Delek Us Holdings, Inc. · NYSE:DK

Delek Us — Investor Presentation (December 2020)

44 slides from Delek Us's investor presentation, December 2020

  1. Slide 1: Delek US Holdings, Inc. Investor Presentation December 2020

    Delek US Holdings, Inc. Investor Presentation December 2020

  2. Slide 2: Disclaimers

    Disclaimers Forward Looking Statements: Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; and collectively with Delek US, “we” or “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL”, respectively. These slides

  3. Slide 3: Investment Overview (NYSE: DK)

    Investment Investment Overview Overview(NYSE: (NYSE: DK) DK) • September 30, 2020 balance sheet: Flexible Financial Position to • Delek US: approx. $808 million of cash; $2.4 billion of debt Support Midstream Growth • Includes $6.0 million cash and $1.0 billion long-term debt of DKL • Net debt (excl

  4. Slide 4: Integrated Company with Asset Diversity and Scale

    Integrated Company with Asset Diversity and Scale Strategically located assets with growing crude oil optionality Source 207,000 bpd from Permian Basin Cushing Optionality: 100,000 bpd • Growing gathering system • Wink to Webster JV Crude oil Pipeline CADDO RIO Refining Logistics Asphalt Retail Rene

  5. Slide 5: Long History of Opportunistic Acquisitions & Value Creation

    Long History of Opportunistic Acquisitions & Value Creation Being Nimble and Capturing Market Dislocations / Opportunities DKL Joint Ventures Increased Gathering RIO Pipeline East and West Texas Caddo Pipeline 2011 SALA Gathering Lion Oil acquisition 2019 2013 2014 2015 2018 2005 2011 2012 2017 New

  6. Slide 6: Environmental, Social, and Governance (ESG)

    Environmental, Social, and Governance (ESG) Published New Sustainability Report in September 2020 Environmental Social Governance  Published our first GHG disclosures, which  Consistent with our Mission, Vision and Core  Delek observes responsible, ethical and goes beyond what many of our peers V

  7. Slide 7: Pathway to Improving Cash Flow

    Pathway to Improving Cash Flow • Reducing CAPEX approximately 40% Y/Y; 2021 spending guidance of $150 to $160 million (including turnarounds) • Exceeding G&A and operating cost reduction guidance in 2020; expect incremental $90 million reductions in 2021 • Krotz Springs Flexibility Plan • Option 1:

  8. Slide 8: DKL Relative to Peer Group

    DKL Relative to Peer Group Where It is and Where It is Going 3Q20 Distribution Coverage Yr/Yr Distribution Growth 6.5% Achieved year-end distribution target of 1.4x to 1.5x in 2Q20 3.0% 1.5% 1.1% DKL MPLX MMP EPD PSXP PBFX HEP PAA -2.8% -41.7% 3.30x 2.00x 1.77x 1.60x 1.50x 1.40x 1.10x 1.10x -48.0% -

  9. Slide 9: Midstream: Big Spring Gathering System

    Midstream: Big Spring Gathering System Gathering Helps Control Crude Oil Quality and Cost into Refineries  Getting closer to wellhead allows us to control crude quality and cost Big Spring Gathering System  Provides improvement in refining performance and cost structure  Drop down to DKL complete

  10. Slide 10: Midstream: Wink to Webster Crude Oil Long Haul Pipeline Joint Venture

    Midstream: Wink to Webster Crude Oil Long Haul Pipeline Joint Venture Complements Gathering – Provides Access to Gulf Coast Markets Wink to Webster Pipeline JV  650-mile 36-inch diameter crude oil pipeline  Wink to Webster Pipeline LLC – Exxon, Plains, MPLX/ Delek US JV, Rattler Midstream, Lotus M

  11. Slide 11: Midstream: Red River Pipeline Joint Venture

    Midstream: Red River Pipeline Joint Venture Red River Pipeline JV  DKL purchased 33% interest in May 2019  Planned expansion from 150 kbpd to 235 kbpd  Approx. $128.0 million initial investment; Financed with revolver  Expansion completed during 3Q 2020  DKL will contributed $20.0 million to th

  12. Slide 12: Midstream: Utilizing Free Cash Flow & Strong Balance Sheet to Fund Growth

    Midstream: Midstream: Midstream: Utilizing Utilizing UtilizingFreeFree Cash Free Cash CashFlowFlow Flow & & Strong Strong & Strong Balance BalanceBalance Sheet Sheet Sheet to to Fund Fund to Growth Fund Growth Growth Supports goal to generate approximately $370 million to $395 million of annualized

  13. Slide 13: Transforming to More Diversified Adjusted EBITDA

    Transforming to More Diversified Adjusted EBITDA 2019 Adjusted EBITDA (1) -25%  Midstream to comprise increasing % of future adjusted EBITDA 26%  More stable revenue stream 93%  Higher multiple business 6%  Refining contribution supported by operating Refining Retail Midstream Corporate, Other a

