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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Delek US Holdings Inc New | NYSE:DK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.095 | -0.34% | 27.825 | 28.75 | 27.58 | 27.64 | 615,796 | 18:10:06 |
þ
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ANNUAL REPORT PURSUANT TO SECTION 18 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2018
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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32-2581557
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.01 par value
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New York Stock Exchange
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Date
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Acquired Company/Assets
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Acquired From
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Approximate
Purchase Price
(1)
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February 2014
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The Crossett Facility, a biodiesel plant in Crossett, Arkansas
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Pinnacle Biofuels, Inc.
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$11.1 million
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October 2014
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The Greenville-Mount Pleasant Assets, a light products terminal in Mount Pleasant, Texas, a light products storage facility in Greenville, Texas and a 76-mile pipeline connecting the locations.
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An affiliate of Magellan Midstream Partners, L.P.
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$11.1 million
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December 2014
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FTT, a transport company that primarily hauls crude oil and asphalt by truck, including 130 trucks and 210 trailers.
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Frank Thompson Transport, Inc.
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$12.0 million
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May 2015
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33.7 million shares of common stock of Alon, representing approximately 48% of the outstanding common stock of Alon at the time of investment.
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Alon Israel Oil Company, Ltd.
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$575.8 million
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July 2017
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Purchased the remaining 53% ownership in Alon, that Delek did not already own, in an all-stock transaction.
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Shareholders of Alon
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$530.7 million
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September 2017
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The Big Spring Pipeline, an approximate 40-mile pipeline and related ancillary assets, which originates in Big Spring, Texas and terminates in Midland, Texas.
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Plains Pipeline, L.P.
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$9.0 million
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February 2018
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Purchased the remaining 18.4% ownership in the Alon Partnership that Delek did not already own, in an all-equity transaction.
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Limited partner unit holders of the Alon Partnership
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$184.7 million
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•
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the Lion Pipeline System, which transports crude oil to, and refined products from, the El Dorado refinery (the "Lion Pipeline System");
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the SALA Gathering System, which gathers and transports crude oil production in southern Arkansas and northern Louisiana, primarily for the El Dorado refinery;
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the Paline Pipeline System, which primarily transports crude oil from Longview, Texas to third-party facilities in Nederland, Texas;
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the East Texas Crude Logistics System, which currently transports a portion of the crude oil delivered to the Tyler refinery (the "East Texas Crude Logistics System");
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the Tyler-Big Sandy Product Pipeline, which is a pipeline between the Tyler refinery and the Big Sandy Terminal;
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the Tyler Tanks;
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the El Dorado Tanks;
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the Greenville-Mount Pleasant Pipeline and Greenville Storage Facility;
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the North Little Rock Tanks;
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the El Dorado Rail Offloading Racks;
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the Tyler Crude Tank;
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the Talco Crude Pipeline;
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the Big Spring Pipeline;
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Big Spring Truck Unloading Station; and
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Big Spring Tanks
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a
50%
interest in an 80-mile crude oil pipeline with a capacity of 80,000 bpd that originates in Longview, Texas, with destinations in the Shreveport, Louisiana area (the "Caddo Pipeline") and;
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a
33%
interest in a 109-mile crude oil pipeline with an initial capacity of 80,000 bpd, that originates in north Loving County, Texas near the Texas-New Mexico border and terminates in Midland, Texas ("the RIO Pipeline").
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Year Ended December 31,
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2018
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2017
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2016
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Operating Information:
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West Texas marketing throughputs (average bpd)
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13,323
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13,817
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13,257
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Terminalling throughputs (average bpd)
(1)
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155,193
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124,488
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122,350
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East Texas marketing throughputs (average bpd)
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77,487
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73,655
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68,131
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(1)
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Consists of terminalling throughputs at our Tyler, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.
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Year Ended December 31,
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2018
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2017
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2016
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Throughputs (average bpd)
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Lion Pipeline System:
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Crude pipelines (non-gathered)
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51,992
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59,362
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56,555
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Refined products pipelines to Enterprise Systems
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45,728
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51,927
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52,071
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SALA Gathering System
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16,571
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15,871
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17,756
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East Texas Crude Logistics System
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15,696
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15,780
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12,735
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Year ended December 31, 2018
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Period from July 1, 2017 through December 31, 2017
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Number of fuel stores (end of period)
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271
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293
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Average number of fuel stores (during period)
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271
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293
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Total fuel revenue (in thousands)
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$
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571,596
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$
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251,781
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Retail fuel revenues (thousands of gallons)
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217,118
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107,599
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Average retail gallons per store (based on average number of stores) (thousands of gallons)
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801
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367
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Retail fuel margin ($ per gallon)
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$
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0.24
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$
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0.19
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Year ended December 31, 2018
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Period from July 1, 2017 through December 31, 2017
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Number of merchandise stores (end of period)
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279
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302
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Average number of merchandise stores (during period)
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295
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302
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Merchandise margin percentage
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30.9
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%
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30.7
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%
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Total merchandise revenues (in thousands)
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$
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339,000
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$
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174,600
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Average merchandise sales per store (in thousands)
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$
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275
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$
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578
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•
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changes in global and local economic conditions;
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domestic and foreign supply and demand for crude oil and refined products;
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the level of foreign and domestic production of crude oil and refined petroleum products;
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increased regulation of feedstock production activities, such as hydraulic fracturing;
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infrastructure limitations that restrict, or events that disrupt, the distribution of crude oil, other feedstocks and refined petroleum products;
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excess or overbuilt infrastructure;
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an increase or decrease of infrastructure limitations (or the perception that such an increase or decrease could occur) on the distribution of crude oil, other feedstocks or refined products;
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investor speculation in commodities;
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worldwide political conditions, particularly in significant oil producing regions such as the Middle East, Africa, the former Soviet Union and South America;
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the ability of the members of the Organization of Petroleum Exporting Countries to maintain oil price and production controls;
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pricing and other actions taken by competitors that impact the market;
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the level of crude oil, other feedstocks and refined petroleum products imported into and exported out of the United States;
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excess capacity and utilization rates of refineries worldwide;
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development and marketing of alternative and competing fuels, such as ethanol and biodiesel;
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changes in fuel specifications required by environmental and other laws, particularly with respect to oxygenates and sulfur content;
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local factors, including market conditions, adverse weather conditions and the level of operations of other refineries and pipelines in our markets;
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volatility in the costs of natural gas and electricity used by our refineries;
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accidents, interruptions in transportation, inclement weather or other events, including cyber attacks, that can cause unscheduled shutdowns or otherwise adversely affect our refineries or the supply and delivery of crude oil from third parties; and
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United States government regulations.
