Delek Q4 Loss Narrower Than Expected, Revenues Lag Estimates

Delek US Holdings, Inc. DK reported a fourth-quarter 2024 adjusted net loss of $2.45 per share, narrower than the Zacks Consensus Estimate of a loss of $2.89, owing to lower year-over-year operating costs. The figure was wider than the year-ago quarter’s loss of $1.46 per share. The loss was due to the Refining segment's weak year-on-year contributions.Net revenues decreased 39.8% year over year to $2.4 billion.  The figure also missed the Zacks Consensus Estimate by $176 million.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The diversified downstream energy company’s adjusted EBITDA loss was $23.2 million, a significant decline from $60.6 million profit in the year-ago period.On Feb. 18, DK’s board of directors approved the regular quarterly dividend of 25.5 cents per share. The dividend will be paid on March 10 to its shareholders of record as of March 3, 2025.Delek US Holdings, Inc. Price, Consensus and EPS Surprise Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. QuoteDelek US' logistics division is Delek Logistics Partners, LP DKL, a midstream energy partnership where the former holds 63.6% ownership as of Jan. 2, 2025. Throughout 2024, Delek US and DKL undertook significant strategic actions.DK made substantial progress toward achieving its Sum of the Parts goals, demonstrating a clear focus on maximizing shareholder value. Subsequently, the company successfully sold its retail assets, generating $390 million in proceeds.Additionally, both DK and DKL executed intercompany amendments and extensions, strengthening their operational relationship. Moreover, DK completed the drop-down of the Wink to Webster ("W2W") pipeline into DKL, thereby enhancing the latter's asset portfolio.In parallel, DKL finalized the acquisition of H2O Midstream, significantly expanding its third-party cash flows. Notably, DKL also achieved a record quarterly adjusted EBITDA of $107.2 million, highlighting its strong financial performance.Beyond these strategic moves, DK successfully completed a five-year turnaround at its Krotz Springs refinery, improving operational efficiency.Furthermore, the company achieved a $100 million cost reduction run rate through zero-based budget efforts, demonstrating its commitment to financial discipline.To further boost profitability, DK announced the Enterprise Optimization Plan, aiming to increase overall profitability by at least $100 million. DK repurchased approximately $42 million in shares, returning capital to its shareholders.DK’s Segmental PerformancesRefining: The refining segment's adjusted EBITDA loss grew to $69.6 million, a notable decrease from $4.4 million loss reported in the prior-year quarter. This significant year-over-year loss was due to lower refining crack spreads and turnaround at the Krotz Springs refinery. Additionally, the reported figure missed our profit estimate of $29.6 million.Benchmark crack spreads for Delek were reduced an average of 13.1% in the fourth quarter of 2024, relative to prior-year levels.Logistics: This unit represents Delek’s majority interest in DKL, a publicly traded master limited partnership, that owns, operates, develops and acquires pipelines and other midstream assets.In the fourth quarter, the segment registered an adjusted EBITDA of $107.2 million compared with $99.4 million in the year-ago quarter. The figure also beat our estimate of $89.1 million. Strong contributions from the Delaware Gathering systems, annual rate increases, the W2W dropdown and the H2O Midstream acquisition on Sept. 11, 2024, fueled year-over-year growth.DK’s FinancialsTotal operating expenses in the fourth quarter decreased about 32% year over year to $2.8 billion. Delek spent $92 million on capital programs in the same time frame.As of Dec. 31, 2024, the company had cash and cash equivalents worth $735.6 million and long-term debt of $2.8 billion, with debt to total capital ratio of about 82.8%.Delek US' consolidated balance sheet, as of Dec. 31, 2024, included DKL, which held $5.4 million in cash and $1.9 billion in long-term debt. Excluding DKL, Delek US reported $730.2 million in cash and $889.8 million in long-term debt, yielding a net debt of $159.6 million.DK’s Transaction & Restructuring-Related CostsDK incurred $3.8 million ($2.9 million after-tax) in transaction-related costs during the three months, ended Dec. 31, 2024. These costs are directly associated with several strategic actions, namely, the H2O Midstream Acquisition, intercompany agreement amendments, the sale of its retail business and the Gravity Acquisition.Furthermore, Delek US recorded $3.3 million ($2.6 million after-tax) in restructuring costs for the fourth quarter of 2024. This expenditure indicates its ongoing business transformation, designed to improve cost structure efficiency. Notably, of this restructuring cost, $3.1 million was allocated to general and administrative expenses, while $0.2 million was included in operating expenses.DK’s Q1 and 2025 GuidanceFor 2025, the integrated downstream energy company expects capital expenditures of $405 million.For the first quarter, the company anticipates operating costs in the band of $220-$235 million, general and administrative expenses in the range of $55-$60 million and depreciation and amortization costs between $100 million and $105 million. It also expects net interest expenses in the $78-$88 million range.The company anticipates a total crude throughput of 255,000-269,000 barrels per day and a total throughput of 278,000-292,000 barrels per day in the same time frame.DK expects to process 65,000-69,000 barrels of crude oil per day (bpd) at its Tyler, TX, refinery in the first quarter. The El Dorado, AR, refinery is expected to process 73,000-76,000 bpd. The Big Spring, TX, refinery is expected to process 57,000 bpd to 61,000 bpd and the Krotz Springs, LA, refinery is expected to process 83,000 bpd to 86,000 bpd.DK currently carries a Zacks Rank #3 (Hold) and DKL holds a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Important Earnings at a GlanceWhile we have discussed DK’s fourth-quarter results in detail, let us take a look at three other key reports of this space.Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion. Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Halliburton Company (HAL): Free Stock Analysis Report Delek US Holdings, Inc. (DK): Free Stock Analysis Report Kinder Morgan, Inc. (KMI): Free Stock Analysis Report Delek Logistics Partners, L.P. (DKL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks