Delek US Q2 2025 Earnings Report

Delek US EPS Results

• Actual EPS: -$0.56
• Consensus EPS: -$0.92
• Beat/Miss: Beat by +$0.36
• One Year Ago EPS: -$0.92

Delek US Revenue Results

• Actual Revenue: $2.76 billion
• Expected Revenue: $2.68 billion
• Beat/Miss: Beat by +$81.63 million
• YoY Revenue Growth: -16.40%

Delek US Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 11:00AM ET

Delek US (NYSE:DK) engages in the integrated downstream energy business in the United States. The company operates through Refining, Logistics, and Retail segments. The Refining segment processes crude oil and other feedstock for the manufacture of various grades of gasoline, diesel fuel, aviation fuel, asphalt, and other petroleum-based products that are distributed through owned and third-party product terminal. It owns and operates refineries located in Tyler, Texas; El Dorado, Arkansas; Big Spring, Texas; and Krotz Springs, Louisiana, as well as biodiesel facilities in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi. The Logistics segment gathers, transports, and stores crude oil, intermediate, and refined products; and markets, distributes, transports, and stores refined products, as well as disposes and recycles water for third parties. It owns or leases crude oil transportation pipelines, refined product pipelines, crude oil gathering systems, and associated crude oil storage tanks; and owns and operates light product distribution terminals, as well as markets light products using third-party terminals. The Retail segment owns and leases convenience store sites located primarily in West Texas and New Mexico. Its convenience stores offer various grades of gasoline and diesel under the DK or Alon brand; and food products and service, tobacco products, non-alcoholic and alcoholic beverages, and general merchandise, as well as money orders to the public primarily under the 7-Eleven and DK or Alon brand names. It serves oil companies, independent refiners and marketers, jobbers, distributors, utility and transportation companies, government, and independent retail fuel operators. Delek US Holdings, Inc. was founded in 2001 and is headquartered in Brentwood, Tennessee.

Delek US Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delek raised its Enterprise Optimization Plan (EOP) guidance to $130 million–$170 million in run-rate annual savings starting H2, achieving the prior $120 million target one quarter early and realizing ~$30 million of benefits in Q2.
• Positive Sentiment: Refinery operations set a record throughput in Q2 across Big Spring, El Dorado, Tyler and Krotz Springs, driven by reliability investments and process efficiency improvements.
• Positive Sentiment: Delek Logistics (DKL) secured over $1 billion of liquidity via a high-yield offering, advanced economic separation from DK, and remains on track for 2025 EBITDA guidance of $480 million–$520 million as gathering volumes grow in key basins.
• Negative Sentiment: The company reported a GAAP net loss of $106 million (–$1.76/share) in Q2, although adjusted EBITDA increased to $170 million, underscoring residual volatility in earnings.
• Positive Sentiment: Management returned capital with $16 million in dividends and $13 million of share repurchases in Q2, reflecting a balanced approach to buybacks and debt management.

Presentation

[Operator]

Thank you for standing by. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek U. S. Second Quarter Earnings Call.

[Operator]

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Robert Wright, Deputy Chief Financial Officer. You may begin.

[Robert Wright, Senior VP & Deputy Chief Financial Officer at Delek US]

Good morning, and welcome to the Delek U. S. Second quarter earnings conference call. Participants joining me on today's call will include Albigail Sorek, President and CEO Joseph Israel, EVP Operations and Mark Hobbs, EVP and Chief Financial Officer. Today's presentation material can be found on the Investor Relations section of the Delek U.

[Robert Wright, Senior VP & Deputy Chief Financial Officer at Delek US]

S. Website. Slide two contains our Safe Harbor statement regarding forward looking comments. Any forward looking information shared during today's call will involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included here as well as within our SEC filings.