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select, and compete successfully in, new markets;
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obtain suitable sites at acceptable costs;
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realize an acceptable return on the capital invested in new facilities;
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hire, train, and retain qualified personnel;
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integrate new retail fuel and convenience stores into our existing distribution, inventory control, and information systems;
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expand relationships with our suppliers or develop relationships with new suppliers; and
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secure adequate financing, to the extent required.
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its reliance on significant customers, including us;
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macroeconomic factors, such as commodity price volatility that could affect its customers' utilization of its assets;
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its reliance on us for near-term growth;
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sufficiency of cash flow for required distributions;
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counterparty risks, such as creditworthiness and force majeure;
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competition from third-party pipelines and terminals and other competitors in the transportation and marketing industries;
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environmental regulations;
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operational hazards and risks;
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pipeline tariff regulations;
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limitations on additional borrowings and other restrictions in its debt agreements; and
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other financial, operational and legal risks.
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We may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms;
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We usually compete with others to acquire assets, which competition may increase, and any level of competition could result in decreased availability or increased prices for acquisition candidates;
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We may experience difficulty in anticipating the timing and availability of acquisition candidates;
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We may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; and
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As a public company, we are subject to reporting obligations, internal controls and other accounting requirements with respect to any business we acquire, which may prevent or negatively affect the valuation of some acquisitions we might otherwise deem favorable or increase our acquisition costs.
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during the acquisition process, we may fail, or be unable, to discover some of the liabilities of companies or businesses that we acquire;
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we may assume contracts or other obligations in connection with particular acquisitions on terms that are less favorable or desirable than the terms that we would expect to obtain if we negotiated the contracts or other obligations directly;
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we may fail to successfully integrate or manage acquired assets;
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acquired assets may not perform as we expect, or we may not be able to obtain the cost savings and financial improvements we anticipate;
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acquisitions may require us to incur additional debt or issue additional equity;
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acquired assets may suffer a diminishment in fair value as a result of which we may need to record a write-down or impairment;
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we may fail to grow our existing systems, financial controls, information systems, management resources and human resources in a manner that effectively supports our growth;
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to the extent that we acquire assets in new lines of business, we may become subject to additional regulatory requirements and additional risks that are characteristic or typical of these lines of business; and
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to the extent that we acquire equity interests in entities that control assets (rather than acquiring the assets directly), we may become subject to liabilities that predate our ownership and control of the assets.
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our quarterly or annual earnings, or those of other companies in our industry;
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inaccuracies in, and changes to, our previously published quarterly or annual earnings;
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changes in accounting standards, policies, guidance, interpretations or principles;
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economic conditions within our industry, as well as general economic and stock market conditions;
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the failure of securities analysts to cover our common stock, or the cessation of such coverage;
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changes in financial estimates by securities analysts and the frequency and accuracy of such reports;
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future issuance or sales of our common stock;
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announcements by us or our competitors of significant contracts or acquisitions;
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sales of common stock by our senior officers or our affiliates; and
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the other factors described in these "Risk Factors."
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stockholder actions may only be taken at annual or special meetings of stockholders;
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members of our Board of Directors can be removed with or without cause by a supermajority vote of stockholders;
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the Court of Chancery of the State of Delaware is, with certain exceptions, the exclusive forum for certain legal actions;
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our bylaws, as may be in effect from time to time, can be amended only by a supermajority vote of stockholders; and
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certain provisions of our certificate of incorporation, as may be in effect from time to time, can be amended only by a supermajority vote of stockholders.
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increase our vulnerability to general adverse economic and industry conditions;
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require us to dedicate a substantial portion of our cash flow from operations to service our debt and lease obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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place us at a disadvantage relative to our competitors that have less indebtedness or better access to capital by, for example, limiting our ability to enter into new markets, upgrade our refining assets or pursue acquisitions or other business opportunities;
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limit our ability to borrow additional funds in the future; and
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increase interest costs for our borrowed funds and letters of credit.
