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| 8-K - 8-K - Delek US Holdings, Inc. | a8kinvestorpresentation12-.htm |
Investor Presentation December 2012
Safe Harbor Provision 2 Delek US Holdings is traded on the New York Stock Exchange in the United States under the symbol “DK” and, as such, is governed by the rules and regulations of the United States Securities and Exchange Commission. This presentation may contain forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning our current estimates, expectations and projections about our future results, performance, prospects and opportunities and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under United States securities laws. Investors are cautioned that the following important factors, among others, may affect these forward-looking statements. These factors include but are not limited to: risks and uncertainties with the respect to the quantities and costs of crude oil, the costs to acquire feedstocks and the price of the refined petroleum products we ultimately sell; management's ability to execute its strategy through acquisitions and transactional risks in acquisitions; our competitive position and the effects of competition; the projected growth of the industry in which we operate; changes in the scope, costs, and/or timing of capital projects; losses from derivative instruments; general economic and business conditions, particularly levels of spending relating to travel and tourism or conditions affecting the southeastern United States; potential conflicts of interest between our majority stockholder and other stockholders; and other risks contained in our filings with the United States Securities and Exchange Commission. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek US undertakes no obligation to update or revise any such forward-looking statements.
Integrated Downstream Energy Company(1) Breadth of Exposure Across Refining, Wholesale Marketing and Retail Distribution Operates 140,000 BPD of combined refined production capacity in Texas and Arkansas Refining Segment ) Owned crude/product terminals and pipeline assets in Texas, Arkansas and Tennessee Marketing Segment Approximately 372 convenience stores -- primarily in Tennessee, Alabama and Georgia Retail Segment 3 60,000 BPD 9.4 complexity (1) As of September 30, 2012 Tyler Refinery 80,000 BPD 9.0 complexity El Dorado Refinery Strategically Located Refineries Allow For Broad Wholesale and Retail Product Distribution Opportunities Longview Crude Oil Hub Strategic crude oil supply point that allows our refining system access to domestic inland and Gulf Coast feedstock 372 Stores Locations in 7 states Retail Marketing Abilene Terminal San Angelo Terminal
$158.3 $16.9 $62.1 $85.3 $164.3 $46.2 $67.8 $100.3 $214.3 FY 2011 Q1 Q2 Q3 YTD 2011 2012 Recent Financial Performance 4 (1) Represents net income from continuing operations; YTD as of September 30 (2) Delek US assumed operational control of the El Dorado refinery and related assets through the acquisition of a majority equity interest in Lion Oil on April 29, 2011 Substantial Growth In Net Income ($MM)(1,2) Steady Decline In Net Debt ($MM) $248.7 $246.7 $206.7 $205.4 $54.8 YE 2009 YE 2010 YE 2011 9/30/2011 9/30/2012 Acquired Lion Oil, Two Pipelines, a Terminal and Paid Three Special Cash Dividends Net income of $214 mm through third quarter driven by growth in refining segment Record First , Second & Third Quarter Profitability Continued reduction in net debt; $317.8 mm in cash as of 9/30/12 Reduced Net Debt, Improved Liquidity Generated Record Profitability in 2011 and through Sept 30, 2012 Diluted EPS 9 Months Ending Sept 30, 2012: $3.62/sh 2011: $2.91/sh
Refining Segment Operational Update
Longview and Rail Support Crude Slate Flexibility for Refining System 6 Focused On Increasing Refining System Access to Cost-Advantaged Feedstocks Introduced rail into El Dorado Capacity up to 18,000 bpd
$17.54 $23.14 $30.80 $30.23 $17.94 $23.98 $23.87 $25.42 $29.96 $31.02 $26.20 $26.84 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 Q1 Q2 Q3 October November YTD 2011 2012 +$2.86/bbl on a y/y basis 54,407 60,032 47,452 55,317 58,461 127,784 145,878 146,190 134,017 127,097 130,346 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Year-over-Year Improvement in Refining Economics 7 Tracking the HSD 5-3-2 Gulf Coast Crack Spread Per Barrel(2) Lion Oil Acquisition More Than Doubled Throughput Volumes (1) 60,000 bpd Tyler Refinery Only 60,000 bpd Tyler Refinery (and) 80,000 bpd El Dorado Refinery (1) Delek US operated the El Dorado refinery for 247 days in 2011, following our acquisition of majority ownership (2) Source: Platts; YTD data is thru November 27
($30.00) ($20.00) ($10.00) $0.00 $10.00 $20.00 $30.00 $40.00 Ja n -1 0 Fe b -1 0 M ar -1 0 A p r- 1 0 M ay -1 0 Ju n -1 0 Ju l- 1 0 A u g- 1 0 Se p -1 0 Oct -1 0 N o v- 1 0 D e c- 1 0 Ja n -1 1 Fe b -1 1 M ar -1 1 A p r- 1 1 M ay -1 1 Ju n -1 1 Ju l- 1 1 A u g- 1 1 Se p -1 1 Oct -1 1 N o v- 1 1 D e c- 1 1 Ja n -1 2 Fe b -1 2 M ar -1 2 A p r- 1 2 M ay -1 2 Ju n -1 2 Ju l- 1 2 A u g- 1 2 Se p -1 2 Oct -1 2 N o v- 1 2 Brent-WTI Spread Per Barrel (1) WTI 5-3-2 Gulf Coast Crack Spread Per Barrel (2) LLS 5-3-2 Gulf Coast Crack Spread Per Barrel (2) Favorable Refining Economics Continue Into 4Q12(1) 8 Elevated Refined Product Margins and Discounted WTI-Linked Feedstock Favor Delek US (1) Source: Platts; November 2012 data is as of November 27, 2012 (2) Crack Spreads: (+/-) Contango/Backwardation 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Crude Slate Transition at El Dorado Underway 9 Historically processed local Arkansas, domestic offshore and foreign crude oils El Dorado Has A Diverse Crude Slate Ability to displace expensive foreign and GC crudes with discounted local, inland crudes Supplying More WTI-Linked Barrels We Anticipate El Dorado’s Crude Slate Will Be Weighted Toward WTI-linked Crude In Early 2013 Targeting 80,000 bpd of non-Gulf Coast crude deliveries to El Dorado Focus Is On First Half of 2013 Receiving More WTI-Linked Barrels (BPD)(2) (1) The El Dorado refinery’s total throughput in October 2012 is in line with 3Q12 rates. (2) Includes local Arkansas barrels collected via the Company’s 600 mile crude gathering system, in addition to west Texas crude oils delivered to the refinery El Dorado Refinery Crude Slate (3Q12) (1) Other Crude, 35% Local Crude, 27% Rail, 24% Midland Crude, 14% 18k bpd 35k bpd June-11 3Q11 4Q11 1Q12 2Q12 3Q12 1H13 Local Arkansas Crude WTI/WTS - Midland Rail ~27k bpd ~28k bpd ~28k bpd ~21k bpd ~25k bpd ~25k bpd Rail
Improved Access to Rail Supplied Crude to El Dorado 10 Including Bakken, Canada, Eagle Ford, and Cushing Access to addition types of crude Allows increased throughput to above 70,000 bpd at the El Dorado Refinery Expected increase in Q4 total throughput Rail capabilities improve access to more economical types of crude Allows for the potential of heavier crude in 2013 Flexibility to process wider range Rail Unloading Capability (BPD) (1) Actual Crude Delivered Via Rail (BPD) 0 18,000 18,000 10,000 2011 3Q 2012 1Q 2013 Light to Medium Sour Crude Heavy Crude 1,038 2,816 9,405 11,905 13,636 May Jun Jul Aug Sep 2012 (1) Heavy Crude capability has the option of up to 10k bpd of heavy crude or up to 32k bpd of light crude
Access To Lower Cost Crude at Tyler Refinery 11 Processes primarily West Texas Intermediate and East Texas crude oils On a blended basis, Tyler is purchasing crude at $2.37/bbl above WTI in 3Q12 Tyler Crude Costs Near Parity with WTI Tyler Refinery Enjoys An Advantaged Crude Slate – Anticipate More Lower Cost Crude in Early 2013 In early 2013, intend to supply Tyler with increased volumes of advantaged crude Seek to Further Reduce Crude Costs Tyler Refinery Crude Slate (3Q12)(1) Access to Cost-Advantaged Crude WTI, 80% East Texas Crude, 20% (1) Includes crude oil received at the Tyler refinery in third quarter 2012 (2) Anticipate that by early 2013, additional volumes of crude will be supplied to the Tyler refinery priced at Midland. Midland WTI currently sells at a discount to Cushing WTI. Tyler Refinery Crude Slate (3Q12)(2) 3Q12 Purchasing crude at $2.37/bbl above WTI at Tyler Early 2013 Anticipate crude costs at Tyler will decline to levels at or below WTI (assuming Midland discount)
