Earning Date, Transcript Summary & Report

Operational Improvements Achieved: Despite a challenging refining margin environment, Delek US Holdings made significant operational improvements in 2024, including a successful major turnaround at KSR, leading to improved operational performance.

Refinery Production Consistency: Big Spring refinery consistently ran over 70,000 barrels per day in 2024, showing significant reliability improvements and no major turnarounds planned for 2025.

Asset Sale Success: The company successfully sold its retail asset for $390 million, allowing for continued progress in a tough refining environment.

Midstream Company Expansion: Delek Logistics is becoming a strong independent midstream company, with two accretive acquisitions adding around $100 million in third-party EBITDA.

Refinery Profitability Improvement: The economic swap of assets between DK and DKL is expected to improve refinery profitability and provide more certainty to DKL's cash flow.

Cost Savings Initiative: The zero-based budget initiative completed in 2024 saved around $100 million in costs, laying the foundation for the Enterprise Optimization Plan (EOP) aimed at improving cash flow by $80 million to $120 million per year starting in the second half of 2025.

Shareholder Returns Strategy: The company paid $16 million in dividends and repurchased $22 million of its shares, demonstrating a commitment to shareholder returns and a disciplined capital allocation approach.

SRE Petition Review Changes: The D.C. Circuit Court's ruling on small refinery exemptions is expected to lead to a more predictable approach to SRE petition reviews, which could benefit the company.

Future Growth Prospects: Overall, the company is optimistic about its prospects for 2025 and beyond, with a focus on operational excellence and commercial optimization initiatives.

Net Loss Reported: Despite operational improvements, the company reported a net loss of $414 million in Q4 2024, translating to a negative $6.55 per share, indicating significant financial distress.

Adjusted Net Loss Analysis: The adjusted net loss was $161 million, or negative $2.54 per share, with an adjusted EBITDA loss of $23 million, highlighting ongoing profitability challenges.

Refining Margin Decline: Refining margins were reported to be around $6 below mid-cycle in Q4 2024, contributing to an $80 million decrease in refining contributions compared to Q3 2024.

Supply and Marketing Loss: The supply and marketing segment incurred a loss of $34.6 million in Q4, driven by low seasonal demand and poor performance in wholesale marketing and supply.

Cash Flow Challenges: Cash flow from operations was a use of $164 million, indicating cash flow challenges, exacerbated by a net loss and working capital movements.

Goodwill Impairment Impact: The company experienced a significant impairment of goodwill amounting to $212 million, reflecting a decline in asset value.

Liquidity Pressures and Debt Reliance: Despite capital expenditures of $198 million in Q4, the company drew approximately $300 million in cash, indicating liquidity pressures and reliance on debt for funding operations.