Delek Us Holdings, Inc. · NYSE:DK

Delek Us — Investor Presentation (September 2020)

44 slides from Delek Us's investor presentation, September 2020

  1. Slide 1: Delek US Holdings, Inc. Investor Presentation

    Delek US Holdings, Inc. Investor Presentation September 2020

  2. 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

  3. Slide 3: Investment Overview (NYSE: DK)

    Investment Investment Overview Overview(NYSE: (NYSE: DK) DK) • June 30, 2020 balance sheet: Flexible Financial Position to • Delek US: approx. $849 million of cash; $2.4 billion of debt Support Midstream Growth • Includes $16.0 million cash and $995 million debt of DKL • Net debt (excl. DKL) of $627

  4. Slide 4: Integrated Company with Asset Diversity and Scale

    Integrated Company with Asset Diversity and Scale Strategically located assets with growing crude oil optionality Source 207,000 bpd from Permian Basin Access to Cushing; 35,000 bpd • Growing gathering system increasing to 100,000 bpd second half • Wink to Webster JV Crude oil 2020 Pipeline CADDO RI

  5. Slide 5: Long History of Opportunistic Acquisitions & Value Creation

    Long History of Opportunistic Acquisitions & Value Creation Being Nimble and Capturing Market Dislocations / Opportunities DKL Joint Ventures Increased Gathering RIO Pipeline East and West Texas Caddo Pipeline 2011 SALA Gathering Lion Oil acquisition 2019 2013 2014 2015 2018 2005 2011 2012 2017 New

  6. Slide 6: Environmental, Social, and Governance (ESG)

    Environmental, Social, and Governance (ESG) Environmental Social Governance  DK owns 3 biodiesel facilities with ~40mm  We are committed to our employees, the  DK’s governance structure reflects our gallons of annual biodiesel production environment and communities in which we commitment to serve

  7. Slide 7: DKL Relative to Peer Group

    DKL Relative to Peer Group Where It is and Where It is Going 2Q20 Distribution Coverage Yr/Yr Distribution Growth Achieved distribution coverage target range of 1.4x to 1.5x by 5.9% 3.0% 1.5% 1.1% the end of 2020 in second quarter 2020. 0.0% DKL MPLX MMP EPD PSXP PBFX HEP PAA -41.7% 2.16x 2.00x 1.67

  8. Slide 8: Midstream: Big Spring Gathering System

    Midstream: Big Spring Gathering System Gathering Helps Control Crude Oil Quality and Cost into Refineries  Getting closer to wellhead allows us to control crude quality and cost Big Spring Gathering System  Provides improvement in refining performance and cost structure  Drop down to DKL complete

  9. Slide 9: Midstream: Wink to Webster Crude Oil Long Haul Pipeline Joint Venture

    Midstream: Wink to Webster Crude Oil Long Haul Pipeline Joint Venture Complements Gathering – Provides Access to Gulf Coast Markets Wink to Webster Pipeline JV  650-mile 36-inch diameter crude oil pipeline  Wink to Webster Pipeline LLC – Exxon, Plains, MPLX, Delek US, Rattler Midstream, Lotus Mids

  10. Slide 10: Midstream: Red River Pipeline Joint Venture

    Midstream: Red River Pipeline Joint Venture Red River Pipeline JV  DKL purchased 33% interest in May 2019  Planned expansion from 150 kbpd to 235 kbpd  Approx. $128.0 million initial investment; Financed with revolver  Expected completion in second half of 2020  DKL will contribute $20.0 millio

  11. Slide 11: Midstream: Utilizing Free Cash Flow & Strong Balance Sheet to Fund Growth

    Midstream: UtilizingFree Midstream: Utilizing Free Cash Cash Flow Flow & Strong & Strong Balance Balance Sheet Sheet to Fund to Fund Growth Growth Supports goal to generate approximately $370 million to $395 million of annualized midstream adjusted EBITDA by ’23 Supports goal to generate approximate

  12. Slide 12: Transforming to More Diversified Adjusted EBITDA

    Transforming to More Diversified Adjusted EBITDA 2019 Adjusted EBITDA (1) -25%  Midstream to comprise increasing % of future adjusted EBITDA 26%  More stable revenue stream 93%  Higher multiple business 6%  Refining contribution supported by operating Refining Retail Midstream Corporate, Other a

  13. Slide 13: Previous Organic Capital Spend Drives Future EBITDA

    Previous Organic Capital Spend Drives Future EBITDA Growth Capital Diversifies EBITDA Base Divested Underperforming Assets Adjusted EBITDA ($mm)  ’18 divested Paramount, CA/AltAir Renewables, West Coast Asphalt terminals, Long Beach, CA  (collectively removed ~$35mm of annual carrying costs - base

