Delek US Q3 Earnings Call Highlights

Key Points

• Strong refining performance helped Delek report third-quarter net income of about $1.13 billion and adjusted EBITDA of $1.28 billion. The company raised its annual Enterprise Optimization Plan target to at least $250 million in run-rate improvement.
• Delek expects approximately $425 million in fourth-quarter proceeds from small refinery exemptions; the exemptions could provide an estimated $750 million to $800 million total accounting benefit at current RIN prices.
• The company raised its quarterly dividend about 18% to $0.30 per share, repurchased $50 million of stock in Q3, and plans roughly $100 million more in buybacks by year-end. Delek Logistics also raised 2026 EBITDA guidance to $530 million–$560 million.

Delek US NYSE: DK reported third-quarter net income of approximately $1.13 billion and raised its dividend, as stronger refining margins and higher capture rates helped drive results. The company also increased its enterprise optimization target and outlined plans for further share repurchases.

Net income was $18.22 per share, while EBITDA was approximately $1.64 billion, Chief Financial Officer Robert Wright said on the earnings call. Adjusted net income was approximately $843 million, or $13.55 per share, and adjusted EBITDA was approximately $1.28 billion.

Excluding a 50% renewable volume obligation adjustment and the impact of small refinery exemptions granted during the quarter, adjusted EBITDA was approximately $1.04 billion and adjusted earnings were approximately $10.53 per share. Wright said stronger refining margins and higher capture rates led the improvement in adjusted EBITDA from the second quarter on that basis.

Refining performance and optimization

President and Chief Executive Officer Avigal Soreq said all four refineries operated reliably during the quarter. Big Spring performed strongly following its turnaround, exceeding targets for reliability, crude slate flexibility, product yield and blending capabilities, he said. Delek has no planned turnarounds for the rest of 2026.

The company raised its Enterprise Optimization Plan target to at least $250 million in annual run-rate improvement, up from an initial target of $100 million in annual free cash flow improvement. Soreq estimated that the program contributed approximately $60 million to the company’s profit and loss in the third quarter.

Asked how much of the improvement in capture rates was structural rather than a result of market conditions, Soreq pointed to the optimization program and said the company was pursuing more than 90 related projects. Mohit Bhardwaj, executive vice president of strategy and investor relations, said those structural changes supported management’s expectation of $700 million to $800 million in mid-cycle free cash flow.

Supply and marketing margin was approximately $37 million in the quarter, including $36.7 million from wholesale marketing, Wright said. He attributed the wholesale result to optimization efforts and a strong market environment. The logistics segment generated approximately $143 million in adjusted EBITDA.

Exemptions and cash flow

Soreq said Delek received all four small refinery exemptions for the 2025 period and expects approximately $425 million in proceeds in the fourth quarter. He also said the company expects the Environmental Protection Agency to continue providing relief to qualifying small refineries for 2026 and beyond.

At current renewable identification number, or RIN, prices, Wright said the exemptions would produce a total accounting benefit of approximately $750 million to $800 million. That includes a $335 million realized gain and an approximately $274 million unrealized mark-to-market gain. Delek expects another $150 million to $200 million to be recognized over the next several quarters as it applies excess RINs against future compliance obligations.

During the question-and-answer session, analysts asked how many RINs Delek held and whether it was current on its obligations. Soreq said the company had remained in compliance and intended to continue doing so. Bhardwaj said Delek does not disclose its RIN buying strategy and manages its position around cash needs, compliance, price risk and taxes.

Third-quarter operating cash flow was $567 million, reflecting a net working capital outflow of approximately $809 million, Wright said. Most of that outflow related to approximately $425 million in exemption receivables. Excluding working capital, operating cash flow was approximately $1.38 billion.

Dividend, buybacks and debt

Delek increased its quarterly dividend by approximately 18% to $0.30 per share. It repurchased $50 million of shares in the third quarter and expects to repurchase approximately $100 million more by year-end.

On a standalone basis, excluding Delek Logistics, Delek ended the quarter with approximately $22 million in net cash, an improvement of $224 million from the second quarter, Wright said. The company expects standalone interest expense of around $10 million on a quarterly run-rate basis after paying off its term loan.

Soreq declined to provide a 2027 buyback target or a specific cash balance goal. He said the company wants to maintain a strong balance sheet and return capital to shareholders without holding excess cash.

Logistics and fourth-quarter outlook

Delek Logistics raised its 2026 EBITDA guidance to $530 million to $560 million. Soreq said its organic growth projects are expected to add $60 million in annual run-rate EBITDA in 2027, in addition to $15 million realized in 2026. The first sour compressor station and acid gas injection well have been constructed and are being commissioned, he said.

Soreq said Delek continues to work toward deconsolidating the logistics business. Asked about the path to reducing Delek’s ownership below 50%, he cited a decline from 79% to 58% but did not give a timetable.

For the fourth quarter, Delek forecast total refinery throughput of 288,000 to 308,000 barrels per day. It expects operating expenses of $225 million to $235 million and general and administrative expenses of $50 million to $55 million.

On the refining outlook, Soreq cited elevated freight costs and low diesel inventories as factors supporting the market, while noting uncertainty around global events. Bhardwaj said management remained positive about the outlook for distillate and jet fuel crack spreads.

About Delek US (NYSE:DK)

Delek US Holdings, Inc is a downstream energy company headquartered in Brentwood, Tennessee. The company operates petroleum refineries and related logistics assets, producing and transporting fuels and other refined petroleum products for markets primarily in the southern United States.

Through its refining operations, Delek processes crude oil into products such as gasoline, diesel, jet fuel and asphalt. Its logistics business, conducted in part through Delek Logistics Partners, owns and operates pipelines, crude oil gathering systems, storage terminals, transportation assets and other infrastructure that supports the movement of crude oil and refined products.

Delek has also operated convenience stores and fuel stations, particularly in Texas and neighboring states, under brands including DK and Alon.

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