Delek US Holdings Inc

Previous wording

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, statements that refer to the acquisition of 3 Bear (subsequently renamed to Delek Delaware Gathering ("Delaware Gathering")) (the "Delaware Gathering Acquisition"), including any statements regarding the expected benefits, synergies, growth opportunities, impact on liquidity and prospects, and other financial and operating benefits thereof, the information concerning possible future results of operations, business and growth strategies, including as the same may be impacted by any ongoing military conflict, such as the war between Russia and Ukraine ("the Russia-Ukraine War"), financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions or dispositions, including the planned sale of our Retail Stores and H2O Midstream acquisition, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements.

Current wording

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, statements that refer to the acquisition of 3 Bear (subsequently renamed to Delek Delaware Gathering ("Delaware Gathering")) (the "Delaware Gathering Acquisition"), including any statements regarding the expected benefits, synergies, growth opportunities, impact on liquidity and prospects, and other financial and operating benefits thereof, the information concerning possible future results of operations, business and growth strategies, including as the same may be impacted by any ongoing military conflict, such as the war between Russia and Ukraine ("the Russia-Ukraine War"), financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions or dispositions, including the sale of our Retail Stores and H2O Midstream acquisition, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements.

Previous wording

•our ability to execute our long-term sustainability strategy and growth through acquisitions and dispositions such as the planned sale of our Retail Stores, the planned H20 Midstream acquisition, the Delaware Gathering Acquisition and joint ventures, including our ability to successfully integrate acquisitions, complete strategic transactions, safety initiatives and capital projects, realize expected synergies, cost savings and other benefits therefrom, return value to shareholders, or achieve operational efficiencies;

Current wording

•our ability to execute our long-term sustainability strategy and growth through acquisitions and dispositions such as the sale of our Retail Stores, the H20 Midstream acquisition, the Delaware Gathering Acquisition and joint ventures, including our ability to successfully integrate acquisitions, complete strategic transactions, safety initiatives and capital projects, realize expected synergies, cost savings and other benefits therefrom, return value to shareholders, or achieve operational efficiencies;

Previous wording

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 has 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 $350.0 million plus the purchase of inventory and other customary adjustments under the Retail Purchase Agreement for indebtedness (the “Retail Transaction”). The closing of the Retail Transaction is currently anticipated to occur by the end of 2024, subject to certain customary closing conditions, including, among other things, the receipt of required governmental and other third party approvals (or the termination or expiration of applicable waiting periods). The Retail Transaction includes a long-term agreement whereby Delek will sell to FEMSA certain motor fuel products for use at the Retail Stores. Refer to Note 18 of the condensed consolidated financial statements in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q for further information.

Current wording

We are an integrated downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and, prior to July 2024, convenience store retailing. Prior to July 2024, we aggregated our operating segments into three reportable segments: refining, logistics, and retail. However, in July 2024, we 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 has 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 ("Retail Transaction"). On September 20, 2024, the Retail Transaction closed. As a result of the Retail Purchase Agreement, we met the requirements of Accounting Standards Codification ("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.

Previous wording

Our focus on safe and reliable operations is a pillar which underlines all of our business activities. We continue to identify opportunities to mitigate market risk and focus on efforts that improve our overall cost structure while not compromising operational excellence. During the second quarter of 2024, we experienced narrowing crack spreads. The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, and the WTI Midland to Cushing differential narrowed favorably during the quarter. The differentials remained relatively consistent with 2023. Along with lower crack spreads driven by higher inventories, the industry experienced lower natural gas costs and lower RINs costs, which counterbalanced lower crack spreads. Though refining margins softened, demand for refined products continues to be robust driven by the continued constrained supply in the markets we serve. We achieved record throughput in the second quarter 2024, driven by increased reliability and we will continue to identify opportunities for operational efficiency improvements. Our logistics segment (or "Logistics") continued to contributed strong results driven by increased volumes from the Delaware Basin and rate increases. Logistics also continues to benefit from strong performance amongst our pipeline joint venture investments. The retail segment experienced decreased sales due to the remodeling of stores which limited some store availability during quarter. We expect to begin seeing benefits from successful re-branding and remodeling in future periods.

