Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Investor Presentation (August 2016)
35 slides from Delek Us's investor presentation, Aug 8, 2016
Slide 1: Investor Presentation Delek US Holdings August 2016
Investor Presentation Delek US Holdings August 2016
Slide 2: Disclaimers
Disclaimers 2 Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (defined as “we”, “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL” respectively, and, as such, are governed by the rules and regulations of the United States Secu
Slide 3: Delek US Holdings Overview
REFINING Delek US Holdings Overview 3 (1) Rail supplied light crude capability consists of 25,000 bpd of light crude or 12,000 bpd heavy crude offloading that is available at a facility owned by Delek Logistics adjacent to the El Dorado refinery. In addition, 20,000 bpd light crude capability is cur
Slide 4: Delek US Investment Highlights
Delek US Investment Highlights 4 • Crude nameplate capacity increased by 15 kbpd to 155 kpbd in 2015 • Turnarounds completed and FCC reactors replaced at both refineries • Declining capital expenditure needs; No scheduled turnarounds until 2019/2020 Refining Increased capacity and improved flexibili
Slide 5: Alon USA Investment
5 0 122 176 146 208 80 0 176 80 255 192 0 0 128 0 127 211 141 158 211 215 185 58 7 127 127 127 Alon USA Investment On May 14, 2015, Delek completed the acquisition of approximately 33.7 million shares, or approximately 48% of the outstanding shares, of Alon USA Energy (NYSE: ALJ) (“Alon USA”) comm
Slide 6: Refining Segment Operational Update
Refining Segment Operational Update
Slide 7: Refineries Serve Local Niche Markets
Supports High Refining Utilization Refineries Serve Local Niche Markets 7 0 50 100 150 200 250 300 350 400 450 500 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 1Q1 6 2Q1 6 Delek Logistics Partners terminals support refining system: Tyler primarily serves a 100 mile rad
Slide 8: Increased Access to Cost Advantaged Crude
Approximately 80% of crude slate consists of Midland and local crude supply Increased Access to Cost Advantaged Crude 8 45.0 45.0 87.0 105.0 107.0 17.2 17.9 18.6 17.2 16.0 0 50 100 150 200 2012 2013 2014 2015 2016E In 0 0 0 b p d Midland Local Crude Throughput Capacity $(3.31) $(2.71) $(6.11) $(1.43
Slide 9: Refining Capital Investment Program Improved Operations
Increased crude throughput capacity and operating flexibility Refining Capital Investment Program Improved Operations 9 Large investment cycle in refining now completed Capital expenditure needs declining from 2015 level 2016E based on maintenance and regulatory spending Projects completed d
Slide 10: Tyler Refinery Overview
54% 55% 54% 52% 54% 39% 39% 40% 41% 39% 7% 6% 6% 7% 7% 0% 20% 40% 60% 80% 100% 120% 2013 2014 2015 2Q15 2Q16 Gasoline Diesel Petro/Other 62,304 65,523 60,704 72,358 74,130 Tyler Refinery Overview 10 Overview Niche market generally priced above Gulf Coast; supported by Delek Logistics' terminals
Slide 11: El Dorado Refinery Overview
80,000 bpd refinery with crude slate flexibility to process light and medium gravity crudes El Dorado Refinery Overview 11 Overview Inland PADD III refinery located in Southern Arkansas Flexible crude sourcing Access to Gulf Cost crudes beginning in August 2016 Midland, local Arkansas, eas
Slide 12: Logistics Operational Update
Logistics Operational Update
Slide 13: Strategic Partner in Delek Logistics Partners, LP
Strategic Partner in Delek Logistics Partners, LP (NYSE: DKL) 13 Delek Logistics Partners , LP (NYSE:DKL) began operating on Nov. 7, 2012 and 100% of its performance is reported as a segment of Delek US beginning 4Q12. Delek US and its affiliates own approximately 62%, including the 2.0% general par
Slide 14: DKL: Joint Venture Pipeline Projects
DKL: Joint Venture Pipeline Projects 14 Caddo Pipeline ■ DKL (50%)/Plains (50%) ■ Est. total cost: $120 million (1) ■ Capacity: 80,000 bpd ■ Length: 80 miles ■ Expected Completion: January 2017 Rio Pipeline ■ Rangeland (67%)/ DKL (33%) ■ Est. total cost: $119 million (1) ■ Capacity: 55,000 bpd ■ Len
Slide 15: Increased Distribution with Conservative Coverage and Leverage
Increased Distribution with Conservative Coverage and Leverage 15 (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 33 for reconciliation. (3) 2
Slide 16: DKL: Potential Growth
$68.2 $100.5 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 LTM Net Income 6/30/16 LTM EBITDA 6/30/16 Pipeline Joint Ventures (2) Potential Retail Drop (3) $ in millions * Potential Retail asset drop down from Delek US 8x to 10x EBITDA target DKL: Potential Growth (1) 16 • Options for Grow
Slide 17: Incentive Distribution Rights and Assumed Distribution Growth
17 Marginal Percentage Interest in Distributions Assumed Distribution per Limited Partner Unit if Delek Logistics Meets 15% Annual Growth Target (1) Delek Logistics GP Incentive Distribution Rights Total Quarterly Distribution Per Unit Target Amount Unitholders General Partner Minimum Quarterly Dist