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declare dividends and redeem or repurchase capital stock;
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prepay, redeem or repurchase debt;
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make loans and investments, issue guaranties and pledge assets;
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incur additional indebtedness or amend our debt and other material agreements;
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make capital expenditures;
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engage in mergers, acquisitions and asset sales; and
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enter into certain intercompany arrangements or make certain intercompany payments, which in some instances could restrict our ability to use the assets, cash flows or earnings of one operating segment to support another operating segment or Holdings.
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans
or Programs
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October 1 - October 31, 2018
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184,589
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$
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42.60
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184,589
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$
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59,722,234
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November 1 - November 30, 2018
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—
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—
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—
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559,722,234
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December 1 - December 31, 2018
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3,990,286
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37.59
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3,990,286
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409,722,408
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Total
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4,174,875
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$
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37.81
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4,174,875
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N/A
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Repurchases on 2016 Authorization (excluding December 29, 2016 Authorization)
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Repurchases on December 29, 2016 Authorization
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Repurchases on February 2018 Authorization
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Repurchases on December 2018 Authorization
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Period
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Share Repurchase Authorization
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Shares Repurchased
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Average Price Paid per Share
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Shares Repurchased
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Average Price Paid per Share
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Shares Repurchased
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Average Price Paid per Share
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Shares Repurchased
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Average Price Paid per Share
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Beginning Share Repurchases Authorized as of January 1, 2016
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$
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—
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Repurchases Authorized 2016 (excluding December 29, 2016 Authorization)
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125,000,000
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2016 Repurchases
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(5,999,839
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)
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386,090
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$
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15.54
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Repurchases Expiration
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(119,000,161
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)
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December 29, 2016 Repurchases Authorized
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150,000,000
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Share Repurchases Authorized as of December 31, 2016
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150,000,000
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2017 Repurchases
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(24,999,985
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)
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762,623
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$
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32.78
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||||||||||
Share Repurchases Authorized as of December 31, 2017
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125,000,015
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Repurchases Authorized February 2018
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150,000,000
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Repurchases Authorized November 2018
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500,000,000
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2018 Repurchases
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(365,277,607
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)
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|
|
|
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3,135,942
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$
|
39.86
|
|
|
3,449,260
|
|
|
$
|
43.49
|
|
|
2,437,184
|
|
|
$
|
37.04
|
|
||||
Share Repurchases Authorized as of December 31, 2018
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$
|
409,722,408
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|
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Year Ended December 31,
|
||||||||||||||||||
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2018
(1)(2)
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2017
(3)
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2016
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2015
(4)
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2014
(4)
|
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Statement of Operations Data:
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|
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|
|||||||||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
|
$
|
4,782.0
|
|
|
$
|
7,019.2
|
|
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|
21.3
|
|
|
326.9
|
|
|||||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|
(15.8
|
)
|
|
101.6
|
|
|||||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7)
|
|
|
37.1
|
|
|
225.3
|
|
|||||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|
6.6
|
|
|
0.7
|
|
|||||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|
43.7
|
|
|
226.0
|
|
|||||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|
24.3
|
|
|
27.4
|
|
|||||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
|
$
|
19.4
|
|
|
$
|
198.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total basic income (loss) per share
|
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$
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4.11
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|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
|
$
|
0.32
|
|
|
$
|
3.38
|
|
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
|
$
|
0.32
|
|
|
$
|
3.34
|
|
Dividends declared per common share outstanding
|
|
$
|
0.96
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
1.00
|
|
|
|
December 31,
|
||||||||||||||||||
|
|
2018
(5)
|
|
2017
(3)
|
|
2016
|
|
2015
(4)
|
|
2014
(4)
|
||||||||||
Balance Sheet Data:
|
|
|
|
(In millions)
|
|
|
||||||||||||||
Cash and cash equivalents
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
|
$
|
689.2
|
|
|
$
|
287.2
|
|
|
$
|
429.8
|
|
Total current assets
|
|
2,420.3
|
|
|
2,611.8
|
|
|
1,396.9
|
|
|
1,389.4
|
|
|
1,656.0
|
|
|||||
Total assets
|
|
5,760.6
|
|
|
5,935.2
|
|
|
2,979.8
|
|
|
3,316.8
|
|
|
2,888.7
|
|
|||||
Total current liabilities
|
|
1,663.5
|
|
|
2,671.7
|
|
|
935.2
|
|
|
996.0
|
|
|
1,057.5
|
|
|||||
Total debt, including current maturities
|
|
1,783.3
|
|
|
1,465.6
|
|
|
832.9
|
|
|
805.2
|
|
|
464.8
|
|
|||||
Total stockholders' equity
|
|
1,808.1
|
|
|
1,964.2
|
|
|
1,182.5
|
|
|
1,353.9
|
|
|
1,198.4
|
|
•
|
volatility in our refining margins or fuel gross profit as a result of changes in the prices of crude oil, other feedstocks and refined petroleum products;
|
•
|
our ability to execute our strategy of growth through acquisitions and capital projects and changes in the expected value of and benefits derived therefrom, including any inability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;
|
•
|
acquired assets may suffer a diminishment in fair value, which may require us to record a write-down or impairment;
|
•
|
reliability of our operating assets;
|
•
|
actions of our competitors and customers;
|
•
|
changes in, or the failure to comply with, the extensive government regulations applicable to our industry segments;
|
•
|
changes in interpretations, assumptions and expectations regarding the Tax Cuts and Jobs Act, including additional guidance that may be issued by federal and state taxing authorities;
|
•
|
diminution in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;
|
•
|
general economic and business conditions affecting the southern, southwestern and western United States, particularly levels of spending related to travel and tourism;
|
•
|
volatility under our derivative instruments;
|
•
|
deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties);
|
•
|
unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement and periodic turnaround projects;
|
•
|
risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals;
|
•
|
operating hazards, natural disasters, casualty losses and other matters beyond our control;
|
•
|
increases in our debt levels or costs;
|
•
|
changes in our ability to continue to access the credit markets;
|
•
|
compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;
|
•
|
the inability of our subsidiaries to freely make dividends, loans or other cash distributions to us;
|
•
|
seasonality;
|
•
|
acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks;
|
•
|
disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;
|
•
|
changes in the cost or availability of transportation for feedstocks and refined products; and
|
•
|
other factors discussed under Item 1A, Risk Factors and Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and in our other filings with the SEC.