Identified “Quick-Hit” Capital Projects 12 Completed Low-Cost, High-Return Capital Projects at Tyler and El Dorado LSR/Sat Gas Project (LSR) -El Dorado Scope: Improve liquid recovery of Butane & Propane at El Dorado Cost: $14.5 million Anticipated Return: $15-18 million contribution margin annually(1) Vacuum Tower Bottoms Project (VTB) -Tyler Scope: Convert El Dorado asphalt to light product via Coker at Tyler Cost: $5.7 million Anticipated Return: $10 million contribution margin annually(1) New Quick-Hit Capital Projects Identified LSR/Sat Gas = $16 mm VTB = $5 mm LSR/Sat Gas = $20 mm/yr VTB = $10 mm/yr (1) Subject to market pricing economics DHT Revamp –Phases I & II -El Dorado Anticipated Benefit (Phase I): $6 million contribution margin annually(1) Anticipated Benefit (Phase II): $2 million contribution margin annually(1) Anticipated Cost: $2.5 million (Phases I & II) Timing: First Quarter 2013 (I) and 2014 (II) Alky Refrigeration Compressor - El Dorado Anticipated Benefit: $4 million contribution margin annually(1) Anticipated Cost: $3.5 million Timing: Third Quarter 2013
Retail Segment Operational Update
Growth In Same-Store Sales Key Factors That Drive Same-Store Sales Relevant Factors: Location, size, appeal, offering, affordability, people Same-Store Merchandise Sales ) Relevant Factors: Commodity prices, weather, empl oyment, supply disruptions Same-Store Gallons Sold 14 Consistent Growth In Same-Store Merchandise Sales Recovery In Same-Store Fuel Gallons Sold 4.2% -0.3% 3.4% 5.2% -0.8% -2.3% -1.3% 3.2% 4.3% 0.8% 2.2% -0.8% 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 5.0% 1.2% 4.6% 6.3% 4.4% 4.0% 0.6% 2.4% 2.0% 7.6% 4.3% 0.5% 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Store Reimaging & New Construction Initiatives(1) Reimaging and Construction Update Approximately 182 stores have been built or reimaged since 2006 Multi-Year Store Enhancement Initiative ) Long-term target of at least 8-12 new large-format builds per annum Multi-Year New Store Construction Plan 15 50% of Store Base Has Been Reimaged or Newly Constructed During The Past Five Years(1) Create a retail presence in markets capable of being supplied by El Dorado Expanding Market Footprint (1) YTD as of September 30, 2012 ) Reimaging at least 20 sites in 2012 Accelerating Store Reimaging Plan 394 497 482 442 412 377 372 0% 10% 20% 30% 40% 50% 60% 0 100 200 300 400 500 600 2006 2007 2008 2009 2010 2011 YTD 2012 To tal Re m o d eled St o res as % o f To tal N u m b er o f St o re s To tal N u m b er o f St o res (En d o f P er io d ) Total Number of Stores (End of Period) Reimages/Prototypes as % of Total Store Base
Marketing Segment Operational Update
$23.3 $23.7 $24.8 $26.2 $20.2 $25.3 2008 2009 2010 2011 YTD 2011 YTD 2012 16,557 13,378 14,354 15,595 15,546 21,573 2008 2009 2010 2011 YTD 2011 YTD 2012 Midstream Assets Generate Consistent Results Wholesale Marketing In West Texas Owned (San Angelo, Abilene, Tyler); Third-Party (Aledo, Odessa, Big Springs, Frost) Product Marketing Terminals 17 ) Positive contribution margin every quarter since 2 006 Consistent Contribution Margin Total Sales Volumes (Barrels Per Day) (1) Consistent Contribution Margin ($MM) (1) (1) YTD as of September 30, 2012
Completed IPO of Logistics Assets on November 7, 2012 18 (1) Tyler, TX and El Dorado, AR refineries are not be included in the MLP • Approximately 200 miles of transportation pipelines and a 600 mile crude oil gathering system, in addition to associated storage facilities with 1.4 million barrels of active shell capacity supporting Delek US’ El Dorado and Tyler Refineries (1) • The Paline pipeline, a 185 mile crude oil pipeline from Longview to Nederland, Texas • Five light product terminals: Texas - Abilene, Big Sandy, San Angelo Tennessee - Nashville and Memphis Initial Assets Included in the MLP: • Delek US’ wholesale marketing business in Texas
Appendix Additional Data
($8.00) ($7.00) ($6.00) ($5.00) ($4.00) ($3.00) ($2.00) ($1.00) $0.00 WTI Midland vs. WTI Cushing 20 Differential Between Midland and Cushing Sourced WTI (1) Source: Argus 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
$42.3 $36.0 $82.7 $14.5 $45.0 $50.4 2010 (A) 2011 (A) 2012 (E) Refining Retail, Marketing and Other Historical and Projected Capital Spending 21 2010: $56.8 mm 2011: $81.0 mm 2012 (E): $133.1 mm Estimate includes a full- year of capital spending at Lion Oil Company
Investor Relations Contact: Assi Ginzburg Keith Johnson Executive Vice President Vice President of Investor Relations 615-224-1158 615-435-1366