Current wording

We had another safe and reliable quarter from an operational perspective; however, the current refining margin environment is challenging as crack spreads narrowed and followed atypical seasonal patterns during the third quarter of 2024. The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, and the WTI Midland to Cushing differential narrowed favorably during the quarter and compared to the third quarter of 2023. Though refining margins softened, demand for refined products continues to be strong. Logistics continued to contribute strong results driven by increased volumes from the Delaware Basin and rate increases. Additionally, Logistics also continues to benefit from strong performance amongst our pipeline joint venture investments. We will continue to execute on our priorities of running safe and reliable operations, and making further progress on our "sum of the parts" efforts, and delivering shareholder value while maintaining our financial strength and flexibility.

Previous wording

The near term economic outlook still has some uncertainty with geopolitical instability and commodity market volatility, and as a result we continue to progress our business transformation focused on enterprise-wide opportunities to improve the efficiency of our cost structure. During 2024, we have implemented additional cost reduction measures across the organization, including reducing contract services and reducing or eliminating non-critical travel. By executing on our initiatives to optimize our cost structure, we are positioning the Company in the event of lower crack spreads and volatility in the commodity markets.

Current wording

The near term economic outlook still has some uncertainty with geopolitical instability and commodity market volatility, and as a result we continue to progress our business transformation focused on enterprise-wide opportunities to improve the efficiency of our cost structure. During 2024, we have implemented additional cost reduction measures across the organization, including reducing contract services and reducing or eliminating non-critical travel. We completed our zero based budget action plans and announced a new enterprise optimization plan ("EOP") which includes initiatives that are focused on improving our financial health and ability to generate cash flows. The EOP includes leaner costs including lower general and administrative expenses, lower operating expenses specifically at the Big Spring Refinery and Krotz Springs Refinery and lowering interest expense. The EOP also includes stronger margins including accretive minimal capital projects in our Refining segment and commercial improvements including market optionality, improved product slate and optimization. By executing on our initiatives to optimize our cost structure, we are positioning the Company in the event of lower crack spreads and volatility in the commodity markets.

Previous wording

We want to reward our shareholders with a disciplined and balanced capital allocation framework. As we strengthen our relative financial position, we believe a balanced approach between shareholder returns and balance sheet improvement is appropriate. In 2024 to date, we have returned $31.7 million of capital to shareholders through dividends.

Current wording

We want to reward our shareholders with a disciplined and balanced capital allocation framework. As we strengthen our relative financial position, we believe a balanced approach between shareholder returns and balance sheet improvement is appropriate. In 2024 to date, we have returned $68.1 million of capital to shareholders through dividends and share buybacks.

Previous wording

Our near-term focus is centered around the following: (1) operations excellence, (2) financial strength and flexibility and (3) strategic initiatives which includes unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to enhance the Company's scale and diversify revenue streams. In first half of 2024, we took steps to refinance the Delek Logistics Partners, LP ("Delek Logistics") long term debt, ending with a more attractive maturity profile. Delek Logistics also completed a public equity offering of its common units in March 2024. These steps allowed us to further execute on our "sum of the parts" plan by facilitating Delek Logistics' planned acquisition of H2O Midstream, purchase of the Wink to Webster Pipeline joint venture and planned expansion of its natural gas processing plant. These Delek Logistics transactions will enhance Delek Logistics position as a full service (crude, natural gas and water) provider in the most prolific areas of

Current wording

Our near-term focus is centered around the following: (1) operations excellence, (2) financial strength and flexibility and (3) strategic initiatives which includes unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to enhance the Company's scale and diversify revenue streams. In 2024, we took steps to refinance the Delek Logistics Partners, LP ("Delek Logistics") long term debt, ending with a more attractive maturity profile. Delek Logistics also completed two public equity offerings of its common units in March and October 2024. These steps allowed us to further execute on our "sum of the parts" plan by facilitating Delek Logistics' acquisition of H2O Midstream, purchase of the Wink to Webster Pipeline joint venture and planned expansion of its natural gas processing plant. These Delek Logistics transactions will enhance Delek Logistics position as a full service (crude, natural gas and water) provider in the most prolific areas of the Permian basin while increasing third party revenue. In addition, the Retail Transaction will allow us to strengthen our balance sheet. We believe each of these steps is consistent with our focus on strategic initiatives which includes unlocking the "sum of the parts". See further discussion in the "Strategic Objectives" section below.