[Robert Wright, Senior VP & Deputy Chief Financial Officer at Delek US]

The company assumes no obligation to update any forward looking statements. I will now turn the call over to Abigail for opening remarks. Abigail?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Thank you, Robert. Good morning and thanks for joining us today. Delek continued on its transformational journey during the second quarter by making progress on several key strategic initiatives. We have made excellent progress on our enterprise optimization plan. Given the progress we have made so far, we are increasing our guidance on EOP to $130,000,000 to $170,000,000 on a run rate basis.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Some of the past efforts also continues to progress well. During the quarter, we completed our intercompany agreement, worked on raising liquidity at DKL and made great progress in increasing the economic separation between DK and DKL. As I always do, I will give an update on our key long term priorities in more detail. First, certain reliable operations. We have made further progress in improving the operations throughout our company and reported record throughput in the quarter.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

The Big Spring refinery had a strong quarter with a strong overall throughput and operational performance. We have continued to make reliability investment that will serve us well in the future. Tyler, El Dorado and Quezar also had a strong operations during the quarter. Eldorado has showed additional benefit from EOP improvements. With most of our capital projects complete in the first half of the year, we look forward to capture the advantage of our operational EOP and strategic progress during the remainder of the year and beyond.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Now, I would like to discuss the progress we have made on our EOP efforts. As a reminder, we started EOP with an aim to improve DK cash flow by 80,000,000 to $120,000,000 starting the 2025. We focus on improving overall free cash flow generation through this cycle. The basis of this COP improvement was further cost reduction, but more importantly, by making structural changes in the way we ran our company. These structural changes are tied to our cost base, the way we run our refineries, the way we buy our crude and the way we sell our products.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

During the quarter, we estimate approximately $30,000,000 of this EOP cash flow improvement have flowed through our P and L. As you can see, we have already achieved our prior target of $120,000,000 of run rate EOP benefits one quarter ahead of schedule. Today, we are further increasing our range of EOP improvements to $130,000,000 to $170,000,000 on a run rate basis starting the second half of this year. I'm extremely proud of the team for adapting a culture of continuous improvement. While there is still more work ahead, I like the direction we are heading.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We also continue to make progress towards our sum of the part goals. With the commissioning of DKL Libbey II plant and the completion of intercompany agreements, we are making great progress in making DK and DKL economically independent. During the quarter, we increased the financial liquidity at DKL through a very successful high yield offering. Post our intercompany agreements and the latest high yield offering with over $1,000,000,000 of liquidity at DKL. This financial flexibility will allow DKL to continue on its growth journey and complete the economic separation from DK.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

As I've highlighted in the past, DKL has a strong runway of growth in both Midland and Delaware basins. DKL is making great progress in developing its sour gas gathering and acid gas injection capabilities. These capabilities will provide DKL the ability to fully capitalize on all of its growth opportunities in the Delaware Basin. DKL is also having a lot of success increasing its crude gathering business both in the Midland and Delaware Basin. During the third quarter, we see a material increase in volumes in both Midland and Delaware systems.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Direct Logistics is on track to meet its 2025 EBITDA guidance of $480,000,000 to $520,000,000 We continue to work on additional steps to unlock the value of approximately $400,000,000 in third party EBITDA at DKL such that it's fully reflected in DK share price and DKL unit price. We'll complete the DKL sum of the parts in methodical manner that will create value for both DK shareholders and DKL unitholders. The final piece of our strategy is being a shareholder friendly and having a strong balance sheet. During the quarter, we paid approximately $16,000,000 in dividends and bought back approximately $13,000,000 of our shares. Our strong balance sheet, improved reliability and confidence in EOP has allowed us to continue the counter cyclical buyback in 2025. We remain committed to a disciplined and balanced approach to capital allocation. Now, I would like to make a comment about small refinery exemptions. As you know, SRE petitions are an important focus area for Delek as our pending petitions are worth more than our current market cap.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

