BRENTWOOD, Tenn. -- Delek US Holdings Inc. plans to make up to two acquisitions this year, Uzi Yemin, president and CEO said last week at the Citi Refining Conference in New York, according to DTN's OilSpot News. The company is targeting retail as well as refinery assets for potential acquisition, said the report.
"I think multiples are coming down," said Yemin, which "helps companies such as ours that want to be active in the acquisition arena."
Click hereto [image-nocss] listen to a rebroadcast of Delek US Holdings' presentation at the Citi Refining Conference.
During 2007, Delek increased its retail footprint to approximately 500 company-operated retail sites with the purchase and integration of 107 convenience stores. The company, which a refinery in Tyler, Texas, also added to its refining network with the purchase of a 34.6% interest in Lion Oil Co.
Click herefor previous CSP Daily News coverage of Delek US's plans.
Meanwhile, Tel Aviv-based Delek Group Ltd. reported its results for the fourth quarter and 12 months ending December 31, 2007.
Net income for 2007 totaled NIS 1.3 billion ($368 million U.S.), compared with NIS 1.5 billion ($424.7 million) for 2006. Net income excluding capital gains, for 2007 totaled NIS 1.1 billion ($310.8 million) compared with NIS 940 million ($265.6 million) for 2006, representing an increase of 22%. This increase is attributed to profit growth in the Israeli fuel sector, U.S. fuel sector, automotive sector and the inclusion, for the first time of profits of the European fuel sector.
Net income for fourth-quarter 2007 was NIS 129 million ($36.5 million), compared with NIS 283 million ($80.1 million) for fourth-quarter 2006. The lower net income is due to the decline in refining margins at Delek US following the sharp increase in crude oil prices, among other factors.
Asaf Bartfeld, CEO of Delek Group, said, "Delek US presented a strong year in terms of business and financial performance.
Delek US Holdings recently reported net income for full-year 2007 of $96.4 million, or $1.82 per diluted share, compared to $93 million, or $1.94 per diluted share for full-year 2006. For the fourth quarter, Delek reported a net loss of $12.1 million, or a loss of 23 cents per basic share, compared to net income of $11.6 million, or net income of 22 cents per diluted share, for fourth-quarter 2006.
Although Delek US's fourth-quarter financial performance was not as strong as in the prior quarters of 2007, this was largely due to refining industry specific factors it faced during the quarter, the company said. The refining segment was impacted by, among other things, the sharp increase in crude oil prices and backwardation in the crude market. Delek US was able to partially offset the higher crude prices by continuing to optimize its crude slate by processing 11% West Texas sour crude during the quarter and by an increased contribution margin from the retail segment supported, in part, by ethanol blending in the month of December.
"Overall, 2007 was another successful and profitable year for Delek. We furthered our strategic goals by increasing our retail convenience store portfolio and diversifying our refinery holdings through the acquisition and integration of 107 convenience stores and through the acquisition of a 34.6% equity interest in Lion Oil Company," Yemin said in a statement.
"On the retail side, we increased our merchandise margin while maintaining same store sales growth and during the fourth quarter began offering E10 products at approximately 180 of our stores. In fact, beginning January 1, 2008, we were offering E10 blended fuel in our refining and retail segments and were working toward the offering of E10 in the marketing segment."
The refining segment had a negative contribution margin of $5.9 million for fourth-quarter 2007 compared to a positive contribution margin of $23.7 million for fourth-quarter 2006. The refinery operating gross margin, adding back intercompany marketing fees of 78 cents per barrel, was $4.46 per barrel sold compared to $8.57 per barrel sold for the same quarter last year. The fourth quarter realized margin was affected by the sharp increase in crude oil prices and trailing sales prices of our residual products. Net sales for the quarter were $480.6 million compared to net sales of $353.4 million for the same quarter last year.
The retail segment contribution margin was $12.1 million for fourth-quarter 2007 compared to $9 million for fourth-quarter 2006. Net sales for the quarter were $477.3 million, an increase of 44.4% compared to the same quarter last year.
Merchandise sales for the quarter increased 22% to $103.2 million compared to $84.6 million for fourth-quarter 2006. The increase was supported by the $18.1 million in merchandise sales associated with stores acquired during 2007 and by a same store sales increase of 0.2%. The merchandise margin for fourth-quarter 2007 was 30.7% compared to 30.8% for the same period last year. For the full year the merchandise margin increased from 30.6% to 31.6%.
Retail fuel gallons sold increased 16.2% to 121.4 million for fourth-quarter 2007 from 104.4 million in fourth-quarter 2006. The increase in gallons sold was primarily driven by sales associated with stores acquired during second-quarter 2007 and by same store gallon growth of 1.3%. Retail fuel margin for fourth-quarter 2007 increased to 13.7 cents per gallon from 8.8 cents per gallon for the same period last year, supported, in part, by the introduction of E10 blended fuel in fourth-quarter 2007.
The marketing segment reported a contribution margin of $5.8 million compared to $6.2 million for the same period last year. Net sales were $160.2 million, including $3.9 million of intercompany fees and sales from the refinery segment. For the full year 2007, the marketing segment produced $28.7 million in contribution margin.
During the quarter, Delek announced that it had begun blending ethanol in approximately 180 of its retail fuel and c-stores. The company now offers E10 blended fuel in approximately 280 stores and is currently blending ethanol with two-thirds of its gasoline production at the Tyler refinery.
Delek Group is diversified into the following three major subsidiaries: Delek Petroleum, with its two subsidiaries: Delek Israel, a gasoline and lubricants distributor in Israel, and Delek USA, which operates gas stations and c-stores and an oil refinery in southern United States; Delek Investments & Properties, a holding company with subsidiaries in the energy, infrastructure, automotive, finance and media sectors; and Delek Real Estate, through its subsidiaries Dankner and Delek Belron Investments, owns and manages prime global real-estate investments.
Delek US Holdings is a diversified energy business focused on petroleum refining, marketing and supply of refined products, and retail marketing of fuel and general merchandise. The refining segment operates a high conversion, independent refinery, with a design crude distillation capacity of 60,000 barrels per day, in Tyler, Texas. The marketing and supply segment markets refined products through its terminals in Abilene, Texas, and San Angelo, Texas, as well as other third-party terminals. The retail segment markets gasoline, diesel and other refined petroleum products and convenience merchandise through a network of company-operated retail fuel and c-stores operated under the MAPCO Express, MAPCO Mart, East Coast, Discount Food Mart, Fast Food & Fuel and Favorite Markets brand names.
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