Delek US Holdings Reports Fourth Quarter and Full Year 2014 Results

Completion of Tyler expansion and new FCC reactor estimated to add $50 to $75 million of annual EBITDA at current market conditions
$125 million buyback authorization approved for 2015

uzi yemin

Delek Logistics’ expected growth should support its ability to reach IDR high splits in the second half 2015
Fourth quarter 2014 operating income reduced by a $72.9 million inventory adjustment
February 23, 2015 05:30 PM Eastern Standard Time
BRENTWOOD, Tenn.--(BUSINESS WIRE)--Delek US Holdings, Inc. (NYSE: DK) (“Delek US”) today announced financial results for its fourth quarter ended December 31, 2014. Delek US reported fourth quarter net income of $37.5 million, or $0.64 per diluted share, versus a net loss of $(4.7) million, or $(0.08) per basic share, in the quarter ended December 31, 2013.

Operating income for the fourth quarter 2014 benefited from $60.9 million of net hedging gains, of which $42.6 million were realized. Those gains partially offset $72.9 million of higher cost related to inventory adjustments resulting from a decline in crude oil and product prices during the quarter. Excluding the impact of inventory adjustments and net unrealized hedging gains, fourth quarter 2014 after-tax earnings would have been higher by $37.7 million.

On a year-over-year basis, fourth quarter 2014 results improved in all three segments led primarily by refining. The refining segment benefited from a combination of a wider discount between Midland WTI and Cushing WTI, more stable local market netbacks relative to Gulf Coast light product price trends, and a lower crude oil price environment that improved margins on residual products, particularly asphalt. These factors more than offset a lower 5-3-2 Gulf Coast crack spread.

For the full year 2014, Delek US reported net income of $198.6 million, or $3.35 per diluted share, compared to net income of $117.7 million, or $1.96 per diluted share in 2013.

Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US stated, “We performed well in the fourth quarter across all three operating segments. Our access to local markets for our refined products, a diversified crude slate and lower cost crude that benefited asphalt margins, combined with increased throughput, improved our refining performance year-over-year. This improvement occurred in the face of more challenging market conditions for refining as measured by a decline in the 5-3-2 crack spread. Our logistics segment benefited from a strong west Texas wholesale margin, while a higher fuel margin increased results in our retail segment compared to the fourth quarter 2013.”

Yemin concluded, “In 2014, we invested $257 million in capital expenditures across our operations, which included the turnaround and improvement in crude flexibility at our El Dorado refinery, as well as the ongoing expansion project at our Tyler refinery. Additionally, we returned a significant amount of cash to our shareholders in the form of $59 million in dividends and $75 million of stock repurchases. As we enter 2015, we are on schedule to complete our Tyler refinery turnaround and expansion project by mid-March, which will bring us to the end of a large capital spending program. We anticipate, based on Delek Logistics’ expected growth, it should have the ability to reach the high splits on the incentive distribution rights during the second half of 2015, which should increase the cash flow to the general partner. We remain focused on creating long-term value for our shareholders by growing our business, while returning cash to our shareholders through dividends and our new $125 million 2015 share repurchase program.