The Supreme Court and the District Circuit Court have made it clear that the EPA must thoughtfully address this problem. We believe the EPA understands the issues small refiners like Delek faced in the absence of clear policy around SRE. As a reminder, since 2019, while our SRE petition has been pending, Delek has remained in full compliance. We are confident in a favorable outcome on our petitions based upon the principle laid in the RFS law, ruling from the D. C.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Circuit Court and the EPA understanding of the issues involved. In closing, I would like to thank our entire team for their hard work and dedication. We are optimistic about DK trajectory in the 2025 and beyond, with a strong momentum and promising opportunities on the horizon. I will now turn the call over to Joseph, who will provide additional color on our operations.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Thank you, Avigal. Second quarter operations performance was strong from safety, reliability and optimization standpoint. Starting with reliability, record throughput results were set in big spring, crop springs and for the entire system. With regards to optimization, our refining teams have been successful in the bulk making, improving liquid yield recovery, maximizing production value and optimizing sulfur and benzene balances. Process efficiency improvement is well reflected in our numbers.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Our realized refining margins increased by $0.96 per barrel compared to the 2024, despite an $0.18 per barrel decline in the benchmark net margin. Our commercial team has reworked contracts and optimized our new logistics to expand market optionality. Overall, we made good progress operationally and we are well positioned to meet or exceed our European goals. Starting with Tyler. Total throughput in the second quarter was 74,000 barrels per day.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Our production margin was $9.95 per barrel and operating expenses were $4.58 per barrel. For the third quarter, our estimated total throughput in Tyler is in the 73 to 77,000 barrels per day range. In El Dorado, total throughput in the second quarter was approximately 81,000 barrels per day. Our production margin was $5.21 per barrel and operating expenses were $4.38 per barrel. The El Dorado system is one of our top operational EOP priorities.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

In the second quarter, our estimated EOP impact on gross margin is $1.45 per barrel, which is in line with our approximately $2 per barrel run rate target. Planned throughput for the third quarter is in the 79,000 to 83,000 barrels per day range. In Big Spring, total throughput in the second quarter was approximately 76,000 barrels per day, reflecting our progress with people, process and equipment. Our production margin was $9.65 per barrel and operating expenses were $6.67 per barrel. In the third quarter, the estimated throughput is in the 69,000 to 72,000 barrels per day range.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

In Krotz Springs, we continue to demonstrate improved capacity capabilities since the major turnaround. Total throughput in the second quarter was approximately 85,000 barrels per day. Our production margin was $7.59 per barrel, and operating expenses in the quarter were $5.13 per barrel. Our planned throughput for the third quarter is in the 81,000 to 85,000 barrels per day range. Our implied system throughput target for the third quarter is in the 302,000 to 317,000 barrels per day range.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Moving on to the commercial front. In the second quarter, supply and marketing contributed a gain of $26,000,000 Of that, approximately $19,000,000 was generated by wholesale marketing. Asphalt contributed a gain of approximately $200,000 Both were positively impacted by seasonal trends and structural EOP improvements in our business. Approximately $7,000,000 gain was attributed to supply. In summary, we delivered strong performance in the second quarter, driven by operational excellence and strategic execution.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

We are well positioned to further enhance efficiency while upholding our commitment to safe and reliable operations. Mark will now address the financial variance.

[Mark Hobbs, EVP & CFO at Delek US]

Thank you, Joseph. Referring to Slide 16. For the second quarter, Delek had a net loss of $106,000,000 or negative $1.76 per share. Adjusted net loss was $33,000,000 or negative $0.56 per share and adjusted EBITDA was $170,200,000 On slide 18, the waterfall of adjusted EBITDA from the first quarter of twenty twenty five to the second quarter shows that there were two main drivers for the increase in EBITDA. First, a $141,000,000 increase in refining was primarily driven by a higher margin environment in the second quarter relative to the first quarter along with sequentially higher throughputs.

[Mark Hobbs, EVP & CFO at Delek US]

Second, in the logistics segment, we continue to have another strong quarter delivering approximately $120,000,000 in adjusted EBITDA, about a $4,000,000 increase over our previous record of quarterly adjusted EBITDA achieved in the first quarter. These improvements were mitigated by slightly higher cost in the corporate segment of $1,000,000 compared to the prior period. Moving to slide 19 to discuss cash flow. Cash flow provided by operations was $51,000,000 This includes our net loss for the period in addition to an inflow of approximately $51,000,000 of timing related working capital movements, which includes the impact of our inventory intermediation agreement as well as an outflow of $30,000,000 of restructuring and other one time charges. Investing activities of $163,000,000 includes approximately 115,000,000 for growth projects primarily at DKL.

