Q2 2026 Delek US Holdings Inc Earnings Call Transcript
Key Points
- Delek US Holdings Inc (DK) reported strong second-quarter results with adjusted EBITDA of approximately $639 million and adjusted EPS of $5.48, driven by robust refining margins and higher throughput.
- The company's Enterprise Optimization Plan (EOP) contributed approximately $60 million to P&L in Q2 2026, and management is working on further initiatives to create an additional meaningful step change in free cash flow.
- Delek Logistics (DKL) delivered its best quarterly results in history with approximately $144 million in adjusted EBITDA, and reaffirmed its 2026 EBITDA guidance of $520 million to $560 million.
- The successful completion of the Big Spring turnaround has improved reliability, crude slate flexibility, product yields, and octane/blending capabilities, positioning the refinery well for the rest of the year with no planned turnarounds.
- The company maintains a shareholder-friendly capital allocation strategy, having bought back approximately 10% of its shares since the beginning of 2025, and continues to pay dividends and execute buybacks.
- Delek US Holdings Inc (DK) is making progress on its Sum of the Parts strategy, with DKL's third-party EBITDA expected to exceed 80% on a pro forma basis in 2026, moving closer to deconsolidation goals.
- The recent award of a Small Refinery Exemption (SRE) for Krotz Springs reflects the company's strong petition and the EPA's recognition of disproportionate economic harm, which bodes well for its 2025 SRE petitions.
- The company faces significant uncertainty and burden from the RFS obligations, with elevated RVO costs and the absence of SREs creating a substantial financial impact on small refineries like Delek US Holdings Inc (DK).
- The refining margin environment is subject to volatility, with steep backwardation in Q2 2026 expected to ease in Q3, which could negatively impact refining margins quarter-over-quarter.
- The company does not hedge its refining margin exposure, leaving investors fully exposed to crack spread volatility, which could lead to unpredictable earnings.
- There is ongoing geopolitical risk and market disruption from events in the Middle East and Eastern Europe, which, while creating opportunities, also introduces significant operational and market uncertainty.
- The company's asphalt business saw a $3 million reduction in contribution in Q2, and its performance remains dependent on volatile crude prices and market conditions.
- Delek US Holdings Inc (DK) faces potential tax implications on SRE proceeds, and while management has a tax minimization strategy, the exact impact remains uncertain and unquantified.
- The company's free cash flow is subject to working capital swings, as evidenced by a $138 million net outflow from changes in working capital in Q2, which can impact liquidity.
Hello, everyone. Thank you for joining us, and welcome to the Delek US second-quarter 2026 earnings call. (Operator Instructions)
I will now hand the conference over to Robert Wright, EVP and CFO. Robert, go ahead.
Good morning, and welcome to the Delek US Second Quarter Earnings Conference Call. Participants joining me on today's call will include Avigal Soreq, President and CEO; Mohit Bhardwaj, EVP, New Energy, Strategy and Investor Relations; as well as other members of our management team. Today's presentation materials can be found on the Investor Relations section of the Delek US website. Slide 2 contains our safe harbor statement regarding forward-looking information. As a reminder, this conference call will contain forward-looking information as defined under the federal securities laws, including statements regarding guidance and future business outlook.
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