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Delek (DK) Q4 Earnings Miss Estimates, Sales Decline Y/Y
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Delek US Holdings, Inc. (DK - Free Report) reported fourth-quarter 2023 adjusted net loss of $1.46 per share, wider than the Zacks Consensus Estimate of a loss of $1.28. The figure also deteriorated from the year-ago quarter’s profit of 88 cents per share. The underperformance could be attributed to the Refining segment's weak year-on-year contributions.
Net revenues decreased 9.6% year over year to $4 billion. The figure, however, beat the consensus mark of $3.8 billion due to record contributions from the Retail and Logistics segments.
The diversified downstream energy company’s Adjusted EBITDA came in at $60.6 million compared with $209.8 million in the year-ago period.
On Feb 20, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24.5 cents per share. The dividend will be paid out on Mar 20, 2024, to shareholders of record as of Mar 1, 2024.
DK distributed $35.4 million to shareholders through dividends and share buybacks during this reported quarter. Throughout the year, DK returned $145.7 million to shareholders through dividends and share buybacks.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Refining: The segment's Adjusted EBITDA was ($10.4 million), indicating a decline from the prior-year quarter's profit of $170.9 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 50.7% during the period. The reported figure missed our prediction of a profit of $101.1 million.
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.
During the fourth quarter, Logistics managed to set a new record. It registered an adjusted EBITDA of $99.4 million compared with $90.6 million in the year-ago quarter. The figure beat our projection of $68.3 million. This substantial growth can be attributed to the exceptional performance of the Midland Gathering and the Delaware Gathering systems, as well as annual rate increases.
Retail: The segment registered an adjusted EBITDA of $9.3 million during the reported quarter compared with $7.8 million in the year-ago period. The figure beat our projection of $10.9 million.
The rise was mainly fueled by increased margins within stores and the overall volume of retail fuel gallons sold during this quarter.
Merchandise sales of $74.4 million declined from the year-ago quarter’s reported figure of $77.4 million. However, the figure missed our estimate by 2%. The merchandise margin increased to 33.3% from the year-ago quarter's reported figure of 32.1%.
DK’s retail stations sold 43,631 thousand gallons of gasoline compared with 41,523 in the corresponding period of 2022.
Financials
Total operating expenses in the fourth quarter decreased about 8.6% year over year to $4.2 billion. Delek spent $372 million on capital programs in the same time frame.
As of Dec 31, 2023, the company had cash and cash equivalents worth $822.2 million and long-term debt of $2.6 billion, with debt to total capital of about 72.7%.
2024 Guidance
For full-year 2024, Delek expects capital expenditures of approximately $330 million as it plans to spend $220 million on Refining, $70 million on Logistics (Delek Logistics Partners), $15 million on Retail and $25 million on Corporate/Other.
For the first quarter, the company anticipates operating costs in the band of $215-$225 million, general and administrative expenses in the range of $60-$65 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
DK anticipates a total crude throughput of 269,000-281,000 barrels per day (bpd) and a total throughput of 289,000-301,000 bpd during the same time frame.
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ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
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MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
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Delek (DK) Q4 Earnings Miss Estimates, Sales Decline Y/Y
Delek US Holdings, Inc. (DK - Free Report) reported fourth-quarter 2023 adjusted net loss of $1.46 per share, wider than the Zacks Consensus Estimate of a loss of $1.28. The figure also deteriorated from the year-ago quarter’s profit of 88 cents per share. The underperformance could be attributed to the Refining segment's weak year-on-year contributions.
Net revenues decreased 9.6% year over year to $4 billion. The figure, however, beat the consensus mark of $3.8 billion due to record contributions from the Retail and Logistics segments.
The diversified downstream energy company’s Adjusted EBITDA came in at $60.6 million compared with $209.8 million in the year-ago period.
On Feb 20, DK’s board of directors approved a 2.1% increase in regular dividends, bringing the quarterly payout to 24.5 cents per share. The dividend will be paid out on Mar 20, 2024, to shareholders of record as of Mar 1, 2024.
DK distributed $35.4 million to shareholders through dividends and share buybacks during this reported quarter. Throughout the year, DK returned $145.7 million to shareholders through dividends and share buybacks.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote
Segmental Performances
Refining: The segment's Adjusted EBITDA was ($10.4 million), indicating a decline from the prior-year quarter's profit of $170.9 million. This significant year-over-year decline can be attributed to lower refining crack spreads, with DK’s benchmark crack spreads decreasing approximately 50.7% during the period. The reported figure missed our prediction of a profit of $101.1 million.
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.
During the fourth quarter, Logistics managed to set a new record. It registered an adjusted EBITDA of $99.4 million compared with $90.6 million in the year-ago quarter. The figure beat our projection of $68.3 million. This substantial growth can be attributed to the exceptional performance of the Midland Gathering and the Delaware Gathering systems, as well as annual rate increases.
Retail: The segment registered an adjusted EBITDA of $9.3 million during the reported quarter compared with $7.8 million in the year-ago period. The figure beat our projection of $10.9 million.
The rise was mainly fueled by increased margins within stores and the overall volume of retail fuel gallons sold during this quarter.
Merchandise sales of $74.4 million declined from the year-ago quarter’s reported figure of $77.4 million. However, the figure missed our estimate by 2%. The merchandise margin increased to 33.3% from the year-ago quarter's reported figure of 32.1%.
DK’s retail stations sold 43,631 thousand gallons of gasoline compared with 41,523 in the corresponding period of 2022.
Financials
Total operating expenses in the fourth quarter decreased about 8.6% year over year to $4.2 billion. Delek spent $372 million on capital programs in the same time frame.
As of Dec 31, 2023, the company had cash and cash equivalents worth $822.2 million and long-term debt of $2.6 billion, with debt to total capital of about 72.7%.
2024 Guidance
For full-year 2024, Delek expects capital expenditures of approximately $330 million as it plans to spend $220 million on Refining, $70 million on Logistics (Delek Logistics Partners), $15 million on Retail and $25 million on Corporate/Other.
For the first quarter, the company anticipates operating costs in the band of $215-$225 million, general and administrative expenses in the range of $60-$65 million, and depreciation and amortization costs between $90 million and $95 million. It also projects net interest expenses in the $80-$85 million range.
DK anticipates a total crude throughput of 269,000-281,000 barrels per day (bpd) and a total throughput of 289,000-301,000 bpd during the same time frame.
Zacks Rank and Key Picks
Currently, DK carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Subsea 7 S.A. (SUBCY - Free Report) , Energy Transfer LP (ET - Free Report) and Murphy USA Inc. (MUSA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7 is valued at $4.22 billion. The company currently pays a dividend of 38 cents per share, or 2.77%, on an annual basis.
SUBCY offers offshore project services for the energy industry. It specializes in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
Energy Transfer is valued at $48.93 billion. The company currently pays a dividend of $1.26 per share, or 8.67%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Murphy USA is valued at around $8.64 billion. In the past year, its shares have risen 63.4%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.