  14. Slide 14: Retail: Diversifies Delek

    Retail: Diversifies Delek DK Advantage and Footprint  ~80% integration with existing downstream operations offering synergies and competitive advantage  Operate approximately 253 C-stores in Central and West Texas and New Mexico Ongoing Strategy  Divesting underperforming stores  Rebrand 7-Eleve

  15. Slide 15: Renewables: Biodiesel Facilities

    Renewables: Biodiesel Facilities Estimated Carbon Saved by producing Lower Carbon Intensity Fuel (1) 3 Biodiesel Facilities: ~40mm gallons of Annual Biodiesel Production Capacity ~1 Billion Crossett, AR Miles driven by an average passenger vehicle Cleburne, TX New Albany, MS : ~86,500 ~52 billion Pa

  16. Slide 16: PADD 3 Refining System with Crude Slate Optionality

    PADD 3 Refining System with Crude Slate Optionality Tyler, Texas First Half 2020 • 75,000 bpd crude oil Tyler(1) throughput 7% Increasing Access to Cushing Crude Oil Grades, bpd • 8.7 complexity WTI 100% • Light crude oil refinery Crude Current 1st Half 2020 WTI Throughput Crude Oil ETX • Permian Ba

  17. Slide 17: Niche Market = Margin Strength

    Niche Market = Margin Strength Permian Centric Assets Offer Advantaged Access Transportation economics should set the differential Long-Term Indication of Permian/Brent Export Economics (1)  Barrels need incentive to clear the market $10.00  The “incremental barrel” must be exported  Permian shou

  18. Slide 18: Long-Term Capital Allocation Framework

    Long-Term Capital Allocation Framework Four pillars underpinned by a rigorous and disciplined capital allocation program to create long-term value Priorities: • Invest: Capital allocation program focuses on safety, maintenance, and reliability as top priority • Dividends: Maintain a competitive, com

  19. Slide 19: Capital Allocation – Balanced & Flexible

    Capital Allocation – Balanced & Flexible  2020 includes the following projects:  CAPEX expected to decline approximately  Big Spring Turnaround  23% from original 2020 forecast  Completed in early March 2020  42% from 2019 actuals  Spent 81% of full-year budget in First Half 2020  Does not i

  20. Slide 20: Capital Allocation Discipline

    Capital Allocation Discipline Cash Balance & Net Debt (DK Ex. DKL)(1) Maintaining a Strong Balance Sheet $1,128 $1,090 $1,079 $984 $1,000 $946 $950  Should support ability to invest in the business and $833 $781 return cash to shareholders $627  Provides ability to act quickly to take advantage of

  21. Slide 21: Capital Allocation Discipline in Practice

    Capital Allocation Discipline in Practice Cash Returned to Shareholders Delek US Cash Returned(1) 2019 Cash Returned to Shareholders as % of Market Cap(2) 12% 11% 10% 9% 9% 8% 8% 7% $157.9 6% 6% $92.1 4% 4% $58.6 $46.20 $43.0 $30.3 2% $1.9 $21.5 $21.8 $22.5 $23.1 $22.9 $21.0 $20.9 $21.00 0% PBF VLO

  22. Slide 22: Market Opportunities & Valuation

    Market Opportunities & Valuation

  23. Slide 23: Peer Leading Light Products Yield

    Peer Leading Light Products Yield Delek US positioned to benefit with high value product yields and crude oil slate flexibility  Refining system product yields  Middle distillate: average approx. 108 mbpd of distillate 2Q20 Refiners’ Middle Distillates Yield % (1) (2) (3) or 39 million barrels ann

  24. Slide 24: Valuation Opportunity

    Valuation Opportunity Partial Segment Sum of Parts Midstream DKL Units Held Market Value  IDR valuation fully recognized in DKL ownership (2) 32.26 34.75 $1,121  DK owns 34.7mm units Retail EBITDA Multiple '23E Estimated EBITDA ($mm) (1) $45.00 10.0x 12.0x  Retail easily underpinned by tangible p

  25. Slide 25: Permian Focused Refining System with Increasing Access to Cushing

    An Integrated and Financial Flexibility to Diversified Refining, Support Strategic Logistics and Retail Company Objectives Permian Focused Invest in the Business to Refining System with Focus on Long-Term Operate Reliably and Increasing Access to Shareholder Returns Safely Cushing Growing Midstream

  26. Slide 26: Appendix

    Appendix

  27. Slide 27: 2Q20 Cash Flows

    2Q20 Cash Flows  Strong financial position with over $849 million of cash on the balance sheet  Cash flow from operating activities of approx. $194 million  Working capital decreased cash flow by approx. $363 million  $130 million of income tax receivables  $35 million of SPR Inventory  Total

