Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Cowen and Company Energy Conference 2015
34 slides from Delek Us's conference presentation, Nov 30, 2015
Slide 1: Investor Presentation Delek US Holdings
Investor Presentation Delek US Holdings Cowen and Company Energy Conference December 1, 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
REFINING 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 cur
Slide 4: Delek US Investment Highlights
Delek US Investment Highlights 4 • Crude nameplate capacity increased by 15 kbpd to 155 kpbd • Turnarounds completed and FCC reactors replaced at both refineries • Declining capital expenditure needs; No scheduled turnarounds until 2019/2020 Refining Increased capacity and improved flexibility • Ach
Slide 5: Alon USA Investment
5 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 6: Refining Segment Operational Update
Refining Segment Operational Update
Slide 7: Refineries Serve Local Niche Markets
Supports High Refining Utilization Refineries Serve Local Niche Markets 7 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 2Q 1 5 3Q 1 5 Delek Logistics Partners terminals support refining system: Tyler primarily serves a 60-80 mile radius El Dorad
Slide 8: Increased Access to Cost Advantaged Crude
Approximately 80% of crude slate consists of Midland and local crude supply Increased Access to Cost Advantaged Crude 8 45.0 45.0 87.0 103.0 17.2 17.9 18.6 18.0 0 50 100 150 200 2012 2013 2014 2015-3Q In 0 0 0 b p d Midland Local Crude Throughput Capacity $(3.31) $(2.71) $(6.11) $(2.64) $(2.38) $0.1
Slide 9: Refining Capital Investment Program Improved Operations
Increased crude throughput capacity and operating flexibility Refining Capital Investment Program Improved Operations 9 Large investment cycle in refining now completed Projects completed during 2014 and 2015 included: Turnarounds completed at both refineries Improved crude oil processing fl
Slide 10: Tyler Refinery Overview
Tyler Refinery Overview 10 Overview Niche market generally priced above Gulf Coast; supported by Delek Logistics' terminals Crude slate consists of approx. 65 kbpd Midland sourced crude; plus east Texas and Cushing crudes Completed turnaround in March 2015; FCC reactor replaced; next schedul
Slide 11: El Dorado Refinery Overview
80,000 bpd refinery with crude slate flexibility to process light and medium gravity crudes El Dorado Refinery Overview 11 Overview Inland PADD III refinery located in Southern Arkansas Flexible crude sourcing Midland, local Arkansas, east Texas Rail offloading capability Mid Valley and
Slide 12: Logistics Operational Update
Logistics Operational Update
Slide 13: Strategic Partner in Delek Logistics Partners, LP
Strategic Partner in Delek Logistics Partners, LP (NYSE: DKL) 13 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 14: DKL: Joint Venture Pipeline Projects
DKL: Joint Venture Pipeline Projects 14 Caddo Pipeline ■ DKL (50%)/Plains (50%) ■ Est. total cost: $109 million (1) ■ Capacity: 80,000 bpd ■ Length: 80 miles ■ Expected Completion: Second half 2016 Rio Pipeline ■ Rangeland (67%)/ DKL (33%) ■ Est. total cost: $125 million (1) ■ Capacity: 55,000 bpd ■
Slide 15: DKL: Potential EBITDA Growth
DKL: Potential EBITDA Growth (1) 15 (1) Information provided in Delek Logistics Partners, LP (NYSE: DKL) RBC November 2015 investor presentation available at www.deleklogistics.com. 3Q2015 EBITDA based on LTM information provided in that presentation. Please see public filings with the Securities an
Slide 16: Increased Distribution with Conservative Coverage and Leverage
Increased Distribution with Conservative Coverage and Leverage 16 Distribution has been increased eleven 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 $0.570 - 0.200 0.400 0.600 MQD (1) 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q1
Slide 17: Marginal Percentage Interest in Distributions
17 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 18: Retail Operational Update
Retail Operational Update
Slide 19: Retail Locations Create Synergies for Product Marketing
Fuel Gallons Sold Per Store (000’s) 1,039 1,082 1,112 1,204 893 952 2011 2012 2013 2014 YTD 3Q14 YTD 3Q15 951 1,011 1,037 1,106 829 875 2011 2012 2013 2014 YTD 3Q14 YTD 3Q15 Retail Locations Create Synergies for Product Marketing 19 Expanding Market Footprint in Markets Capable of Being Supplied by
Slide 20: Focused on Organic Growth
Focused on Organic Growth 20 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 21: Financial Update
Financial Update
Slide 22: Financial Highlights
Financial Highlights $164 $151 $130 $445 $655 $439 $610 $430 2008 2009 2010 2011 2012 2013 2014 2015 LTM At Sept. 30, 2015 Cash of $366.3 million; Debt of $953.7 million Includes $325.2 million of debt at Delek Logistics (DKL) Excluding DKL, Delek US’ net debt position was approximately $262
Slide 23: Declining Capital Needs Expected after 2014
Increases potential free cash flow generation from operations $18.8 $74.9 $61.6 $82.9 $155.1 $42.3 $36.0 $46.1 $136.7 $201.1 $172.4 $0.2 $0.3 $0.9 $0.5 $0.9 $30.3 $12.7 $7.2 $16.8 $10.4 $21.4 $23.3 $18.6 $14.3 $14.4 $36.5 $29.1 $37.9 $26.2 $19.6 $2.0 $0.1 $0.1 $7.6 $26.5 $35.0 $22.4 $18.3 $110.0 200
Slide 24: Delek US Capital Allocation Program
Delek US Capital Allocation Program 24 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 • Additional interest in Alon USA • Acquired 48%
Slide 25: Limited Value Attributed to Delek US Refining Assets
Limited Value Attributed to Delek US Refining Assets in Current Environment 25 Creates attractive capital allocation opportunity Refining, $0.19 to $0.00 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: $27.63 X Share
Slide 26: 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 27: Questions and Answers
27 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 28: Appendix Additional Data
Appendix Additional Data
Slide 29: Summary Organization Structure
29 Summary Organization Structure (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 Nov. 24, 2015. 9
Slide 30: 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 31: Brent-WTI 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 32: Access to Midland Crudes Benefits Margins
($14.00) ($12.00) ($10.00) ($8.00) ($6.00) ($4.00) ($2.00) $0.00 $2.00 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 11 M ay -1 1 Ju n -1 1 Ju l-1 1 A u g- 1 1 Se p -1 1 O ct-1 1 N o v- 1 1 De c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 12 M ay -1 2 Ju n -1 2 Ju l-1 2 A u g- 1 2 Se p -1 2 O ct-1 2 N o v- 1 2
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation 33 Source: Company filings. ($ in millions) 2008 2009 2010 2011 2012 2013 2014 YTD 3Q14 YTD 3Q15 3Q15 LTM Net sales $4,723.7 $2,666.7 $3,755.6 $7,198.2 $8,726.7 $8,706.8 $8,324.3 $6,562.6 $4,397.9 $6,159.6 Cost of goods sold 4,308.1 2,394.1 3,412.9 6,429.9 7,704.4 7,880.7 7,3
Slide 34: Investor Relations Contact
Investor Relations Contact: Assi Ginzburg Keith Johnson Chief Financial Officer Vice President of Investor Relations 615-435-1452 615-435-1366
Delek US Holdings — Cowen and Company Energy Conference 2015 on 6ix