Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Citi 2018 Global Energy & Utilities Conference
39 slides from Delek Us's conference presentation, May 14, 2018
Slide 1: Citi 2018 Global Energy & Utilities Conference
Exhibit 99.1 Delek US Holdings, Inc. Citi 2018 Global Energy & Utilities Conference May 2018
Slide 2: Disclaimers
Disclaimers 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, as
Slide 3: Investment Highlights
Investment Highlights • Current Price: $48.58/share (1) Overview (NYSE: DK) • Market Capitalization: $4.1 billion (1) • NYSE: DKL: (Market cap $699 mm) Own 63.5%, including 2% GP (2) •Refining crude slate is approximately 70% Permian Basin crude Permian Focused •Big Spring, TX refinery located in Ho
Slide 4: Integrated Company with Asset Diversity and Scale
Integrated Company with Asset Diversity and Scale Strategically Located Assets with Permian Basin Exposure Refining (1) Logistics (2) Asphalt (3) Retail Renewables • 7th largest independent • 10 terminals • 14 asphalt terminals • Approximately 300 Approx. 23m gallons refiner • Approximately 1,290 lo
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: 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) Tyler, Texas El Dorado, Arkansas Big Spring, Texas Krotz Springs, Louisiana • 75,000 bpd crude • 80,000 bpd crude • 73,000 bpd crude • 74,000 bpd cru
Slide 7: Midland WTI-Brent Crude Oil Price Differential Trends Improving
Midland WTI-Brent Crude Oil Price Differential Trends Improving Differential is additive to crack spread trends in the current market environment WTI versus Brent has widened • WTI Midland vs Brent, $/bbl (1) Outlook Began in early 2017 • Cushing-Brent Differential Midland-Cushing Differential $5 •
Slide 8: Permian Basin Attractive Drilling Economics Support Growth
Permian Basin Attractive Drilling Economics Support Growth Production continued to grow through crude oil price volatility Crude Oil Production Grew Despite Rig Decline (1) • Crude oil production benefited by low 3,500 600 breakeven costs and improved 3,000 500 efficiencies 2,500 400 2,000 300 • As
Slide 9: Permian Basin Outlook - Production versus Pipeline Takeaway Capacity
Permian Basin Outlook - Production versus Pipeline Takeaway Capacity Current pipeline takeaway capacity adequate, but production growth may tighten balance 5,000 $2.50 $0.50 4,500 ($1.50) 4,000 Capacity under construction ($3.50) 3,500 ($5.50) Capacity ramping up 3,000 ($7.50) ($9.50) 2,500 ($11.50)
Slide 10: Crack Spread Cycle Turning Up
Crack Spread Cycle Turning Up Crack spread expected to continue upward trend $50 Brent-WTI Cushing Spread Per Barrel WTI 5-3-2 Gulf Coast Crack Spread Per Barrel 2010 2011 2012 2013 2014 2015 2016 2017 2018F $40 Avg: Avg: Avg: Avg: Avg: Avg: Avg: Avg: Avg: $9.08 $23.78 $26.91 $18.08 $12.60 $15.67 $1
Slide 11: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value
Slide 12: Simplifying Corporate Structure and Divesting non-core Assets
Simplifying Corporate Structure and Divesting non-core Assets Following Alon USA acquisition initiatives have been underway to unlock value. • Simplified Corporate Structure • On February 7, 2018, acquired remaining limited partner units of Alon USA Partners (ALDW); Delek US owned 81.6% of the outst
Slide 13: Robust Synergy Opportunity from DK/ALJ Combination
Robust Synergy Opportunity from DK/ALJ Combination Steady improvement in expected synergies from transaction ($ in millions) New Feb. 2018 Type Description Corporate Cost of Capital Operational Commercial Estimate Estimate $115-$130 • Logistics, purchase and $105-$120 trading benefits from a • $24-$
Slide 14: Krotz Springs Improvement Initiatives
Krotz Springs Improvement Initiatives Areas of focus to add flexibility and increase margin potential from refinery Improve Units to Add Product Flexibility • Alkylation Project – approx. $103.0 million cost; 1Q19 expected completion • Estimated annual EBITDA (1) $35-$40 million • Converts lower pri
Slide 15: Logistics Assets Positioned for Growth
Logistics Assets Positioned for Growth
Slide 16: Logistics Assets Positioned to Benefit from Permian Basin Activity
Logistics Assets Positioned to Benefit from Permian Basin Activity Growing logistics assets support crude sourcing and product marketing for customers Pipelines/Transportation Segment • ~805 miles (1) of crude and product transportation pipelines, including the 195 mile crude oil pipeline from Longv
Slide 17: Increased Drop Down Inventory Creates Platform for Logistics Growth
Increased Drop Down Inventory plus Organic Project Creates Platform to Support Logistics Growth Potential Growth for DKL Strong EBITDA Growth Profile Supporting Distribution Growth (1) ($ in millions) • Delek Logistics Partners provides platform $250.0 to unlock logistics value • Increased access to
Slide 18: Big Spring Dropdown and Green Plains JV Should Provide Growth
Big Spring Dropdown and Green Plains JV Should Provide Growth Big Spring Dropdown Green Plains Partners Joint Venture • Closed in March with an effective date of March 1, 2018 • Announced February 20, 2018 definitive agreement to purchase • Purchase price of $315.0 million which equates to a third p
Slide 19: Positive Outlook for Paline Pipeline and West Texas Wholesale
