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| 8-K - 8-K - Delek US Holdings, Inc. | dk-8kxinvestorpresentation.htm |
November 22, 2017
Delek US Holdings, Inc.
Investor Presentation - Tel Aviv Stock Exchange
Today’s Speakers
2
Ezra Uzi Yemin (Chairman, President and Chief Executive Officer)
Ezra Uzi Yemin has served as the Chairman of our Board since December 2012, as our Chief Executive Officer since
June 2004 and as our president and a director since April 2001. Mr. Yemin also served as our treasurer from April
2001 to November 2003 and as our secretary from May 2001 to August 2005. Mr. Yemin’s duties include the
formulation of our policies and direction, oversight of executive officers, and overall responsibility for our operation
and performance. Mr. Yemin has also served as the chairman of the board of directors and chief executive officer of
Delek Logistics GP, LLC since April 2012.
Assi Ginzburg (Executive Vice President)
Assaf Ginzburg has served as an Executive Vice President since May 2009 and as a vice president since February
2005. Mr. Ginzburg served as our Chief Financial Officer from January 2013 to June 2017. Mr. Ginzburg has also
served as a member of the board of directors and an executive vice president of Delek Logistics GP, LLC since April
2012, and as its chief financial officer from January 2013 to June 2017. Mr. Ginzburg has been a member of the
Israel Institute of Certified Public Accountants since 2001.
Disclaimers
3
Forward Looking Statements:
Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; collectively with Delek US, defined as “we”, “our”) and Alon USA Partners, LP (“Alon
Partners”) are traded on the New York Stock Exchange in the United States under the symbols “DK”, ”DKL” and “ALDW” respectively, and, as such, are governed by the rules and
regulations of the United States Securities and Exchange Commission. These slides and any accompanying oral and written presentations contain forward-looking statements that
are based upon current expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about future results,
performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding OPEC crude oil markets, production,
pricing, cuts and growth; differentials including increases, trends and the impact of thereof on crack spreads; crude oil quality; the post-merger integration and transition plan with
Alon USA Energy Inc. (“ALJ”), including the timing, closing and success thereof; crude oil pricing, production, quality, imports, exports, cuts and location differentials;
improvements in global markets; pipeline utilization, expansions and rates; Permian Basin production and takeaway balance; refinery complexity, configurations, utilization, crude
oil slate flexibility, capacities, equipment limits, margins, bottlenecks and capital investments; advantages of U.S. refineries to global peers including world distillation capacity and
transportation and energy advantages; crack spread cycles and trends; the potential transaction with Alon Partners including the costs, exchange ratio, benefits and synergies
thereof and our ability to complete the transaction timely or at all; future crude oil supply at the Company's refineries including link to WTI, differentials, cash flow, EBITDA; our
ability to complete the Alkylation project at Krotz Springs successfully or at all and the benefits, flexibility, returns and EBITDA therefrom; future investments in, projects at and
growth of our retail, logistics and refining assets and the value and impact thereof; financial strength and flexibility; integration of assets and operations; light product pricing
including the relationship of such pricing to the Gulf Coast; future initiatives, valuations, balance sheet, cash, dropdown inventory, cash flow and self help projects including the
profitability thereof; cost of capital and capital allocation and value creation relating thereto; our ability to create sustainable value; synergies and efficiencies relating to the ALJ
acquisition; future ability to return value to shareholders, future dropdowns and the success thereof; continued safe and reliable operations; opportunities, anticipated future
performance and financial position, and other factors. 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 related to the ability to successfully integrate the businesses of Delek US and ALJ; the risk that the combined
company may be unable to achieve cost-cutting synergies, or it may take longer than expected to achieve those synergies; uncertainty related to timing and amount of value
returned to shareholders; risks and uncertainties with respect to the quantities and costs of crude oil we are able to obtain and the price of the refined petroleum products we
ultimately sell; gains and losses from derivative instruments; management's ability to execute its strategy of growth through acquisitions and the transactional risks associated
with acquisitions and dispositions; acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment in carrying value
of the asset; changes in the scope, costs, and/or timing of capital and maintenance projects; operating hazards inherent in transporting, storing and processing crude oil and
intermediate and finished petroleum products; our competitive position and the effects of competition; the projected growth of the industries in which we operate; general
economic and business conditions affecting the geographic areas in which we operate; and other risks contained in Delek US’, Delek Logistics’ and Alon Partners’ 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. Neither Delek US, Delek Logistics Partners nor Alon Partners undertakes any obligation to update or revise any such forward-looking
statements.
Non-GAAP Disclosures:
Delek US and Delek Logistics believe that the presentation of EBITDA, distributable cash flow and distribution coverage ratio provides useful information to investors in assessing
their financial condition, results of operations and cash flow their business is generating. EBITDA, distributable cash flow and distribution coverage ratio should not be considered
as alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA,
distributable cash flow and distribution coverage ratio have important limitations as analytical tools because they exclude some, but not all, items that affect net income.
Additionally, because EBITDA, distributable cash flow and distribution coverage ratio may be defined differently by other companies in its industry, Delek US' and Delek Logistics’
definitions may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see reconciliations of EBITDA and distributable cash
flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP in the appendix.
Current Refining Market Environment
5
OPEC production increases led to dramatic decline in oil prices
Permian Basin production continued to grow as oil price declined
In November 2016, OPEC agreed to first oil output cut in eight years
Permian Production up 51% since Oct. 2014 and 24% since Nov. 2016
Permian Production, 2018-2019: Simmons & Company research, May 2017.
US Crude Oil Production is Growing
-
2,000
4,000
6,000
8,000
10,000
12,000
$-
$20
$40
$60
$80
$100
$120
$140
$160
Ja
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WTI $/bbl Permian Oil Prod. (MBbl/d) US Oil Production
Differential is additive to crack spread trends in the current market environment
WTI-Brent Crude Oil Price Differential Trends Improving
6 1) Differential source: Bloomberg 11/17/18.
-$30
-$25
-$20
-$15
-$10
-$5
$0
$5
$10
Jan
-0
7
A
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Oct
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WTI vs Brent, $/bbl (1) WTI versus Brent has widened
Began in early 2017
Primary drivers of this change include:
Global market improvement - OPEC
cuts
Current WTI price supports production
in U.S.
Increased light production from Shale
plays
Transportation cost to clear in the
export market
Increased production of light domestic crude
oil
Permian Basin production has
continued to grow
Light barrels will need to clear the
market
WTI versus Mars and Maya differentials favor light crude oil refineries
Light-Heavy Crude Oil Price Differential Trends Improving
7 1) Differential source: Argus – November 20, 2017; NYMEX futures prices.
