Delek US Q2 Earnings Call Highlights

Key Points

• Strong Q2 results: Delek US reported approximately $170 million in net income and $639 million in adjusted EBITDA, driven by stronger refining margins, higher throughput and record logistics performance.
• Refining and logistics outlook remains favorable: The Big Spring turnaround improved reliability and product yields, while Delek Logistics posted record adjusted EBITDA of about $144 million and reaffirmed its 2026 guidance of $520 million to $560 million.
• Debt reduction and capital allocation continued: Delek reduced its term loan by $70 million and standalone net debt by $72 million during the quarter, while paying $16 million in dividends and repurchasing approximately $20 million of shares.

Delek US NYSE: DK reported second-quarter 2026 net income of approximately $170 million, or $2.71 per share, as stronger refining margins, improved throughput and record logistics results supported performance.

On an adjusted basis, the company posted net income of about $344 million, or $5.48 per share, and adjusted EBITDA of approximately $639 million. Excluding a 50% renewable volume obligation, or RVO, adjustment, adjusted EBITDA was about $490 million and adjusted earnings were $3.64 per share, according to Executive Vice President and CFO Robert Wright.

President and CEO Avigal Soreq said the company navigated volatility in crude and product markets during the quarter while continuing to focus on reliability, cash-flow generation and disciplined capital allocation.

Refining performance and market outlook

Wright said quarter-over-quarter EBITDA improvement was led by stronger refining margins and higher throughput following the completion of the Big Spring refinery turnaround. Soreq said Big Spring has performed in line with expectations since the turnaround, with improved reliability, greater crude-slate flexibility, better product yields and increased octane and blending capability.

Delek has no planned refinery turnarounds for the remainder of 2026, Soreq said, positioning its system to participate in favorable market conditions.

Management pointed to steep backwardation, shifting crude differentials and tight transportation-fuel markets as important factors in the refining environment. Soreq said the company believes access to crude supplies, high distillate yields and the ability to respond quickly to market changes are important advantages.

During the question-and-answer session, Soreq said global refined-product markets remain affected by capacity outages and that normalization could take several quarters after current market disruptions end. He also cited Delek’s access to Gulf Coast and Midcontinent markets, domestic crude availability and high distillate and jet fuel yields as favorable characteristics.

On refining margin capture, Soreq said a decline in market backwardation should benefit realized crack spreads. He described the current forward curve as relatively flat compared with the significantly steeper backwardation seen during the second quarter.

For the third quarter, Delek guided to total refining-system throughput of 296,000 to 316,000 barrels per day. By refinery, the company expects:

• Tyler throughput of 72,000 to 77,000 barrels per day;
• El Dorado throughput of 78,000 to 83,000 barrels per day;
• Big Spring throughput of 68,000 to 73,000 barrels per day; and
• Krotz Springs throughput of 78,000 to 83,000 barrels per day.

The company also forecast third-quarter operating expenses of $220 million to $230 million, general and administrative expenses of $50 million to $55 million, and depreciation and amortization expense of $110 million to $120 million.

Optimization efforts and logistics growth

Soreq said Delek’s Enterprise Optimization Plan, or EOP, contributed an estimated $60 million to second-quarter profit and loss. The program is intended to increase annual cash flow by at least $220 million on a run-rate basis.

Management said it is pursuing another phase of optimization initiatives, though it did not provide details. Soreq described EOP as an ongoing effort across the organization rather than a one-time project. Mohit Bhardwaj, Delek’s executive vice president of New Energy, Strategy and Investor Relations, said the company’s confidence in its mid-cycle free-cash-flow profile has increased.

Delek Logistics Partners delivered approximately $144 million in adjusted EBITDA, its best quarterly result in company history, Wright said. Performance was supported by momentum across its Permian Basin crude, natural gas and water businesses.

Delek Logistics reaffirmed its 2026 EBITDA guidance of $520 million to $560 million. Soreq said the partnership expects third-party EBITDA to exceed 80% on a pro forma basis during 2026, a metric that management views as central to its strategy to further separate the logistics business economically from Delek US.

Mark Hobbs, executive vice president of Delek Logistics Partners, said the Libby I and Libby II gas plants are operating well and that the company is nearing completion of a sour-gas gathering and compression system. The facilities and associated acid-gas injection well are intended to provide a sour-gas solution in the Northern Delaware Basin and support increased gas volumes through the remainder of the year.

Cash flow, debt reduction and shareholder returns

Cash flow from operations totaled $263 million in the second quarter, including a $138 million net working-capital outflow. Investing activities used $176 million, including $61 million of capital purchases at Delek Logistics, primarily for growth projects, and $55 million of refining capital purchases.

Financing activities represented an $82 million outflow. Delek reduced its term loan from $920 million to $850 million through a refinancing and paydown, while standalone net debt, excluding Delek Logistics, declined by $72 million during the quarter, Wright said.

The company paid approximately $16 million in dividends and repurchased about $20 million of shares during the quarter. Soreq said Delek intends to maintain its dividend through the cycle and balance additional cash deployment between debt reduction and share repurchases.

Small refinery exemptions

Management also discussed small refinery exemptions under the Renewable Fuel Standard. Soreq said elevated RVO costs have created a burden for qualifying small refineries and that the company expects the Environmental Protection Agency to continue providing relief for 2025 and beyond.

Bhardwaj said Delek’s recently granted Krotz Springs exemption reflected findings by the EPA and Department of Energy that the refinery faced disproportionate economic harm from Renewable Fuel Standard obligations. He said the company is encouraged by the strength of its 2025 petitions but did not provide timing or financial guidance for potential awards.

Management emphasized that any RIN-related proceeds would represent the return of costs previously incurred to remain in compliance, rather than new cash provided by another party. Delek said it would continue its existing capital-allocation approach and does not intend to hold excess cash solely for the purpose of maintaining a larger balance-sheet cash position.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source