dk-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2024


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the transition period from to

Commission file number 001-38142

DELEK US HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware			35-2581557
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

310 Seven Springs Way, Suite 500	Brentwood	Tennessee	37027
(Address of principal executive offices)			(Zip Code)

(615) 771-6701

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01

New York Stock Exchange

At November 1, 2024, there were 63,195,165 shares of common stock, $0.01 par value, outstanding (excluding securities held by, or for the account of, the Company or its subsidiaries).

Table of Contents

Delek US Holdings, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended September 30, 2024






































PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)						3
Condensed Consolidated Balance Sheets						3
Condensed Consolidated Statements of Income						4
Condensed Consolidated Statements of Comprehensive Income						5
Condensed Consolidated Statements of Changes in Stockholders' Equity						7
Condensed Consolidated Statements of Cash Flows						8
Notes to Condensed Consolidated Financial Statements						9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						33
Item 3. Quantitative and Qualitative Disclosures about Market Risk						69
Item 4. Controls and Procedures						71

PART II. OTHER INFORMATION
Item 1. Legal Proceedings						72
Item 1A. Risk Factors						72

Item 5. Other Information						73
Item 6. Exhibits						75
Signatures						76


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Financial Statements

Part I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Delek US Holdings, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(In millions, except share and per share data)


	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,037.6	$	821.8
Accounts receivable, net	561.6		783.7


Inventories, net of inventory valuation reserves	915.0		941.2
Current assets of discontinued operations	—		41.5
Other current assets	50.6		77.8
Total current assets	2,564.8		2,666.0
Property, plant and equipment:
Property, plant and equipment	4,790.7		4,460.3
Less: accumulated depreciation	(1,961.7)		(1,764.0)
Property, plant and equipment, net	2,829.0		2,696.3
Operating lease right-of-use assets	98.8		121.5
Goodwill	687.5		687.5
Other intangibles, net	328.6		287.7
Equity method investments	408.7		360.7
Non-current assets of discontinued operations	—		228.1
Other non-current assets	112.9		124.0
Total assets	$	7,030.3	$	7,171.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,713.6	$	1,814.3


Current portion of long-term debt	9.5		44.5
Current portion of obligation under Inventory Intermediation Agreement	3.6		0.4
Current portion of operating lease liabilities	45.6		50.1
Current liabilities of discontinued operations	—		11.5
Accrued expenses and other current liabilities	694.7		764.3
Total current liabilities	2,467.0		2,685.1
Non-current liabilities:
Long-term debt, net of current portion	2,779.9		2,555.3
Obligation under Inventory Intermediation Agreement	385.3		407.2
Environmental liabilities, net of current portion	33.7		110.9
Asset retirement obligations	24.4		36.4
Deferred tax liabilities	243.9		264.1
Operating lease liabilities, net of current portion	63.7		85.7
Non-current liabilities of discontinued operations	—		34.3
Other non-current liabilities	87.0		33.1
Total non-current liabilities	3,617.9		3,527.0
Redeemable non-controlling interest	70.0		—
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 110,000,000 shares authorized, 81,231,308 shares and 81,539,871 shares issued at September 30, 2024 and December 31, 2023, respectively	0.8		0.8
Additional paid-in capital	1,172.7		1,113.6
Accumulated other comprehensive loss	(4.8)		(4.8)
Treasury stock, 17,575,527 shares, at cost, at September 30, 2024 and December 31, 2023, respectively	(694.1)		(694.1)
Retained earnings	228.5		430.0
Non-controlling interests in subsidiaries	172.3		114.2
Total stockholders’ equity	875.4		959.7
Total liabilities, redeemable non-controlling interest and stockholders’ equity	$	7,030.3	$	7,171.8

See accompanying notes to the condensed consolidated financial statements


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Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Income (unaudited)

(In millions, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,

	2024		2023		2024		2023
Net revenues	$	3,042.4	$	4,628.8	$	9,478.5	$	12,525.1
Cost of sales:
Cost of materials and other	2,788.7		4,049.4		8,547.1		11,111.2
Operating expenses (excluding depreciation and amortization presented below)	181.4		217.7		580.3		577.2
Depreciation and amortization	92.5		83.7		259.6		243.1
Total cost of sales	3,062.6		4,350.8		9,387.0		11,931.5


