.
Despite efforts, there are still significant steps needed to achieve the targeted $90 million to $100 million run rate in cost savings by the end of 2024.
Q & A Highlights
Q: Could you provide more details on the capital program for Q1 and the full-year forecast? A: Avigal Soreq, President and CEO of Delek US Holdings, explained that it's still early in the year, and they are not changing their guidance at this point. They aim to ensure a safe turnaround and achieve a $30 million uplift from the scope of work, keeping costs in check.
Q: What led to the decision to potentially monetize the retail business, and what are the expected dis-synergies? A: Avigal Soreq noted the importance of demonstrating financial strength and unlocking shareholder value. Mark Hobbs, EVP of Corporate Development, added that they are evaluating strategic options without significant dis-synergies, focusing on strengthening cash flow and leverage.
Q: How should funds from retail disposition be used, considering the assets like Wink to Webster? A: Avigal Soreq discussed prioritizing a strong balance sheet and consistent dividends, indicating that strategic initiatives are guiding their capital allocation decisions, including potential benefits from the Wink to Webster pipeline.
Q: What operational improvements are being made at Big Spring, and what are the targets for throughput and cost? A: Joseph Israel, EVP of Operations, mentioned progress in reliability and cost structure at Big Spring, aiming for a mid $5 per barrel cost target by year-end and consistent throughput around 70,000 barrels per day.
Q: Can you discuss the mid-cycle EBITDA expectations for the refining business and the strategies to achieve these? A: Joseph Israel projected a mid-cycle EBITDA of $750 to $800 million for the entire company, focusing on stable refining operations with minimal surprises.
Q: What are the plans and progress on cost reduction targets for 2024 and beyond? A: Avigal Soreq confirmed aiming for $90 to $100 million in cost savings by the end of 2024, with additional opportunities identified for 2025. They are on track with most steps implemented and more planned for the upcoming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