  14. Slide 14: Previous Organic Capital Spend Drives Future EBITDA

    Previous Organic Capital Spend Drives Future EBITDA Growth Capital Diversifies EBITDA Base Divested Underperforming Assets Adjusted EBITDA ($mm)  ’18 divested Paramount, CA/AltAir Renewables, West Coast Asphalt terminals, Long Beach, CA  (collectively removed ~$35mm of annual carrying costs - base

  15. Slide 15: Retail: Diversifies Delek

    Retail: Diversifies Delek DK Advantage and Footprint  ~80% integration with existing downstream operations offering synergies and competitive advantage  Operate approximately 253 C-stores in Central and West Texas and New Mexico Ongoing Strategy  Divesting underperforming stores  Rebrand 7-Eleve

  16. Slide 16: Renewables: Biodiesel Facilities

    Renewables: Biodiesel Facilities Estimated Carbon Saved by producing Lower Carbon Intensity Fuel (1) 3 Biodiesel Facilities: ~40mm gallons of Annual Biodiesel Production Capacity ~1 Billion Crossett, AR Miles driven by an average passenger vehicle Cleburne, TX New Albany, MS : ~86,500 ~52 billion Pa

  17. Slide 17: PADD 3 Refining System with Crude Slate Optionality

    PADD 3 Refining System with Crude Slate Optionality Nine Months Ending September 30, 2020 Tyler, Texas • 75,000 bpd crude oil Tyler(1) throughput 8% Increasing Access to Cushing Crude Oil Grades, bpd • 8.7 complexity WTI 100% • Light crude oil refinery Crude Current WTI Throughput 1st Half 2020 ETX

  18. Slide 18: Escaping the Midland Overhang

    Escaping the Midland Overhang Transforming Away from Reliance on Midland Combination of cost cuts and increased contribution from DKL should more than offset the Midland Benefit DK realized in 2018 and 2019 $600 OPEX and G&A Savings  2018 and 2019 Total OPEX and G&A was ~$924mm/yr on average $500 

  19. Slide 19: Long-term Capital Allocation Framework

    Long-term Capital Allocation Framework Four pillars underpinned by a rigorous and disciplined capital allocation program to create long-term value Priorities: • Invest: Capital allocation program focuses on safety, maintenance, and reliability as top priority • Cash Returns: Maintain a competitive c

  20. Slide 20: Capital Allocation – Balanced & Flexible

    Capital Allocation – Balanced & Flexible  2020 includes the following projects:  CAPEX expected to decline approximately  Big Spring Turnaround  24% from original 2020 forecast  Completed in early March 2020  42% from 2019 actuals  2021 spending guidance of $150 to $160 million  Does not inc

  21. Slide 21: Capital Allocation Discipline

    Capital Allocation Discipline Cash Balance & Net Debt (DK Ex. DKL)(1) Maintaining a Strong Balance Sheet $1,090 $1,079 $984 $1,000 $946 $950  Should support ability to invest in the business $833 $781 $802  Provides ability to act quickly to take advantage of $666 $627 opportunities $496  DK excl

  22. Slide 22: Market Opportunities & Valuation

    Market Opportunities & Valuation

  23. Slide 23: Peer Leading Light Products Yield

    Peer Leading Light Products Yield Delek US positioned to benefit with high value product yields and crude oil slate flexibility  Refining system product yields  Strong middle distillate yield versus peers 3Q20 Refiners’ Middle Distillates Yield % (1) (2) (3)  Ability to switch ~10% between gasoli

  24. Slide 24: Valuation Opportunity

    Valuation Opportunity Partial Segment Sum of Parts Midstream  IDR valuation fully recognized in DKL ownership DKL(1) Units Held Market Value 30.28 34.75 $1,052  DK owns 34.7mm units Retail EBITDA Multiple (2)  Retail easily underpinned by tangible public transactions '23E Estimated EBITDA ($mm) $

  25. Slide 25: Permian Focused Refining System with Increasing Access to Cushing

    An Integrated and Financial Flexibility to Diversified Refining, Support Strategic Logistics and Retail Company Objectives Permian Focused Invest in the Business to Refining System with Focus on Long-Term Operate Reliably and Increasing Access to Shareholder Returns Safely Cushing Growing Midstream

  26. Slide 26: Appendix

    Appendix

  27. Slide 27: 3Q20 Cash Flows

    3Q20 Cash Flows  Strong financial position with $808 million of cash on the balance sheet  Cash flow from operating activities of approx. $(37) million  Working capital impacted cash flow by approx. $(40) million  Total investing activities of approx. $7 million:  Cash capital expenditures of a