Operating expenses related to wholesale business (excluding depreciation and amortization presented below)	3.7		(3.7)		5.7		3.9
General and administrative expenses	70.4		67.7		191.6		208.0
Depreciation and amortization	5.6		4.0		18.6		12.1
Asset impairment	9.2		—		31.3		—
Other operating expense (income), net	12.8		(2.1)		(67.6)		(19.0)
Total operating costs and expenses	3,164.3		4,416.7		9,566.6		12,136.5
Operating (loss) income	(121.9)		212.1		(88.1)		388.6
Interest expense, net	78.8		82.4		244.1		239.1
Income from equity method investments	(25.1)		(27.0)		(77.4)		(67.1)






Other (income) expense, net	(0.5)		2.0		(1.1)		(4.6)
Total non-operating expense, net	53.2		57.4		165.6		167.4
(Loss) income from continuing operations before income tax (benefit) expense	(175.1)		154.7		(253.7)		221.2
Income tax (benefit) expense	(40.3)		29.1		(56.7)		38.3
(Loss) income from continuing operations, net of tax	(134.8)		125.6		(197.0)		182.9
Discontinued operations:
Income from discontinued operations, including gain on sale of discontinued operations	95.4		12.9		107.8		29.1
Income tax expense	28.1		2.4		29.6		5.2
Income from discontinued operations, net of tax	67.3		10.5		78.2		23.9
Net (loss) income	(67.5)		136.1		(118.8)		206.8
Net income attributable to:

Non-controlling interests	9.3		7.4		27.8		22.1
Net (loss) income attributable to Delek	$	(76.8)	$	128.7	$	(146.6)	$	184.7
Basic (loss) income per share:
(Loss) income from continuing operations	$	(2.25)	$	1.82	$	(3.51)	$	2.44
Income from discontinued operations	1.05		0.16		1.22		0.36
Total basic (loss) income per share	$	(1.20)	$	1.98	$	(2.29)	$	2.80
Diluted (loss) income per share:
(Loss) income from continuing operations	$	(2.25)	$	1.81	$	(3.51)	$	2.42
Income from discontinued operations	1.05		0.16		1.22		0.36
Total diluted (loss) income per share	$	(1.20)	$	1.97	$	(2.29)	$	2.78
Weighted average common shares outstanding:
Basic	64,063,609		64,889,504		64,099,700		65,864,141
Diluted	64,063,609		65,464,970		64,099,700		66,372,335

See accompanying notes to the condensed consolidated financial statements


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Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(In millions)


	Three Months Ended September 30,				Nine Months Ended September 30,

	2024		2023		2024		2023
Net (loss) income	$	(67.5)	$	136.1	$	(118.8)	$	206.8
Other comprehensive (loss) income:

























Other loss, net of taxes	—		—		—		(0.1)
Total other comprehensive loss	—		—		—		(0.1)

Comprehensive (loss) income attributable to:	$	(67.5)	$	136.1	$	(118.8)	$	206.7

Non-controlling interest	9.3		7.4		27.8		22.1
Comprehensive (loss) income attributable to Delek	$	(76.8)	$	128.7	$	(146.6)	$	184.6

See accompanying notes to the condensed consolidated financial statements


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Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)

(In millions, except share and per share data)


	Three Months Ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock			Non-Controlling Interest in Subsidiaries		Total Stockholders' Equity		Redeemable Non-Controlling Interest
	Shares	Amount								Shares	Amount
Balance at June 30, 2024	82,085,570	$	0.8	$	1,175.8	$	(4.8)	$	328.1	(17,575,527)	$	(694.1)	$	177.0	$	982.8	$	—


Net (loss) income	—	—		—		—		(76.8)		—	—		9.3		(67.5)		—


Common stock dividends ($0.255 per share)	—	—		—		—		(16.4)		—	—		—		(16.4)		—
Distributions to non-controlling interests	—	—		—		—		—		—	—		(14.1)		(14.1)		—
Equity-based compensation expense	—	—		10.0		—		—		—	—		0.3		10.3		—


Repurchase of common stock	(942,329)	—		(13.5)		—		(6.5)		—	—		—		(20.0)

Taxes paid due to the net settlement of equity-based compensation	—	—		(0.5)		—		—		—	—		(0.3)		(0.8)		—
Exercise of equity-based awards	59,485	—		—		—		—		—	—		—		—		—

Issuance of Delek Logistics preferred units	—	—		—		—		—		—	—		—		—		70.0

Other	28,582	—		0.9		—		0.1		—	—		0.1		1.1		—
Balance at September 30, 2024	81,231,308	$	0.8	$	1,172.7	$	(4.8)	$	228.5	(17,575,527)	$	(694.1)	$	172.3	$	875.4	$	70.0


	Three Months Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock			Non-Controlling Interest in Subsidiaries		Total Stockholders' Equity		Redeemable Non-Controlling Interest
	Shares	Amount								Shares	Amount
Balance at June 30, 2023	83,150,295	$	0.8	$	1,121.8	$	(5.3)	$	518.1	(17,575,527)	$	(694.1)	$	121.6	$	1,062.9	$	—


Net income	—	—		—		—		128.7		—	—		7.4		136.1		—


Common stock dividends ($0.235 per share)	—	—		—		—		(15.2)		—	—		—		(15.2)		—
Distributions to non-controlling interests	—	—		—		—		—		—	—		(9.7)		(9.7)		—
Equity-based compensation expense	—	—		8.0		—		—		—	—		0.2		8.2		—


Repurchase of common stock	(981,690)	—		(13.3)		—		(11.7)		—	—		—		(25.0)		—

Taxes paid due to the net settlement of equity-based compensation	—	—		(0.7)		—		—		—	—		(0.3)		(1.0)		—
Exercise of equity-based awards	48,154	—		—		—		—		—	—		—		—		—
Other	24,760	—		0.6		—		—		—	—		0.1		0.7		—
Balance at September 30, 2023	82,241,519	$	0.8	$	1,116.4	$	(5.3)	$	619.9	(17,575,527)	$	(694.1)	$	119.3	$	1,157.0	$	—


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Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)

(In millions, except share and per share data)


	Nine Months Ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Shares			Non-Controlling Interest in Subsidiaries		Total Stockholders' Equity		Redeemable Non-controlling Interest
	Shares	Amount								Shares	Amount
Balance at December 31, 2023	81,539,871	$	0.8	$	1,113.6	$	(4.8)	$	430.0	(17,575,527)	$	(694.1)	$	114.2	$	959.7	$	—


Net (loss) income	—	—		—		—		(146.6)		—	—		27.8		(118.8)		—



Common stock dividends ($0.750 per share)	—	—		—		—		(48.1)		—	—		—		(48.1)		—
Distributions to non-controlling interests	—	—		—		—		—		—	—		(37.7)		(37.7)		—
Equity-based compensation expense	—	—		24.3		—		—		—	—		0.8		25.1		—


Repurchase of common stock	(942,329)	—		(13.5)		—		(6.5)		—	—		—		(20.0)



Taxes paid due to the net settlement of equity-based compensation	—	—		(4.9)		—		—		—	—		(0.8)		(5.7)		—
Exercise of equity-based awards	506,524	—		—		—		—		—	—		—		—		—
Equity attributable to issuance of Delek Logistics common limited partner units, net of tax	—	—		50.5		—		—		—	—		68.3		118.8		—
Issuance of Delek Logistics preferred units	—	—		—		—		—		—	—		—		—		70.0

Other	127,242	—		2.7		—		(0.3)		—	—		(0.3)		2.1		—
Balance at September 30, 2024	81,231,308	$	0.8	$	1,172.7	$	(4.8)	$	228.5	(17,575,527)	$	(694.1)	$	172.3	$	875.4	$	70.0


	Nine Months Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock			Non-Controlling Interest in Subsidiaries		Total Stockholders' Equity		Redeemable Non-Controlling Interest
	Shares	Amount								Shares	Amount
Balance at December 31, 2022	84,509,517	$	0.9	$	1,134.1	$	(5.2)	$	507.9	(17,575,527)	$	(694.1)	$	125.9	$	1,069.5	$	—
Net income	—	—		—		—		184.7		—	—		22.1		206.8		—
Common stock dividends ($0.685 per share)	—	—		—		—		(44.9)		—	—		—		(44.9)		—
Equity-based compensation expense	—	—		20.0		—		—		—	—		0.5		20.5		—
Distributions to non-controlling interests	—	—		—		—		—		—	—		(28.8)		(28.8)		—

Repurchase of common stock	(2,793,317)	(0.1)		(37.7)		—		(27.6)		—	—		—		(65.4)		—

