Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Deutsche Bank Energy Summit 2016
36 slides from Delek Us's conference presentation, Sep 21, 2016
Slide 1: Deutsche Bank Energy Summit Delek US Holdings September 2016
Deutsche Bank Energy Summit Delek US Holdings September 2016
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
REFINING Delek US Holdings Overview 3 Crude Sourcing/Logistics Flexibility • Pipeline Access: Midland (105,000 bpd in system) Gulf Coast and Cushing • Gathered Barrels: Local barrels in Arkansas/ North Louisiana East and West Texas • Rail Capability at El Dorado Up to 45,000 BPD of light c
Slide 4: Delek US Investment Highlights
Delek US Investment Highlights 4 • Crude nameplate capacity increased by 15 kbpd to 155 kpbd in 2015 • Turnarounds completed and FCC reactors replaced at both refineries • Declining capital expenditure needs; No scheduled turnarounds until 2019/2020 Refining Increased capacity and improved flexibili
Slide 5: 2016 Initiatives to Create Value and Improve Financial Flexibility
2016 Initiatives to Create Value and Improve Financial Flexibility 5 • Total capital expenditure expected to be $63.9 million in 2016 • Reduced from $218.6 million in 2015 and $256.9 million in 2014 • Completed large invest program in refining in 2015 • No scheduled turnarounds until 2019/2020 Reduc
Slide 6: Retail Transaction Summary
Retail Transaction Summary MAPCO Sale Transaction Retail segment and associated logistics entities to be sold to Compañía de Petróleos de Chile COPEC S.A. (SNSE:COPEC) $535 million in cash plus MAPCO cash on hand at close ($13 million at 6/30/16) Represents EBITDA multiple of approximately 12.7x
Slide 7: Delek US Focused on Creating Long Term Shareholder Value
Financial flexibility supports ability to explore opportunities Delek US Focused on Creating Long Term Shareholder Value 7 $535 million(1) retail transaction should reduce debt and improve cash position – Debt associated with the retail assets will be repaid from proceeds at closing. At 6/30/16 re
Slide 8: Refining Segment Operational Update
Refining Segment Operational Update
Slide 9: Refineries Serve Local Niche Markets
Supports High Refining Utilization Refineries Serve Local Niche Markets 9 0 50 100 150 200 250 300 350 400 450 500 1Q1 3 2Q1 3 3Q1 3 4Q1 3 1Q1 4 2Q1 4 3Q1 4 4Q1 4 1Q1 5 2Q1 5 3Q1 5 4Q1 5 1Q1 6 2Q1 6 Delek Logistics Partners terminals support refining system: Tyler primarily serves a 100 mile rad
Slide 10: Increased Access to Cost Advantaged Crude
Approximately 80% of crude slate consists of Midland and local crude supply Increased Access to Cost Advantaged Crude 10 45.0 45.0 87.0 105.0 107.0 17.2 17.9 18.6 17.2 16.0 0 50 100 150 200 2012 2013 2014 2015 2016E In 0 0 0 b p d Midland Local Crude Throughput Capacity $(3.31) $(2.71) $(6.11) $(1.4
Slide 11: Initiatives Underway to Improve Asset Performance
Initiatives Underway to Improve Asset Performance 11 Consistent focus on factors under our control •Next turnarounds in 2019 and 2020 •No large capital projects scheduled • Primarily maintenance focused capital spend •Procurement strategies •Reduce overhead and operating expenses • Expand local foot
Slide 12: Refining Capital Investment Program Improved Operations
Increased crude throughput capacity and operating flexibility Refining Capital Investment Program Improved Operations 12 Large investment cycle in refining now completed Capital expenditure needs declining from 2015 level 2016E based on maintenance and regulatory spending Projects completed
Slide 13: Tyler Refinery Overview
54% 55% 54% 52% 54% 39% 39% 40% 41% 39% 7% 6% 6% 7% 7% 0% 20% 40% 60% 80% 100% 120% 2013 2014 2015 2Q15 2Q16 Gasoline Diesel Petro/Other 62,304 65,523 60,704 72,358 74,130 Tyler Refinery Overview 13 Overview Niche market generally priced above Gulf Coast; supported by Delek Logistics' terminals
Slide 14: El Dorado Refinery Overview
80,000 bpd refinery with crude slate flexibility to process light and medium gravity crudes El Dorado Refinery Overview 14 1) COPEC is a wholly owned subsidiary of Empresas COPEC S.A, which owns and operates convenience stores in Chile, Columbia, Panama, Ecuador, Peru and Mexico. On Aug. 29, 2016 De
Slide 15: Logistics Operational Update
Logistics Operational Update
Slide 16: Strategic Partner in Delek Logistics Partners, LP
Strategic Partner in Delek Logistics Partners, LP (NYSE: DKL) 16 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 17: DKL: Joint Venture Pipeline Projects
