Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Credit Suisse Energy Summit 2018
40 slides from Delek Us's conference presentation, Feb 13, 2018
Slide 1: Delek US Holdings, Inc. Credit Suisse Energy Summit
February 14, 2018 Delek US Holdings, Inc. Credit Suisse Energy Summit EX 99.1
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, a
Slide 3: Investment Highlights
Investment Highlights (1) Based on price per common share as of close of trading on February 12, 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 ownersh
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 (2) • 14 asphalt terminals locate
Slide 5: Permian Focused WTI-Linked Crude Oil Refining System
Delek US Permian Focused WTI-Linked Crude Oil Refining System Current Refining Market Environment
Slide 6: Midland WTI-Brent Crude Oil Price Differential Trends Improving
Differential is additive to crack spread trends in the current market environment Midland WTI-Brent Crude Oil Price Differential Trends Improving 61) Differential source: Argus – February 9, 2018; futures based on ICE/NYMEX curve. • WTI versus Brent has widened • Began in early 2017 • Primary driver
Slide 7: Crude Oil Production Grew Despite Rig Decline
1) Crude oil price through February 9, 2018. 2) EIA production data through January 2018, Drilling Productivity Report; Baker Hughes rig count as of Feb 2, 2018. 3) Company estimates; current production based on EIA for January 2018. 7 Crude Oil Production Grew Despite Rig Decline (2) - 500 1,000 1,
Slide 8: Permian Basin Outlook - Production versus Pipeline Takeaway Capacity
Permian Basin Outlook - Production versus Pipeline Takeaway Capacity 8 • Outlook assumes production growth of approximately 600 kbpd • Permian pipeline take-away utilization should remain >90% during 2018 • Plains Sunrise Expansion and Cactus II are the only 2019 project currently committed out of a
Slide 9: Crack Spread Cycle Turning Up
Crack Spread Cycle Turning Up Crack spread at highest since 2015 and expected to continue upward trend 9 -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 1 0 - J a n - 1 0 1 0 - M a r - 1 0 1 0 - M a y - 1 0 1 0 - J u l - 1 0 1 0 - S e p - 1 0 1 0 - N o v - 1 0 1 0 - J a n - 1 1 1 0 - M a r - 1 1 1 0 - M a y -
Slide 10: WTI-Linked Refining System with Permian Based Crude Oil Slate
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 10 Tyler, Texas • 75,000 bpd crude throughput • 8.7 complexity • Light crude refinery • Permian Basin and east Texas sourced crude El Dorado, Arkansa
Slide 11: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value
Slide 12: Acquisition of Alon Provides Opportunities to Unlock Value
Transaction completed on July 1; Initiatives underway across the asset base Acquisition of Alon Provides Opportunities to Unlock Value 12 Simplify Corporate Structure: • ALDW Transaction – Closed transaction to purchase remaining 18.4% of ALDW LP units that Delek US does not own on February 7 Synerg
Slide 13: Acquisition of the Remaining Alon USA Partners LP Units
Simplifies corporate structure of Delek US Acquisition of the remaining Alon USA Partners LP Units 13 • On February 7, 2018, acquired remaining limited partner units of Alon USA Partners (ALDW) • Delek US owned 81.6% of the outstanding common units • All stock for unit transaction for remaining 18.4
Slide 14: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination 14 Expect to achieve run-rate synergies of approximately $85 - $105 million in 2018; $53.0 million of annualized synergies captured as of Sept. 30, 2017 Type Description Estimate Commercial • Logistics, purchase and trading benefits from a larger pl
Slide 15: Krotz Springs Improvement Initiatives
Areas of focus to add flexibility and increase margin potential from refinery Krotz Springs Improvement Initiatives 15 Improve Units to Add Product Flexibility • Alkylation Project – under construction - provides ability to upgrade low value production into higher value gasoline Crude – Transportati
Slide 16: Krotz Springs Alkylation Project
Expected annual EBITDA $35-$40 million; Target completion in 1Q19 Krotz Springs Alkylation Project 16 • Alkylation unit with 6,000 bpd capacity • Approx. $103.0 estimated capital costs with $20.0 million spent as of Sept. 30, 2017 • Improves refinery flexibility • Converts lower priced iso-butane in
Slide 17: Non-Core Asset Divestiture Initiatives
Assets are non core to Delek US geographic footprint; Exploring ways to derive value and reduce costs Non-Core Asset Divesture Initiatives 17 • West Coast Asphalt Terminals • On February 12, 2018 announced definitive agreement to sell West Coast terminals • $75.0 million in cash plus working capital