  28. Slide 28: 4Q20 Guidance Range

    4Q20 Guidance Range 4Q20 Guidance Range ($ in millions) Consolidated Operating Expenses $130 $140 Consolidated G&A $57 $63 Consolidated Depreciation and Amort. $63 $66 Net interest expense $28 $31 Total Crude Throughput 225,000 235,000 ***Krotz Springs Total Crude Throughput 20,000 30,000 Nine Month

  29. Slide 29: Summary Organizational Structure

    Summary Organizational Structure • Eliminated incentive distribution rights (IDRs) • General partner (GP) converted to non-economic interest • Transaction: 14 million newly issued DKL common limited partner units and $45 million in cash during August 2020. Delek US Holdings, Inc. Delek Logistics GP,

  30. Slide 30: Market Data

    Market Data

  31. Slide 31: WTI Midland vs. WTI Cushing Crude Oil Pricing

    ($ per barrel) $0.00 $2.00 ($8.00) ($6.00) ($4.00) ($2.00) ($18.00) ($16.00) ($14.00) ($12.00) ($10.00) Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 1) Source: Argus – as of November 30, 2020 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14

  32. Slide 32: Crack Spreads: Contango/Backwardation

    -$30 -$20 -$10 $0 $10 $20 $40 $50 $30 Jan-10 2) 1) Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Crack Spreads: (+/-) Contango/Backwardation Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Brent-WTI Cushing Spread Per Barrel Mar-13 (1) May-13 Jul-13 Source: Platts and

  33. Slide 33: Reconciliations

    Reconciliations

  34. Slide 34: Non-GAAP Reconciliation of Alkylation Project EBITDA

    Non-GAAP Reconciliation of Alkylation Project EBITDA(1) Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Alkylation Project ($ in millions) Annual Amount Forecasted Incremental Net Income $ 33.2 Add Forecasted Incremental Amounts for: Interest Exp

  35. Slide 35: Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA

    Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA(1) Krotz Springs Logistics Drop Down Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA ($ in millions) Forecasted Range Forecasted Incremental Net Income $ 2.9 $ 3.3 Add Forecasted Incr

  36. Slide 36: Non-GAAP Reconciliations of Adjusted EBITDA

    Non-GAAP Reconciliations of Adjusted EBITDA 36

  37. Slide 37: DKL Distribution and Leverage Ratio

    DKL Distribution and Leverage Ratio Distribution per unit has increased twenty-nine consecutive times since the IPO $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 $0.570 $0.590 $0.610 $0.630 $0.655 $0.680 $0.690 $0.705 $0.715 $0.725 $0.750 $0.770 $0.790 $0.810 $0.820 $0.850 $0

  38. Slide 38: DKL: Reconciliation of Distributable Cash Flow

    DKL: Reconciliation of Distributable Cash Flow (dollars in millions, except coverage) 42013 (2) 1Q14 (2) 2Q14(2) 3Q14(2) 4Q14(2) 2014 (2) 1Q15(2) 2Q15 3Q15 4Q15 2015 (2)(3) 1Q16 2Q16 3Q16 4Q16 2016 (3) Reconciliation of Distributable Cash Flow to net cash from operating activities Net cash provided

  39. Slide 39: DKL: Income Statement and Non-GAAP EBITDA Reconciliation

    DKL: Income Statement and Non-GAAP EBITDA Reconciliation 4 Q2013(1) 1Q14(1) 2Q14 3Q14 4Q14 2014 (1) 1Q15(2) 2Q15 3Q15 4Q15 2015(2) 1Q16 2Q16 3Q16 4Q16 2016 Net Revenue $907.4 $203.5 $236.3 $228.0 $173.3 $841.2 $143.5 $172.1 $165.1 $108.9 $589.7 $104.1 $111.9 $107.5 $124.7 $448.1 Cost of Sales (811.4

  40. Slide 40: Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA

    Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA(1) Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Paline Pipeline Tariff Increase ($ in millions) Annual Monthly Forecasted Incremental Net Income $ 10.8 $ 0.9 Add Forecasted Inc

  41. Slide 41: Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA

    Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA (1) Delek Logistics Partners, LP Reconciliation of Forecasted Incremental Annualized Net Income to Forecasted Incremental Annualized Adjusted EBITDA for the Red River Pipeline Joint Venture ($ in millions) Pre-Expansion Range Post-Ex

  42. Slide 42: Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA

    Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA 42

  43. Slide 43: Non-GAAP Reconciliations of Trucking Assets Forecasted EBITDA

    Non-GAAP Reconciliations of Trucking Assets Forecasted EBITDA 43

  44. Slide 44: Investor Relations Contacts

    Investor Relations Contacts: Blake Fernandez, SVP IR/Market Intelligence 615-224-1312

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