Taxes paid due to the net settlement of equity-based compensation	—	—		(4.1)		—		—		—	—		(0.5)		(4.6)		—
Exercise of equity-based awards	409,993	—		—		—		—		—	—		—		—		—
Other	115,326	—		4.1		(0.1)		(0.2)		—	—		0.1		3.9		—
Balance at September 30, 2023	82,241,519	$	0.8	$	1,116.4	$	(5.3)	$	619.9	(17,575,527)	$	(694.1)	$	119.3	$	1,157.0	$	—

See accompanying notes to the condensed consolidated financial statements


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Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(In millions)


	Nine Months Ended September 30,

	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(118.8)	$	206.8
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	278.2		255.2

Non-cash lease expense	23.7		43.9
Deferred income taxes	(56.8)		24.9
Asset impairment	31.3		—
Income from equity method investments	(77.4)		(67.1)
Dividends from equity method investments	43.9		35.8
Non-cash lower of cost or market/net realizable value adjustment	(10.5)		(6.2)


Loss on extinguishment of debt	3.6		—



Equity-based compensation expense	25.1		20.5
Income from discontinued operations, including gain on sale of discontinued operations, net	(78.2)		(23.9)

Other	1.6		6.4
Changes in assets and liabilities:
Accounts receivable	233.6		78.6
Inventories and other current assets	70.3		373.7
Fair value of derivatives	3.0		(8.6)
Accounts payable and other current liabilities	(177.9)		54.8
Obligation under Inventory Intermediation Agreements	(18.7)		(97.5)
Non-current assets and liabilities, net	(97.1)		(5.6)
Cash provided by operating activities - continuing operations	78.9		891.7
Cash provided by (used in) operating activities - discontinued operations	17.8		31.1
Net cash provided by operating activities	96.7		922.8
Cash flows from investing activities:

Acquisition of H2O	(159.5)		—
Equity method investment contributions	(18.6)		—
Distributions from equity method investments	4.1		10.5
Purchases of property, plant and equipment	(237.2)		(320.3)
Purchase of equity securities	(0.7)		(11.0)
Purchases of intangible assets	(1.6)		(2.6)
Proceeds from sale of property, plant and equipment	10.6		1.3
Insurance and settlement proceeds	15.5		1.5


Cash used in investing activities - continuing operations	(387.4)		(320.6)
Cash provided by (used in) investing activities - discontinued operations	361.7		(18.0)
Net cash used in investing activities	(25.7)		(338.6)
Cash flows from financing activities:
Proceeds from long-term revolvers	5,540.1		2,615.4
Payments on long-term revolvers	(5,865.7)		(3,019.4)
Proceeds from term debt	1,059.0		—
Payments on term debt	(538.4)		(18.4)

Proceeds from product and other financing agreements	676.4		908.2
Repayments of product and other financing agreements	(729.3)		(922.6)
Proceeds from Inventory Intermediation Agreement	—		32.2
Proceeds from termination of Supply & Offtake Obligation	—		25.8
Taxes paid due to the net settlement of equity-based compensation	(5.7)		(4.6)

Repurchase of common stock	(20.0)		(65.4)

Distribution to non-controlling interest	(37.7)		(28.8)

Proceeds from issuance of Delek Logistic common limited partner units, net	132.2		—


Payment of debt extinguishment costs	(0.3)		—
Dividends paid	(48.1)		(44.9)

Deferred financing costs paid	(18.1)		(1.3)
Cash provided by (used in) financing activities - continuing operations	144.4		(523.8)

Net used in financing activities	144.4		(523.8)
Net increase in cash and cash equivalents	215.4		60.4
Cash and cash equivalents at the beginning of the period	822.2		841.3
Cash and cash equivalents at the end of the period	1,037.6		901.7
Less cash and cash equivalents of discontinued operations at the end of the period	—		0.4
Cash and cash equivalents of continuing operations at the end of the period	$	1,037.6	$	901.3

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited) (Continued)

(In millions)


	Nine Months Ended September 30,
	2024		2023







































































Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest of $2.3 million and $3.2 million in the 2024 and 2023 periods, respectively	$	233.5	232.3
Income taxes	$	3.5	$	8.3
Non-cash investing activities:

Delek Logistics preferred units issued in connection with H2O Acquisition	$	70.0	$	—
Decrease in accrued capital expenditures	$	7.4	$	(34.7)
Non-cash financing activities:

Non-cash lease liability arising from obtaining right-of-use assets during the period	$	13.3	$	27.0

See accompanying notes to the condensed consolidated financial statements


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Notes to Consolidated Financial Statements

Delek US Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Organization and Basis of Presentation

Delek US Holdings, Inc. operates through its consolidated subsidiaries, which include Delek US Energy, Inc. ("Delek Energy") (and its subsidiaries) and Alon USA Energy, Inc. ("Alon") (and its subsidiaries). The terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek and its consolidated subsidiaries. Delek's common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "DK."