-$6.00
-$4.00
-$2.00
$0.00
$2.00
$4.00
$6.00
Jan
-1
5
M
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5
M
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5
Ju
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5
Se
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5
N
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5
Jan
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M
ar-1
6
M
ay-1
6
Ju
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6
Se
p
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6
N
o
v-1
6
Jan
-1
7
M
ar-1
7
M
ay-1
7
Ju
l-1
7
Se
p
-1
7
N
o
v-1
7
S
p
er
b
b
l.
WTI vs Mars, $/bbl (1)
-$2.00
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
Jan
-1
5
M
ar-1
5
M
ay-1
5
Ju
l-1
5
Se
p
-1
5
N
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5
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6
M
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6
M
ay-1
6
Ju
l-1
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Se
p
-1
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N
o
v-1
6
Jan
-1
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M
ar-1
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M
ay-1
7
Ju
l-1
7
Se
p
-1
7
N
o
v-1
7
S
p
er
b
b
l.
WTI vs Maya, $/bbl (1) Light – Heavy crude oil differential has narrowed
during 2017
OPEC cuts have primarily been medium
sour barrels
Heavy sour production declines in Mexico
and Venezuela
Majority of barrels from the U.S. shale
production are light sweet
This change in differentials affects the Gulf Coast
refining complex economics
Most US Gulf Coast refineries are
configured to run medium/heavy
Significant impact on effective refinery
capacity as light crude oil is increased
Capital investment can be significant to
overcome bottlenecks
8 1. Sources: Oil & Gas Journal and Stancil data.
2. Henry Hub natural gas prices.
U.S. Refineries have Advantages compared to Global Peers
US Refiners are more complex on average
allowing more production flexibility
U.S. complexity 11.5 versus 7.0 global
average
In addition to complexity, advantages include:
Transportation advantage – Crude oil
production near consumers
Energy advantage with declining natural
gas prices
Crude oil differentials favor U.S. as domestic
crude oil production has increased
World Refining Crude Oil Distillation Capacity (1)
(Barrels per Calendar Day unless otherwise noted)
$0
$2
$4
$6
$8
$10
$12
$14
Jan
-0
5
Se
p
-0
5
M
ay-0
6
Jan
-0
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Se
p
-0
7
M
ay-0
8
Jan
-0
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Se
p
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M
ay-1
0
Jan
-1
1
Se
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-1
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M
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Jan
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Se
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M
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M
ay-1
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Jan
-1
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Se
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S
p
er
M
M
B
tu
US Natural Gas Prices (1)
Crack Spread Cycle Turning Up
Crack spread at highest since 2015 and expected to continue upward trend
9
-$30
-$20
-$10
$0
$10
$20
$30
$40
$50
1
0
-J
a
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-1
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-Ma
r-
1
0
1
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-Ma
y
-1
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1
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l-
1
0
1
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-1
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1
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1
2
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1
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-1
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2
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3
2
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r-
1
3
2
-Ma
y
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2
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1
3
2
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2
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3
2
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2
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1
4
2
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y
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1
4
2
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p
-1
4
2
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4
2
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5
2
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r-
1
5
2
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y
-1
5
2
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5
2
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-1
5
2
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v
-1
5
2
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a
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6
2
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r-
1
6
2
-Ma
y
-1
6
2
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1
6
2
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p
-1
6
2
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-1
6
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a
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-1
7
2
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1
7
2
-Ma
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-1
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2
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1
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2
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-1
7
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v
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2
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a
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-1
8
2
-Ma
r-
1
8
2
-Ma
y
-1
8
Q
3
2
0
1
8
2
0
1
9
Brent-WTI Cushing Spread Per Barrel WTI 5-3-2 Gulf Coast Crack Spread Per Barrel
(1) Source: Platts as of November 20, 2017; 5-3-2 crack spread based on HSD. Mitsui Forward Curve as of November 13, 2017
(2) Crack Spreads: (+/-) Contango/Backwardation
2010
Avg:
$9.08
2011
Avg:
$23.78
2012
Avg:
$26.91
2013
Avg:
$18.08
2014
Avg:
$12.60
2015
Avg:
$15.67
2016
Avg:
$10.36
2017
Avg:
$14.04
2018F
Avg:
$17.66
2010 Brent-
WTI Diff:
$(0.67)
2011 Brent-
WTI Diff:
$(15.81)
2012 Brent-
WTI Diff:
$(17.57)
2013 Brent-
WTI Diff:
$(10.77)
2014 Brent-
WTI Diff:
$(6.48)
2015 Brent-
WTI Diff:
$(4.86)
2016 Brent-
WTI Diff:
$(1.71)
2017 Brent-
WTI Diff:
$(4.01)
2018F Brent-
WTI Diff:
$(5.58)
Delek US Overview
11
Current Delek US Corporate Structure
(1) As of September 30, 2017, a 5.4% interest in the Delek US ownership interest in the general partner is held by three members of senior management of Delek US. The
remaining ownership interest is indirectly held by Delek US.
(2) Market cap based on share and unit prices on November 20, 2017.
94.6%
ownership interest (1)
2.0% interest
General partner interest
Incentive distribution
rights Delek Logistics Partners, LP
NYSE: DKL
Market Cap: $694 million
Delek Logistics GP, LLC
(the General Partner)
Delek US Holdings, Inc.
NYSE: DK
Market Cap: $2.5 billion
61.5% interest in
LP units
Alon USA Partners, LP
NYSE: ALDW
Market Cap: $932 million
81.6% interest
Focused on simplifying the structure
• On Nov. 8, 2017 a definitive agreement was reached to acquire the remaining limited partner units of ALDW
that Delek US does not already own in an all stock transaction.
• Exchange ratio of 0.49 shares of Delek US for each ALDW common unit not already owned by Delek US,
subject to customary closing conditions
Investment Highlights
12
• Net income of $1.29 per share
• Adjusted net income of $0.81 per share
• Adjusted EBITDA of $195.9 million
Strong Third Quarter 2017
Performance (1)
• Closed on July 1, 2017
• Purchased the remaining 53% ownership that DK did not
already own in an all stock transaction; exchange ratio
0.5040 share of DK for each share for ALJ
• Reached definitive agreement to purchase remaining ALDW
units on November 8, 2017
Alon Acquisition
Opportunities to Unlock Value
•September 30, 2017 balance sheet:
•Delek US: $831.7 million of cash; $1,427.8 million of debt
•Includes $5.3 million cash and $401.3 million debt of DKL
Flexible Financial Position to
Support Growth
(1) Please see page 36 for reconciliation of GAAP to non GAAP amounts.
