Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Scotia Howard Weil Energy Conference 2018
40 slides from Delek Us's conference presentation, Mar 23, 2018
Slide 1: Delek US Holdings, Inc. Scotia Howard Weil Energy Conference
March 27, 2018 Delek US Holdings, Inc. Scotia Howard Weil Energy Conference
Slide 2: Disclaimers
Disclaimers 2 Forward Looking Statements: Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; collectively with Delek US, defined as “we”, “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL”, respectively, and,
Slide 3: Investment Highlights
Investment Highlights (1) Based on price per common share as of close of trading on March 21, 2018. (2) Currently 5.4% of the ownership interest in the general partner is owned by three members of senior management of Delek US (who are also directors of the general partner). The remaining ownership
Slide 4: Integrated Company with Asset Diversity and Scale
Integrated Company with Asset Diversity and Scale Strategically Located Assets with Permian Basin Exposure 4 Retail • Approximately 300 stores • Southwest US locations • Largest licensee of 7- Eleven stores in the US • West Texas wholesale marketing business Asphalt (3) • 14 asphalt terminals locate
Slide 5: Delek US Permian Focused WTI-Linked Crude Oil Refining System; Current Refining Market Environment
Delek US Permian Focused WTI-Linked Crude Oil Refining System Current Refining Market Environment
Slide 6: System with Over 300,000 bpd of Crude Oil Throughput Capacity
System with Over 300,000 bpd of Crude Oil Throughput Capacity (~69% Permian Basin Based) WTI-Linked Refining System with Permian Based Crude Oil Slate 6 Tyler, Texas • 75,000 bpd crude throughput • 8.7 complexity • Light crude refinery • Permian Basin and east Texas sourced crude El Dorado, Arkansas
Slide 7: Midland WTI-Brent Crude Oil Price Differential Trends
Differential is additive to crack spread trends in the current market environment Midland WTI-Brent Crude Oil Price Differential Trends Improving 71) Differential source: Argus – March 21, 2018; futures based on ICE/NYMEX curve. • WTI versus Brent has widened • Began in early 2017 • Primary drivers
Slide 8: Crude Oil Production Grew Despite Rig Decline
1) EIA production data through February 2018, March 12, 2018 Drilling Productivity Report; Baker Hughes rig count as of Mar. 16, 2018. 2) Company estimates; current production based on EIA for February 2018. 8 Crude Oil Production Grew Despite Rig Decline (1) - 500 1,000 1,500 2,000 2,500 3,000 3,50
Slide 9: Permian Basin Outlook - Production versus Pipeline Takeaway Capacity
Permian Basin Outlook - Production versus Pipeline Takeaway Capacity Current pipeline takeaway capacity adequate, but production growth may tighten balance 9 ($13.50) ($11.50) ($9.50) ($7.50) ($5.50) ($3.50) ($1.50) $0.50 $2.50 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Jan-11 A pr-11 Jul
Slide 10: Crack Spread Cycle Turning Up
Crack Spread Cycle Turning Up Crack spread expected to continue upward trend 10 -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 10 -J an -1 0 10 -M ar -1 0 10 -M ay -1 0 10 -J ul -1 0 10 -S ep -1 0 10 -N ov -1 0 10 -J an -1 1 10 -M ar -1 1 10 -M ay -1 1 10 -J ul -1 1 10 -S ep -1 1 10 -N ov -1 1 10 -J an -1 2
Slide 11: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value
Slide 12: Simplifying Corporate Structure and Divesting non-core Assets
Following Alon USA acquisition initiatives have been underway to unlock value. Simplifying Corporate Structure and Divesting non-core Assets 12 • Simplified Corporate Structure • On February 7, 2018, acquired remaining limited partner units of Alon USA Partners (ALDW); Delek US owned 81.6% of the ou
Slide 13: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination 13 Expect to achieve run-rate synergies of approximately $105-$120 million in 2018; Increased from original target of $85-$105 million $89 million of annualized synergies captured as of Dec. 31, 2017 Type Description New Estimate Previous Estimate C
Slide 14: Krotz Springs Improvement Initiatives