|
•
|
For our Tyler refinery, we compare our per barrel refined product margin to the Gulf Coast 5-3-2 crack spread. The Gulf Coast 5-3-2 crack spread is used as a benchmark for measuring a refinery's product margins by measuring the difference between the market price of light products and crude oil, and represents the approximate refined product margin resulting from processing one barrel of crude oil into three-fifths barrel of gasoline and two-fifths barrel of high-sulfur diesel.
|
•
|
For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread. The Gulf Coast 3-2-1 crack spread is calculated assuming that one barrel of WTI Cushing crude oil are converted into two-thirds barrel of Gulf Coast conventional gasoline and one-third barrel of Gulf Coast ultra-low sulfur diesel. Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oils, and therefore the WTI Cushing/WTS price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.
|
•
|
For our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 high sulfur diesel crack spread, which is calculated assuming that one barrel of LLS crude oil is converted into one-half barrel of Gulf Coast conventional gasoline and one-half barrel of Gulf Coast high sulfur diesel. The Krotz Springs refinery has the capability to process substantial volumes of light sweet, crude oils to produce a high percentage of refined light products.
|
•
|
The crude oil and product slate flexibility of the El Dorado refinery allows us to take advantage of changes in the crude oil and product markets; therefore, we anticipate that the quantities and varieties of crude oil processed and products manufactured at the El Dorado refinery by processing a variety of feedstocks into a number of refined product types will continue to vary. While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the Gulf Coast 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.
|
•
|
Maintain and continue to enhance our safe operations.
As we invest in and grow our business, we remain focused on safe and compliant operations for the benefit of our employees, communities, customers and shareholders.
|
•
|
Capitalize on the successful integration of the Alon transaction.
During 2017 and 2018 we expended significant efforts to fully integrate the Alon organization. Now that the integration is complete, our goal is to continue to implement best practices to improve the performance of our larger organization which includes focusing on simplifying the organization structure and the balance sheet. We are continuing to realize synergies that are expected to have a positive effect on our combined operations.
|
•
|
Build on a winning culture.
During 2017 and 2018, we believe our team responded well to our larger scale, as steps were taken to integrate the two companies following the acquisition of Alon in July 2017. We are now a larger and more diverse company, but our focus is to foster a culture that has the ability to act quickly in a changing environment to take advantage of opportunities. In order to support this operation, we continue to be focused on expanding our team, developing systems and providing the resources to position the organization for success in the future.
|
•
|
Enhance our position in the Permian Basin.
Our 302,000 barrels per day of crude throughput capacity is primarily a WTI-linked crude oil slate that is weighted to supply from the Permian Basin through our access to approximately 200,000 barrels per day. In addition, we have complementary retail and logistics presence in the area. Our strategic focus will be to evaluate options to utilize our position to create additional growth across our businesses, while working toward reducing our susceptibility to volatility in the crude and refined product markets.
|
•
|
Grow our logistics operations.
The combination of our access to the Permian Basin and larger refining operation should allow us to continue to grow our logistics footprint. We will look for opportunities to capitalize on this position to increase our crude gathering operations, support the refining system and third party customers. This includes exploring opportunities for continued development through joint ventures and opportunities to acquire assets in markets that are complementary to our existing geographic footprint.
|
•
|
Optimization of our refining system.
We have doubled the size of our refining system since 2016. This gives us the opportunities to utilize the best practices from each location to improve reliability, efficiencies and yields in an effort to maximize performance. This should enhance our competitive position and free cash flow potential.
|
•
|
Use our financial flexibility and cash flow to create shareholder value.
We are focused on managing the cash flow in our business to support our capital allocation program that includes: 1) returning cash to shareholders through dividends and share repurchases, 2) investing in our business and 3) growing through acquisitions - all of which combine to serve our central goal of increasing long-term value for our shareholders.
|
•
|
growing our business through new lines of business and investment in our existing businesses including capital improvements and new technology, and
|
•
|
identifying and managing operational and financial risks to improve operational decision-making and increase profitability.
|
I.
|
Become nationally recognized for safety and wellness leadership,
|
II.
|
Maximize return on assets through best-in-industry reliability and integrity,
|
III.
|
Improve efficiency and execution through development of systems and processes,
|
IV.
|
Identify and manage risks to improve decision making and increase profitability, and
|
V.
|
Significantly increase overall earnings.
|
I.
|
Safety and wellness.