Integrated Company with Asset Diversity and Scale
Strategically Located Assets with Permian Basin Exposure
13
Retail
• Approximately 300
stores
• Southwest US locations
• Largest licensee of 7-
Eleven stores in the US
• West Texas wholesale
marketing business
Asphalt
• 14 asphalt terminals
located in TN, OK, TX,
WA, CA, AZ and NV
• Largest asphalt supplier
in CA and second
largest asphalt supplier
in TX
Refining (1)
• 7th largest independent
refiner
• 302,000 bpd in total
• El Dorado, AR
• Tyler, TX
• Big Spring, TX
• Krotz Springs, LA
• Own 81.6% of LP/100%
of GP of ALDW, which
owns Big Spring
Logistics
• 9 terminals
• Approximately 1,290
miles of pipeline
• 8.5 million bbls of
storage capacity
• West Texas wholesale
• Joint venture crude oil
pipelines: RIO / Caddo
• Own 63.5%, incl. 2% GP,
of DKL
1) California refineries have not operated since 2012.
Renewables
Approx. 61m gallons
Biodiesel:
• Crossett, AR
• Cleburne, TX
Renewable Diesel/Jet:
• California
Strategic Combination with Financial Flexibility to Support
Growth and Unlock Value
14
• Grown through opportunistic acquisitions across
multiple market cycles
• Expertise to invest in/improve operations
• Strong balance sheet
• Low cost reliable operator
• Retail expertise/largest 7-Eleven licensee
• Asphalt blending and marketing expertise
• Historically capital constrained
Creates a Permian Focused Refining System with Broadened Marketing Reach
Initiatives underway to unlock sustainable value from combined organization
Synergies
• Target - $85 million to $105
million annual synergies by 2018
• Captured - $53 million on
annualized basis through
September 2017
Unlock Logistics Value
• Potential Growth for DKL -
$78 million of EBITDA for
potential future dropdowns
• Dropdowns provides cash
flow back to Delek US
Simplify Structure
• ALDW Transaction –
Announced agreement to
purchase remaining 18.4% of
ALDW LP units that Delek US
does not own, subject to
customary closing conditions.
Improve Operations
• Krotz Springs Refinery –
Reduce cost; add flexibility;
increase WTI-linked crude
• California Assets – Derive
Value from asset base
through asset sale program
and reducing cost
WTI-Linked Crude Oil Refining System
System with Over 300,000 bpd of Crude Oil Throughput Capacity (~69% Permian Basin Based)
WTI-Linked Refining System with Permian Based Crude Oil Slate
16
Tyler, Texas
• 75,000 bpd crude
throughput
• 8.7 complexity
• Light crude refinery
• Permian Basin and
east Texas sourced
crude
El Dorado, Arkansas
• 80,000 bpd crude
throughput
• 10.2 complexity
• Flexibility to process
medium and light
crude
• Permian Basin, local
Arkansas, east Texas
and Gulf Coast crudes
Big Spring, Texas
• 73,000 bpd crude
throughput
• 10.5 complexity
• Process WTI and WTS
crude
• Located in the Permian
Basin
Krotz Springs, Louisiana
• 74,000 bpd crude
throughput
• 8.4 complexity
• Permian Basin, local
and Gulf Coast crude
sources
Crude Oil Supply is Primarily WTI Linked barrels - Currently approximately 262,000 barrels per day/95.6
million barrels per year; $1/bbl. change in WTI-Brent differential is approximately $96 million of EBITDA
Big Spring
73 kbpd
26.6 m bbls
100% WTI
linked
Tyler
75 kbpd
27.4 m bbls
100% WTI
linked
El Dorado
80 kbpd
29.2 m bbls
100% WTI
linked
Krotz
74 kbpd
27.0 m bbls
46% WTI
linked
By 2018 WTI-linked barrels accounted for 90% of the crude oil slate; Benefitting from Current Differentials
Delek US’ WTI Linked Crude Oil Supply has Continued to Grow
17
Ability to increase WTI-linked barrels in 2018
• Krotz Springs – LLS vs Midland – Ability to increase Midland barrels by 10 kbpd; each $1 increase in
differential equates to $3.7 million EBITDA when differential is above $3.50/bbl
• This would increase WTI-linked barrels to approximately 272,000 barrels per day/99.3 million barrels per
year; $1/bbl change in Midland-Brent differential is approximately $99 million of EBITDA in 2018
• significant cash flow potential from refining assets
18,250 20,450
34,485
41,947 43,875
46,887
48,703
56,575
99,304
6,051
39,069
0
20,000
40,000
60,000
80,000
100,000
120,000
2010 2011 2012 2013 2014 2015 2016 2017
Current
Prod.
2018 E
In
0
0
0
o
f
B
ar
rel
s
DK WTI Linked Bbls Acquisition
26,501
95,644
Expected annual EBITDA $35-$40 million; Target completion in 1Q19
Krotz Springs Alkylation Project
18
• Alkylation unit with 6,000 bpd capacity
• Approx. $103.0 estimated capital costs with
$20.0 million spent as of Sept. 30, 2017
• Improves refinery flexibility
• Converts lower priced iso-butane into higher
value alkylate
• Enables multiple summer grades of gasoline to
be produced
• Increases octane to produce premium gasoline
• Ability to access local markets
• Estimated project returns
• Estimated annual EBITDA (1) $35-$40 million
• Driven by the conversion/Reduces
dependency on crack spread environment for
project return
• Economics based on 67 cents/gallon spread
between CBOB 7.8 and iso-butane
• Sensitivity: each 10 cents/gallon change equals
$3.2 million EBITDA change
0.69
0.97
1.23 1.21
0.90
0.61
0.65
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Sp
re
ad
, CP
G
Gulf Coast CBOB 7.8 – Isobutane Spread
38.4 44.0
22.2
22.2
8.0
8.0
11.1 8.7
Base Alky
Change in Yields, in 000 bpd
Gasoline Diesel/Jet Heavy Oils Other
1) Please see page 37 for a reconciliation of forecasted EBITDA to forecasted net income.
Opportunities for Retail
Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas
19
Current Retail Operations
• Approximately 300 store retail system in
Central/west Texas and New Mexico
• Supplies ~635 branded sites,
including substantially all of Alon’s
retail sites
• Opportunity to invest in business to
improves store base and grow over time
to increase retail system value
Refineries
Legen
d:
Big Spring
Krotz
Spring
s
Branded license agreement and payment card
location Branded company-operated and distributor location
Unbranded supply available
Phoenix
Tucso
n
El
Paso
Abilene
Wichita
Falls
Albuquerque
DKL served terminals
El
Dorado Tyl
er
Prior Retail Experience
• Built Southeast U.S. retail system
with 348 stores
• In November 2016 sold the network
for $535.0 million, net cash proceeds
of $377.3 million before tax
• Deal value of approximately 12.7x
EBITDA multiple
13.6x
16.4x
6.9x 7.9x
19.3x
7.8x
10.4x
12.7x
Susser
(2014)
Hess
(2014)
Pioneer
(2014)
Aloha
(2014)
Warren
(2014)
Pantry
(2014)
CST
Brands
(2016)
DK
Retail
(2016)
Comparative Retail Transaction EBITDA Multiples
Median: 10.4x
Logistics Assets Positioned for
Growth
~805 miles (1) of crude oil and
product transportation pipelines,
including the 195 mile crude oil
pipeline from Longview to
Nederland, TX
~ 600 mile crude oil gathering
system in AR
Storage facilities with 7.3 million
barrels of active shell capacity
Rail Offloading Facility
Pipelines/Transportation Segment
Wholesale and marketing business
in Texas
9 light product terminals: TX, TN,
AR
Approx. 1.2 million barrels of
active shell capacity
Wholesale/Terminalling Segment
21
Logistics Assets Positioned to Benefit from Permian Basin Activity
Growing logistics assets support crude oil sourcing and product marketing for customers
(1) Includes approximately 240 miles of leased pipeline capacity.
