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Delek US Holdings (DK) Stock Rises 2% Despite Q3 Earnings Lag
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Delek US Holdings’ (DK - Free Report) stock has gone up 2.1% since its third-quarter 2022 results were announced on Nov 7. Despite the bottom-line lag, the rise could be attributed to better-than-expected sales in the reported quarter and a small hike in DK’s dividend.
What Did Delek's Earnings Unveil?
Delek US Holdings reported a third-quarter 2022 adjusted net income of 2 cents per share, underperforming the Zacks Consensus Estimate of 31 cents and also lower than the year-earlier profit of 13 cents. The underperformance could be attributed to unfavorable inventory valuation impacts.
The diversified downstream energy company said that its adjusted EBITDA was $135.8 million compared with $101.9 million in the year-earlier period.
Meanwhile, Delek’s revenues of $5.3 billion surged 80.1% year over year and beat the consensus mark by $1.25 billion, primarily due to soaring sales from its key Refining segment. Revenues from the unit came in at almost $4 billion, up 53.2% from the third quarter of 2021 and 21.2% more than the Zacks Consensus Estimate.
In good news for investors, DK’s board of directors approved an increase of 1 cent per share in the regular dividend, bringing the quarterly dividend to 21 cents per share. The dividend will be paid out on Dec 2, 2022 to shareholders of record on Nov 18, 2022.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Refining: The segment’s contribution margin (the refining margin minus operating expenses) increased from $82.1 million in the third quarter of 2021 to $106 million. However, the same lagged the Zacks Consensus Estimate of $317 million.
On a year-over-year basis, the refining segment’s results were negatively impacted by $225.1 million of inventory valuation impacts in the third quarter of 2022 compared with a $2.7 million unfavorable impact in the third quarter of 2021.
In the third quarter of 2022, Delek’s benchmark crack spreads were up an average of about 79.3% from prior-year levels. However, the ongoing burden of the Renewable Fuel Standard program continues to negatively impact small refineries' ability to fully capture the crack spread.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P., a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
The Logistics unit’s margin of $90.5 million was higher than the year-ago period’s income of $66.9 million and beat the Zacks Consensus Estimate of $88 million. The segment benefited from robust refinery utilization and contributions from the 3Bear Energy acquisition.
Retail: In the third quarter of 2022, the Retail segment — formed by the acquisition of Alon USA Energy in 2017 — had a contribution margin of $17.4 million compared with $17.9 million a year ago. Further, the margin failed to match the consensus mark of $19.12 million.
Meanwhile, merchandise sales of $84.2 million were more than the third-quarter 2021 sales of $81.7 million and beat the Zacks Consensus Estimate by 6.6%. However, the merchandise margin of 32.6% worsened from 33.7% in the year-ago period.
In the third quarter, DK’s retail stations sold 44,729 thousand gallons of gasoline compared with 41,912 thousand gallons a year ago. There was a 6% rise in the retail fuel margin to 35 cents per gallon. However, these factors were more than offset by a lower store count (248 versus 250).
Costs & Balance Sheet
The company’s total operating costs and expenses were $5.27 billion in the third quarter of 2022, up 80.6% from the year-ago quarter. This rise was primarily due to the higher cost of sales, which surged 82.7%.
As of Sep 30, Delek US Holdings had cash and cash equivalents of $1.15 billion and long-term debt of $2.67 billion, with debt-to-total capital of about 67.5%.
Guidance
Delek projects the fourth-quarter 2022 crude oil throughput to average between 280,000 and 290,000 barrels per day or roughly 94% utilization at the midpoint.
For full-year 2022, the company expects capital expenditures of approximately $300 million. DK expects additional repurchases of approximately $75 to $100 million of its common stock in the fourth quarter of 2022.
The Zacks Consensus Estimate for Earthstone’s 2022 earnings is pegged at $5.31 per share, indicating an increase of about 324.8% from the year-ago earnings of $1.25.
ESTE beat the consensus mark for earnings in three of the trailing four quarters, the average being around 12.2%.
The Zacks Consensus Estimate for TotalEnergies’ 2022 earnings is pegged at $14.41 per share, up about 115.7% from the year-ago earnings of $6.68.
TTE beat the consensus estimate for earnings in three of the trailing four quarters, the average being around 10.9%.
The Zacks Consensus Estimate for Phillips’ 2022 earnings stands at $20.88 per share, which implies an increase of about 266.3% from the year-ago earnings of $5.70.
PSX beat estimates for earnings in all the trailing four quarters, the average being around 28%.