In the refining environment, safety is always of paramount concern. But safety, and wellness, are also critical to maximizing productivity and optimizing the use of our team members' talents and capital assets, our two most valuable resources. For these reasons, safety and wellness have become an enterprise-wide, pervasive mantra in our culture that is already resulting in fewer injuries and less downtime. For 2019, our initiatives are centered around awareness and developing programs with our employees' input to guide and support all of the business units. We believe these cultural programs will drive continued reductions in work-related recordable injuries and move us toward becoming first in class with respect to safety and wellness.
|
II.
|
Reliability and integrity.
We are focused on improving refinery system availability through top-tiered maintenance and equipment monitoring, and minimizing environmental releases by exploring new technologies and methods for monitoring and correcting failures before they result in releases. But this objective reaches beyond our refining and logistics operations. We are also committed to improving the reliability and integrity of our internal information and organizational infrastructure, with a specific emphasis on information technology as well as other functions that support the operating business units.
|
III.
|
Systems and processes.
A primary focus to achieve not only an efficient model for sustainability but also to position us to absorb anticipated growth is to develop next generation processes and systems that are integrated, organized, and that are aligned with our operational and strategic objectives.
|
IV.
|
Risk-based decision making.
Making effective and insightful decisions in a rapidly changing environment is a hallmark of high-performing organizations that sustain through volatile times. We are working to develop mitigation plans for defined operational and business unit risks that will be anticipatory and preemptive.
|
V.
|
Positioning for growth.
We have a history of achieving growth, largely through acquisitions. Our view for the future includes continuing to identify acquisition targets that are strategic as well as accretive while also exploring the possibility of capital investment opportunities in new technology and alternative energy.
|
Summary Statement of Operations Data
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
(1)(2)
|
|
2017
(3)
|
|
2016
|
||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
Total operating costs and expenses
|
|
9,621.2
|
|
|
7,086.8
|
|
|
4,247.1
|
|
|||
Operating income (loss)
|
|
611.9
|
|
|
180.3
|
|
|
(49.2
|
)
|
|||
Total non-operating expenses (income), net
|
|
126.4
|
|
|
(119.0
|
)
|
|
342.0
|
|
|||
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7
|
)
|
|||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net incremental revenues of
$2,710.9 million
in the year ended
December 31, 2018
, which included twelve months of Alon operating results, as compared to the year ended
December 31, 2017
, which included only six months; and
|
•
|
the effects of increases in the price of finished petroleum products at our refineries (including a
18.0%
increase in average price of CBOB gasoline per gallon and a
26.3%
increase in average price of ULSD per gallon).
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net sales of
$1,906.4
during the
year ended
December 31, 2017
(related to the six months since the date of the Delek/Alon Merger);
|
•
|
the effects of increases in the price of finished petroleum products at our refineries (including a
19.7%
increase in average price of CBOB gasoline per gallon and a
22.8%
increase in average price of ULSD per gallon); and
|
•
|
net increases in sales volumes in our refining and logistics segments during
2017
.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed net incremental cost of materials and other of
$2,159.2 million
during the
year ended
December 31, 2018
which included twelve months of Alon operating results, as compared to the
year ended
December 31, 2017
, which included only six months of Alon operating results;
|
•
|
an increase in the cost of crude oil feedstocks at the refineries including an increase in the cost of WTI Cushing crude oil from an average of
$50.78
per barrel to an average of
$65.20
, and an increase in the cost of WTI Midland crude oil from an average of
$50.44
per barrel to an average of
$57.84
; and
|
•
|
an increase in the cost of refined products in the logistics segment where the average cost per gallon of gasoline and diesel purchased increased
$0.23
per gallon and
$0.45
per gallon, respectively.
|
•
|
a reduction in cost of materials and other attributable to a decrease in average RIN prices and RIN waivers received which resulted in an incremental net reduction of such costs as compared to the prior year.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed cost of materials and other of
$1,531.90 million
during the
year ended
December 31, 2017
(related to the six months since the date of the Delek/Alon Merger);
|
•
|
an increase in the cost of crude oil feedstocks at the refineries including an increase in the cost of WTI Cushing crude oil from an average of
$43.33
per barrel to an average of
$50.78
, and an increase in the cost of WTI Midland crude oil from an average of
$43.25
per barrel to an average of
$50.44
;
|
•
|
an increase in the cost of refined products in the logistics segment where the average cost per gallon of gasoline and diesel purchased increased
$0.27
per gallon and
$0.31
per gallon, respectively; and
|
•
|
an increase in sales volumes in our refining and logistics segments.
|
•
|
a reduction in cost of materials and other attributable to RIN waiver received which resulted in an incremental net reduction of such costs as compared to the prior year.
|
•
|
the addition of Alon financial results as a result of the Delek/Alon Merger, which contributed incremental operating expenses of
$160.5 million
during the
year ended
December 31, 2018
, which included twelve months of Alon operating results, as compared to the
year ended
December 31, 2017
, which included only six months of Alon operating results;
|
•
|
higher employee related expenses due to increased headcount, overtime and employee incentive costs;
|
•
|
higher operating costs at our refineries associated with various spills, maintenance, outages and increased utility expenses; and
|
•
|
higher operating costs in our logistics segment associated with increased volumes at our terminals and maintenance costs.
|
•
|
a $16.0 million reduction of operating expenses attributed to recoveries received from the settlement of disputed indemnification matters related to environmental obligations and asset retirement obligations at the Bakersfield Refinery.
