Refiner and convenience-store operator Delek US Holdings said it operated well in its fourth quarter, which ended Dec. 31, achieving a record total throughput in refining.
“The market environment was less than favorable, but we remained focused on what we could control,” said Avigal Soreq, president and CEO of Brentwood, Tennessee-based Delek US Holdings.
For the retail segment, fourth-quarter 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $9.3 million compared with $7.8 million in the prior-year period. The increase was primarily driven by higher inside store margins and total retail fuel gallons sold.
In 2024, the company expects its retail segment’s capital expenditures to be about $15 million. Delek US is dedicating funds to maintaining its 250 convenience stores, including interior rebranding and reimaging initiatives as it converts its 7-Eleven stores to its own DK brand.
Highlights from the fourth quarter:
- Net loss of $164.9 million or $2.57 per share, adjusted net loss of $93.2 million or $1.46 per share, adjusted EBITDA of $60.6 million.
- Reduced debt by $38.2 million.
- Refining delivered record total throughput rate.
Full-year 2023 highlights:
- Net income of $19.8 million or $0.30 per share, adjusted net income of $196.6 million or $2.98 per share, adjusted EBITDA of $949.7 million.
- Reduced debt by $453.9 million.
- Successfully executed major turnaround at Tyler Refinery and ran refining system at record total throughput.
“Our employees delivered a strong performance in 2023, successfully managing both opportunities and challenges to drive results,” Soreq said. “Throughout the year, we made strategic investments to strengthen our foundation. We focused on people, processes and equipment to support safe and reliable operations. At the same time, we drove long-term shareholder value and improved our financial strength by returning $146 million of capital to shareholders and reducing our net debt by $435 million during the year.”
Noting its 2024 Capital Program, Delek said its 2024 capital expenditures are estimated to be about $330 million, including $220 million for refining and $70 million for logistics.
- Delek US Holdings is No. 34 on CSP's2023 Top 202 ranking of the largest convenience-store chains in the United States.
“Our guiding principles in 2024 are focused execution and a disciplined approach to capital allocation,” Soreq said. “The strategic initiatives we started in 2023 are gaining momentum and delivering results. We are making significant progress towards unlocking value intrinsic in our business and continue to focus on our stakeholders as we advance this initiative.”
Other highlights:
Refining Segment
The refining segment adjusted EBITDA was a loss of $10.4 million in fourth-quarter 2023 compared with $170.9 million in the same quarter last year, which reflects other inventory impacts of $48.6 million and $193.6 million for fourth-quarter 2023 and 2022, respectively.
“The decrease over 2022 is primarily due to lower refining crack spreads, partially offset by higher sales volume.” Delek said. “During the fourth-quarter 2023, Delek US’s benchmark crack spreads were down an average of 50.7% from prior-year levels.”
Liquidity
As of Dec. 31, 2023, Delek US had a cash balance of $822.2 million and total consolidated long-term debt of $2.6 billion, resulting in net debt of $1.78 billion. Excluding Delek Logistics, Delek US had $818.4 million in cash and $896 million of long-term debt, or a $77.6 million net debt position.
Capital Program
The Delek US 2024 Capital Program is forecasted to be about $330 million, with $255 million for sustaining and regulatory capital and $75 million for growth capital. The 2024 Capital Program compares with the 2023 Capital Program of $372 million, which includes $17 million of insurance proceeds, growth capital partially funded by producers, as well as other reimbursements. Excluding these proceeds, 2023 capital expenditures were $389 million.
“The capital program reflects our dedication to maintaining safe and reliable operations, enhancing our portfolio with strategic growth projects, and delivering shareholder value while maintaining our financial strength and flexibility,” Soreq said. “We believe we are well positioned from both an operational and financial standpoint to deliver competitive returns.”
For 2024, in the refining segment, Delek US plans to invest $220 million, with 93% of the capital dedicated toward sustaining and regulatory projects and 7% for projects focused on improving the efficiency and yield of Delek refineries. Most of refining’s capital expenditures are for the Krotz Spring Refinery major turnaround scheduled during the fourth quarter of 2024, as well as projects at Big Spring Refinery to improve capture rates.
Delek US Holdings Inc. is a diversified downstream energy company with assets in petroleum refining, logistics, pipelines, renewable fuels and convenience-store retailing. The convenience-store retail segment operates approximately 250 convenience stores in West Texas and New Mexico under the DK and 7-Eleven brands.
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