Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Investor Presentation (February 2019)
38 slides from Delek Us's investor presentation, Feb 20, 2019
Slide 1: Delek US Holdings, Inc. Investor Presentation February 2019
EX 99.1 Delek US Holdings, Inc. Investor Presentation February 2019
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
Slide 3: Investment Overview
Investment Overview • Current Price: $34.86/share(1) • Market Capitalization: $2.88 billion(1) Overview (NYSE: DK) • NYSE: DKL: (Market cap $729mm)(1) Owns 63.4%, including 2% GP(2) • 4Q18 Net Income: $121.6 million; Adjusted EBITDA: $251.4 million(3) • December 31, 2018 balance sheet: Flexible Fina
Slide 4: Integrated Company with Asset Diversity and Scale
Integrated Company with Asset Diversity and Scale Strategically located assets with Permian Basin exposure • Source 207,000 bpd from Permian Basin • Growing gathering system Refining (1) Logistics (2) Asphalt Retail Renewables • 6th largest independent • 10 terminals 6 asphalt terminals located • Ap
Slide 5: WTI-Linked Refining System with Permian Based Crude Oil Slate
WTI-Linked Refining System with Permian Based Crude Oil Slate System with over 300,000 bpd of crude oil throughput capacity (~70% Permian Basin based) Crude Oil Supply is Primarily WTI-Linked Tyler(1) Tyler, Texas 16% 1% • 75,000 bpd crude oil Crude throughput Throughput WTI 100% WTI • 8.7 complexit
Slide 6: Brent – WTI Differential
Brent – WTI Differential Transportation economics should keep the differential wide (1)(2) • Transportation economics should play a role in the Indication of Cushing Sourced Export Transport Economics differential $10.00 $5.91 - $10.05 • Current break-even transport economics for exporting from $8.0
Slide 7: Permian Basin Outlook
Permian Basin Outlook Production continues to grow while incremental takeaway capacity outlook is uncertain (1) • Steady growth has continued in production Average Annual Crude Oil Production (Mbpd) • Drilling supported by improved technology and low costs and WTI-Midland Price (2) Low break-even ra
Slide 8: Delek US Forecast Case EBITDA
Delek US Forecast Case EBITDA Under current Midland-Cushing conditions Forecast Case Segment EBITDA(1)(2) $1,200 RefiningRefiningBasic Assumptions*Assumptions $165 $35 MidlandMidland– Cushing Differential Differential -$4.06 $1,000 $867 HSD 5-3-2 Crack Spread $832 WTI HSD 5-3-2 Crack Spread $13.50 U
Slide 9: Delek US Forecast Case Free Cash Flow Potential
Delek US Forecast Case Free Cash Flow Potential Under Cal 18/19 average Midland-Cushing conditions Indicative Free Cash Flow Available for Buybacks, Dividend Growth & Growth Capex(1) 1000 (2) 900 $867 $100 800 $120 700 $130 600 $55 500 $120 (2) 400 $342 300 Sustaining200 Capex 100 0 Delek US Forecas
Slide 10: Capital Allocation Framework
Capital Allocation Framework Balance the following objectives using a rigorous and disciplined capital allocation program to create long-term value for our shareholders: • Invest: Capital allocation program focuses on safety, maintenance, and reliability as priority • Grow: Maintain financial streng
Slide 11: Capital Allocation Discipline in Practice
Capital Allocation Discipline in Practice Capital Allocation(1) • Maintaining strong balance sheet Returned $445 million or ~15.5% of current market cap to • DK excluding DKL, $8.1 million net debt at 12/31/18 shareholders in 2018 through buybacks and dividends(2) • Investing in the business • 4 ref
Slide 12: Growth and Market Opportunities
Growth and Market Opportunities
Slide 13: Krotz Springs Refinery - Alkylation Project
Krotz Springs Refinery- Alkylation Project • Alkylation unit with 6,000 bpd capacity Change in Yields, in 000 bpd • Approx. $130.0 million estimated capital costs with $103.0 million spent as of December 31, 2018 Gasoline Diesel/Jet Heavy Oils Other 8.7 • Improves refinery flexibility 11.1 8.0 • Con