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Delek US Holdings (DK) Stock Rises 2% Despite Q3 Earnings Lag
Delek US Holdings’ (DK - Free Report) stock has gone up 2.1% since its third-quarter 2022 results were announced on Nov 7. Despite the bottom-line lag, the rise could be attributed to better-than-expected sales in the reported quarter and a small hike in DK’s dividend.
What Did Delek's Earnings Unveil?
Delek US Holdings reported a third-quarter 2022 adjusted net income of 2 cents per share, underperforming the Zacks Consensus Estimate of 31 cents and also lower than the year-earlier profit of 13 cents. The underperformance could be attributed to unfavorable inventory valuation impacts.
The diversified downstream energy company said that its adjusted EBITDA was $135.8 million compared with $101.9 million in the year-earlier period.
Meanwhile, Delek’s revenues of $5.3 billion surged 80.1% year over year and beat the consensus mark by $1.25 billion, primarily due to soaring sales from its key Refining segment. Revenues from the unit came in at almost $4 billion, up 53.2% from the third quarter of 2021 and 21.2% more than the Zacks Consensus Estimate.
In good news for investors, DK’s board of directors approved an increase of 1 cent per share in the regular dividend, bringing the quarterly dividend to 21 cents per share. The dividend will be paid out on Dec 2, 2022 to shareholders of record on Nov 18, 2022.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote
Segment Details
Refining: The segment’s contribution margin (the refining margin minus operating expenses) increased from $82.1 million in the third quarter of 2021 to $106 million. However, the same lagged the Zacks Consensus Estimate of $317 million.
On a year-over-year basis, the refining segment’s results were negatively impacted by $225.1 million of inventory valuation impacts in the third quarter of 2022 compared with a $2.7 million unfavorable impact in the third quarter of 2021.
In the third quarter of 2022, Delek’s benchmark crack spreads were up an average of about 79.3% from prior-year levels. However, the ongoing burden of the Renewable Fuel Standard program continues to negatively impact small refineries' ability to fully capture the crack spread.
Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P., a publicly traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets.
The Logistics unit’s margin of $90.5 million was higher than the year-ago period’s income of $66.9 million and beat the Zacks Consensus Estimate of $88 million. The segment benefited from robust refinery utilization and contributions from the 3Bear Energy acquisition.
Retail: In the third quarter of 2022, the Retail segment — formed by the acquisition of Alon USA Energy in 2017 — had a contribution margin of $17.4 million compared with $17.9 million a year ago. Further, the margin failed to match the consensus mark of $19.12 million.
Meanwhile, merchandise sales of $84.2 million were more than the third-quarter 2021 sales of $81.7 million and beat the Zacks Consensus Estimate by 6.6%. However, the merchandise margin of 32.6% worsened from 33.7% in the year-ago period.
In the third quarter, DK’s retail stations sold 44,729 thousand gallons of gasoline compared with 41,912 thousand gallons a year ago. There was a 6% rise in the retail fuel margin to 35 cents per gallon. However, these factors were more than offset by a lower store count (248 versus 250).
Costs & Balance Sheet
The company’s total operating costs and expenses were $5.27 billion in the third quarter of 2022, up 80.6% from the year-ago quarter. This rise was primarily due to the higher cost of sales, which surged 82.7%.
As of Sep 30, Delek US Holdings had cash and cash equivalents of $1.15 billion and long-term debt of $2.67 billion, with debt-to-total capital of about 67.5%.
Guidance
Delek projects the fourth-quarter 2022 crude oil throughput to average between 280,000 and 290,000 barrels per day or roughly 94% utilization at the midpoint.
For full-year 2022, the company expects capital expenditures of approximately $300 million. DK expects additional repurchases of approximately $75 to $100 million of its common stock in the fourth quarter of 2022.
Zacks Rank & Other Stocks to Consider
Delek US Holdings currently has a Zacks Rank #2 (Buy). Some other similar-ranked stocks from the energy space that warrant a look include Earthstone Energy , TotalEnergies (TTE - Free Report) and Phillips 66 (PSX - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Earthstone’s 2022 earnings is pegged at $5.31 per share, indicating an increase of about 324.8% from the year-ago earnings of $1.25.
ESTE beat the consensus mark for earnings in three of the trailing four quarters, the average being around 12.2%.
The Zacks Consensus Estimate for TotalEnergies’ 2022 earnings is pegged at $14.41 per share, up about 115.7% from the year-ago earnings of $6.68.
TTE beat the consensus estimate for earnings in three of the trailing four quarters, the average being around 10.9%.
The Zacks Consensus Estimate for Phillips’ 2022 earnings stands at $20.88 per share, which implies an increase of about 266.3% from the year-ago earnings of $5.70.
PSX beat estimates for earnings in all the trailing four quarters, the average being around 28%.