(2) DK assets acquired through the ALJ acquisition which creates potential for drop-down assets to DKL. Drop-down subject to Delek Logistics' conflicts committee review and approval.
Market information based on Nov. 20, 2017. NY008LRP - 912119_1.wor - rL - r- rLL P 912119_1.wo
San Angelo
Fort Worth Dallas
Waco
Tyler
Shreveport
Monroe
El Dorado
Beaumont New Orleans
Little Rock Memphis
Brentwood
Nashville
Knoxville
Abilene
Big Spring
Krotz Springs
NY008LRP - 912119_1.wor - rL 1.P 912119_
SALA GATHERING SYSTEM
AR
LA
Magnolia El Dorado
(NY008LRP) 912119_1.wor1. r(NY008LR ) 912119_ rr) 912119 1.1.) 912119(NY008LRP _ o(NY008LR _
EAST TEXAS LOGISTICS SYSTEM
Mt. Pleasant
Big Sandy
Longview
Kilgore
Henderson
Tyler
DELEK THIRD-
PARTY ASSETS
Enterprise Pipeline (Product)
Delek US Refinery
DELEK LOGISTICS (DKL)
Product Terminal
Product Tank Farm
Product Pipeline
Corporate Headquarters
Crude Tank Farm
Crude Pipeline Third Party Terminal
Product Terminal
Asphalt Terminal
West Coast Asphalt Terminals (2)
Mojave, Phoenix, Elk Grove and
Bakersfield
NY008LRP - 912119_1.wor - .L P rY008 912119_1- .- .P rP r008L 912119_1L008 912119_1Y R - . o - .Y
Paramount/
Long Beach
Mojave
CA
Bakersfield
Elk Grove
Flagstaff
Phoenix
NV
AZ
Overview
NYSE: DKL
Current Price: $27.40/unit
Market Capitalization: $694.3 million
Total Distribution Since IPO:
$10.65/unit
3Q17 Net Income: $16.9 million
3Q17 EBITDA: $29.7 million
Increased Drop Down Inventory Creates Platform to Support Logistics
Growth
22
Potential Growth for DKL
• Delek Logistics Partners provides
platform to unlock logistics value
• Increased access to Permian and
Delaware basin through presence of
Big Spring refinery
• Improves ability to develop
crude oil gathering and
terminalling assets
1) Information for illustrative purposes only to show potential based on estimated dropdown assets listed. Actual amounts will vary based on market conditions, which assets
are dropped, timing of dropdowns, timing of Paline Pipeline 7,000 bpd capacity expansion, actual performance of the assets and Delek Logistics in the future.
2) Based on 7x multiple. Assumed for illustrative purposes. Will vary based on market conditions and valuations at the time of the dropdown of each asset.
3) Please see page 38 for a reconciliation of EBITDA.
Strong EBITDA Growth Profile Supporting Distribution Growth (1)
$108
$12 $8 $34
$32
$194
$-
$50.0
$100.0
$150.0
$200.0
$250.0
LTM DKL
EBITDA
9/30/2017
Asphalt Drop
down
Inventory
Annualized
EBITDA -
Paline
expansion
Big Spring
Drop Down
Inventory
Krotz Springs
Drop Down
Inventory
Total EBITDA
Potential
• Drop downs, excluding Krotz Springs, could create significant cash flow to Delek
• $42-$50m EBITDA equates to ~$300-350m cash proceeds to DK (2)
• Provides visibility for continued DKL LP double digit distribution growth
• Significant GP benefits
Potential Dropdown Items from
Alon Acquisition
Estimated EBITDA
($ million / year)
Asphalt Terminals $11-13
Big Spring Asphalt Terminal $9-11
Big Spring assets $8-10
Big Spring Wholesale Marketing $14-16
Total Excluding Krotz Springs $42-50
Krotz Springs assets $30-34
Total $72-84 (3)
($ in millions)
Note: based on DKL LTM EBITDA + potential
dropdowns + Paline expansion
Potential Timing
4Q17 1H18 2019 1Q18
Delek Logistics Financial Update
24
(1) MQD = minimum quarterly distribution set pursuant to the Partnership Agreement.
(2) Distribution coverage based on distributable cash flow divided by distribution amount in each period. Please see page 42 for reconciliation.
(3) 3Q17 based on total distributions paid on November 14, 2017.
(4) Leverage ratio based on LTM EBITDA as defined by credit facility covenants for respective periods.
1.70x 1.58x
2.28x 2.40x
3.21x 2.69x 2.55x 2.56x 3.00x
3.14x 3.11x 3.49x 3.48x 3.47x 3.70x 3.85x 3.83x
3.88x 3.72x
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
DKL: Increased Distribution with Conservative Coverage and Leverage
Distribution per unit has been increased nineteen consecutive time since the IPO
Distributable Cash Flow Coverage Ratio (2)(3)
Leverage Ratio (4)
$0.375 $0.385 $0.395 $0.405 $0.415 $0.425
$0.475 $0.490 $0.510 $0.530 $0.550
$0.570 $0.590 $0.610 $0.630 $0.655
$0.680 $0.690 $0.705 $0.715
MQD (1)1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Increased 90.7% through 3Q 2017 distribution
1.39x 1.32x 1.35x 1.30x
1.61x 2.02x 1.42x 1.67x
1.23x 1.47x 1.50x 1.17x 1.19x 1.31x 0.99x 0.90x 0.98x
1.07x
0.97x
1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q16 1Q17 2Q17 3Q17
Avg. 1.35x in 2013
Avg. 1.68x in 2014
Avg. 1.37x in 2015 Avg. 1.09x in 2016
Avg. 1.01x in 2017
25
Delek US GP and IDR Ownership is in DKL in the high splits
Future Potential Dropdowns to DKL Benefit Delek US Cash Flow
Supports Long Term Distribution Growth at Delek Logistics
Total Quarterly Distribution Per Unit
Target Amount
Unitholders General Partner
Minimum Quarterly Distribution below $0.37500 98.0% 2.0%
First Target Distribution $0.37500 to $0.43125 98.0% 2.0%
Second Target Distribution $0.43125 to $0.46875 85.0% 15.0%
Third Target Distribution $0.46875 to $0.56250 75.0% 25.0%
Thereafter above $0.56250 50.0% 50.0%
• DKL Distribution was
$0.715/unit for 3Q 2017
• DKL distribution growth
target per LP unit of at least
10% annually through 2019
• Delek US Ownership:
• 61.5% of LP Units
• 2% GP Interest
(1) Based on no change in number of units and assumes all units are paid distribution, including IDRs to Delek US and its affiliates. Targeted annual growth rate in distribution
based on 10% through 2019 per Delek Logistics guidance in 4Q16 earnings release. Growth based on declared amounts. Growth from 2019 to 2020 based on 10% per year.