Slide 18: Logistics Assets Positioned for Growth
Logistics Assets Positioned for Growth
Slide 19: Logistics Assets Positioned to Benefit from Permian Basin Activity
NY008LRP - 912119_1.wor .- rLY008 P 912119_1. . .- r- rLLY008 P 912119_1. .Y008 P 912119_1. San Angelo Fort Worth Dallas Waco Tyler Shreveport Monroe El Dorado Beaumont New Orleans Little Rock Memphis Brentwood Nashville Knoxville Abilene Big Spring Krotz Springs SALA GATHERING SYSTEM AR LA Magnolia
Slide 20: Increased Drop Down Inventory Supports Logistics Growth
Increased Drop Down Inventory plus Organic Project Creates Platform to Support Logistics Growth 20 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 21: Positive Outlook for Paline Pipeline and West Texas Wholesale
Positive Outlook for Paline Pipeline and West Texas Wholesale 21 • Approximately 195-mile 35 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 • Adding capacity in 1Q18 • Adding pump capacity to achiev
Slide 22: Delek US GP and IDR Ownership in DKL
22 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 23: DKL: Increased Distribution with Conservative Coverage and Leverage
23 (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) 3Q17 based on total distributions paid on November 14, 2017. (4)
Slide 24: Opportunities for Retail
Opportunities for Retail Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas 24 Current Retail Operations • Approximately 300 store retail system in Central/west Texas and New Mexico • Supplies ~635 branded sites, including substantially all of Alon’s ret
Slide 25: Solid Financial Position
Solid Financial Position
Slide 26: Financial Strength and Flexibility to Support Initiatives
Financial Strength and Flexibility to Support Initiatives At September 30, 2017 approximately $832 million of cash 26 • 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 September 30
Slide 27: Capital Allocation Focused on Long-Term Value Creation
• Invest in the business • Forecast 2017 capex includes spending on Alon assets for six months • Commenced Alky unit project at Krotz Springs • 1Q 2019 El Dorado Turnaround planning underway • Programs in place allow different options to return cash to shareholders • Regular dividend • $150 million
Slide 28: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value Execution of strategic initiatives 28 • $53 million captured on annualized basis in 3Q17 • $85 million to $105 million target range on annual basis • On track to reach annualized goal in 2018 Synergies • Improve Krotz Springs refinery flexibility • $1
Slide 29: Current Valuation Below Peer EV to EBITDA
Current Valuation Below Peer EV to EBITDA Permian focused refining system with flexible financial position 29(1) Based on NASDAQ IR Insights/Factset as of February 12, 2018. • Balance sheet with $832 million of cash at 3Q17 supports company initiatives • Permian focused refining system • Capital all
Slide 30: Questions and Answers
30 Complementary Logistics Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Long Term Shareholder Returns Financial FlexibilityPermian Focused Refining System Questions and Answers An Integrated and Diversified Refining, Logistics and Marketing Company
Slide 31: Appendix
Appendix
Slide 32: 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 33: Current Delek US Corporate Structure
33 Current Delek US Corporate Structure (1) As of September 30, 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 an
Slide 34: ($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 J a n - 1
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 J a n - 1 1 F e b - 1 1 M a r - 1 1 A p r - 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 N o v - 1 1 D e c - 1 1 J a n - 1 2 F e b - 1 2 M a r - 1 2 A p r - 1 2 M a y - 1 2 J u n - 1 2 J u l - 1 2 A
Slide 35: Non GAAP Reconciliations Delek US EPS and EBITDA
Non GAAP Reconciliations Delek US EPS and EBITDA 35 Three Months Ended September 30, 2017 Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA (Unaudited) Reported net income (loss) per share attributable to Delek $ 104.4 Add: Interest expense, net 33.2 Income tax expense 133.5 Depreciat
Slide 36: Non GAAP Reconciliations of Potential Alky Unit EBITDA
Non GAAP Reconciliations of Potential Alky Unit EBITDA (1) 36 (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 37: Non GAAP Reconciliations of Potential Dropdown EBITDA
Non GAAP Reconciliations of Potential Dropdown EBITDA (1) 37 (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 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