[Mark Hobbs, EVP & CFO at Delek US]

Financing activities of $103,000,000 reflects $13,000,000 in share repurchases, approximately $16,000,000 in dividend payments and approximately $22,000,000 in DKL distribution payments to public unitholders. On slide 20, we show our actual progress under the 2025 capital program. Second quarter capital expenditures were $164,000,000 Approximately $119,000,000 of this spend was in the logistics segment. This includes the $115,000,000 in growth capital at DKL, of which $48,000,000 was associated with completing the Libbey II gas plant. Primarily all of the remaining capital spend during the quarter was in the refining segment, addressing planned sustaining capital initiatives.

[Mark Hobbs, EVP & CFO at Delek US]

Our DK refining and corporate capital spending outlook for 2025 remains consistent with prior guidance. Our net debt position is broken out between Delek and Delek Logistics on slide 21. Excluding Delek Logistics, we spent approximately $74,000,000 on cash return to shareholders and capital expenditures in the second quarter, while our Delek standalone net debt remained relatively flat around $275,000,000 at the end of the quarter. Moving now to slide 22 where we cover third quarter outlook items. In addition to the guidance Joseph provided, for the 2025, we expect operating expenses to be between two ten million and $225,000,000 Our operating expense guidance for the third quarter incorporates both higher expected throughput across our refining segment as well as increased operating expenses associated with the ramp up of our new Libbey II plant at DKL, G And A to be between 52,000,000 and $57,000,000 D and A is expected to be between 100,000,000 and $110,000,000 and net interest expense to be between 85,000,000 and $95,000,000 With that, we will now open the call for questions.

[Operator]

Thank you. The floor is now open for questions. Session. Your first question comes from the line of Doug Leggate of Wolfe Research. Your line is open.

[Keith Stanley, Director at Wolfe Research, LLC]

Hi. It's Luke Stanley, Charles Blair on for Doug Leggate this morning. He said he'd joining us at the time. So our first question is going to start with the SRE. You guys have definitely expressed some confidence around what looks to be a favorable outcome.

[Keith Stanley, Director at Wolfe Research, LLC]

I wanna know if you're kinda if your confidence has kinda picked up and increases us as we get closer to a final decision. And along with that, should you be granted the exemption? I guess I was trying to form or understand what what do you see as the best use of proceeds? And how could that allow DK to improve structurally on an operational level?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes, absolutely, Doug. Thank you for the question. Listen, we are very optimistic about the small refinery exemption. The law is in our side. The DC Circuit Court is in our side.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We are the only public refineries refiners that all of our assets can apply to small refinery exemption. We stay in full compliance during the last six years that our petition are pending. And as you can easily calculate, it's bigger than our market cap. So it's very clear around the economical harm that we're having because of that pending lingering issue. EP understand the issue, and we are confident in favorite outcome.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

With one comment about the last part of your question about what is deposit, I'm not going to comment around it, but I'm sure the EPA understand that it cannot compensate someone that stay in compliance and we were in compliance. So I hope that that comment makes a lot of sense to you.

[Keith Stanley, Director at Wolfe Research, LLC]

Sure. Thank you. And, my my follow-up is going to be around EOP. Of course, you kind of talked about this last quarter where it looks like there was some definitely opportunity to revise to the upside, and that that definitely can tended to be the cases in this quarter. So my question is, I mean, I guess I'll ask again, is there any continued room to the upside and some opportunities there?

[Keith Stanley, Director at Wolfe Research, LLC]

What were the drivers that you guys were able to identify that moved the guide forward? And last part of that question is where do you see sustaining capital for refining now at the should you be able to execute on this target of between 130,000,000 and $170,000,000

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes, Doug, that's a very nice answer for you to ask that question because we are extremely proud of the EOP focus and the momentum we have here in our shop. EOP is not a project, it's a lifestyle. And when I'm saying it's a lifestyle, we have a weekly meeting about that. We have a T3 project. We have are auditing that internal audit, external audit and have accounting look over that.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

So it's a very tight process that allows everyone to take a part and contributing for that. The all essence of EOP is free cash flow and below mid cycle and reduce our breakeven. And we are very proud of that. As you probably saw on our press release and also on my prepared remarks, we increased the guidance of EOP to 120 prior to this call to 130 to 170. And the reason that we were one quarter ahead of time and we see more projects coming in the queues for that EOP.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

So we are extremely optimistic and see a lot of value in it. Mohit, do you want to chime in?

