Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Investor Presentation (February 2018)
42 slides from Delek Us's investor presentation, Feb 28, 2018
Slide 1: Delek US Holdings, Inc. Investor Presentation
March 2018 Delek US Holdings, Inc. Investor Presentation 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,
Slide 3: Investment Highlights
Investment Highlights (1) Based on price per common share as of close of trading on February 23, 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 (3) • 14 asphalt terminals locate
Slide 5: Delek US 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 23, 2018; futures based on ICE/NYMEX curve. • WTI versus Brent has widened • Began in early 2017 • Primary drive
Slide 7: Crude Oil Production Grew Despite Rig Decline
1) EIA production data through January 2018, Drilling Productivity Report; Baker Hughes rig count as of Feb 23, 2018. 2) Company estimates; current production based on EIA for January 2018. 7 Crude Oil Production Grew Despite Rig Decline (1) - 500 1,000 1,500 2,000 2,500 3,000 J a n - 0 7 J u n - 0
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 projects currently committed out of
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: 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 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 the Remaining Alon USA Partners LP Units
Simplifies corporate structure of Delek US Acquisition of the remaining Alon USA Partners LP Units 12 • 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 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 – under construction - provides ability to upgrade low value production into higher value gasoline Crude – Transportati
Slide 15: Krotz Springs Alkylation Project
Expected annual EBITDA $35 to $40 million; Target completion in 1Q19 Krotz Springs Alkylation Project 15 • Alkylation unit with 6,000 bpd capacity • Approx. $103.0 estimated capital costs with $29.0 million spent as of Dec. 31, 2017 • Improves refinery flexibility • Converts lower priced iso-butane
Slide 16: 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 16 • 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 17: Logistics Assets Positioned for Growth
Logistics Assets Positioned for Growth
Slide 18: Logistics Assets Positioned to Benefit from Permian Basin Activity
• ~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 19: Increased Drop Down Inventory Supports Logistics Growth
Increased Drop Down Inventory plus Organic Project Creates Platform to Support Logistics Growth 19 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 20: Big Spring Logistics Asset Dropdown
20 1) Please see page 39 for a reconciliation of EBITDA. Big Spring Logistics Asset Dropdown • Drop down expected to close 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 $40.2M • Financed th
Slide 21: Joint Venture with Green Plains Partners
21 Joint Venture with Green Plains Partners Improves logistics presence in North Little Rock and east Texas • On February 20, 2018 announced a joint venture with Green Plains Partners to purchase third party logistics assets • Acquisition • Two light products terminals – Caddo Mills, TX and North Li
Slide 22: Positive Outlook for Paline Pipeline and West Texas Wholesale
Positive Outlook for Paline Pipeline and West Texas Wholesale 22 • 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 March 2018 • Adding pump capacity to
Slide 23: Delek US GP and IDR Ownership in DKL
23 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 24: DKL Distribution Coverage and Leverage
24 (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 25: Opportunities for Retail
Opportunities for Retail Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas 25 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 26: Solid Financial Position
Solid Financial Position
Slide 27: Financial Strength and Flexibility to Support Initiatives
Financial Strength and Flexibility to Support Initiatives At December 31, 2017 approximately $932 million of cash 27 • 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 28: 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 29: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value Execution of strategic initiatives 29 •$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 flexibili
Slide 30: Current Valuation Below Peer EV to EBITDA
Current Valuation Below Peer EV to EBITDA Permian focused refining system with flexible financial position 30(1) Based on NASDAQ IR Insights/Factset as of February 23, 2018. • Balance sheet with $932 million of cash at 4Q17 supports company initiatives • Permian focused refining system • Capital all
Slide 31: An Integrated and Diversified Refining, Logistics and Marketing Company
31 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 32: Appendix
Appendix
Slide 33: 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 34: Current Delek US Corporate Structure
34 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 35: ($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 36: Non GAAP Reconciliations Delek US EPS and EBITDA
Non GAAP Reconciliations Delek US EPS and EBITDA 36 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 37: Non GAAP Reconciliations of Potential Alky Unit EBITDA
Non GAAP Reconciliations of Potential Alky Unit EBITDA (1) 37 (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 38: Non GAAP Reconciliations of Potential Dropdown EBITDA
Non GAAP Reconciliations of Potential Dropdown EBITDA (1) 38 (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 39: Non GAAP Reconciliations of EBITDA
Non GAAP Reconciliations of EBITDA (1) 39 (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 40: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution 40 (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 41: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 41 (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 42: 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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