Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Credit Suisse Small/Mid Cap Conference 2015
39 slides from Delek Us's conference presentation, Sep 14, 2015
Slide 1: Investor Presentation - Credit Suisse Small/Mid Cap Conference
Investor Presentation Delek US Holdings Credit Suisse Small/Mid Cap Conference Sept. 16, 2015
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
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 currently av
Slide 4: Delek US Investment Highlights
Delek US Investment Highlights 4 • Crude nameplate capacity increased by 15 kbpd to 155 kpbd • Improved light crude processing flexibility at El Dorado • Turnarounds completed and FCC reactors replaced at both refineries • DHT capacity increased to 71 kbpd from 52 kbpd (2013) • No scheduled turnarou
Slide 5: Historical and Projected Capital Spending
Increases potential free cash flow generation from operations $18.8 $74.9 $61.6 $82.9 $155.1 $42.3 $36.0 $65.9 $144.3 $201.1 $10.4 $21.4 $23.3 $18.6 $14.3 $14.4 $36.5 $29.1 $37.9 $26.2 $2.0 $0.1 $0.1 $7.6 $26.5 $35.0 $22.4 Q1 $86.9 Q2 $41.7 Q3 $51.0 Q4 $40.3 $100.0 2005A 2006A 2007A 2008A 2009A 2010
Slide 6: Alon USA Investment
6 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 7: Refinery-Backed Small & Mid-Cap Midstream MLP Environment Changing
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Cu rr en t Yiel d Market Cap ($MM) MLP's: Sept 2014 7 Source: Wells Fargo Equity Research – Sept 2014 & July 2015 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% $0 $2,000 $4,000 $6,000 $8,000 $10,000 $1
Slide 8: Limited Value Attributed to Delek US Refining Assets in Current Environment
Limited Value Attributed to Delek US Refining Assets in Current Environment 8 Creates attractive capital allocation opportunity Refining, $0.59 to $0.30 Retail, $0.36 to $0.40 GP, $0.25 to $0.50 ALJ, $0.60 DKL, $0.50 $0.0 $0.5 $1.0 $1.5 $2.0 V al u e, $ in b ill ion s Delek US Price: $31.16 X Shares
Slide 9: Investment Options Available to Delek US
Remaining Interest in Alon USA •48% of outstanding shares acquired on May 14, 2015 •Potential next steps (1): •Acquire remaining 52% for 100% ownership •Acquire additional 3% for effective control at 51% • Stock ratio (ALJ/DK) (2) • April 14, 2015 = 0.41x (deal announced) •May 14, 2015 = 0.45x (deal
Slide 10: Refining Segment Operational Update
Refining Segment Operational Update
Slide 11: Increased Access to Cost Advantaged Crude
Approximately 75% of crude slate consist of Midland and local crude supply Increased Access to Cost Advantaged Crude 11 45.0 45.0 87.0 97.0 17.2 17.9 18.6 18.0 0 50 100 150 200 2012 2013 2014 2015-2Q In 0 0 0 b p d Midland Local Crude Throughput Capacity $(3.31) $(2.71) $(6.11) $(2.64) $(2.38) $(0.5
Slide 12: Improved Operating Flexibility
Increased ability to process light crude oil and ULSD capacity Improved Operating Flexibility 12 Since 2012 increased light crude processing capability by 27% based on 2015 target ULSD capability expected to improve by 37% El Dorado has ability to process 80 kbpd medium or mostly light crude
Slide 13: Tyler Refinery Expansion and FCC Reactor Economics
Completed in March 2015; Expected annual incremental EBITDA of $75 million Tyler Refinery Expansion and FCC Reactor Economics Based on incremental 15,000 bpd of crude throughput capacity – Capital cost of approximately $67 million Expected product yield +15.3 kbpd – Gasoline +7.5 kbpd – Diesel/J
Slide 14: Refineries Serve Local Niche Markets
Supports High Refining Utilization Refineries Serve Local Niche Markets 14 0 50 100 150 200 250 300 350 400 450 500 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q 1 4 4Q1 4 1Q1 5 2Q1 5 Delek Logistics Partners terminals support refining system: Tyler refinery serves a 60 to 80 mile radius El Dorado ha
Slide 15: El Dorado Asphalt Inventory $/bbl Declining
El Dorado Asphalt Inventory $/bbl Declining 15 Asphalt inventory cost/bbl has declined during first half of 2015 Cost of sales for asphalt based on FIFO inventory method Asphalt inventory is built during winter months and sold in 2Q/3Q each year Higher cost inventory was sold in the first ha
Slide 16: Operating Cost Per Barrel
Operating Cost Per Barrel 16 Focus on reducing costs in operations Total operating cost per barrel declined year over year in 2Q15 Goal to reduce to below $4.00 per barrel Reduction in cost enhances competitive position $4.82 $4.71 $4.63 $4.41 $4.52 $3.82 2011 2012 2013 2014 2Q14 2Q15 Tyler
Slide 17: Logistics Operational Update
Logistics Operational Update
Slide 18: Strategic Partner in Delek Logistics Partners, LP
Strategic Partner in Delek Logistics Partners, LP (NYSE: DKL) 18 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 19: DKL: Plans in Place for Future Growth