Slide 14: Growing Midstream - Big Spring Gathering System
Growing Midstream - Big Spring Gathering System Delek US’ Gathering Helps Control Crude Oil Quality and Costs into Refineries • Approximately 200-mile gathering • Allows Delek US to get closer to system, 300Kbpd throughput capacity wellhead to control crude oil quality • Currently more than 200,000
Slide 15: Growing Midstream - Permian Basin Crude Oil Long Haul Pipeline JV
Growing Midstream - Permian Basin Crude Oil Long Haul Pipeline JV with Experienced Partners ETP, MMP, and MPLX Supports Delek US’ Long-Term Investment in Midstream • Partnership provides expertise, throughput commitments • Supports potential for quicker construction and throughput ramp • Joint ventu
Slide 16: DK Operations Positioned to Benefit from IMO 2020
DK Operations Positioned to Benefit from IMO 2020 Delek US positioned to benefit with high value product yields and crude oil slate flexibility 3Q18 Refiners’ Middle Distillates Yield % (1) (2) (3) • Refining system product yields • Middle distillate: average approx. 115,000 bpd of distillate or 43%
Slide 17: Delek US' Initiatives Drive Potential EBITDA Growth
Delek US’ Initiatives Drive Potential EBITDA Growth Delek US positioned to generate strong cash flows to return cash to shareholders Difference $ in millions between -$2.50 Expected Incremental Benefit from Company Initiatives/Projects $1,200 and -$4.06 Midland-Cushing $205 differential $160 $1,000
Slide 18: Organic Projects Create Platform to Support Midstream Growth
Organic Projects Create Platform to Support Midstream Growth Supports Delek US’ goal to generate approximately $370 million to $390 million of annual midstream EBITDA • Big Spring logistics assets dropdown closed Strong EBITDA Growth Profile from Midstream Initiatives (1) in March 2018, effective Ma
Slide 19: Current Valuation Below Peer EV-to-EBITDA
Current Valuation Below Peer EV-to-EBITDA DK positioned to benefit from Midland to Brent crude diffs and IMO; low valuation to peer group • Strong balance sheet with $1.1 billion of cash; net debt of $704.0 million; net debt excl. DKL of $8.1 million(1) • Operations positioned to generate strong cas
Slide 20: An Integrated and Diversified Refining, Logistics and Marketing Company
An Integrated and Financial Flexibility to Diversified Refining, Support Strategic Logistics and Marketing Company Objectives Invest in the Business to Permian Focused Focus on Long-Term Operate Reliably and Refining System Shareholder Returns Safely Growing Midstream Platform to Diversify EBITDA St
Slide 21: Appendix
Appendix
Slide 22: 4Q18 Highlights – Cash Flow
4Q18 Highlights – Cash Flow • Strong cash flow generation in Total Consolidated Cash Flows 4Q18 supported investment in 1,600 the business and returning cash $359.1 to shareholders 1,400 ($88.1) • Operating cash flow from 1,200 $1,109.1 continuing ops $359.1 million $1,079.3 ($300.8 ) 1,000 • Invest
Slide 23: Guidance
Guidance 1Q19 Guidance Low High Total Crude Throughput 250,000 260,000 El Dorado Crude Throughput 37,000 42,000 Realized Midland-Cushing Discount, $/bbl $3.50 $3.80 Backwardation/(Contango) ($0.35) ($0.40) Consolidated Operating Expenses, $ in millions $165.0 $175.0 Consolidated G&A, $ in millions $
Slide 24: Delek US Growth Focused on Growth through Acquisitions
Delek US Growth Focused on Growth through Acquisitions 2005 to 2007 2011 to 2012 2013 to Current 2011 Crude Oil Increased Gathering SALA Gathering East and West Texas Gathering Lion Oil acquisition 2012 DKL Joint Ventures 2011 Crude Oil Nettleton RIO Pipeline Paline Pipeline Pipeline Caddo Pipeline
Slide 25: Current Delek US Corporate Structure