Slide 18: Retail Operational Update
Retail Operational Update
Slide 19: Retail Locations Create Synergies for Product Marketing
Fuel Gallons Sold Per Store (000’s) 1,112 1,204 1,274 623 640 2013 2014 2015 2Q15 YTD 2Q16 YTD 1,037 1,106 1,169 564 594 2013 2014 2015 2Q15 YTD 2Q16 YTD Retail Locations Create Synergies for Product Marketing 19 Expanding Market Footprint in Markets Capable of Being Supplied by El Dorado Merchandis
Slide 20: Focused on Organic Growth
Focused on Organic Growth 20 Large Format Stores are focal point Approximately 4,800 square feet Offer customers wider product selection Prepared food service offering increases traffic Avg. approximately 4 million gallons and $2+million inside sales once market penetrated 3 year growth
Slide 21: Financial Update
Financial Update
Slide 22: Financial Highlights
Financial Highlights At June 30, 2016 Cash of $377.1 million; Debt of $941.1 million Includes $362.6 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net debt position was approximately $201.7 million Capital allocation focused on cash returned to shareholders, acquisition
Slide 23: Declining Capital Needs
Increases potential free cash flow generation from operations $18.8 $74.9 $61.6 $82.9 $155.1 $42.3 $36.0 $46.1 $123.6 $199.1 $164.5 $27.8 $0.2 $0.3 $0.9 $0.5 $0.9 $30.3 $25.8 $9.2 $18.6 $14.3 $10.4 $21.4 $23.3 $18.6 $14.3 $14.4 $36.5 $29.1 $37.9 $26.2 $18.3 $13.2 $2.0 $0.1 $0.1 $7.6 $26.5 $35.0 $22.
Slide 24: Delek US Capital Allocation Options
Delek US Capital Allocation Options 24 Invest in Business • Safe and efficient operations • Maintenance level spend in refining • Building new stores in retail • JV pipeline projects in logistics Acquisitions • Focus on Logistics • Environment more attractive • Build off existing platform • Acquire
Slide 25: Limited Value Attributed to Delek US Refining Assets in Current Environment
Limited Value Attributed to Delek US Refining Assets in Current Environment 25 Creates attractive capital allocation opportunity Refining, ($0.29) to ($0.02) Retail, $0.32 to $0.45 GP, $0.10 to $0.24 ALJ, $0.30 DKL, $0.40 -$0.3 $0.0 $0.3 $0.6 $0.9 $1.2 V al u e, $ in b ill ion s Delek US Price: $14.
Slide 26: Summary and Questions and Answers
26 Large, Complementary Logistics and Marketing Retail Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Shareholder Returns Strong Balance Sheet Strategically Positioned Refining Platform Questions and Answers
Slide 27: Appendix Additional Data
Appendix Additional Data
Slide 28: Summary Organization Structure
28 Summary Organization Structure (1) Currently a 4.90% 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 will be indirectly held by Delek. Market cap based on share prices on August 5, 2016.
Slide 29: Delek US Focused on Building an Integrated Business Model
Delek US Focused on Building an Integrated Business Model A core part of Delek US' strategy is to grow via prudent strategic transactions since 2001 (1) Includes logistic assets in purchase price. Purchase price includes working capital for refineries. (2) Mt. Pleasant includes $1.1 million of inven
Slide 30: Brent Crude Pricing
-$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 0 F e b -1 0 M a r- 1 0 A pr -1 0 M a y -1 0 J u n -1 0 J u l- 1 0 A u g -1 0 S e p -1 0 O c t- 1 0 No v -1 0 De c -1 0 J a n -1 1 F e b -1 1 M a r- 1 1 A pr -1 1 M a y -1 1 J u n -1 1 J u l- 1 1 A u g -1 1 S e p -1 1 O c t- 1 1 No v -1 1 De c -1 1 J a
Slide 31: Access to Midland Crudes Benefits Margins
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 11 M ay -1 1 Ju n -1 1 Ju l-1 1 A u g- 1 1 Se p -1 1 O ct-1 1 N o v- 1 1 De c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 12 M ay -1 2 Ju n -1 2 Ju l-1 2 A u g- 1 2 Se p -1 2 O ct-1 2 N o v- 1 2
Slide 32: Delek US Consolidated Income Statement
Delek US Consolidated Income Statement 32 Source: Company filings. ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015 YTD2Q15 YTD2Q16 2Q16 LTM Net sales $4,723.7 $2,666.7 $3,755.6 $7,198.2 $8,726.7 $8,706.8 $8,324.3 $5,762.0 $2,843.7 $2,532.3 $5,450.6 Cost of goods sold 4,308.1 2,394.1 3,412.9
Slide 33: DKL: Reconciliation of EBITDA and Cash Available for Distribution
DKL: Reconciliation of EBITDA and Cash Available for Distribution 33 (1) Forecast period for twelve month period ending 9/30/2013 EBITDA is reconciled to net income on page 34. (2) Distribution for forecast period based on $1.50 per unit; Distribution for year ended December 31, 2013 , 2014 and 2015
Slide 34: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 34 (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 35: Investor Relations Contact
Investor Relations Contact: Assi Ginzburg Keith Johnson Chief Financial Officer Vice President of Investor Relations 615-435-1452 615-435-1366
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