Our condensed consolidated financial statements include the accounts of Delek and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading. Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 28, 2024 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K.

Our condensed consolidated financial statements include Delek Logistics Partners, LP ("Delek Logistics", NYSE:DKL), which is a variable interest entity ("VIE"). As the indirect owner of the general partner of Delek Logistics, we have the ability to direct the activities of this entity that most significantly impact its economic performance. We are also considered to be the primary beneficiary for accounting purposes for this entity and are Delek Logistics' primary customer. In the event that Delek Logistics incurs a loss, our operating results will reflect such loss, net of intercompany eliminations, to the extent of our ownership interest in this entity.

On July 31, 2024, a wholly owned subsidiary of Delek, entered into a definitive equity purchase agreement (the "Retail Purchase Agreement") with a subsidiary of Fomento Económico Mexicano, S.A.B. de C.V. (“FEMSA”). Under the terms of the Retail Purchase Agreement, Delek agreed to sell, and FEMSA agreed to purchase, 100% of the equity interests in four of Delek’s wholly-owned subsidiaries that own and operate 249 retail fuel and convenience stores (the "Retail Stores") under the Delek US Retail brand for a cash consideration of $390.2 million including the purchase of inventory and other customary adjustments under the Retail Purchase Agreement for indebtedness (the “Retail Transaction”). The Retail Transaction closed on September 30, 2024.

As a result of the Retail Purchase Agreement, we met the requirements under the provisions of Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements - Discontinued Operations ("ASC 205-20") and ASC 360, Property, Plant and Equipment ("ASC 360"), to report the results of the Retail Stores as discontinued operations and to classify the Retail Stores as a group of discontinued operations assets.

On September 11, 2024, Delek Logistics completed the acquisition of 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “Purchased Interests” or "H2O Midstream Acquisition") from H2O Midstream Holdings, LLC (the “Seller”). The H2O Midstream Acquisition included water disposal and recycling operations in the Midland Basin in Texas. See Note 2 for further information.

In the opinion of management, all adjustments necessary for a fair presentation of the financial condition and the results of operations for the interim periods have been included. All significant intercompany transactions and account balances have been eliminated in consolidation. All adjustments are of a normal, recurring nature. Operating results for the interim period should not be viewed as representative of results that may be expected for any future interim period or for the full year.

Reclassifications

Certain prior period amounts have been reclassified in order to conform to the current period presentation.

Having classified the Retail Stores as discontinued operations, the condensed consolidated balance sheets for all periods presented have been reclassified to reflect discontinued operations assets and discontinued operations liabilities. The condensed consolidated statements of income for all periods presented have been reclassified to reflect the results of the Retail Stores as income from discontinued operations, net of taxes. See Note 4 for further information regarding discontinued operations.


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Notes to Consolidated Financial Statements

Accounting Pronouncements Adopted

ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements

In March 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-02 Codification Improvements - Amendments to Remove References to the Concepts Statements ("ASU 2024-02"), which amends the Accounting Standards Codification ("Codification") to remove references to various concepts statements and impacts a variety of topics in the Codification. The ASU is intended to simplify the Codification and draw a distinction between authoritative and non-authoritative literature. ASU 2024-02 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company adopted the provisions of ASU 2024-02 in the third quarter of 2024, and the adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

Accounting Pronouncements Not Yet Adopted

ASU 2023-09, Income Taxes(Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 Income Taxes(Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). The standard is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis with the option to apply the standard retrospectively. The adoption of ASU 2023-09 will result in additional disclosure requirements but is not anticipated to have a significant impact on our condensed consolidated financial statements.

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the chief decision maker ("CODM") and included within each reported measure of a segment's profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets. The ASU also requires disclosure of the title and position of the individual or group identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented in the financial statements. The adoption of ASU 2023-07 will result in additional segment reporting disclosure requirements but is not anticipated to have a significant impact on our condensed consolidated financial statements.