Previous wording

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 (the “Additional 2029 Notes”), at 101.25%. The Additional 2029 Notes were issued under the same indenture as the Delek Logistics 2029 Notes and formed a part of the same series of notes as the Delek Logistics 2029 Notes. The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

Current wording

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 101.25% and on August 16, 2024, Delek Logistics sold $200.0 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 103.25% (collectively, the "Additional 2029 Notes"). The Additional 2029 Notes were issued under the same indenture as the Delek Logistics 2029 Notes and formed a part of the same series of notes as the Delek Logistics 2029 Notes. The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

Previous wording

These steps improved availability under the Delek Logistics Revolving Facility to approximately $800 million and helped create the foundation for a "sum of the parts" initiative.

Current wording

These steps improved availability under the Delek Logistics Revolving Facility and helped create the foundation for a "sum of the parts" initiative.

Previous wording

During the second quarter of 2024, we made the decision to idle the Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi biodiesel facilities, while exploring viable and sustainable alternatives. Those alternatives could include restarting if market conditions improve, marketing for sale or permanently closing any of the facilities. Our decision to idle these facilities was driven by the decline in the overall biodiesel market and aligns with our continued operational and cost optimization efforts. As a result, we conducted an evaluation of impairment and based on our review we recorded a $22.1 million impairment which included property, plant and equipment and right of use assets. In addition, $0.4 million of severance and benefit expenses were recognized in the three and six months ended June 30, 2024.

Current wording

During the second quarter of 2024, we made the decision to idle the Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi biodiesel facilities, while exploring viable and sustainable alternatives. Those alternatives could include restarting if market conditions improve, marketing for sale or permanently closing any of the facilities. Our decision to idle these facilities was driven by the decline in the overall biodiesel market and aligns with our continued operational and cost optimization efforts. As a result, we conducted an evaluation of impairment and based on our review we recorded a $22.1 million impairment which included property, plant and equipment and right of use assets. In addition, $0.4 million of severance and benefit expenses were recognized in the nine months ended months ended September 30, 2024. No severance and benefit expenses were recognized in the three months ended September 30, 2024.

Previous wording

As a result of the termination of the License Agreement, we are no longer obligated to remove equipment from the property for certain development activities and as a result we reversed the $17.9 million asset retirement obligation since we intend to operate the property as an asphalt and marine fuel terminal. Additionally, as a result of the settlement we reduced the non-contingent guarantee and environmental liability to $1.0 million since our risk of a contingent guarantee was eliminated and determined it appropriate to retain an accrual based on what we can reasonably estimate as the cost of the initial steps once operations cease or a cleanup is ordered. Total net gain from the property settlement was $53.4 million and is recorded in other operating income, net in the condensed consolidated statements of income. Refer to Note 11 of the condensed consolidated financial statements in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q for further information.

Current wording

As a result of the termination of the License Agreement, we are no longer obligated to remove equipment from the property for certain development activities and as a result we reversed the $17.9 million asset retirement obligation since we intend to operate the property as an asphalt and marine fuel terminal. Additionally, as a result of the settlement, we reduced the non-contingent guarantee and environmental liability to $1.0 million since our risk of a contingent guarantee was eliminated and determined it appropriate to retain an accrual based on what we can reasonably estimate as the cost of the initial steps once operations cease or a cleanup is ordered. Total net gain from the property settlement was $53.4 million and is recorded in other operating expense (income), net in the condensed consolidated statements of income. Refer to Note 13 of the condensed consolidated financial statements in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q for further information.