Positive Outlook for Paline Pipeline and West Texas Wholesale Paline Pipeline West Texas Wholesale • Approximately 195-mile 42 kbpd crude oil pipeline from • Operates in an area around the Permian Basin; Complementary to Delek US refining / retail in region: Longview, TX south to Beaumont • Purchase
Slide 20: Future Potential Dropdowns to DKL Benefit Delek US Cash Flow
Future Potential Dropdowns to DKL Benefit Delek US Cash Flow Supports Long Term Distribution Growth at Delek Logistics Delek US GP and IDR Ownership is in DKL in the high splits • DKL Distribution was $0.75/unit for 1Q 2018 Total Quarterly Distribution Per Unit Unitholders General Partner • DKL dist
Slide 21: DKL: Increased Distribution with Conservative Coverage and Leverage
DKL: Increased Distribution with Conservative Coverage and Leverage Distribution per unit has been increased twenty one consecutive times since the IPO $0.705 $0.715 $0.725 $0.750 $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 $0.415 $
Slide 22: Opportunities for Retail
Opportunities for Retail Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas Current Retail Operations Prior Retail Experience • Approximately 300 store retail system in • Built Southeast U.S. retail system central/west Texas and New Mexico with 348 store
Slide 23: Solid Financial Position
Solid Financial Position
Slide 24: Financial Strength and Flexibility to Support Initiatives
Financial Strength and Flexibility to Support Initiatives At March 31, 2018 approximately $1 billion of cash Cash Balance ($MM) (1) • Focused on growing business, while maintaining $1,018 $932 financial flexibility • Sold retail assets in Nov. 2016 for $535 million $590 $689 • Closed Alon transactio
Slide 25: Capital Allocation Focused on Long-Term Value Creation
Capital Allocation Focused on Long-Term Value Creation • Invest in the business Historical Capital Spending (3) • 2018 spending includes the Alky unit project at Krotz Springs ($ in millions) • 1Q 2019 El Dorado Turnaround planning underway • Programs in place allow different options to return cash
Slide 26: Initiatives Underway to Create Sustainable Value
Initiatives Underway to Create Sustainable Value Execution of strategic initiatives • $104 million captured on annualized basis in 1Q18 Synergies • Increased annualized target range to $115 million to $130 million • On track to reach annualized goal in 2018 Invest in the Business • Improve Krotz Spr
Slide 27: 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 27
Slide 28: Appendix
Appendix
Slide 29: Delek US Focused on Growth through Acquisitions
Delek US Focused on Growth through Acquisitions 2005 to 2007 2011 to 2012 2013 to Current 2011 Crude Increased Gathering SALA Gathering East and West Texas Gathering Lion Oil acquisition 2012 DKL Joint Ventures 2011 Crude Nettleton RIO Pipeline Paline Pipeline Pipeline Caddo Pipeline Logistics $50 m
Slide 30: Current Delek US Corporate Structure
Current Delek US Corporate Structure 94.6% Delek US Holdings, Inc. ownership interest (1) NYSE: DK Market Cap: $4.1 billion Delek Logistics GP, LLC (the General Partner) 61.5% interest in LP units 2.0% interest General partner interest Incentive distribution Delek Logistics Partners, LP rights NYSE:
Slide 31: Access to Midland Crude Oil Benefits Margins
Access to Midland Crude Oil Benefits Margins WTI Midland vs. WTI Cushing Crude Oil Pricing ($ per barrel) $2.00 $0.00 ($2.00) ($4.00) ($6.00) ($8.00) Approx. 207,000 ($10.00) bpd of Midland crude oil in DK ($12.00) system ($14.00) Jul-17 Jul-16 Jul-15 Jul-14 Jul-13 Jul-12 Jul-11 Jan-18 Jan-17 Jan-16
Slide 32: U.S. Refining Environment Trends
U.S. Refining Environment Trends Refined Product Margins and WTI-Linked Feedstock Favor Delek US Brent-WTI Cushing Spread Per Barrel (1) WTI 5-3-2 Gulf Coast Crack Spread Per Barrel(2) LLS 5-3-2 Gulf Coast Crack Spread Per Barrel (2) $50 $40 $30 $20 $10 $0 -$10 -$20 -$30 Jul-10 Jul-11 Jul-12 Jul-13
Slide 33: Krotz Springs Alkylation Project
Krotz Springs Alkylation Project Expected annual EBITDA $35 to $40 million; Target completion in 1Q19 • Alkylation unit with 6,000 bpd capacity Change in Yields, in 000 bpd • Approx. $103.0 million estimated capital costs with $42.0 million spent as of March 31, 2018 Gasoline Diesel/Jet Heavy Oils O
Slide 34: Non GAAP Reconciliations of Potential Alky Unit EBITDA
Non GAAP Reconciliations of Potential Alky Unit EBITDA (1) Reconciliation of Forecast U.S. GAAP Net Income (Loss) to Forecast Forecasted EBITDA for Alkylation Project Range Forecasted Net Income $ 17.8 $ 21.0 Add: Interest Expense, net — — Income tax expense 10.3 12.1 Depreciation and amortization 6
Slide 35: Non GAAP Reconciliations of Krotz Springs Potential Dropdown EBITDA
Non GAAP Reconciliations of Krotz Springs Potential Dropdown EBITDA (1) (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 E
Slide 36: Non GAAP Reconciliations of EBITDA
Non GAAP Reconciliations of EBITDA (1) (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 multiples f
Slide 37: DKL: Reconciliation of Cash Available for Distribution
DKL: Reconciliation of Cash Available for Distribution (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 ex
Slide 38: DKL: Income Statement and Non-GAAP EBITDA Reconciliation
DKL: Income Statement and Non-GAAP EBITDA Reconciliation (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 comm
Slide 39: 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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