Delek US Holdings beats Q3 earnings, raises dividend

Delek US Holdings, Inc. (NYSE:) reported a substantial increase in adjusted net income for Q3 2023 today, topping analysts’ expectations with earnings of $2.02 per share compared to the consensus estimate of $1.36. This performance marks a significant leap from the 2 cents per share recorded in the same quarter last year, attributed to strong contributions from its Logistics and Retail segments, combined with reduced operational expenses.

The company’s net revenues declined by 11.3% year-over-year to $4.2 billion, which nonetheless surpassed the consensus estimate of $4 billion. Adjusted EBITDA for the quarter was reported at $345.1 million, a decrease from $414 million in Q3 2022.

Breaking down the performance by segment:

• The Refining segment saw adjusted EBITDA fall to $285.5 million from $355.7 million in the prior year’s quarter due to lower refining crack spreads.
• The Logistics segment’s adjusted EBITDA climbed to $96.5 million, up from $91.5 million in Q3 2022. This increase was driven by robust performance of the Midland Gathering and Delaware Gathering systems and annual rate increases.
• The Retail segment reported an adjusted EBITDA of $16.2 million, rising from last year’s $13.5 million, propelled by increased fuel margins and volume as well as higher in-store sales.

Despite a slight drop in merchandise sales to $83.5 million from $84.2 million in Q3 2022, the merchandise margin improved significantly to 35.5%. Additionally, total operating expenses for the quarter were trimmed by about 14.2% year-over-year to $4.5 billion.

On the financial health front, as of September 30, Delek US Holdings held cash and cash equivalents of $901.7 million and had long-term debt of $2.6 billion, resulting in a debt-to-total capital ratio of approximately 69.5%.

Looking ahead, Delek anticipates capital expenditures for 2023 to be between $380-$390 million and expects operating costs for Q4 to range between $210-$220 million, with general and administrative expenses projected at $65-$70 million and depreciation and amortization costs estimated between $90 million and $95 million.

In a move reflecting confidence in its financial position and future prospects, Delek’s board announced on November 1 that it raised its regular dividends by 2.1%, setting a quarterly payout of 24 cents per share payable on November 20 to shareholders of record as of November 13.

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