DKL: Plans in Place for Future Growth 19 Paline Pipeline ■ New agreements effective January 1, 2015 until June 30, 2016 ■ Increased volume and capacity usage rate from 2014 level ■ Potential for utilization and/or capacity increase Continued Asset Development ■ Delek US continues to develop assets t
Slide 20: Joint Venture Pipeline Projects
Joint Venture Pipeline Projects 20 Caddo Pipeline ■ DKL (50%)/Plains (50%) ■ Est. total cost: $100 million ■ Capacity: 80,000 bpd ■ Length: 80 miles ■ Expected Completion: Mid-2016 Rio Pipeline ■ Rangeland (67%)/ DKL (33%) ■ Est. total cost: $125 million ■ Capacity: 55,000 bpd ■ Length: 107 miles ■
Slide 21: DKL: Potential EBITDA Growth
DKL: Potential EBITDA Growth (1) 21 (1) Information provided in Delek Logistics Partners, LP (NYSE: DKL) August 2015 investor presentation available at www.deleklogistics.com. 2Q2015 EBITDA based on LTM information provided in that presentation. Pro forma include cost adjustments based as shown in t
Slide 22: Increased Distribution with Conservative Coverage and Leverage
Increased Distribution with Conservative Coverage and Leverage 22 Distribution has been increased eight consecutive times since the IPO $0.375 $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 - 0.200 0.400 0.600 MQD (1) 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q
Slide 23: Marginal Percentage Interest in Distributions
23 Marginal Percentage Interest in Distributions Assumed Distribution per Limited Partner Unit if Delek Logistics Meets 15% Annual Growth Target (2) Delek Logistics GP Incentive Distribution Rights Total Quarterly Distribution Per Unit Target Amount Unitholders General Partner Minimum Quarterly Dist
Slide 24: Retail Operational Update
Retail Operational Update
Slide 25: Retail Locations Create Synergies for Product Marketing
Fuel Gallons Sold Per Store (000’s) 1,039 1,082 1,112 1,204 574 623 2011 2012 2013 2014 1H14 1H15 951 1,011 1,037 1,106 535 564 2011 2012 2013 2014 1H14 1H15 Retail Locations Create Synergies for Product Marketing 25 Expanding Market Footprint in Markets Capable of Being Supplied by El Dorado Mercha
Slide 26: Focused on Organic Growth
Focused on Organic Growth 26 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 27: Current Retail Valuation Comparison
Current Retail Valuation Comparison 27 Valuations moving higher than historical 6x-8x range 9.8x 10.0x 12.1x 7.8x 9.1x CASY CAPL CST MUSA SUN Enterprise Value (“EV”) / Frwd. EBITDA Average = 9.8x (1) Source: Capital IQ; September 1, 2015.
Slide 28: Financial Update
Financial Update
Slide 29: Financial Highlights
Financial Highlights $164 $151 $130 $445 $655 $439 $610 $524 2008 2009 2010 2011 2012 2013 2014 2015 LTM At June 30, 2015 Cash of $378.4 million; Debt of $971.9 million Includes $316.9 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net debt position was approximately $276.
Slide 30: Delek US Capital Allocation Program
Delek US Capital Allocation Program 30 Invest in Business • Safe and Efficient Operations • Building new stores in retail • JV pipeline projects in logistics Acquisitions • Focus on Logistics • Environment more attractive • Build off existing platform • Remaining interest in Alon USA • Acquired 48%
Slide 31: Questions and Answers
31 Large, Complementary Logistics, Marketing and Retail Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Shareholder Returns Strong Balance Sheet Strategically Positioned Refining Platform Questions and Answers
Slide 32: Appendix Additional Data
Appendix Additional Data
Slide 33: 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 34: Historical and Projected Capital Spending
$18.8 $74.9 $61.6 $82.9 $155.1 $42.3 $36.0 $65.9 $144.3 $201.1 $172.9 $0.2 $0.3 $0.9 $0.5 $0.9 $10.5 $5.1 $7.2 $19.8 $10.4 $21.4 $23.3 $18.6 $14.3 $14.4 $36.5 $29.1 $37.9 $26.2 $24.2 $2.0 $0.1 $0.1 $7.6 $26.5 $35.0 $22.4 $22.8 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015F Refinin
Slide 35: Brent-WTI Spread and Crack Spreads
-$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 36: Access to Midland Crudes Benefits Margins
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 11 M ay -1 1 Ju n -1 1 Ju l-1 1 A u g- 1 1 Se p -1 1 O ct-1 1 N o v- 1 1 De c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 12 M ay -1 2 Ju n -1 2 Ju l-1 2 A u g- 1 2 Se p -1 2 O ct-1 2 N o v- 1 2
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation 37 Source: Company filings. ($ in millions) 2012 2013 2014 1H14 1H15 2Q15 LTM Net cash provided by operating activities $462.9 $102.5 $319.1 $172.0 $92.4 $239.5 Purchase of property, plant and equipment 132.0 222.3 256.8 153.4 138.4 $241.8 Free cash flow $330.9 ($119.8) $62.3
Slide 38: Summary Organization Structure
Summary Organization Structure 38 (1) Currently a 4.4% 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 will be indirectly held by Delek. Market cap based on share prices on 9/11/2015. 95.6%
Slide 39: 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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