Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Wolfe Research Utilities & Energy Conference 2018
32 slides from Delek Us's conference presentation, Oct 3, 2018
Slide 1: Wolfe Research Utilities & Energy Conference Presentation
Exhibit 99.1 Delek US Holdings, Inc. Wolfe Research Utilities & Energy Conference Presentation October 2018
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: $43.12/share(1) Overview (NYSE: DK) • Market Capitalization: $3.7 billion(1) • NYSE: DKL: (Market cap $827mm) Own 63.4%, including 2% GP(2) • Operating model built to benefit from crude oil differentials and IMO’s impact on market trends Favorable Market Factors
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 Refining (1) Logistics (2) Asphalt Retail Renewables • 7th largest independent • 10 terminals 6 asphalt terminals located • Approximately 300 Approx. 23m g
Slide 5: 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) (2) • Drilling supported by improved technology and low and WTI-Midland Price costs 7.00 $64.76 $65.9
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 $7.80 - $8.05 $6.54 - $6.79 $1.10 $0.20 • Current break-even transport economics for e
Slide 7: IMO 2020
IMO 2020 Current impact on oil and product markets • Market is NOT pricing a high compliance rate; only ~60-65% WTI-HSFO Spread (1) • Increased compliance will decrease HSFO demand $0 • Excess supply will go into power generation market -$5 -$10 • Expect to see downside pressure on HSFO curve -$15 •
Slide 8: Three Main Drivers for Delek US' Performance
Three Main Drivers for Delek US’ Performance Market Factors Aligning to Extend a Favorable Market for Delek US Through 2022 2018-2019 2019-2022 Wide Midland – Brent crude oil differential driven • IMO 2020 is expected to drive structural market by a combination of factors: changes • Permian producti
Slide 9: 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 2% • 75,000 bpd crude oil Crude throughput Throughput WTI 19% 100% WTI • 8.7 complexit
Slide 10: 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 2Q18 Refiners’ Middle Distillates Yield % (1) (2) (4) • Refining system product yields • Middle distillate: average approx. 119,000 bpd of distillate or 44%
Slide 11: Company Initiatives and Projects
Company Initiatives and Projects Delek US’ long-term investments in midstream and its refineries support cash flow generation Gulf Coast CBOB 7.8 – Isobutane Spread • Krotz Springs refinery improvement initiatives $1.40 • Crude oil transportation and flexibility $1.23 $1.21 • Product netback improve
Slide 12: Increased Dropdown Inventory Creates Platform for Logistics Growth
Increased Dropdown Inventory plus Organic Project Creates Platform to Support Logistics Growth Potential Growth for DKL Strong EBITDA Growth Profile Supporting Distribution Growth (1) ($ in millions) • Delek Logistics provides platform to unlock logistics value • Big Spring logistics assets dropdown
Slide 13: Main Drivers of Delek's Expected Performance
Main Drivers of Delek’s Expected Performance Delek US positioned to generate strong cash flows to return cash to shareholders Expected Incremental Benefit from Market Changes (2018 Base) and Company Initiatives/Projects $1,400 $168.4 $227.3 $1,200 $16.4 $75.9 $1,000 $1,038 High $800 $791 $600 Low $4
Slide 14: 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 $909.7 million; net debt excl. DKL of $177.8 million(1) • Operations positioned to generate strong c
Slide 15: Significant Cash Returns to Shareholders
Significant Cash Returns to Shareholders Focus on returning cash to shareholders while maintaining financial strength Cash to Shareholders (2)(3) • Target dividend level that can be supported through a cycle • 2Q18 increased regular dividend by 25% to $0.25/qtr(1) • Follows a 1Q18 increased regular
Slide 16: Questions and Answers
Questions and Answers Significant Organic Focus on Long-Term Growth / Margin Shareholder Returns Improvement Opportunities An Integrated and Permian Focused Diversified Refining, Financial Flexibility Refining System Logistics and Marketing Company Complementary Logistics Systems
Slide 17: Appendix
Appendix
Slide 18: 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 19: Current Delek US Corporate Structure
Current Delek US Corporate Structure 94.6% Delek US Holdings, Inc. ownership interest (1) NYSE: DK Market Cap: $3.7 billion(2) Delek Logistics GP, LLC (the General Partner) 61.4% interest in LP units 2.0% interest General partner interest Incentive distribution Delek Logistics Partners, LP rights NY
Slide 20: Access to Midland Crude Oil Benefits Margins
Access to Midland Crude Oil Benefits Margins WTI Midland vs. WTI Cushing Crude Oil Pricing ($ 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-17 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Ju
Slide 21: 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 -$30 Jul-10 Jul-11 Jul-12 Jul-13
Slide 22: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination Steady improvement in expected synergies from transaction ($ in millions) New Apr. 2018 Type Description Corporate Cost of Capital Operational Commercial Estimate Estimate Targets $130-$140 • Logistics, purchase and $131 Commercial trading benefits
Slide 23: Financial Strength and Flexibility to Support Initiatives
Financial Strength and Flexibility to Support Initiatives At June 30, 2018 Approximately $1.1 Billion of Cash (1) • Focused on growing business, while maintaining Cash Balance ($MM) financial flexibility $1,133 $1,018 • Closed Alon transaction on July 1, 2017 $932 $689 • At June 30, 2018, cash balan
Slide 24: Non-GAAP Reconciliation of Potential Alkylation Project EBITDA
Non-GAAP Reconciliation of Potential Alkylation Project EBITDA(1) Reconcilation of Forecast U.S. GAAP Net Income (Loss) to Forecast EBITDA for Alkylation Project ($ in millions) Forecasted Range Forecasted Net Income $ 24.1 $ 27.3 Add: Interest expense, net - - Income tax expense 14.0 15.8 Depreciat
Slide 25: 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 26: Non-GAAP Reconciliations of EBITDA
Non-GAAP Reconciliations of 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 expense - Depreciation and amorti
Slide 27: Non-GAAP Reconciliations of Adjusted EBITDA
Non-GAAP Reconciliations of Adjusted EBITDA Three Months Ended June 30, Reconciliation of Net Income (Loss) to Adjusted EBITDA 2018 2017 (Unaudited) Reported net income (loss) attributable to Delek $ 79.1 $ (37.9) Add: Interest expense, net $ 30.6 $ 14.1 Income tax expense (benefit) - continuing ope
Slide 28: Non GAAP Reconciliations of 2018 Projected EBITDA
Non GAAP Reconciliations Non GAAP Reconciliation of 2018 Projected Net Income to Projected Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) (1) $ in millions High Low Net Income $ 586 $ 369 Add: Taxes 166 102 Interest 127 119 Depreciation and Amortization 159 201 Projected EBI
Slide 29: DKL: Increased Distribution with Conservative Coverage and Leverage
DKL: Increased Distribution with Conservative Coverage and Leverage Distribution per unit has been increased twenty-two consecutive times since the IPO $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 $0.395 $0.405 $
Slide 30: 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 Reconciliation of Distributable Cash Flow to net cas
Slide 31: 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 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 $111.9 $107.5 $124.
Slide 32: 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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