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yeah. Thanks, Abigail. So all I would say on EOP, as Abigail just mentioned, is a free cash flow improvement exercise for the company. If you look at the second quarter, dollars 30,000,000 flowed through our financials. And that, you know, allows us to have a $120,000,000 run rate.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

And I just want to remind everybody that we started with the 80 to a $120,000,000 guidance. Now to your specific question around where is this improvement or higher confidence in a higher rate is coming from? So if you'll if you if you remember, the $120,000,000 had two components to it. One was cost, and the other one was margin. And our confidence in our margin improvement is increasing, and that is where most of the increase has come from.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

So if you look at the $150,000,000 at the midpoint of the enhanced increased guidance that we have provided today.

[Operator]

Thank you. Your next question comes from the line of Alexa Petrik of Goldman Sachs. Your line is open.

[Alexa Petrick, Investment Research Analyst at Goldman Sachs]

Hey. Good morning, team, and thank you for taking our question. Wanted to ask, there's been great progress in EOP free cash flow generation. How do we then think about the allocation of that cash? Can you remind us of your strategy there?

[Alexa Petrick, Investment Research Analyst at Goldman Sachs]

How you're balancing between capital returns and balance sheet efforts?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes. Absolutely, Alexa. Thank you for that question. We are very consistent with our capital allocation program. You can see that, first of all, we said that we're going to maintain dividend toward the cycle.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We can definitely check that box very nicely. Then we said that we have a balanced approach between balance sheet and the buyback. We have done that as well. So we are very consistent and confident around those abilities. We have done buyback in Q1 counter cyclical.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We've done buyback Q2. We have done buyback Q3. As we see you can see in the last twelve months, we have more of around $150,000,000 of total return to shareholder and we are number one versus in our peers around return to investors in terms of capital return to investors. So we are very proud and consistent about the way we look at capital and we plan to maintain it. So thank you for that question.

[Alexa Petrick, Investment Research Analyst at Goldman Sachs]

Okay, great. Thank you. And then maybe just as a follow-up, I know it's a bit early, but how is Q3 shaping up? What demand trends are you seeing? What's your view for crew differentials going forward? Any thoughts around the quarter ahead would be great.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yeah, absolutely. We just seen a DOE, I think, like fifty four minutes ago, and we see still a positive trend in terms of diesel. Diesel, it's in five years low, and we see a decent demand on diesel and gasoline. Gasoline had a draw of 1.2, you saw that as well. So in terms of inventory, we're in a good shape.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

In terms of supply, we've seen more closer than we actually expected even in the last couple of weeks shaking out to around 900,000,000 during 2025, which balance the openings that we have seen, but doesn't compensate for increasing demand. So when we are putting all of that together, we see a pretty structural constructive market ahead of us in the short term and also in the midterm, all the way probably until the end of the decade. We do not see the demand of gasoline and diesel coming off as people first fit. Mohit, do you want to chime in?

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yes. Vikal, I just want to add, Alexa, if you look at where, pad two specific inventories are, we've seen pad to split distillate inventories are way below their five year averages, which is a very relevant, metric for us. If you look at the utilization in fact, it has been very, very high. So despite very high utilization, we see inventories remaining low, and we expect demand to pick up as the ag season starts. And you would also see some turnarounds going forward. So as far as bad to specific inventories are concerned, I think the outlook remains very optimistic, especially on the diesel side.

[Operator]

Your next question comes from the line of Matthew Blair of PTH. Your line is open.