ASU 2023-06, Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06 Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). The main provision of ASU 2023-06 is to clarify or improve disclosure and presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB accounting standard codification with the SEC's regulations. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the provisions of the amendments and the impact on its future condensed consolidated financial statements, but does not currently expect adopting this new guidance will have a material impact on our condensed consolidated financial statements and related disclosures.

2. Acquisitions

H2O Midstream

Delek Logistics completed the H2O Midstream Acquisition on September 11, 2024, in which it acquired water disposal and recycling operations, in the Midland Basin in Texas (the "Midland Water Gathering System") for total consideration of $229.5 million, subject to customary adjustments for net working capital and indebtedness ("H2O Transaction"). The purchase price was comprised of approximately $159.5 million in cash and $70.0 million of Delek Logistics’ preferred units. See Note 6 for further information on Preferred Units. The cash portion was financed through a combination of cash on hand and borrowings under the Delek Logistics' Credit Facility (as defined in Note 10).

For the three and nine months ended September 30, 2024, we incurred $6.1 million in incremental direct acquisition and integration costs that principally consist of legal, advisory and other professional fees. Such costs are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

Our consolidated financial and operating results reflect the H2O Midstream Acquisition operations beginning September 11, 2024. Our results of operations included revenue and net income of $3.6 million and $1.3 million, respectively, for the period from September 11, 2024 through September 30, 2024 related to these operations.


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Notes to Consolidated Financial Statements

The H2O Midstream Acquisition was accounted for using the acquisition method of accounting, whereby the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values.

Determination of Purchase Price (1)

The table below represents the estimated purchase price (in millions):


Base purchase price:	$	230.0
Less: closing net working capital (as defined in the H2O Purchase Agreement)	(2.5)
Plus: various closing adjustments	2.0
Adjusted purchase price	229.5

Cash paid	159.5
Fair value of preferred units issued	70.0
Preliminary purchase price	$	229.5

(1) These amounts are based upon estimates at closing, but are subject to a subsequent review and revision period pursuant to the H2O Midstream Acquisition agreement at which time final settlements for these components will be determined. Such subsequent adjustments may result in changes to the preliminary purchase price.

Purchase Price Allocation

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed in the H2O Midstream Acquisition as of September 11, 2024 (in millions):


Assets acquired:

Accounts receivables	$	6.7
Inventories	2.5
Other current assets	0.9
Property, plant and equipment	174.5
Operating lease right-of-use assets	0.5
Other intangibles (1)	58.9

Total assets acquired	244.0

Liabilities assumed:
Accounts payable	4.0
Accrued expenses and other current liabilities	5.1
Current portion of operating lease liabilities	0.3
Asset retirement obligations	4.9
Operating lease liabilities, net of current portion	0.2
Total liabilities assumed	14.5
Fair value of net assets acquired	$	229.5

(1)The acquired intangible assets amount includes the following identified intangibles:

•Customer relationship intangible that is subject to amortization with a preliminary fair value of $24.0 million, which will be amortized over an 12.6 years useful life. The estimated amortization expense is $1.9 million for each of the five succeeding fiscal years.

•Rights-of-way intangibles valued at $30.1 million, of which, the majority has an indefinite life.

•Favorable supply contract intangible that is subject to amortization with a preliminary fair value of $4.8 million which will be amortized over a 4.8 years useful life. The estimated amortization expense is $1.0 million for each of the next four fiscal years, and $0.4 million in the fifth succeeding fiscal year.

The amortization expense related to the above intangible assets for the three and nine months ended September 30, 2024 was immaterial.

These fair value estimates are preliminary and therefore, the final fair value of assets acquired and liabilities assumed and the resulting effect on our financial position may change once all necessary information has become available, the final working capital adjustment is complete, and we finalize our valuations. To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of September 30, 2024. We will continue to evaluate these items until they are satisfactorily resolved and adjust our purchase price allocation accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805").

The fair value of property, plant and equipment was based on the combination of the cost and market approaches. Key assumptions in the cost approach include determining the replacement cost by evaluating recently published data and adjusting replacement cost for physical deterioration, functional and economic obsolescence. We used the market approach to measure the value of certain assets through an analysis of recent sales or offerings of comparable properties.

The fair value of customer relationships was based on the income approach. Key assumptions in the income approach include projected revenue attributable to customer relationships, attrition rate, operating margins and discount rates.