Previous wording

In Q2 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin. The plant is expected to have a capacity of approximately 110 MMcf/d (as defined below) and aims to meet the rising demand for natural gas in the region. Total estimated cost is between $160.0 and $165.0 million with an anticipated start-up of early 2025. This expansion project will also increase Delek Logistics' third party revenue. Expected annual EBITDA is estimated to be approximately $40.0 million.

Current wording

In second quarter of 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin. The plant is expected to have a capacity of approximately 110 MMcf/d (as defined below) and aims to meet the rising demand for natural gas in the region. Total estimated cost is between $160.0 and $165.0 million with an anticipated start-up of early 2025. This expansion project will also increase Delek Logistics' third party revenue. Expected annual EBITDA is estimated to be approximately $40.0 million.

Previous wording

On August 2, 2024, Delek Logistics entered into a Purchase and Sale Agreement with H2O Midstream Holdings, LLC (the “Seller”) to purchase 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"), related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas (the “H2O Purchase Agreement”) for total consideration of $230.0 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness (the "H2O Transaction"). The purchase price is comprised of approximately $160.0 million in cash and $70.0 million of preferred equity. Delek Logistics paid a deposit under the H2O Purchase Agreement of $23.0 million. The closing of the H2O Transaction is currently anticipated to occur by the end of 2024. Refer to Note 18 of the condensed consolidated financial statements in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q for further information.

Current wording

On September 11, 2024, Delek Logistics completed the previously announced 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") from H2O Midstream Holdings, LLC (the “Seller”) related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas (the “H2O Purchase Agreement”) for total consideration of $229.5 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness (the "H2O Transaction"). The purchase price is comprised of approximately $159.5 million in cash and $70.0 million of preferred equity. Refer to Note 2 of the condensed consolidated financial statements in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q for further information.

Previous wording

On August 1, 2024, we purchased an additional 0.6% indirect investment in Wink to Webster Pipeline LLC for $18.6 million, bringing our total indirect ownership in the pipeline joint venture to 15.6%. On August 5, 2024, we contributed all of our 50% investment in W2W Holdings LLC ("HoldCo") which includes our 15.6% indirect interest in the Wink to Webster Pipeline LLC joint venture and related joint venture indebtedness, to a subsidiary of Delek Logistics. Total consideration was comprised of $86.6 million in cash, forgiveness of a $60.0 million payable to Delek Logistics and 2,300,000 of Delek Logistics common units.

Current wording

On August 1, 2024, we purchased an additional 0.6% indirect investment in Wink to Webster Pipeline LLC for $18.6 million, bringing our total indirect ownership in the pipeline joint venture to 15.6%. On August 5, 2024, we contributed all of our 50% investment in HoldCo which includes our 15.6% indirect interest in the Wink to Webster Pipeline LLC joint venture and related joint venture indebtedness, to a subsidiary of Delek Logistics. Total consideration was comprised of $83.9 million in cash, forgiveness of a $60.0 million payable to Delek Logistics and 2,300,000 of Delek Logistics common units.

Previous wording

Our logistics segment gathers, transports and stores crude oil and natural gas; markets, distributes, transports and stores refined products; and disposes and recycles water in select regions of the southeastern United States, West Texas and New Mexico for our refining segment and third parties. It is comprised of the consolidated balance sheet and results of operations of Delek Logistics (NYSE: DKL), where we owned a 72.6% interest at June 30, 2024. Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are currently integral to our refining and marketing operations. The logistics segment's gathering and processing business owns or leases capacity on approximately 398 miles of crude oil transportation pipelines, approximately 406 miles of refined product pipelines, and an approximately 1,400-mile crude oil gathering system of which 489 miles is decommissioned. The storage and transportation business owns or leases associated crude oil storage tanks with an aggregate of approximately 10.0 million barrels of active shell capacity. It also owns and operates nine light product terminals and markets light products using third-party terminals. Logistics has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations. The logistics segment owns or leases approximately 199 tractors and 353 trailers used to haul primarily crude oil and other products for related and third parties.