[Matthew Blair, MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co]

Thank you and good morning. You mentioned some of the positive drivers in supply and marketing in Q2. I think the wholesale side in particular was quite strong. Could you talk about how supply and marketing is trending so far in the third quarter? And do you think a positive EBITDA contribution is likely in Q3? Thank you.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Thank you, Matt. Thank you for that question. Obviously, the line of supply and marketing, it's part of the EOP effort. We have improved that as with a better logistics around it. We got the gain market access to new market and we made a long term contract that allow us to over time make that line better and better.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

So we obviously enjoying that. We have some seasonal helping us in Q2 and we are extremely optimistic about the way the market are positioning. And I don't Mohit, if you want to chime in and give some more color specifically.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

No. I think, Abhigal, you're right. And, Matt, if you look at our overall commercial strategy, DKTS or our what we call DK Trading and Supply, which is the line item that you're talking about, our commercial strategy is flowing through. But during the quarter, as you know, q two and q three are also seasonally stronger. So, you know, we did get some help from the market.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

But Abhigal rightly described our strategy as far as our commercial operations are concerned. As we have said in the past, this has three components to it. First is wholesale, second is asphalt, and third is supply. And we are making sure all three businesses, the ones that we can control, the parts of these three businesses that we can control, are doing better through, contract renegotiations to improve markets, to enhanced market access, and and and through our refineries making new products that we can sell in these markets through this refined enhanced market access. And these results are showing through, and and we we look forward to continue doing improving this business and going forward.

[Matthew Blair, MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co]

Sounds good. And then just on the some of the parts monetization, you know, slide 12 lists some various avenues and and options for you. What do you think are are, like, the more likely options, and what are the less likely options? And then as far as timing, do you think investors can expect or hope for an economic separation of DKL by the 2025? Or is that looking more likely 2026 or even later? Thank you.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yeah. So that's that's another great great question for us. We are working on steps of some of the parts as we speak. So we are not standing still even for one second and more to come and I will leave it to that. With that said, I can we can just take a one step back and say what we did in the last twelve months, right?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

The last twelve months we saw retail allow us to maintain strong balance sheet and to do counter cyclical buyback. On the midstream side, we make making BKL economically independent, grew the EBITDA from below 400,000,000 to $500,000,000 of EBITDA 2025 guidance midpoint, increased third party business from 40% to 80%, which is a huge achievement. I don't think that many companies like us have done that in the past. It is said that while we are doing all of that, we reduced our ownership from 79 to the low 60, but increased the distribution DK gets. So that's another thing we are very, very proud of.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

In the end of the day, we see that there is not many midsized midstream company left, which give a lot of merit for DKL and we see the opportunities flowing to us as we speak. On the intrinsic value, another very important point to watch is what is the intrinsic value of the assets in DKL. We have just seen the Medallion system sold in a very good multiply. It's a sister system to our DPG that what we mentioned we see volume going up in the prepared remarks. And we have signed we've just seen last week, Northwind sold for also a very nice multiply as well, and that's a sister system to our DGG.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

So going forward, we've we've said many, many times in the past before for outlet outlet that we have to complete some of the part. We are doing that as we speak and more to come. Thank you for that question.

[Operator]

Your next question comes from the line of Joe Lache of Morgan Stanley. Your line is open.

[Joe Laetsch, Executive Director - Energy Equity Research at Morgan Stanley]

Hey, good morning and thanks for taking my questions. So I wanted to ask a couple on the refining side. And Big Spring, you mentioned it had record throughput and capture rates also look like they're pretty strong there as well. Could you talk to what you're seeing from that asset post the turnaround in the first quarter? And then as part of that, could you also talk to the path to achieving the I think it was $5.5 per barrel OpEx goal at that refinery?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes, absolutely. So thank you for the question. I'm extremely proud of the Big Spring progress we have done, throughput and margin. And I will let Joseph that is very close to it take the credit here.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Yes. Big Spring has been on a very positive journey as you all know. We focused first on the risk mitigation and reliability with very good results. Going from 2023 to 2024, to remind you, throughput increased by 10% and the favorable trends continue in 2025 with a record high throughput here in the second quarter. So safe and reliable operations really allow us to focus now on process efficiency and commercial optimization.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

And to be more specific, maximizing liquid yield recovery and product value. In Big Spring, we really mainly going after the high octane, Arizona specs, type of gasoline and improving a asphaltaic grades. We also optimize benzene and sulfur balances. All of that is very visible in our gross margin improvement. So considering the leadership team capabilities and execution thus far, we are very bullish about the plan for the outlook.