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Notes to Consolidated Financial Statements

The fair values discussed above were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

The fair values of all other current assets and payables were equivalent to their carrying values due to their short-term nature.

Unaudited Pro Forma Financial Information

The following table summarizes the unaudited pro forma financial information of the Company assuming the H2O Midstream Acquisition had occurred on January 1, 2023. The unaudited pro forma financial information has been adjusted to give effect to certain pro forma adjustments that are directly related to the H2O Midstream Acquisition based on available information and certain assumptions that management believes are factually supportable. The most significant pro forma adjustments relate to (i) incremental interest expense associated with revolving credit facility borrowings incurred in connection with the H2O Midstream Acquisition, (ii) incremental depreciation resulting from the estimated fair values of acquired property, plant and equipment, (iii) incremental amortization resulting from the estimated fair values of acquired customer relationship intangibles and (iv) transaction costs. The unaudited pro forma financial information excludes any expected cost savings or other synergies as a result of the H2O Midstream Acquisition. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have been achieved had the H2O Midstream Acquisition been effective as of the dates presented, nor is it indicative of future operating results of the combined company. Actual results may differ significantly from the unaudited pro forma financial information.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Net sales	$	3,054.6	$	4,769.3	$	9,523.1	$	12,592.7
(Loss) income from continuing operations, net of tax	$	(130.7)	$	129.9	$	(187.3)	$	196.8

3. Segment Data

Prior to July 2024, we aggregated our operating units into three reportable segments: Refining, Logistics, and Retail. However, on July 31, 2024, Delek entered into the Retail Purchase Agreement to sell the Retail Stores, which consist of the entire retail segment to FEMSA. As a result of the Retail Purchase Agreement, we met the requirements of ASC 205-20, Presentation of Financial Statements - Discontinued Operations and ASC 360, Property, Plant and Equipment, to report the results of the Retail Stores as discontinued operations and to classify the Retail Stores as a group of discontinued operations assets. The Retail Transaction closed on September 30, 2024. Operations that are not specifically included in the reportable segments are included in Corporate, Other and Eliminations, which consist of the following:

•our corporate activities;

•results of certain immaterial operating segments, including our Canadian crude trading operations (as discussed in Note 11); and

•intercompany eliminations.

During the second quarter 2024, we realigned our reportable segments for financial reporting purposes to reflect changes in the manner in which our chief operating decision maker, or CODM, assesses financial information for decision-making purposes. The change represents reporting the operating results of our 50% interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S. within the refining segment. Prior to this change, these operating results were reported as part of corporate, other and eliminations. While this reporting change did not change our consolidated results, segment data for previous years has been restated and is consistent with the current year presentation throughout the financial statements and the accompanying notes.

On August 5, 2024, we contributed all of our 50% investment in W2W Holdings LLC ("HoldCo") which included our 15.6% indirect interest in the WWP joint venture and related joint venture indebtedness, to a subsidiary of Delek Logistics. The operating results of HoldCo are now reported in our Logistics segment. Previously, they were reported as part of corporate, other and eliminations.

The disaggregated financial results for the reporting segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting internal operating decisions. The CODM evaluates performance based upon EBITDA attributable to Delek. We define EBITDA attributable to Delek for any period as net income (loss) attributable to Delek plus interest expense, income tax expense (benefit), depreciation and amortization. Segment EBITDA should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered alternatives to net income (loss), which is the most directly comparable financial measure to EBITDA that is in accordance with U.S. GAAP. Segment EBITDA, as determined and measured by us, should also not be compared to similarly titled measures reported by other companies.

Assets by segment are not a measure used to assess the performance of the Company by the CODM and thus are not disclosed.

Refining Segment

The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals. The refining segment includes the following:


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Notes to Consolidated Financial Statements

•Tyler, Texas refinery (the "Tyler refinery");

•El Dorado, Arkansas refinery (the "El Dorado refinery");

•Big Spring, Texas refinery (the "Big Spring refinery"); and

•Krotz Springs, Louisiana refinery (the "Krotz Springs refinery").

The refining segment also owns three biodiesel facilities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi. During the second quarter of 2024, we made the decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives. See Note 17 for further information. In addition, the refining segment includes our wholesale crude operations and our 50% interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S.