Current wording

Our logistics segment gathers, transports and stores crude oil and natural gas; markets, distributes, transports and stores refined products; and disposes and recycles water in select regions of the southeastern United States, West Texas and New Mexico for our refining segment and third parties. It is comprised of the consolidated balance sheet and results of operations of Delek Logistics (NYSE: DKL), where we owned a 70.4% interest at September 30, 2024. Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. Majority of Delek Logistics' assets are currently integral to our refining and marketing operations. The logistics segment's gathering and processing business owns or leases capacity on approximately 398 miles of crude oil transportation pipelines, approximately 406 miles of refined product pipelines, and an approximately 1,400-mile crude oil gathering system of which 489 miles is decommissioned. In addition, this segment also includes water disposal and recycling operations, located in the Delaware Basin of New Mexico and the Midland Basin of Texas. The storage and transportation business owns or leases associated crude oil storage tanks with an aggregate of approximately 10.0 million barrels of active shell capacity. It also owns and operates nine light product terminals and markets light products using third-party terminals. Logistics has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations. The logistics segment owns or leases approximately 199 tractors and 353 trailers used to haul primarily crude oil and other products for related and third parties.

Previous wording

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near or above nameplate capacity while leveraging our Delek Logistics and retail lines of business with an eye towards the One Delek vision. Increased geopolitical risks and general elevated tensions in the Middle East have put upward pressure on crude oil prices. Many uncertainties remain with respect to the global supply and demand of the crude oil and refined products markets and it is difficult to predict the ultimate economic impacts this may have on our operations. We expect gasoline and diesel demand to continue to follow typical seasonal patterns as we continue through the summer driving season.

Current wording

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near or above nameplate capacity while leveraging our Delek Logistics business with an eye towards the One Delek vision. Many uncertainties remain with respect to the global supply and demand of the crude oil and refined products markets and it is difficult to predict the ultimate economic impacts this may have on our operations. We expect refining capacity to shut down, lower refined products inventory and crude oil demand to continue to rise. These factors will help absorb the recent additions in global supply and balance the market over the next 6 to 12 months. However, escalating conflicts in the Middle East could potentially result in supply disruptions or further volatility in crude oil prices.

Previous wording

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2023 and for the two quarterly periods in 2024.

Current wording

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2023 and for the three quarterly periods in 2024.

Previous wording

The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and Louisiana Light Sweet crude oil ("LLS") to WTI Cushing for each of the quarterly periods in 2023 and for the two quarterly periods in 2024.

Current wording

The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and Louisiana Light Sweet crude oil ("LLS") to WTI Cushing for each of the quarterly periods in 2023 and for the three quarterly periods in 2024.

Previous wording

We are impacted by refined product prices in two ways: (1) in terms of the prices we are able to sell our refined product for in our refining segment, and (2) in terms of the cost to acquire the refined products to meet Refining production shortfalls (e.g., when we have outages), or to acquire refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment. These prices largely depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

Current wording

We are impacted by refined product prices in two ways: (1) in terms of the prices we are able to sell our refined product for in our refining segment, and (2) in terms of the cost to acquire the refined products to meet Refining production shortfalls (e.g., when we have outages), or to acquire refined fuel products we sell to our wholesale customers in our logistics segment. These prices largely depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

Previous wording

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline ("CBOB"), U.S. High Sulfur Diesel ("HSD") and U.S. Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2023 and for the two quarterly periods in 2024.

Current wording

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline ("CBOB"), U.S. High Sulfur Diesel ("HSD") and U.S. Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2023 and for the three quarterly periods in 2024.

Previous wording

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2023 and for the two quarterly periods in 2024.

Current wording

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2023 and for the three quarterly periods in 2024.

Previous wording

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2023 and for the two quarterly periods in 2024.

Current wording

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2023 and for the three quarterly periods in 2024.

Previous wording

The chart below illustrates the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) per million British Thermal Units ("MMBtu")beginning with the first quarter of 2023 through the second quarter of 2024.

Current wording

The chart below illustrates the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) per million British Thermal Units ("MMBtu")beginning with the first quarter of 2023 through the third quarter of 2024.

Previous wording

We report operating results in three reportable segments:

Current wording

We report operating results in two reportable segments:

Previous wording

Consolidated Results of Operations — Comparison of the Three and Six Months Ended June 30, 2024 versus the Three and Six Months Ended June 30, 2023.