Delek US and affiliates own approximately 61% of limited partner units and 100% of the general partner units. Information for illustrative purposes only, actual amounts will
be determined by Delek Logistics based on future performance and pursuant to its partnership agreement.
Assumed Annual Distribution (LP and GP) to Delek US if Delek Logistics were to have a long term distribution
growth of 10% per year.(1) Combination of all Alon logistic assets, including asphalt, could potentially support
growth to 2020
$28.1 $33.1
$38.3 $42.7 $47.0
$51.7 $56.8
$1.9 $5.0
$12.4
$18.8
$25.7
$33.2
$41.6
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2014 2015 2016 2017E 2018E 2019E 2020E
Distribution - LP Distribution - GP
$ in millions 2016 – 2020E GP distribution CAGR +35%
26
(1) Quarterly distributions are included based on payment date to calculated cumulative distribution during period since IPO in November 2012. Data through 11/20/17.
DKL: Consistent Distribution Growth Returned Value to Unitholders
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
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it
+
.Cu
m
u
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ti
ve
D
is
tri
b
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tion/
u
n
it
DKL Close Cumulative Distribution
$10.65 cumulative
Distribution/ LP unit
Solid Financial Position
28 Source: Company reports, Bloomberg and J.P. Morgan estimates; J.P. Morgan 3Q summary report on 11/13/17
Strong Performance by Delek US in 3Q17 Versus Expectations
Delek US led the refining sector with actual results compared to early October expectations
41% 41%
37%
25%
21% 20%
13%
2%
DK MPC HFC Average VLO PBF ANDV PSX
Refining Sector % beat vs October 5th consensus estimates
Financial Strength and Flexibility to Support Initiatives
At September 30, 2017 approximately $832 million of cash
29
• Focused on growing business, while maintaining
financial flexibility
• Sold retail assets in Nov. 2016 for $535
million
• Closed Alon transaction on July 1, 2017
• At September 30 cash balance of $832 million and
net debt of $596 million
• Net debt of $200 million excluding DKL
related cash/debt
• Current balance sheet should have financial
flexibility to support:
• Opportunity for cost of capital benefits from
combination estimated to be approximately
$20 million
• Capital allocation program focused on
investment, return to shareholders and
growth over cycle
1) Amounts prior to 4Q16 have been adjusted to remove cash associated the retail operations that were sold in November 2016.
2) Based on company filings as of 9/30/17.
Capitalization as of September 30, 2017 (2)
Cash Balance ($MM) (1)
$40
$219
$590
$383
$430
$287
$689 $832
2010 2011 2012 2013 2014 2015 2016 3Q17
($ in millions)
Current Debt $351.0
Long-Term Debt 1,076.8
Total Debt $1,427.8
Cash ($831.7)
Net Debt Delek US Consolidated $596.1
Delek Logistics
Total Debt $401.3
Cash ($5.3)
Net Debt Delek Logistics $396.0
Net Debt Delek US excluding DKL $200.1
Invest in the business
Forecast 2017 capex includes spending on Alon assets
for six months
Commenced Alky unit project at Krotz Springs
2018 El Dorado Turnaround planning underway
Consent decree spending at Big Spring
Programs in place allow different options to return cash to
shareholders
Regular dividend
$150 million DK share repurchase plan(1)
$30 million DKL limited partner unit repurchase plan(1)
Capital Allocation Focused on Long-Term Value Creation
30
Dividends Declared ($/share)
$0.15 $0.15 $0.15 $0.21
$0.55 $0.60 $0.60 $0.60 $0.60 $0.18
$0.39
$0.40
$0.40
$0.15 $0.15
$0.33
$0.60
$0.95 $1.00
$0.60 $0.60 $0.60
2009 2010 2011 2012 2013 2014 2015 2016 LTM 3Q17
Regular Special
$37 $75
$42
$6
$150
2013 2014 2015 2016 Current
Authorization
DK Share Repurchases ($MM)
1) These plans do not have expiration dates.
$88.6
$157.1
$213.6
$191.0
$46.3
$161.6
2012A 2013A 2014A 2015A 2016A 2017E
Historical Capital Spending
($ in millions)
(1)
Robust Opportunity from DK/ALJ Combination to Create Value
31
Corporate
Cost of
Capital
Target
$85-$105
($ in millions)
Initiatives Underway across the company
To Date 9/30/17
$53
Balance sheet with $832 million of cash
supports company initiatives
WTI-Linked refining system
Margins benefiting from wider discount
between WTI and Brent crude oil
Initiatives underway to unlock value
$35 to $40 million of annual EBITDA
expected from alky project at Krotz
Springs to be completed in 1Q19
$78 million of potential logistics EBITDA in
dropdown inventory can create cash flow
to Delek US
ALDW Transaction would simplify
corporate structure and allow reallocation
of ALDW distribution to business
investments
$8.0 million of potential EBITDA from
increased capacity on the Paline Pipeline
$40.0-$45.0 million potential cost savings
by divesting all California assets; cash flow
to Delek from asset sales
Synergies from Combination Expected to be
Achieved in 2018
Commercial
Operational
Valuation Comparison
Current Valuation Below Peer EV to EBITDA (1)
32
(1) Based on NASDAQ IR Insights/Factset as of 11/20/17.
Consensus EBITDA(1) 2018: $553 million; 2019: $543 million
Current valuation for Delek US below peer group may create attractive opportunity
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
EV/EBITDA
2018 2019 18 avg 19 avg
33
Complementary
Logistics Systems
Significant Organic
Growth / Margin
Improvement
Opportunities
Focus on Long Term
Shareholder Returns
Financial Flexibility
WTI-Linked Refining
System
Questions and Answers
An Integrated and
Diversified Refining,
Logistics and Marketing
Company
34
Additional Information
No Offer or Solicitation
This communication relates to a proposed business combination between Delek US and Alon Partners. This announcement is for informational
purposes only, and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities, or the solicitation of any vote in any jurisdiction
pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention
of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.
Additional Information and Where to Find It
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.