Logistics Segment

Our logistics segment owns and operates crude oil, refined products and natural gas logistics and marketing assets as well as water disposal and recycling assets. The logistics segment generates revenue by charging fees for gathering, transporting and storing crude oil and natural gas, marketing, distributing, transporting and storing intermediate and refined products and disposing and recycling water in select regions of the southeastern United States, the Midland Basin in Texas, the Delaware Basin in New Mexico and West Texas for our refining segment and third parties, and sales of wholesale products in the West Texas market.

Business Segment Operating Performance

The following is a summary of business segment operating performance as measured by EBITDA attributable to Delek for the period indicated (in millions):


	Three Months Ended September 30, 2024
(In millions)	Refining		Logistics		Corporate, Other and Eliminations (3)		Consolidated
Net revenues (excluding intercompany fees and revenues)	$	2,852.6	$	99.2	$	—	$	2,951.8
Inter-segment fees and revenues (1)	175.2		114.9		(199.5)		90.6
Total revenues	$	3,027.8	$	214.1	$	(199.5)	$	3,042.4

Segment EBITDA attributable to Delek	$	12.8	$	68.6	$	(88.9)	$	(7.5)
Depreciation and amortization	(76.0)		(24.2)		2.1		(98.1)
Interest expense, net	(28.0)		(13.6)		(37.2)		(78.8)
Income tax benefit							40.3
Income from discontinued operations, net of tax							67.3
Net loss attributable to Delek							$	(76.8)

Income from equity method investments	$	9.9	$	15.6	$	(0.4)	$	25.1
Capital spending (2)	$	57.7	$	65.2	$	5.6	$	128.5


	Three Months Ended September 30, 2023
(In millions)	Refining		Logistics		Corporate, Other and Eliminations (3)		Consolidated
Net revenues (excluding intercompany fees and revenues)	$	4,392.4	$	119.5	$	—	$	4,511.9
Inter-segment fees and revenues (1)	232.1		156.4		(271.6)		116.9
Total revenues	$	4,624.5	$	275.9	$	(271.6)	$	4,628.8

Segment EBITDA attributable to Delek	$	295.7	$	96.5	$	(74.8)	$	317.4
Depreciation and amortization	(60.1)		(24.6)		(3.0)		(87.7)
Interest expense, net	(12.0)		(37.0)		(33.4)		(82.4)
Income tax expense							(29.1)
Income from discontinued operations, net of tax							10.5
Net income attributable to Delek							$	128.7

Income from equity method investments	$	10.8	$	9.3	$	6.9	$	27.0
Capital spending (2)	$	20.2	$	13.1	$	7.0	$	40.3


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Notes to Consolidated Financial Statements


	Nine Months Ended September 30, 2024
(In millions)	Refining		Logistics		Corporate, Other and Eliminations (3)		Consolidated
Net revenues (excluding intercompany fees and revenues)	$	8,872.1	$	319.4	$	—	$	9,191.5
Inter-segment fees and revenues	571.2		411.4		(695.6)		287.0
Total revenues	$	9,443.3	$	730.8	$	(695.6)	$	9,478.5

Segment EBITDA attributable to Delek	$	135.2	$	268.9	$	(163.3)	$	240.8
Depreciation and amortization	(194.8)		(74.9)		(8.5)		(278.2)
Interest expense, net	(47.1)		(89.1)		(107.9)		(244.1)
Income tax benefit							56.7
Income from discontinued operations, net of tax							78.2
Net loss attributable to Delek							$	(146.6)

Income from equity method investments	$	25.8	$	32.0	$	19.6	$	77.4
Capital spending (2)	$	126.2	$	90.6	$	17.8	$	234.6


	Nine Months Ended September 30, 2023
(In millions)	Refining		Logistics		Corporate, Other and Eliminations (3)		Consolidated
Net revenues (excluding intercompany fees and revenues)	$	11,842.2	$	351.9	$	—	$	12,194.1
Inter-segment fees and revenues (1)	629.3		414.4		(712.7)		331.0
Total revenues	$	12,471.5	$	766.3	$	(712.7)	$	12,525.1

Segment EBITDA attributable to Delek	$	613.0	$	278.8	$	(198.4)	$	693.4
Depreciation and amortization	(176.5)		(69.4)		(9.3)		(255.2)
Interest expense, net	(33.2)		(104.6)		(101.3)		(239.1)
Income tax expense							(38.3)
Income from discontinued operations, net of tax							23.9
Net income attributable to Delek							$