|
•
|
addition of Alon financial results as a result of the Delek/Alon Merger, which contributed operating expenses of
$172.6
during the
year ended
December 31, 2017
(related to the six months since the date of the Delek/Alon Merger).
|
•
|
the addition of Alon as a result of the Delek/Alon Merger, which contributed incremental general and administrative expenses of
$31.8 million
during the
year ended
December 31, 2018
, which included twelve months of Alon operating results, as compared to the
year ended
December 31, 2017
, which included only six months of Alon operating results;
|
•
|
an increase in employee related costs resulting from increases in incentive plan costs and the addition of employees in connection with the integration of the acquisition of Alon; and
|
•
|
increases in information technology expenses related to system upgrades, security and licensing.
|
•
|
the addition of Alon as a result of the Delek/Alon Merger, which contributed general and administrative expenses of
$37.4
during the
year ended
December 31, 2017
(related to the six months since the date of the Delek/Alon Merger), as well as additional absorbed overhead cost, integration costs and related transaction costs incurred during
2017
; and
|
•
|
transaction costs related to the Delek/Alon Merger incurred by the Company totaled approximately
$24.7 million
, inclusive of
$10.1 million
of merger costs and
$14.7 million
of non-recurring costs associated with the transaction for the year ended
December 31, 2017
.
|
•
|
the addition of Alon property, plant and equipment of
$1,130.3 million
and the addition of amortizable intangibles of
$61.3 million
as a result of the Delek/Alon Merger, combined with the addition of other capital expenditures and acquisitions (net of disposals) completed to date, where such additions contributed
$45.3 million
in incremental depreciation and amortization during the
year ended
December 31, 2018
, which included twelve months of Alon operating results, as compared to the
year ended
December 31, 2017
, which included only six months of Alon operating results.
|
•
|
addition of Alon property, plant and equipment of
$1,130.5 million
(at preliminary fair value) and amortizable intangibles of
$53.6 million
(at preliminary fair value) as a result of the Delek/Alon Merger, which contributed
$34.4 million
in additional depreciation and amortization during
2017
(related to the six months since the date of the Delek/Alon Merger).
|
•
|
an increase of
$20.1 million
related to realized and unrealized gains on trading forward contract derivatives and net of gains of
$7.7 million
on related hedging derivatives in 2018; and
|
•
|
a gain on asset disposal of
$0.9 million
partially driven by the sale of 14 retail stores.
|
•
|
an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately
$594.0 million
(calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) for the
year ended
December 31, 2018
compared to the
year ended
December 31, 2017
, where a significant driver of the increase in borrowings related to the assumption of debt/obligations in connection with the Delek/Alon Merger.
|
•
|
addition of assumed debt totaling
$568.0 million
(at fair value) in connection with the Delek/Alon Merger; and
|
•
|
increases in the weighted average interest rate, including LIBOR interest rates, under our credit facilities
|
•
|
the absence of the equity method investment in Alon during the
year ended
December 31, 2018
whereas we recognized our proportionate share of the net income from our investment in Alon of
$4.5 million
, net of
$1.3 million
in amortization of the excess of our investment over our equity in the underlying net assets of Alon, for the
year ended
December 31, 2017
; and
|
•
|
the disposal of an equity method investment associated with the sale of asphalt terminals during the
year ended
December 31, 2018
.
|
•
|
the absence of an equity method investment in Alon during the last half of
2017
, in which we recognized our proportionate share of the net income from our investment in Alon of
$4.5 million
, net of
$1.3 million
in amortization of the excess of our investment over our equity in the underlying net assets of Alon, as compared to our proportionate share of the net loss from our investment in Alon of
$39.6 million
and
$2.6 million
in amortization of the excess of our investment over our equity in the underlying net assets of Alon for
2016
; and
|
•
|
the recognition of our proportionate share of net income for equity method investments acquired in the Delek/Alon Merger.
|
•
|
the recognition of a gain related to settlement of disputed indemnification matters related to environmental obligations and asset retirement obligations at the Bakersfield Refinery; and
|
•
|
increase in other miscellaneous income, including decrease in reserves related to pending litigation and the relieving of certain retail deposits.
|
•
|
expense associated with the termination of our license agreement with 7-Eleven in 2018 .
|
•
|
pre-tax income of
$485.5 million
compared to
$299.3 million
for the years ended
December 31, 2018
and
2017
, respectively, and an increase in our effective tax rate which was
21.0%
compared to
(9.8)%
for the years ended
December 31, 2018
and
2017
, respectively.
|
•
|
an increase to our effective tax rate to a more normalized level (in relation to statutory tax rates) where the 2017 tax rate was favorably and significantly impacted by the
$166.9 million
benefit attributable to the impact of applying the Tax Reform Act to our existing net deferred tax liabilities in
2017
.