  28. Slide 28: 3Q20 Guidance Range

    3Q20 Guidance Range 3Q20 Guidance Range Low High Consolidated Operating Expenses, $ in millions $145.0 $155.0 Consolidated G&A, $ in millions $57.0 $63.0 Consolidated Depreciation and Amort., $ in millions $60.0 $63.0 Net interest expense, $ in millions $28.0 $30.0 Total Crude Throughput 230,000 250

  29. Slide 29: Summary Organizational Structure

    Summary Organizational Structure • Eliminated incentive distribution rights (IDRs) • General partner (GP) converted to non-economic interest • Transaction: 14 million newly issued DKL common limited partner units and $45 million in cash during August 2020. Delek US Holdings, Inc. Delek Logistics GP,

  30. Slide 30: Market Data

    Market Data

  31. Slide 31: WTI Midland vs. WTI Cushing Crude Oil Pricing

    ($ per barrel) $0.00 $2.00 ($8.00) ($6.00) ($4.00) ($2.00) ($18.00) ($16.00) ($14.00) ($12.00) ($10.00) Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 1) Source: Argus – as of August 25, 2020 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 S

  32. Slide 32: Crack Spreads: (+/-) Contango/Backwardation

    -$30 -$20 -$10 $0 $10 $20 $40 $50 $30 Jan-10 2) 1) Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Crack Spreads: (+/-) Contango/Backwardation Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Brent-WTI Cushing Spread Per Barrel Mar-13 (1) May-13 Source: Platts and NYMEX

  33. Slide 33: Reconciliations

    Reconciliations

  34. Slide 34: Non-GAAP Reconciliation of Alkylation Project EBITDA

    Non-GAAP Reconciliation of Alkylation Project EBITDA(1) Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Alkylation Project ($ in millions) Annual Amount Forecasted Incremental Net Income $ 33.2 Add Forecasted Incremental Amounts for: Interest Exp

  35. Slide 35: Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA

    Non-GAAP Reconciliation of Krotz Springs Potential Dropdown EBITDA(1) Krotz Springs Logistics Drop Down Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA ($ in millions) Forecasted Range Forecasted Incremental Net Income $ 2.9 $ 3.3 Add Forecasted Incr

  36. Slide 36: Non-GAAP Reconciliations of Adjusted EBITDA

    Non-GAAP Reconciliations of Adjusted EBITDA 36

  37. Slide 37: DKL Distribution and Leverage Ratio

    DKL Distribution and Leverage Ratio Distribution per unit has increased twenty-nine consecutive times since the IPO $0.385 $0.395 $0.405 $0.415 $0.425 $0.475 $0.490 $0.510 $0.530 $0.550 $0.570 $0.590 $0.610 $0.630 $0.655 $0.680 $0.690 $0.705 $0.715 $0.725 $0.750 $0.770 $0.790 $0.810 $0.820 $0.850 $0

  38. Slide 38: DKL: Reconciliation of Distributable Cash Flow

    DKL: Reconciliation of Distributable Cash Flow (dollars in millions, except coverage) 42013 (2) 1Q14 (2) 2Q14(2) 3Q14(2) 4Q14(2) 2014 (2) 1Q15(2) 2Q15 3Q15 4Q15 2015 (2)(3) 1Q16 2Q16 3Q16 4Q16 2016 (3) Reconciliation of Distributable Cash Flow to net cash from operating activities Net cash provided

  39. Slide 39: DKL: Income Statement and Non-GAAP EBITDA Reconciliation

    DKL: Income Statement and Non-GAAP EBITDA Reconciliation 4 (1) (1) (1) (2) (2) Q2013 1Q14 2Q14 3Q14 4Q14 2014 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 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 $124.7 $448.1 Cost of Sales (8

  40. Slide 40: Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA

    Non-GAAP Reconciliation of Increased Paline Pipeline Tariff EBITDA(1) Reconciliation of Forecast Incremental U.S. GAAP Net Income (Loss) to Forecast Incremental EBITDA for Paline Pipeline Tariff Increase ($ in millions) Annual Monthly Forecasted Incremental Net Income $ 10.8 $ 0.9 Add Forecasted Inc

  41. Slide 41: Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA

    Non-GAAP Reconciliation of Red River Joint Venture Adjusted EBITDA (1) Delek Logistics Partners, LP Reconciliation of Forecasted Incremental Annualized Net Income to Forecasted Incremental Annualized Adjusted EBITDA for the Red River Pipeline Joint Venture ($ in millions) Pre-Expansion Range Post-Ex

  42. Slide 42: Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA

    Non-GAAP Reconciliations of Big Spring Gathering System Forecasted EBITDA 42

  43. Slide 43: Non-GAAP Reconciliations of Trucking Assets Forecasted EBITDA

    Non-GAAP Reconciliations of Trucking Assets Forecasted EBITDA 43

  44. Slide 44: Investor Relations Contacts

    Investor Relations Contacts: Blake Fernandez, SVP IR/Market Intelligence 615-224-1312

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