Delek US Holdings Reports Q4 2024 Loss, Highlights Strategic Moves

Delek US Holdings, Inc. (NYSE: DK) reported an adjusted net loss of $2.45 per share for the fourth quarter of 2024. This loss is narrower than the Zacks Consensus Estimate of $2.89 but wider than the loss of $1.46 per share recorded in the same quarter last year. The company attributed this loss primarily to weak contributions from its Refining segment.

Net revenues for the quarter fell 39.8% year over year to $2.4 billion, which also missed the Zacks Consensus Estimate by $176 million.

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The diversified downstream energy company reported an adjusted EBITDA loss of $23.2 million, a dramatic decline from a gain of $60.6 million in the prior year.

On February 18, the board of directors for DK approved a regular quarterly dividend of 25.5 cents per share, scheduled for payment on March 10 to shareholders on record as of March 3, 2025.

Delek US Holdings: Price, Consensus, and EPS Surprise

Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote

Delek US operates its logistics division through Delek Logistics Partners, LP (NYSE: DKL), in which it holds a 63.6% interest as of January 2, 2025. Over the past year, both Delek US and DKL implemented significant strategic initiatives.

Delek US made notable progress toward its Sum of the Parts strategy, emphasizing shareholder value maximization. The company successfully sold its retail assets, generating $390 million in proceeds. Additionally, both companies executed intercompany amendments and extensions to strengthen their operational ties. Furthermore, DK completed the drop-down of the Wink to Webster (“W2W”) pipeline into DKL, enhancing DKL’s asset base.

In another strategic move, DKL acquired H2O Midstream, further diversifying its third-party cash flows. This acquisition contributed to DKL achieving a record quarterly adjusted EBITDA of $107.2 million, underscoring its robust financial performance.

Beyond these transactions, DK successfully completed a five-year turnaround at its Krotz Springs refinery, boosting operational efficiency. Additionally, delek US achieved an impressive run rate cost reduction of $100 million through its zero-based budgeting efforts, reinforcing its commitment to fiscal discipline.

To enhance profitability further, DK has initiated the Enterprise Optimization Plan, targeting a minimum increase in overall profitability by $100 million. The company also repurchased approximately $42 million in shares, returning value to shareholders.

DK’s Segmental Performances

Refining: The refining segment’s adjusted EBITDA loss widened to $69.6 million, significantly deteriorating from the $4.4 million loss a year prior. This substantial loss resulted from reduced refining crack spreads and the turnaround process at the Krotz Springs refinery. Moreover, this result fell short of the profit estimate of $29.6 million.

Adjustment in benchmark crack spreads averaged a 13.1% decline in the fourth quarter of 2024 compared to previous year levels.

Logistics: This segment encompasses Delek’s majority interest in DKL, which operates various midstream assets including pipelines.

In the fourth quarter, this segment recorded an adjusted EBITDA of $107.2 million, an increase from $99.4 million in the previous year’s quarter. This figure exceeded our estimate of $89.1 million, buoyed by strong contributions from the Delaware Gathering systems, annual rate hikes, the W2W drop-down, and the H2O Midstream acquisition completed on September 11, 2024.

DK’s Financials

Total operating expenses for the fourth quarter decreased approximately 32% year over year to $2.8 billion. Capital program expenditures for the quarter totaled $92 million.

As of December 31, 2024, the company reported cash and cash equivalents of $735.6 million, with long-term debt totaling $2.8 billion, resulting in a debt-to-total capital ratio of about 82.8%.

Delek US’ consolidated balance sheet on December 31, 2024, included DKL, which recorded $5.4 million in cash and $1.9 billion in long-term debt. Excluding DKL, Delek US reported $730.2 million in cash versus $889.8 million in long-term debt, yielding a net debt of $159.6 million.

DK’s Transaction & Restructuring-Related Costs

During the three months ended December 31, 2024, DK incurred $3.8 million ($2.9 million after-tax) in transaction-related expenses linked to its strategic activities, including the H2O Midstream acquisition, intercompany agreement amendments, the sale of retail operations, and the Gravity acquisition.

Additionally, Delek US reported $3.3 million ($2.6 million after-tax) in restructuring costs for the fourth quarter of 2024. This spending reflects the company’s ongoing business transformation efforts, aimed at enhancing cost efficiency. Notably, $3.1 million of these restructuring costs were allocated to general and administrative expenses, while $0.2 million were included in operating expenses.

DK’s Q1 and 2025 Guidance

For the year 2025, the company expects capital expenditures to reach $405 million.

In the first quarter, Delek anticipates operating costs within the range of $220-$235 million, general and administrative expenses between $55-$60 million, and depreciation and amortization between $100 million and $105 million. The company also forecasts net interest expenses to be in the range of $78-$88 million.

Projected total crude throughput is expected to be between 255,000 and 269,000 barrels per day, with total throughput ranging from 278,000 to 292,000 barrels per day. In the first quarter, the Tyler, TX, refinery expects to process 65,000-69,000 barrels of crude oil daily, while the El Dorado, AR, refinery expects to handle 73,000-76,000 bpd. The Big Spring, TX, refinery is estimated to process between 57,000 and 61,000 bpd, and Krotz Springs, LA, refinery is projected to process between 83,000 and 86,000 bpd.

Currently, DK holds a Zacks Rank #3 (Hold) while DKL is rated at Zacks Rank #4 (Sell).

You can see the full details on their website.