|
•
|
pre-tax income of
$299.3 million
compared to pre- tax loss of
$391.2 million
for the years
2017
and
2016
, respectively, which resulted in income tax expense for
2017
as compared to benefit for
2016
; and
|
•
|
a
$166.9 million
benefit attributable to the impact of applying the Tax Reform Act to our existing net deferred tax liabilities in
2017
.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
9,610.4
|
|
|
$
|
6,620.6
|
|
|
$
|
3,923.2
|
|
Cost of materials and other
|
|
8,279.9
|
|
|
5,852.2
|
|
|
3,614.1
|
|
|||
Refining Margin
|
|
1,330.5
|
|
|
768.4
|
|
|
309.1
|
|
|||
Operating expenses (excluding depreciation and amortization)
|
|
465.4
|
|
|
317.7
|
|
|
212.4
|
|
|||
Insurance proceeds - business interruption
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|||
Contribution margin
|
|
$
|
865.1
|
|
|
$
|
450.7
|
|
|
$
|
139.1
|
|
Contribution margin percentage
|
|
9.0
|
%
|
|
6.8
|
%
|
|
3.5
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Tyler, TX Refinery
|
|
|
|
|
|
|
||||||
Days in period
|
|
365
|
|
|
365
|
|
|
366
|
|
|||
Total sales volume - refined (average barrels per day)
(1)
|
|
78,658
|
|
|
76,041
|
|
|
72,542
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|
|
||||||
Gasoline
|
|
42,138
|
|
|
40,936
|
|
|
38,618
|
|
|||
Diesel/Jet
|
|
30,035
|
|
|
29,194
|
|
|
28,031
|
|
|||
Petrochemicals, LPG, NGLs
|
|
2,564
|
|
|
2,522
|
|
|
2,551
|
|
|||
Other
|
|
1,665
|
|
|
1,677
|
|
|
1,548
|
|
|||
Total production
|
|
76,402
|
|
|
74,329
|
|
|
70,748
|
|
|||
Throughput (average barrels per day):
|
|
|
|
|
|
|
||||||
Crude Oil
|
|
70,041
|
|
|
69,088
|
|
|
67,357
|
|
|||
Other feedstocks
|
|
6,770
|
|
|
6,729
|
|
|
4,310
|
|
|||
Total throughput
|
|
76,811
|
|
|
75,817
|
|
|
71,667
|
|
|||
Per barrel of sales:
|
|
|
|
|
|
|
||||||
Tyler refining margin
|
|
$
|
11.88
|
|
|
$
|
9.10
|
|
|
$
|
7.56
|
|
Direct operating expenses
|
|
$
|
3.64
|
|
|
$
|
3.42
|
|
|
$
|
3.75
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|
|
||||||
WTI crude oil
|
|
83.0
|
%
|
|
81.1
|
%
|
|
80.3
|
%
|
|||
East Texas crude oil
|
|
16.3
|
%
|
|
17.8
|
%
|
|
18.6
|
%
|
|||
Other
|
|
0.7
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
El Dorado, AR Refinery
|
|
|
|
|
|
|
||||||
Days in period
|
|
365
|
|
|
|
|
366
|
|
||||
Total sales volume - refined (average barrels per day)
(2)
|
|
71,381
|
|
|
80,277
|
|
|
78,100
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|
|
||||||
Gasoline
|
|
33,718
|
|
|
38,175
|
|
|
40,751
|
|
|||
Diesel
|
|
24,609
|
|
|
27,482
|
|
|
27,085
|
|
|||
Petrochemicals, LPG, NGLs
|
|
1,228
|
|
|
1,782
|
|
|
1,042
|
|
|||
Asphalt
|
|
5,179
|
|
|
6,507
|
|
|
5,203
|
|
|||
Other
|
|
732
|
|
|
985
|
|
|
947
|
|
|||
Total production
|
|
65,466
|
|
|
74,931
|
|
|
75,028
|
|
|||
Throughput (average barrels per day):
|
|
|
|
|
|
|
||||||
Crude Oil
|
|
65,615
|
|
|
73,577
|
|
|
72,660
|
|
|||
Other feedstocks
|
|
1,313
|
|
|
2,568
|
|
|
3,742
|
|
|||
Total throughput
|
|
66,928
|
|
|
76,145
|
|
|
76,402
|
|
|||
Per barrel of sales:
|
|
|
|
|
|
|
||||||
El Dorado refining margin
|
|
$
|
8.64
|
|
|
$
|
7.76
|
|
|
$
|
3.09
|
|
Direct operating expenses
|
|
$
|
5.22
|
|
|
$
|
3.61
|
|
|
$
|
3.73
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|
|
||||||
WTI crude oil
|
|
58.6
|
%
|
|
60.8
|
%
|
|
65.6
|
%
|
|||
Local Arkansas crude oil
|
|
21.2
|
%
|
|
18.9
|
%
|
|
21.1
|
%
|
|||
Other
|
|
20.2
|
%
|
|
20.3
|
%
|
|
13.3
|
%
|
|
|
Year ended December 31, 2018
|
|
Period from July 1, 2017 through December 31, 2017
|
|||||
Big Spring, TX Refinery (acquired on July 1, 2017)
|
|
|
|
|
|||||
Days in period
|
|
365
|
|
|
184
|
|
|||
Total sales volume - refined (average barrels per day)
(3)
|
|
74,721
|
|
|
74,276
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|||||
Gasoline
|
|
36,596
|
|
—
|
|
37,266
|
|
||
Diesel/Jet
|
|
26,660
|
|
—
|
|
27,027
|
|
||
Petrochemicals, LPG, NGLs
|
|