In connection with the proposed acquisition transaction, a registration statement on Form S-4 will be filed with the SEC that will include a consent
statement of Alon Partners. Delek US also plans to file other relevant materials with the SEC. UNITHOLDERS OF ALON PARTNERS ARE
ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING
THE CONSENT STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final consent solicitation /prospectus will be mailed to unitholders of
Alon Partners. Investors and security holders will be able to obtain the documents, and any other documents that Delek US has filed with the SEC,
free of charge at the SEC's website, www.sec.gov. In addition, documents filed with the SEC by Delek US will be available free of charge by (1)
accessing Delek US’ website at www.delekus.com under the "Investor Relations" link and then under the heading "SEC Filings"; (2) writing Delek US
at 7102 Commerce Way, Brentwood, TN 37027, Attention: Investor Relations; or (3) writing Alon Partners at 7102 Commerce Way, Brentwood, TN
37027, Attention: Investor Relations.
Participants in the Solicitation
Delek US, Alon Partners and their respective directors and executive officers may be deemed to be participants in the solicitation of consents in favor
of the acquisition from the unitholders of Alon Partners. Additional information regarding the interests of those participants and other persons who
may be deemed participants in the transaction may be obtained by reading the consent statement/prospectus regarding the proposed acquisition
when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.
Appendix
Non GAAP Reconciliations Delek US EPS and EBITDA
36
Three Months Ended September 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA
(Unaudited)
Reported net income (loss) per share attributable to Delek $ 104.4
Add:
Interest expense, net 33.2
Income tax expense 133.5
Depreciation and amortization 46.9
EBITDA 318.0
Adjustments
Net inventory valuation (gain) loss (11.6 )
Asset write offs 0.7
Business interruption proceeds —
Unrealized hedging loss (gain) 10.9
Loss on impairment of equity method investment in Alon —
Inventory fair value adjustment 33.2
Transaction related expenses 18.4
Gain on equity method investment in Alon (190.1 )
Non controlling interest 10.0
Discontinued operations loss (gain) 6.4
Total adjustments (122.1 )
Adjusted EBITDA $ 195.9
Three Months Ended September 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted Net Income (Loss)
(Unaudited)
Reported net income (loss) per share attributable to Delek $ 1.29
Adjustments, after tax (per share) (13)
Net inventory valuation (gain) loss (0.09 )
Asset write offs 0.01
Business interruption proceeds —
Unrealized hedging loss (gain) 0.09
Loss on impairment of equity method investment —
Inventory fair value adjustment 0.23
Transaction related expenses 0.15
Gain on equity method investment in Alon (1.48 )
Deferred tax write-off 0.58
Discontinued operations loss (gain) 0.05
Total adjustments (0.48 )
Adjusted net income (loss) per share $ 0.81
Non GAAP Reconciliations of Potential Alky Unit EBITDA (1)
37
(1) Based on projected range of potential future performance from the alkylation unit project at Krotz Springs. Amounts of EBITDA, net income and timing will vary. Actual
amounts will be based on timing of completion, performance of the project and market conditions.
Reconciliation of Forecast U.S. GAAP Net Income (Loss) to Forecast
EBITDA for Alkylation Project
Forecasted
Range
Forecasted Net Income $ 17.8 $ 21.0
Add:
Interest Expense, net — —
Income tax expense 10.3 12.1
Depreciation and amortization 6.9 6.9
Forecasted EBITDA $ 35.0 $ 40.0
Non GAAP Reconciliations of Potential Dropdown EBITDA (1)
38
(1) Based on projected range of potential future logistics assets that could be dropped to Delek Logistics from Delek US in the future. Amounts of EBITDA, net income and timing
will vary, which will affect the potential future EBITDA and associated deprecation and interest at DKL. Actual amounts will be based on timing, performance of the assets,
DKL’s growth plans and valuation multiples for such assets at the time of any transaction. Income taxes are not considered material for DKL and therefore not included in the
adjustments in determining EBITDA.
Reconciliation of Forecasted Logistics Dropdown EBITDA to Forecasted Amounts under US GAAP
Delek Logistics Partners LP
($ in millions)
Forecasted Net Income Range 13.6$ 15.9$
Add: Depreciation and amortization expenses 33.6$ 39.2$
Add: Interest and financing costs, net 24.8$ 28.9$
Forecasted EBITDA Range 72.0$ 84.0$
Potential Dropdown Range
Delek US Focused on Growth through Acquisitions
(1) Includes logistic assets in purchase price. Purchase price includes working capital for refineries.
(2) Mt. Pleasant includes $1.1 million of inventory.
2006
Abilene & San Angelo
terminals
$55.1 mm
2012
Nettleton
Pipeline
$12.3 mm
2011
Paline Pipeline
$50 mm
Acquisition Completed
171 retail fuel &
convenience stores
& related assets
$157.3 mm
2005 to 2007 2011 to 2012 2013 to Current
Crude Oil
Gathering
2013
Biodiesel
Facility
$5.3 mm
2011
Lion refinery &
related pipeline & terminals
$228.7 mm(1)
2005
Tyler refinery &
related assets
$68.1 mm(1)
2011 - 2014
Building new large format convenience stores
2013