Current Delek US Corporate Structure 94.6% (1) Delek US Holdings, Inc. ownership interest NYSE: DK Market Cap: $2.88 billion(2) Delek Logistics GP, LLC (the General Partner) 61.4% interest in LP units 2.0% interest General partner interest Incentive distribution Delek Logistics Partners, LP rights N
Slide 26: Market Data
Market Data
Slide 27: IMO 2020
IMO 2020 Current impact on oil and product markets • Market is pricing a higher scrubber uptake rate WTI-HSFO Spread (1) • Increased scrubber uptakes could decrease ULSD demand $5 • Led to upside pressure on the HFSO curve over past month -$5 • If scrubber adoption is less than projected, could resu
Slide 28: Access to Midland Crude Oil Benefits Margins
Access to Midland Crude Oil Benefits Margins WTI Midland vs. WTI Cushing Crude Oil Pricing ($ per barrel) $2.00 $0.00 ($2.00) ($4.00) ($6.00) ($8.00) ($10.00) ($12.00) ($14.00) Approx. 207,000 bpd of Midland ($16.00) crude oil in DK system ($18.00) Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Ju
Slide 29: U.S. Refining Environment Trends
U.S Refining Environment Trends Refined Product Margins and WTI-Linked Feedstock Favor Delek US (1) (2) (2) $50 Brent-WTI Cushing Spread Per Barrel WTI 5-3-2 Gulf Coast Crack Spread Per Barrel LLS 5-3-2 Gulf Coast Crack Spread Per Barrel $40 $30 $20 $10 $0 -$10 -$20 -$30 Jul-10 Jul-11 Jul-12 Jul-13
Slide 30: Reconciliations
Reconciliations
Slide 31: Non-GAAP Reconciliation of Potential Project EBITDA
Non-GAAP Reconciliation of Potential Project EBITDA(1) Reconcilation of Forecast U.S. GAAP Net Income (Loss) to Forecast EBITDA for Alkylation Project ($ in millions) Forecasted Range Forecasted Net Income $ 24.1 $ 27.3 Add: Interest expense, net - - Income tax expense 14.0 15.8 Depreciation and amo
Slide 32: Non-GAAP Reconciliation of Krotz Spring Potential Dropdown EBITDA
Non-GAAP Reconciliation of Krotz Spring Potential Dropdown EBITDA(1) Krotz Springs Logistics Drop Down Reconciliation of Forecasted Annualized Net Income to Forecasted EBITDA ($ in millions) Forecasted Range Forecasted Net Income $ 2.9 $ 3.3 Add: Depreciation and amortization 15.6 17.7 Interest and
Slide 33: Non-GAAP Reconciliations of Big Spring Potential Dropdown EBITDA
Non-GAAP Reconciliations of Big Spring Potential Dropdown EBITDA(1) Big Spring Logistics Drop Down and Marketing Agreement Reconciliation of Forecasted Annualized Net Income to Forecasted EBITDA Tanks, Terminals ($ in millions) and Marketing Agreement Forecasted Net Income $ 13.3 Add: Income tax exp
Slide 34: Non-GAAP Reconciliations of Adjusted EBITDA
Non-GAAP Reconciliations of Adjusted EBITDA Three Months Ended December 31, Reconciliation of Net Income (Loss) to Adjusted EBITDA 2018 2017 (Unaudited) Reported net income (loss) attributable to Delek $ 121.6 $ 211.1 Add: Interest expense, net 27.9 30.0 Loss on extinguishment of debt - 0 Income tax
Slide 35: DKL: Increased Distribution with Conservative Coverage and Leverage
DKL: Increased Distribution with Conservative Coverage and Leverage Distribution per unit has been increased twenty-four consecutive times since the IPO $0.790 $0.810 $0.705 $0.715 $0.725 $0.750 $0.770 $0.630 $0.655 $0.680 $0.690 $0.550 $0.570 $0.590 $0.610 $0.475 $0.490 $0.510 $0.530 $0.375 $0.385
Slide 36: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution (dollars in millions, except coverage) 2013 (2) 1Q14 (2) 2Q14(2) 3Q14(2) 4Q14(2) 2014 (2) 1Q15(2) 2Q15 3Q15 4Q15 2015 (3) 1Q16 2Q16 3Q16 4Q16 2016 (3) 1Q17 2Q17 3Q17 4Q17 (3) 2017(3) 1Q18 2Q18 3Q18 4Q18 2018 Reconciliation of Distributable Cash
Slide 37: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 2013(1) 1Q14(1) 2Q14 3Q14 4Q14 2014 (1) 1Q15(2) 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 4Q18 2018 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
Slide 38: 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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