[Joe Laetsch, Executive Director - Energy Equity Research at Morgan Stanley]

Great. Thanks. That's helpful. And then shifting to Eldorado, it had a nice step up quarter over quarter in capture rates. From a throughput margin perspective, it still lags some of the other refineries within the system.

[Joe Laetsch, Executive Director - Energy Equity Research at Morgan Stanley]

Could you expand a bit on on slide nine, which shows margin improvements? And then between logistics cost improvements and product yields, where are you in that improvement process? And is is there more to go there?

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

Hey. It's very similar to the Big Springs story as far as EOP and structural improvements. It's all about liquid yield recovery and product value. In El Dorado, we are going after the jet fuel, which is a new product over there. High octane gasoline component after replacing couple of units, say catalyst, and really premium asphalt is a big deal for El Dorado.

[Joseph Israel, EVP, President of Refining & Renewables at Delek US]

So we're expecting the strength to continue, and we like the outlook of the plant.

[Operator]

Your next question comes from the line of Jean Ann Salisbury of Bank of America. Your line is open.

[Jean Ann Salisbury, Managing Director at Bank of America]

Hi, good morning. I wanted to ask about the net crack metric that I think is new here, and how it's constructed, and if that's a metric that you'll continue to track yourselves against.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yeah. Absolutely. Mohit, do wanna take it?

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yeah. Jean Ann, thanks for the question. So the way we define a net crack and, we can obviously talk offline as well. But, you know, the way we define a net crack is, you know, take Gulf Coast five three two on a WTI basis, and we take out RVO, and we take out, you know, backwardation, the CMA impact on it. And we also take out Millen Cushing to get to our net margin number, which is the right way to look at our business because we are a completely inland refiner, and, we are run mostly TI exposed groups.

[Jean Ann Salisbury, Managing Director at Bank of America]

Perfect. Thank you. And then I kinda wanted to go back to, a a comment that was made earlier. But, do you think that the recent sale of Northwind is a good read across to your assets, especially the AGI capability that you're building? And I guess on that, do you think that once you have the AGI capability up and running, that's kind of what it takes to make it attractive for sale?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes. So as we said many times in the past, all options are on the table and we are very much committed to make sure that our unit holder and shareholder get the full value for the HIF. Obviously, we are working very hard in order to complete all of that and maximizing the value over there, but that's just show the investor the full potential in our asset. So it's a it's a having always your neighbors selling a high pass is a good it's a good thing if you are living next door next door, and we were very happy about it. Mohit, do wanna add the chime in?

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yeah. Jean, and and I know that you understand the midstream business well. So I'll just say this that, you know, as far as Northwind is concerned, Northwind is primarily a treating operation. We have a much more comprehensive operation in our, DKL, which includes, gathering, treating, processing. So, you know, we have a much more comprehensive, you know, full suite product over there as far as gas is concerned.

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

So we think it's a very good benchmark, but we also have a better business.

[Operator]

Your next question comes from the line of Jason Gabelman of TD Cowen. Your line is open.

[Jason Gabelman, MD - Energy Equity Research at TD Cowen]

Yes, hey, good morning. Thanks for taking my questions. I wanted to first go back to the EOP program and I'm just trying to understand a couple of things. One, how much was actually reflected in 2Q results? I know you kind of referenced a run rate exiting the quarter, but wondering how much on a gross basis was kind of realized in 2Q?

[Jason Gabelman, MD - Energy Equity Research at TD Cowen]

And then how should we think about the amount of the margin capture uplift that's captured in the supply line versus the site unit margins that you referenced? Or should we think about that kind of moving back and forth depending on how the environment shapes up?