DKL: Joint Venture Pipeline Projects 17 Caddo Pipeline ■ DKL (50%)/Plains (50%) ■ Est. total cost: $120 million (1) ■ Capacity: 80,000 bpd ■ Length: 80 miles ■ Expected Completion: January 2017 Rio Pipeline ■ Rangeland (67%)/ DKL (33%) ■ Est. total cost: $119 million (1) ■ Capacity: 55,000 bpd ■ Len
Slide 18: Increased Distribution with Conservative Coverage and Leverage
Increased Distribution with Conservative Coverage and Leverage 18 (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 34 for reconciliation. (3) 2
Slide 19: Marginal Percentage Interest in Distributions
19 Marginal Percentage Interest in Distributions Assumed Distribution per Limited Partner Unit if Delek Logistics Meets 15% Annual Growth Target (1) Delek Logistics GP Incentive Distribution Rights Total Quarterly Distribution Per Unit Target Amount Unitholders General Partner Minimum Quarterly Dist
Slide 20: Retail Operational Update
Retail Operational Update
Slide 21: Retail Operations
Fuel Gallons Sold Per Store (000’s) 1,112 1,204 1,274 623 640 2013 2014 2015 2Q15 YTD 2Q16 YTD 1,037 1,106 1,169 564 594 2013 2014 2015 2Q15 YTD 2Q16 YTD Retail Operations 21 Merchandise Sales Per Store ($000’s) Tennessee 187 locations Virginia 8 locations Kentucky and Mississippi 10 locations Arkan
Slide 22: Financial Update
Financial Update
Slide 23: Financial Highlights
Financial Highlights At June 30, 2016 Cash of $377.1 million; Debt of $941.1 million Includes $362.6 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net debt position was approximately $201.7 million Capital allocation focused on cash returned to shareholders, acquisition
Slide 24: Declining Capital Needs
Increases potential free cash flow generation from operations $18.8 $74.9 $61.6 $82.9 $155.1 $42.3 $36.0 $46.1 $123.6 $199.1 $164.5 $27.8 $0.2 $0.3 $0.9 $0.5 $0.9 $30.3 $25.8 $9.2 $18.6 $14.3 $10.4 $21.4 $23.3 $18.6 $14.3 $14.4 $36.5 $29.1 $37.9 $26.2 $18.3 $13.2 $2.0 $0.1 $0.1 $7.6 $26.5 $35.0 $22.
Slide 25: Limited Value Attributed to Delek US Refining Assets in Current Environment
Limited Value Attributed to Delek US Refining Assets in Current Environment 25 Creates attractive capital allocation opportunity Refining, ($0.05) to ($0.22) Retail, $0.535 GP, $0.12 to $0.28 ALJ, $0.30 DKL, $0.40 -$0.3 $0.0 $0.3 $0.6 $0.9 $1.2 $1.5 V al u e, $ in b ill ion s Delek US Price: $18.24
Slide 26: Questions and Answers
26 Complementary Logistics Systems Significant Organic Growth / Margin Improvement Opportunities Focus on Shareholder Returns Strong Balance Sheet Strategically Positioned Refining Platform Questions and Answers
Slide 27: Appendix Additional Data
Appendix Additional Data
Slide 28: 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 29: Summary Organization Structure
29 Summary Organization Structure (1) Currently a 4.90% 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 September 16, 2
Slide 30: Alon USA Investment
30 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”) com
Slide 31: -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 J a n -1 F
-$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 32: WTI Midland vs. WTI Cushing Crude Pricing
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 11 M ay -1 1 Ju n -1 1 Ju l-1 1 A u g- 1 1 Se p -1 1 O ct-1 1 N o v- 1 1 De c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 12 M ay -1 2 Ju n -1 2 Ju l-1 2 A u g- 1 2 Se p -1 2 O ct-1 2 N o v- 1 2
Slide 33: Delek US Consolidated Income Statement
Delek US Consolidated Income Statement 33 Source: Company filings. ($ in millions) 2008 2009 2010 2011 2012 2013 2014 2015 YTD2Q15 YTD2Q16 2Q16 LTM Net sales $4,723.7 $2,666.7 $3,755.6 $7,198.2 $8,726.7 $8,706.8 $8,324.3 $5,762.0 $2,843.7 $2,532.3 $5,450.6 Cost of goods sold 4,308.1 2,394.1 3,412.9
Slide 34: DKL: Reconciliation of EBITDA and Cash Available for Distribution
DKL: Reconciliation of EBITDA and Cash Available for Distribution 34 (1) Forecast period for twelve month period ending 9/30/2013 EBITDA is reconciled to net income on page 34. (2) Distribution for forecast period based on $1.50 per unit; Distribution for year ended December 31, 2013 , 2014 and 2015
Slide 35: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation 35 (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 36: Investor Relations Contact
Investor Relations Contact: Assi Ginzburg Keith Johnson Chief Financial Officer Vice President of Investor Relations 615-435-1452 615-435-1366