Tyler-Big Sandy
Pipeline
$5.7 mm
2014
Biodiesel
Facility
$11.1 mm
Logistics Segment Retail Segment Refinery Segment
Crude Oil
Logistics
Refining
Product
Logistics
Retail
2012
Big Sandy
terminal & pipeline
$11.0 mm
2013
North Little Rock
Product Terminal
$5.0 mm
2011
SALA Gathering
Lion Oil acquisition
Assets
P
u
rc
h
as
e
d
Increased Gathering
East and West Texas
39
2014
Mt. Pleasant
System
$11.1 mm (2)
2014
Frank
Thompson
Transport
$11.9 mm
DKL Joint Ventures
RIO Pipeline
Caddo Pipeline
Exp. Inv.: ~$104 mm
2015
47%
ownership
in Alon USA
2015
47%
ownership
in Alon USA
2016
Sold MAPCO
for $535mm
2017
Acquired rest of
Alon USA
2017
Acquired rest
of Alon USA
-$30
-$20
-$10
$0
$10
$20
$30
$40
$50
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u
n
-1
4
J
u
l-
1
4
A
u
g
-1
4
S
e
p
-1
4
O
c
t-
1
4
N
o
v
-1
4
D
e
c
-1
4
J
a
n
-1
5
Fe
b
-1
5
Ma
r-
1
5
A
p
r-
1
5
Ma
y
-1
5
J
u
n
-1
5
J
u
l-
1
5
A
u
g
-1
5
S
e
p
-1
5
O
c
t-
1
5
N
o
v
-1
5
D
e
c
-1
5
J
a
n
-1
6
Fe
b
-1
6
Ma
r-
1
6
A
p
r-
1
6
Ma
y
-1
6
J
u
n
-1
6
J
u
l-
1
6
A
u
g
-1
6
S
e
p
-1
6
O
c
t-
1
6
N
o
v
-1
6
D
e
c
-1
6
J
a
n
-1
7
Fe
b
-1
7
Ma
r-
1
7
A
p
r-
1
7
Ma
y
-1
7
J
u
n
-1
7
J
u
l-
1
7
A
u
g
-1
7
S
e
p
-1
7
O
c
t-
1
7
N
o
v
-1
7
Brent-WTI Cushing Spread Per Barrel WTI 5-3-2 Gulf Coast Crack Spread Per Barrel LLS 5-3-2 Gulf Coast Crack Spread Per Barrel
U.S. Refining Environment Trends
Refined Product Margins and WTI-Linked Feedstock Favor Delek US
(1) Source: Platts as of November 8, 2017; 5-3-2 crack spread based on HSD
(2) Crack Spreads: (+/-) Contango/Backwardation
(1) (2) (2)
40
($14.00)
($12.00)
($10.00)
($8.00)
($6.00)
($4.00)
($2.00)
$0.00
$2.00
Ja
n
-1
1
Fe
b
-1
1
M
ar
-1
1
A
p
r-
11
M
ay
-1
1
Ju
n
-1
1
Ju
l-1
1
A
u
g-
1
1
Se
p
-1
1
O
ct-1
1
N
o
v-
1
1
De
c-
1
1
Ja
n
-1
2
Fe
b
-1
2
M
ar
-1
2
A
p
r-
12
M
ay
-1
2
Ju
n
-1
2
Ju
l-1
2
A
u
g-
1
2
Se
p
-1
2
O
ct-1
2
N
o
v-
1
2
De
c-
1
2
Ja
n
-1
3
Fe
b
-1
3
M
ar
-1
3
A
p
r-
13
M
ay
-1
3
Ju
n
-1
3
Ju
l-1
3
A
u
g-
1
3
Se
p
-1
3
O
ct-1
3
N
o
v-
1
3
De
c-
1
3
Ja
n
-1
4
Fe
b
-1
4
M
ar
-1
4
A
p
r-
14
M
ay
-1
4
Ju
n
-1
4
Ju
l-1
4
A
u
g-
1
4
Se
p
-1
4
O
ct-1
4
N
o
v-
1
4
De
c-
1
4
Ja
n
-1
5
Fe
b
-1
5
M
ar
-1
5
A
p
r-
15
M
ay
-1
5
Ju
n
-1
5
Ju
l-1
5
A
u
g-
1
5
Se
p
-1
5
O
ct-1
5
N
o
v-
1
5
De
c-
1
5
Ja
n
-1
6
Fe
b
-1
6
M
ar
-1
6
A
p
r-
16
M
ay
-1
6
Ju
n
-1
6
Ju
l-1
6
A
u
g-
1
6
Se
p
-1
6
O
ct-1
6
N
o
v-
1
6
De
c-
1
6
Ja
n
-1
7
Fe
b
-1
7
M
ar
-1
7
A
p
r-
17
M
ay
-1
7
Ju
n
-1
7
Ju
l-1
7
A
u
g-
1
7
Se
p
-1
7
O
ct-1
7
N
o
v-
1
7
WTI Midland vs. WTI Cushing Crude Oil Pricing
Access to Midland Crude Oil Benefits Margins
($ per barrel)
Approx. 207,000
bpd of Midland
crude oil in DK
system
41
Source: Argus – as of November 8, 2017
DKL: Reconciliation of Cash Available for Distribution
42
(1) Distribution based on actual amounts distributed during the periods; does not include a LTIP accrual. Coverage is defined as cash available for distribution divided by total distribution.
(2) Results in 2013, 2014 and 2015 are as reported excluding predecessor costs related to the drop down of the tank farms and product terminals at both Tyler and El Dorado during the
respective periods.
Note: May not foot due to rounding and annual adjustments that occurred in year end reporting.
(dollars in millions, except coverage) 1Q13 (2) 2Q13(2) 3Q13(2) 4Q13(2) 2013 (2) 1Q14 (2) 2Q14(2) 3Q14(2) 4Q14(2) 2014 (2) 1Q15(2) 12Q15(2 3Q15(2) 4Q15(2) 2015 (2) 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17
Reconciliation of Distributable Cash Flow to net cash from operating activities
Net cash provided by operating activities $2.0 $18.7 $19.9 $8.9 $49.4 $14.4 $31.2 $20.1 $20.8 $86.6 $15.9 $30.8 $20.2 $1.3 $68.2 $26.4 $31.2 $29.2 $13.9 $100.7 $23.5 $23.9 $30.5
Accretion of asset retirement obligations (0.0) (0.1) (0.0) (0.1) (0.2) (0.1) (0.1) (0.1) 0.0 (0.2) (0.1) (0.1) (0.1) (0.1) (0.3) (0.1) (0.1) (0.1) (0.1) (0.3) (0.1) (0.1) (8.4)
Deferred income taxes 0.0 0.0 (0.1) (0.3) (0.3) 0.0 (0.1) (0.0) 0.2 0.1 (0.2) 0.2 0.0 0.0 (0.0) - - - 0.2 0.2 - (0.1) (0.7)
Gain (Loss) on asset disposals - - - (0.2) (0.2) - (0.1) - (0.0) (0.1) (0.0) 0.0 - (0.1) (0.1) 0.0 - (0.0) - 0.0 (0.0) 0.0 0.4
Changes in assets and liabilities 12.1 (4.9) (5.1) 6.3 8.3 3.4 (6.0) (1.6) 3.0 (1.2) 3.3 (7.3) 3.6 20.5 20.1 (5.4) (7.1) (10.0) 7.7 (14.9) (3.6) 0.9 (0.1)
Maint. & Reg. Capital Expenditures (1.3) (1.1) (1.3) (1.8) (5.1) (0.8) (1.0) (0.8) (3.9) (6.5) (3.3) (3.9) (3.5) (2.7) (11.8) (0.7) (0.9) (0.7) (3.6) (5.9) (2.2) (2.1) (0.1)
Reimbursement for Capital Expenditures 0.3 0.2 - 0.4 0.8 - - - 1.6 1.6 1.2 1.4 2.3 0.0 5.2 0.2 0.6 0.7 0.4 1.9 3.1 0.8 0.0
Distributable Cash Flow $13.1 $12.8 $13.4 $13.3 $52.9 $17.0 $24.0 $17.7 $21.8 $80.3 $16.8 $21.1 $22.6 $18.9 $81.3 $20.4 $23.7 $19.1 $18.5 $81.7 $20.6 $23.4 $21.6
Coverage (1) 1.39x 1.32x 1.35x 1.30x 1.35x 1.61x 2.02x 1.42x 1.67x 1.68x 1.23x 1.47x 1.50x 1.17x 1.37x 1.19x 1.31x 0.99x 0.90x 1.09x 0.98x 1.07x 0.97x
Total Distribution (1) $9.4 $9.7 $9.9 $10.2 $39.3 $10.5 $11.9 $12.4 $13.1 $47.9 $13.7 $14.4 $15.1 $16.1 $59.3 $17.1 $18.1 $19.3 $20.5 $75.0 $21.0 $21.8 $22.3
DKL: Income Statement and Non-GAAP EBITDA Reconciliation
43
(1) Includes approximately $2.0 million of estimated annual incremental general and administrative expenses expected to incur as a result of being a separate publicly traded partnership.