Current wording

Consolidated Results of Operations — Comparison of the Three and Nine Months Ended September 30, 2024 versus the Three and Nine Months Ended September 30, 2023.

Previous wording

Consolidated net loss for the second quarter of 2024 was $26.1 million compared to net loss of $1.5 million for the second quarter of 2023. Consolidated net loss attributable to Delek for the second quarter of June 30, 2024 was $37.2 million, or $(0.58) per basic share, compared to a net loss of $8.3 million, or $(0.13) per basic share, for the second quarter 2023. Explanations for significant drivers impacting net loss as compared to the comparable period of the prior year are discussed in the sections below.

Current wording

Consolidated net loss for the third quarter of 2024 was $67.5 million compared to net income of $136.1 million for the third quarter of 2023. Consolidated net loss attributable to Delek for the third quarter of September 30, 2024 was $76.8 million, or $(1.20) per basic share, compared to a net income of $128.7 million, or $1.98 per basic share, for the third quarter 2023. Explanations for significant drivers impacting net (loss) income as compared to the comparable period of the prior year are discussed in the sections below.

Previous wording

Consolidated net loss for the six months ended June 30, 2024 was $51.3 million compared to a net income of $70.7 million for the six months ended June 30, 2023. Consolidated net loss attributable to Delek for the six months ended June 30, 2024 was $69.8 million, or $(1.09) per basic share, compared to income of $56.0 million, or $0.84 per basic share, for the six months ended June 30, 2023. Explanations for significant drivers impacting net (loss) income as compared to the comparable period of the prior year are discussed in the sections below.

Current wording

Consolidated net loss for the nine months ended September 30, 2024 was $118.8 million compared to a net income of $206.8 million for the nine months ended September 30, 2023. Consolidated net loss attributable to Delek for the nine months ended September 30, 2024 was $146.6 million, or $(2.29) per basic share, compared to income of $184.7 million, or $2.80 per basic share, for the nine months ended September 30, 2023. Explanations for significant drivers impacting net (loss) income as compared to the comparable period of the prior year are discussed in the sections below.

Previous wording

In the second quarter of 2024 and 2023, we generated net revenues of $3,421.7 million and $4,195.6 million, respectively, a decrease of $773.9 million, or 18.4%. The decrease in net revenues was primarily driven by the following factors:

Current wording

In the third quarter of 2024 and 2023, we generated net revenues of $3,042.4 million and $4,628.8 million, respectively, a decrease of $1,586.4 million, or 34.3%. The decrease in net revenues was primarily driven by the following factors:

Previous wording

•in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 1.7% and decreases in wholesale activity, partially offset by increased sales volume and increases in the average price of U.S. Gulf Coast ULSD of 2.5% and HSD of 30.3%;

Current wording

•in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 18.2% and ULSD of 24.6% and decreases in wholesale activity, decreased sales volume (including purchased products), partially offset by increases in the average price of U.S. Gulf Coast HSD of 2.0%; and

Previous wording

We generated net revenues of $6,649.3 million and $8,119.9 million during the six months ended June 30, 2024 and 2023, respectively, a decrease of $1,470.6 million, or 18.1%. The decrease in net revenues was primarily due to the following:

Current wording

We generated net revenues of $9,478.5 million and $12,525.1 million during the nine months ended September 30, 2024 and 2023, respectively, a decrease of $3,046.6 million, or 24.3%. The decrease in net revenues was primarily due to the following:

Previous wording

•in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 4.6% and ULSD of 3.4% and decreases in wholesale activity, partially offset by increased sales volume and an increase in the average price of U.S. Gulf Coast HSD of 14.3%;

Current wording

•in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 9.4% and ULSD of 11.3% and decreases in wholesale activity, partially offset by increased sales volume (including purchased products) and an increase in the average price of U.S. Gulf Coast HSD of 9.4%; and

Previous wording

Cost of materials and other was $3,099.4 million for the second quarter of 2024 compared to $3,766.6 million for the second quarter of 2023, a decrease of $667.2 million, or 17.7%. The net decrease in cost of materials and other was primarily driven by the following:

Current wording

Cost of materials and other was $2,788.7 million for the third quarter of 2024 compared to $4,049.4 million for the third quarter of 2023, a decrease of $1,260.7 million, or 31.1%. The net decrease in cost of materials and other was primarily driven by the following:

Previous wording

•decreased wholesale activity and decreased RINs pricing, partially offset by increases in cost of crude oil feedstocks at the refineries, including a 9.9% increase in the average cost of WTI Cushing crude oil and a 9.9% increase in the average cost of WTI Midland crude oil and an increase in sales volume;

Current wording

•decreases in cost of crude oil feedstocks at the refineries, including an 8.8% decrease in the average cost of WTI Cushing crude oil and a 9.4% decrease in the average cost of WTI Midland crude oil, decreased wholesale activity decreased RINs pricing, decreased sales volume (including purchased products), and a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting; and

Previous wording

•increase in logistics costs due to increased costs of materials and other in our West Texas marketing operations primarily driven by increases in the volumes of gasoline and diesel sold, partially offset by decreases in the average cost per gallon; and

Current wording

•decrease in logistics costs due to decreased costs of materials and other in our West Texas marketing operations primarily driven by decreases in the volumes of gasoline and diesel sold and decreases in the average cost per gallon.

Previous wording

Cost of materials and other was $5,896.7 million for the six months ended June 30, 2024, compared to $7,206.2 million for six months ended June 30, 2023, a decrease of $1,309.5 million, or 18.2%. The net decrease in cost of materials and other primarily related to the following:

Current wording

Cost of materials and other was $8,547.1 million for the nine months ended September 30, 2024, compared to $11,111.2 million for nine months ended September 30, 2023, a decrease of $2,564.1 million, or 23.1%. The net decrease in cost of materials and other primarily related to the following:

Previous wording

•increase in logistics costs due to increased costs of materials and other in our West Texas marketing operations primarily driven by increases in the average volumes of gasoline and diesel sold, partially offset by decreased costs per gallon; and

Current wording

•decrease in logistics costs due to decreased costs of materials and other in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by increases in the average volumes of gasoline and diesel sold.

Previous wording

Operating expenses (included in both cost of sales and other operating expenses) were $211.4 million for the second quarter of 2024 compared to $219.8 million for the second quarter of 2023, a decrease of $8.4 million, or 3.8%. The decrease in operating expenses was primarily driven by the following:

Current wording

Operating expenses (included in both cost of sales and other operating expenses) were $185.1 million for the third quarter of 2024 compared to $214.0 million for the third quarter of 2023, a decrease of $28.9 million, or 13.5%. The decrease in operating expenses was primarily driven by the following:

Previous wording

•decrease in outside services.

Current wording

•a decrease in outside services; and

Previous wording

Operating expenses (included in both cost of sales and other operating expenses) were $451.0 million for the six months ended June 30, 2024 compared to $417.6 million in six months ended June 30, 2023, an increase of $33.4 million, or 8.0%. The increase in operating expenses was primarily driven by the following:

Current wording

Operating expenses (included in both cost of sales and other operating expenses) were $586.0 million for the nine months ended September 30, 2024 compared to $581.1 million in nine months ended September 30, 2023, an increase of $4.9 million, or 0.8%. The increase in operating expenses was primarily driven by the following:

Previous wording

General and administrative expenses were $127.5 million for the six months ended June 30, 2024 compared to $147.3 million in six months ended June 30, 2023, a decrease of $19.8 million, or 13.4%. The decrease was primarily driven by a decrease in employee costs including incentive compensation costs.

Current wording

General and administrative expenses were $191.6 million for the nine months ended September 30, 2024 compared to $208.0 million in nine months ended September 30, 2023, a decrease of $16.4 million, or 7.9%. The decrease was primarily driven by a decrease in employee costs including incentive compensation costs, partially offset by transaction costs associated with the H20 Transaction, transaction costs associated with the amended and new agreements with Delek Logistics and restructuring costs.