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes. Thank you. That's a very nice question of you. Obviously, EOP, we said it very clearly in order to make it easier for everyone, the $30,000,000 benchmark and we're very proud of the progress we are doing. As you well know, Jason, that pretty much agnostic to market, the $30,000,000 we outlined it.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

We obviously add a one slide to make it easier for one to calculate on a similar market environment. You can easily see that in our in our presentation. So that's even make it easier to calculate how how that flows through and that's a very, very simple way on a very similar market environment to see the improvement. On the capture rate and on trading trading and supply and obviously the other part of the business. Other part of the business, very easy to see the G and A.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

You see that we are in the low fifties versus low sixties in 2024. I think that answer most of the questions, if you have anything, Mohit, you wanna chime in. So please

[Mohit Bhardwaj, EVP - Strategy, Business Development & IR at Delek US]

Yeah. I I think, Abhayal, I'll just reiterate what you said. So, Jason, for the second quarter, $30,000,000 were actually included in our financials. So the entire $30,000,000 flowed through it, through our second quarter financials. And as Joseph mentioned, 10,000,000 off that was at El Dorado, and rest was distributed between our, DKTS, the trading and supply line item, and the cost improvements that we have made.

[Jason Gabelman, MD - Energy Equity Research at TD Cowen]

Okay. Yep. Got it. That's that's clear. And then my follow-up is hopefully a quick one just on financing cash flows, which were a benefit in the quarter.

[Jason Gabelman, MD - Energy Equity Research at TD Cowen]

You you you referenced a a number of outflows from that bucket, but wondering what contributed to the net inflow from the financing cash flow line item.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes. So, Jason, in reality, what the the story here is very simple. EOP is all about improving free cash flow, and that's a very, very important part in our equation. And I will let Mark chime in.

[Mark Hobbs, EVP & CFO at Delek US]

Yes, yes. Thanks, Avigal. Jason, I want to step back and talk about just because you're focusing in on kind of EOP and kind of where you can see that in our results. And so I want to be very clear that as Abhagal mentioned that we're seeing this already show up in our results. I want to be pretty specific around this.

[Mark Hobbs, EVP & CFO at Delek US]

And so despite a slightly lower margin environment versus the second quarter of last year, our EBITDA has increased to over $170,000,000 this quarter versus only $107,000,000 last quarter. And our cash flow from operation was approximately $100,000,000 higher than what we generated in the second quarter of last year. And keep in mind that of the $164,000,000 of CapEx in the second quarter, about $115,000,000 of that was growth CapEx largely at DKL for higher return projects like Libbey II, which will benefit us going forward. And and as Abhagal mentioned in his prepared remarks, this year our CapEx in 2025 is very much first half weighted. And so as we go through the year with lower CapEx even more EOP benefits coming through, we feel very good about how we're positioned as we move through the remainder of the year.

[Mark Hobbs, EVP & CFO at Delek US]

And as you talk about the financing on the cash flow statement, keep in mind we've done some things to improve our balance sheet on a consolidated basis. We had a successful high yield offering at DKL, which allowed us to pay down our revolver because we made the Gravity acquisition. We've been investing $100,000,000 in the Libbey II gas plant thus far in the first half of the year. And so added critical liquidity to the balance sheet by doing a very successful oversubscribed high yield offering at a very good rate, and it was an eight year piece of paper. So we're very happy with that.

[Operator]

That concludes our Q and A session. I'll now turn the conference back over to Avigal Solek for closing remarks.

[Avigal Soreq, President, CEO & Director at Delek Logistics Partners]

Yes. So I want to thank my friends around the table, our Board of Directors, our investors and most importantly, our employees that make our company unique in the in greater cities. We'll talk again in the next quarter. Thank you.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Robert Wright, Senior VP & Deputy Chief Financial Officer
• Avigal Soreq, President, CEO & Director
• Joseph Israel, EVP, President of Refining & Renewables
• Mark Hobbs, EVP & CFO
• Mohit Bhardwaj, EVP - Strategy, Business Development & IR

Analysts

• Keith Stanley, Director at Wolfe Research, LLC
• Alexa Petrick, Investment Research Analyst at Goldman Sachs
• Matthew Blair, MD - Refiners, Chemicals & Renewable Fuels Research at TPH&Co
• Joe Laetsch, Executive Director - Energy Equity Research at Morgan Stanley
• Jean Ann Salisbury, Managing Director at Bank of America
• Jason Gabelman, MD - Energy Equity Research at TD Cowen