Areas of focus to add flexibility and increase margin potential from refinery Krotz Springs Improvement Initiatives 14 Improve Units to Add Product Flexibility • Alkylation Project – approx. $103.0 million cost; 1Q19 expected completion • Estimated annual EBITDA(1) $35-$40 million • Converts lower p
Slide 15: Logistics Assets Positioned for Growth
Logistics Assets Positioned for Growth
Slide 16: Logistics Assets Positioned to Benefit from Permian Basin Activity Growth
• ~805 miles (1) of crude and product transportation pipelines, including the 195 mile crude oil pipeline from Longview to Nederland, TX • ~ 600 mile crude oil gathering system in AR • Storage facilities with 10 million barrels (2) of active shell capacity • Rail Offloading Facility Pipelines/Transp
Slide 17: Increased Drop Down Inventory Supports Logistics Growth
Increased Drop Down Inventory plus Organic Project Creates Platform to Support Logistics Growth 17 Potential Growth for DKL • Delek Logistics Partners provides platform to unlock logistics value • Increased access to Permian and Delaware basin through presence of Big Spring refinery • Improves abili
Slide 18: Big Spring Dropdown and Green Plains JV Should Provide Growth
18 1) Please see page 37 for a reconciliation of EBITDA. Big Spring Dropdown and Green Plains JV Should Provide Growth • Closed in March with an effective date of March 1, 2018 • Purchase price of $315.0 million which equates to a 7.8x EBITDA multiple. • Expected annualized EBITDA of $40.2 million(1
Slide 19: Positive Outlook for Paline Pipeline and West Texas Wholesale
Positive Outlook for Paline Pipeline and West Texas Wholesale 19 • Approximately 195-mile 42 kbpd crude oil pipeline from Longview, TX south to Beaumont • Allows shippers the ability to ship Midland or Cushing crude barrels to the Gulf Coast • Increased capacity in March 2018 • Added pump capacity t
Slide 20: Delek US GP and IDR Ownership in DKL
20 Delek US GP and IDR Ownership is in DKL in the high splits Future Potential Dropdowns to DKL Benefit Delek US Cash Flow Supports Long Term Distribution Growth at Delek Logistics Total Quarterly Distribution Per Unit Target Amount Unitholders General Partner Minimum Quarterly Distribution below $0
Slide 21: DKL Distribution Coverage and Leverage
21 (1) MQD = minimum quarterly distribution set pursuant to the Partnership Agreement. (2) Distribution coverage based on distributable cash flow divided by distribution amount in each period. Please see page 38 for reconciliation. (3) 4Q17 based on total distributions paid on February 12, 2018. (4)
Slide 22: Opportunities for Retail
Opportunities for Retail Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas 22 Current Retail Operations • Approximately 300 store retail system in central/west Texas and New Mexico • Big Spring refinery supplies ~635 branded sites, including substantial
Slide 23: Solid Financial Position
Solid Financial Position
Slide 24: Financial Strength and Flexibility to Support Initiatives
Financial Strength and Flexibility to Support Initiatives At December 31, 2017 approximately $932 million of cash 24 • Focused on growing business, while maintaining financial flexibility • Sold retail assets in Nov. 2016 for $535 million • Closed Alon transaction on July 1, 2017 • At December 31 ca
Slide 25: Capital Allocation Focused on Long-Term Value Creation
• Invest in the business • 2018 spending includes the Alky unit project at Krotz Springs • 1Q 2019 El Dorado Turnaround planning underway • Programs in place allow different options to return cash to shareholders • Increased regular dividend by 33% to $0.20/qtr • $150 million DK share repurchase pla
Slide 26: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value Execution of strategic initiatives 26 • $89 million captured on annualized basis in 4Q17 • Increased annualized target range to $105 million to $120 million • On track to reach annualized goal in 2018 Synergies • Improve Krotz Springs refinery flexibi
Slide 27: An Integrated and Diversified Refining, Logistics and Marketing Company
27 Complementary Logistics Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Long Term Shareholder Returns Financial Flexibility Permian Focused Refining System Questions and Answers An Integrated and Diversified Refining, Logistics and Marketing Company