(2) Interest expense and cash interest both include commitment fees and interest expense that would have been paid by the predecessor had the revolving credit facility been in place during the 12
months ended 9/30/13 period presented and Delek Logistics had borrowed $90.0 million under the facility at the beginning of the period. Interest expense also includes the amortization of debt
issuance costs incurred in connection with our revolving credit facility.
(3) Forecast provided in the IPO prospectus on Nov. 1, 2012.
(4) Results in 2013 and 2014 are as reported excluding predecessor costs related to the drop down of the tank farms and product terminals at both Tyler and El Dorado during the respective periods.
(5) Results for 1Q15 are as reported excluding predecessor costs related to the 1Q15 drop downs.
Note: May not foot due to rounding.
Forecast12 Months
9/30/13
(1)(2)(3) 1Q13 (4) 2Q13(4) 3Q13(4) 4Q13(4) 2013(4) 1Q14(4) 2Q14 3Q14 4Q14 2014 (4) 1Q15(5) 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17
Total Net Sales $797.1 $210.9 $230.1 $243.3 $223.1 $907.4 $203.5 $236.3 $228.0 $173.3 $841.2 $143.5 $172.1 $165.1 $108.9 $589.7 $104.1 $111.9 $107.5 $124.7 $448.1 $129.5 $126.8 $130.6
Cost of Goods Sold (721.8) (187.9) (208.0) (218.2) (197.3) (811.4) (172.2) (196.6) (194.1) (134.3) (697.2) (108.4) (132.5) (124.4) (71.0) (436.3) (66.8) (73.1) ($73.5) ($88.8) (302.2) (92.6) (85.0) ($89.1)
Operating Expenses (18.7) (5.9) (6.1) (6.6) (7.2) (25.8) (8.5) (9.5) (10.2) (9.7) (38.0) (10.6) (10.8) (11.6) (11.7) (44.8) (10.5) (8.7) ($9.3) ($8.8) (37.2) (10.4) (10.0) ($10.7)
Contribution Margin $56.6 $17.2 $16.1 $18.4 $18.6 $70.3 $22.8 $30.2 $23.7 $29.3 $106.0 $24.5 $28.8 $29.1 $26.2 $108.6 $26.8 $30.0 $24.7 $27.2 $108.7 $26.5 $31.8 $30.8
Depreciation and Amortization (9.3) (2.4) (2.4) (2.6) (3.4) (10.7) (3.4) (3.5) (3.7) (3.9) (14.6) (4.0) (4.7) (4.5) (5.9) (19.2) (5.0) (4.8) ($5.4) ($5.6) (20.8) (5.2) (5.7) ($5.5)
General and Administration Expense (7.7) (1.7) (1.1) (1.8) (1.7) (6.3) (2.6) (2.2) (2.5) (3.3) (10.6) (3.4) (3.0) (2.7) (2.3) (11.4) (2.9) (2.7) ($2.3) ($2.3) (10.3) (2.8) (2.7) ($2.8)
Gain (Loss) on Asset Disposal - - - - (0.2) (0.2) - (0.1) - - (0.1) - - - (0.1) (0.1) 0.0 - ($0.0) $0.0 0.0 (0.0) 0.0 ($0.0)
Operating Income $39.6 $13.1 $12.6 $14.0 $13.3 $53.2 $16.8 $24.4 $17.5 $22.1 $80.8 $17.1 $21.1 $21.8 $17.9 $77.9 $19.0 $22.5 $17.0 $19.2 $77.7 $18.5 $23.4 $22.6
Interest Expense, net (3.6) (0.8) (0.8) (1.2) (1.8) (4.6) (2.0) (2.3) (2.2) (2.1) (8.7) (2.2) (2.6) (2.8) (3.0) (10.7) (3.2) (3.3) ($3.4) ($3.7) (13.6) (4.1) (5.5) ($7.1)
(Loss) Income from Equity Method Invesments (0.1) (0.3) (0.1) (0.6) (0.2) (0.2) ($0.3) ($0.4) (1.2) 0.2 1.2 $1.6
Income Taxes - (0.1) (0.1) (0.3) (0.2) (0.8) (0.1) (0.3) (0.2) 0.5 (0.1) (0.3) (0.1) (0.1) 0.6 0.2 (0.1) (0.129) ($0.1) $0.3 (0.1) (0.1) (0.1) ($0.2)
Net Income $36.0 $12.2 $11.8 $12.5 $11.3 $47.8 $14.7 $21.8 $15.1 $20.5 $72.0 $14.6 $18.3 $18.6 $15.3 $66.8 $15.4 $18.9 $13.2 $15.3 $62.8 $14.6 $19.0 $16.9
EBITDA:
Net Income $36.0 $12.2 $11.8 $12.5 $11.3 $47.8 $14.7 $21.8 $15.1 $20.5 $72.0 $14.6 $18.3 $18.6 $15.3 $66.8 $15.4 $18.9 $13.2 $15.3 $62.8 $14.6 $19.0 $16.9
Income Taxes - 0.1 0.1 0.3 0.2 0.8 0.1 0.3 0.2 (0.5) 0.1 0.3 0.1 0.1 (0.6) (0.2) 0.1 0.1 $0.1 ($0.3) 0.1 0.1 0.1 0.2
Depreciation and Amortization 9.3 2.4 2.4 2.6 3.4 10.7 3.4 3.5 3.7 3.9 14.6 4.0 4.7 4.5 5.9 19.2 5.0 4.8 $5.4 $5.6 20.8 5.2 5.7 5.5
Interest Expense, net 3.6 0.8 0.8 1.2 1.8 4.6 2.0 2.3 2.2 2.1 8.7 2.2 2.6 2.8 3.0 10.7 3.2 3.3 $3.4 $3.7 13.6 4.1 5.5 7.1
EBITDA $48.9 $15.5 $15.0 $16.6 $16.7 $63.8 $20.2 $27.9 $21.2 $26.1 $95.4 $21.1 $25.7 $26.1 $23.6 $96.5 $23.7 $27.1 $22.0 $24.4 $97.3 $23.9 $30.3 $29.7
Investor Relations Contact:
Kevin Kremke Keith Johnson
Executive Vice President, CFO Vice President of Investor Relations
615-224-1323 615-435-1366