Delek US NYSE: DK executives said the company delivered “strong execution” in the first quarter of 2026, highlighting completion of the Big Spring refinery turnaround, a higher target for its Enterprise Optimization Plan (EOP), and continued focus on capital returns and balance sheet discipline.
Operational execution and market backdrop
President and CEO Avigal Soreq said the first quarter reflected disciplined execution across several fronts, including “disciplined and successful execution of Big Spring turnaround,” continued progress on free cash flow initiatives, and what he described as successful navigation of macro disruptions such as Winter Storm Fern and geopolitical events involving Iran.
Soreq said the Iran-related disruption created “many ripple effects,” including roughly “10 million barrels of crude production and approximately 5 million barrels per day of refining capacity remaining offline,” which he said contributed to elevated crude and product prices, dislocations between physical and paper grades, steep backwardation, and wide ranges of crude differentials. He added that Delek believes the “structural product shortage created in this event will continue to impact the market well after the conflict comes to an end.”
On positioning, Soreq said Delek benefits from access to multiple grades of domestic crude, “high distillate and jet yield,” and the ability to serve both Gulf and Midcontinent markets, which he said provides flexibility to respond to changing conditions.
Big Spring turnaround completed; EOP target raised again
Soreq said Big Spring “successfully completed its planned turnaround,” describing the work as executed “safely on budget, on time,” with the refinery “running at full capacity.” He said the turnaround focus was improving reliability, cost structure, and long-term margin capture. Post-turnaround, he said the company expects improved reliability, crude slate optimization, improved product yields, and “higher octane and blending capabilities.”
With no further planned turnaround, Soreq said Delek has its “highest spending quarter behind us” and is positioned to capture stronger crack spreads and seasonal demand into the summer driving season. In response to analyst questions, management said it was being “a little bit more conservative” in near-term Big Spring guidance as the refinery comes out of the turnaround.
On the company’s Enterprise Optimization Plan, Soreq said the initiative continues to drive value, and Delek raised its EOP target again “to at least $220 million on an annual run rate basis.” For the first quarter of 2026, the company estimated about “$60 million of EOP contribution” to the profit and loss statement. Soreq emphasized that EOP has become embedded across the organization and is not limited to cost savings, describing it as spanning “what we make, where we sell, and all the value chain that we are owning A to Z.”
Financial results, segment performance, and cash flow
EVP and CFO Mark Hobbs reported a first-quarter net loss of $201 million, or $3.34 per share. Adjusted net income was approximately $5 million, or $0.08 per share, and adjusted EBITDA was approximately $212 million.
Hobbs also provided results excluding the impact of small refinery exemptions (SREs). “Excluding SREs,” he said, adjusted EBITDA was approximately $129 million and adjusted EPS was a loss of $0.98 per share, reflecting the removal of “our RVO exemption recognition for the first quarter of $82 million.”
Hobbs said the quarter-to-quarter decline in EBITDA excluding SREs was driven primarily by the Big Spring turnaround and timing impacts in the supply and marketing segment that he said “will reverse over time,” partially offset by stronger refining margins in March following “seasonally weak margins in January and February.”
He reported supply and marketing posted a loss of approximately $61 million, including a $27.1 million loss in wholesale marketing and a $12.1 million loss in asphalt, with the remaining loss coming from supply. In logistics, Hobbs said Delek delivered “our best first quarter to date,” generating approximately $132 million of adjusted EBITDA, including an “approximate $10 million negative impact from Winter Storm Fern.”
On cash flow, Hobbs said cash flow provided by operations was $461 million. Investing activities used $190 million, while financing activities used $273 million, including payments on financing agreements and other activities, about $16 million in dividend payments, and about $22 million in Delek Logistics distributions to public unitholders.
Capital spending, balance sheet, and capital allocation
Hobbs said Delek invested $181 million on a standalone basis in the first quarter, “the majority of which was related to the plant-wide Big Spring turnaround.” Delek Logistics invested $50 million, including about $42 million for growth projects. Hobbs added that excluding Delek Logistics, Delek’s standalone net debt was “largely in line with year-end 2025.”
Soreq said the company paid approximately $60 million in dividends during the quarter and that improved reliability, EOP execution, and confidence in the outlook support “a disciplined approach to capital allocation through continued dividend and buybacks.” Asked about priorities after the turnaround, Soreq said Delek intends to maintain a balanced approach between buybacks and the balance sheet, maintain the dividend through the cycle, and that management sees “a lot of value in our share price.”
Second-quarter outlook and regulatory commentary
For the second quarter of 2026, Hobbs provided throughput guidance by refinery:
- Tyler: 72,000–77,000 barrels per day
- El Dorado: 78,000–83,000 barrels per day
- Big Spring: 65,000–70,000 barrels per day
- Krotz Springs: 78,000–83,000 barrels per day
He said implied system throughput for the quarter is 293,000–313,000 barrels per day. Hobbs also guided to operating expenses of $215 million–$225 million, G&A of $47 million–$52 million, D&A of $105 million–$115 million, and net interest expense of $80 million–$90 million.
On demand, Soreq said Delek is seeing strong demand in its markets and “do not see a demand destruction” at present, calling demand “pretty resilient.” EVP Mohit Bhardwaj, who leads strategy, business development and investor relations, added that the company is seeing expectations for a “very strong summer gasoline driving season” and said gasoline cracks “have a room to move higher.”
Delek also spent significant time on the call discussing the Renewable Fuel Standard and SREs. Soreq said the company is pursuing a proactive strategy to manage its obligations and expects the EPA to continue providing relief for 2025 after clearing a backlog of pending petitions since 2019. He also said the company remains involved in seeking what it views as full value for 2019–2022 RINs tied to what he described as “invalid relief.” Bhardwaj said that at a $1.50 per gallon blended RIN price, Delek’s 2026 Renewable Volume Obligation compliance would be “close to $750 million,” while acknowledging in response to a follow-up that the RIN price referenced by an analyst was higher at the time. Bhardwaj said Delek expects SREs to continue, while emphasizing the decision rests with the EPA.
Separately, Soreq highlighted progress at Delek Logistics, saying DKL reaffirmed 2026 EBITDA guidance of $520 million–$560 million and completed drilling of its “first acid gas injection well” as part of what he described as an industry-leading sour gas solution. He said Delek expects DKL’s third-party EBITDA to exceed 80% on a pro forma basis in 2026, which he said supports a “sum-of-the-part strategy” and deconsolidation goal. In Q&A, Soreq said deconsolidation remains the “ultimate goal” and that the company intends to pursue it “on the right price, on the right condition,” while outlining multiple potential paths, including continued bolt-on acquisitions and other options he described in broad terms.
About Delek US NYSE: DK
Delek US Holdings, Inc NYSE: DK is an independent downstream energy company engaged in the refining, logistics, and marketing of petroleum products. Headquartered in Brentwood, Tennessee, the company operates a network of inland refineries, storage terminals and pipelines, and convenience store locations. Delek US focuses on converting crude oil into a variety of finished products, including gasoline, diesel, jet fuel, asphalt and renewable fuels, serving wholesale and retail customers across the United States.
In its refining segment, Delek US owns and operates four inland refineries located in Texas and Arkansas.
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