Slide 28: Appendix
Appendix
Slide 29: Delek US Focused on Growth through Acquisitions
Delek US Focused on Growth through Acquisitions (1) Includes logistic assets in purchase price. Purchase price includes working capital for refineries. (2) Mt. Pleasant includes $1.1 million of inventory. 2006 Abilene & San Angelo terminals $55.1 mm 2012 Nettleton Pipeline $12.3 mm 2011 Paline Pipel
Slide 30: Current Delek US Corporate Structure
30 Current Delek US Corporate Structure (1) As of December 31, 2017, a 5.4% interest in the Delek US ownership interest in the general partner is held by three members of senior management of Delek US. The remaining ownership interest is indirectly held by Delek US. (2) Market cap based on share and
Slide 31: ($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n- 11 Fe b-
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n- 11 Fe b- 11 M ar -1 1 A pr -1 1 M ay -1 1 Ju n- 11 Ju l-1 1 A ug -1 1 Se p- 11 O ct -1 1 N ov -1 1 D ec -1 1 Ja n- 12 Fe b- 12 M ar -1 2 A pr -1 2 M ay -1 2 Ju n- 12 Ju l-1 2 A ug -1 2 Se p- 12 O ct -1 2 N ov -1 2 D ec -1 2
Slide 32: -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 Ja n- Fe b- M
-$30 -$20 -$10 $0 $10 $20 $30 $40 $50 Ja n- 10 Fe b- 10 M ar -1 0 A pr -1 0 M ay -1 0 Ju n- 10 Ju l-1 0 A ug -1 0 S ep -1 0 O ct -1 0 N ov -1 0 D ec -1 0 Ja n- 11 Fe b- 11 M ar -1 1 A pr -1 1 M ay -1 1 Ju n- 11 Ju l-1 1 A ug -1 1 S ep -1 1 O ct -1 1 N ov -1 1 D ec -1 1 Ja n- 12 Fe b- 12 M ar -1 2 A
Slide 33: Non GAAP Reconciliations Delek US EPS and EBITDA
Non GAAP Reconciliations Delek US EPS and EBITDA 33 Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted Net Income (Loss) 2017 2016 2017 2016 Reported net income (loss) per share attributable to Delek $2.56 $0.72 $4.00 ($2.49) Adjustments, after tax (per share) (13) Net inventory valuation gai
Slide 34: Krotz Springs Alkylation Project
Expected annual EBITDA $35 to $40 million; Target completion in 1Q19 Krotz Springs Alkylation Project 34 • Alkylation unit with 6,000 bpd capacity • Approx. $103.0 million estimated capital costs with $29.0 million spent as of Dec. 31, 2017 • Improves refinery flexibility • Converts lower priced iso
Slide 35: Non GAAP Reconciliations of Potential Alky Unit EBITDA
Non GAAP Reconciliations of Potential Alky Unit EBITDA (1) 35 (1) Based on projected range of potential future performance from the alkylation unit project at Krotz Springs. Amounts of EBITDA, net income and timing will vary. Actual amounts will be based on timing of completion, performance of the p
Slide 36: Non GAAP Reconciliations of Potential Dropdown EBITDA
Non GAAP Reconciliations of Potential Dropdown EBITDA (1) 36 (1) Based on projected range of potential future logistics assets that could be dropped to Delek Logistics from Delek US in the future. Amounts of EBITDA, net income and timing will vary, which will affect the potential future EBITDA and a
Slide 37: Non GAAP Reconciliations of EBITDA
Non GAAP Reconciliations of EBITDA (1) 37 (1) Amounts of EBITDA, net income and timing will vary, which will affect the potential future EBITDA and associated deprecation and interest at DKL. Actual amounts will be based on timing, performance of the assets, DKL’s growth plans and valuation multiple
Slide 38: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution 38 (1) Distribution based on actual amounts distributed during the periods; does not include a LTIP accrual. Coverage is defined as cash available for distribution divided by total distribution. (2) Results in 2013, 2014 and 2015 are as reported
Slide 39: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 39 (1) Includes approximately $2.0 million of estimated annual incremental general and administrative expenses expected to incur as a result of being a separate publicly traded partnership. (2) Interest expense and cash interest both include c
Slide 40: Investor Relations Contact
Investor Relations Contact: Kevin Kremke Keith Johnson Executive Vice President, CFO Vice President of Investor Relations 615-224-1323 615-435-1366
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