3,646
|
|
—
|
|
3,738
|
|
||
Asphalt
|
|
1,855
|
|
—
|
|
1,308
|
|
||
Other
|
|
1,339
|
|
—
|
|
1,354
|
|
||
Total production
|
|
70,096
|
|
—
|
|
70,693
|
|
||
Throughput (average barrels per day):
|
|
|
|
|
|||||
Crude oil
|
|
67,978
|
|
—
|
|
69,549
|
|
||
Other feedstocks
|
|
1,533
|
|
—
|
|
1,253
|
|
||
Total throughput
|
|
69,511
|
|
—
|
|
70,802
|
|
||
Per barrel of sales:
|
|
|
|
|
|||||
Big Spring refining margin
|
|
$
|
18.44
|
|
|
$
|
12.86
|
|
|
Direct operating expenses
|
|
$
|
4.20
|
|
|
$
|
4.04
|
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|||||
WTI crude oil
|
|
73.8
|
%
|
|
72.9
|
%
|
|||
WTS crude oil
|
|
26.2
|
%
|
|
27.1
|
%
|
|||
|
|
|
|
|
|||||
Krotz Springs, LA Refinery (acquired on July 1, 2017)
|
|
|
|
|
|||||
Days in period
|
|
365
|
|
|
184
|
|
|||
Total sales volume - refined (average barrels per day)
(4)
|
|
78,902
|
|
|
70,923
|
|
|||
Products manufactured (average barrels per day):
|
|
|
|
|
|||||
Gasoline
|
|
36,729
|
|
—
|
|
33,286
|
|
||
Diesel/Jet
|
|
31,459
|
|
—
|
|
27,686
|
|
||
Heavy Oils
|
|
1,216
|
|
—
|
|
1,024
|
|
||
Petrochemicals, LPG, NGLs
|
|
7,224
|
|
—
|
|
7,018
|
|
||
Total production
|
|
76,628
|
|
—
|
|
69,014
|
|
||
Throughput (average barrels per day):
|
|
|
|
|
|||||
Crude Oil
|
|
73,171
|
|
—
|
|
67,407
|
|
||
Other feedstocks
|
|
2,211
|
|
—
|
|
1,017
|
|
||
Total throughput
|
|
75,382
|
|
—
|
|
68,424
|
|
||
Per barrel of sales:
|
|
|
|
|
|||||
Krotz Springs refining margin
|
|
$
|
9.48
|
|
|
$
|
8.29
|
|
|
Direct operating expenses
|
|
$
|
3.84
|
|
|
$
|
3.80
|
|
|
Crude Slate: (% based on amount received in period)
|
|
|
|
|
|||||
WTI Crude
|
|
61.3
|
%
|
|
52.9
|
%
|
|||
Gulf Coast Sweet Crude
|
|
38.7
|
%
|
|
47.1
|
%
|
Pricing statistics (average for the periods presented):
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
WTI — Cushing crude oil (per barrel)
|
|
$
|
65.20
|
|
|
$
|
50.78
|
|
|
$
|
43.33
|
|
WTI — Midland crude oil (per barrel)
|
|
$
|
57.84
|
|
|
$
|
50.44
|
|
|
$
|
43.25
|
|
WTS -- Midland crude oil (per barrel)
(5)
|
|
$
|
57.43
|
|
|
$
|
49.81
|
|
|
$
|
42.49
|
|
LLS (per barrel)
(5)
|
|
$
|
70.19
|
|
|
$
|
54.01
|
|
|
$
|
45.02
|
|
Brent crude oil (per barrel)
|
|
$
|
71.69
|
|
|
$
|
54.73
|
|
|
$
|
45.18
|
|
|
|
|
|
|
|
|
||||||
U.S. Gulf Coast 5-3-2 crack spread (per barrel)
(5)
|
|
$
|
13.21
|
|
|
$
|
13.01
|
|
|
$
|
9.19
|
|
U.S. Gulf Coast 3-2-1 crack spread (per barrel)
(5)
|
|
$
|
16.63
|
|
|
$
|
16.69
|
|
|
$
|
12.43
|
|
U.S. Gulf Coast 2-1-1 crack spread (per barrel)
(5)
|
|
$
|
9.58
|
|
|
$
|
10.94
|
|
|
$
|
8.47
|
|
|
|
|
|
|
|
|
||||||
U.S. Gulf Coast Unleaded Gasoline (per gallon)
|
|
$
|
1.83
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
Gulf Coast Ultra low sulfur diesel (per gallon)
|
|
$
|
2.05
|
|
|
$
|
1.62
|
|
|
$
|
1.32
|
|
U.S. Gulf Coast high sulfur diesel (per gallon)
|
|
$
|
1.92
|
|
|
$
|
1.47
|
|
|
$
|
1.18
|
|
Natural gas (per MMBTU)
|
|
$
|
3.07
|
|
|
$
|
3.02
|
|
|
$
|
2.55
|
|
(1)
|
Total sales volume includes
986
,
1,592
and
622
bpd sold to the logistics segment during the years ended
December 31, 2018
,
2017
and
2016
, respectively. Total sales volume also includes sales of
193
,
129
and
510
bpd of intermediate and finished products to the El Dorado refinery during the years ended
December 31, 2018
,
2017
and
2016
, respectively. Total sales volume also includes
399
and
546
bpd of produced finished product sold to the Big Spring refinery for the years ended
December 31, 2018
and
2017
, respectively, and
232
bpd sold to the Krotz Springs refinery during the year ended
December 31, 2018
. Total sales volume excludes
4,444
,
4,209
and
1,281
bpd of wholesale activity during the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(2)
|
Total sales volume includes
1,387
,
514
, and
102
bpd of produced finished product sold to the Tyler refinery during the years ended
December 31, 2018
,
2017
and
2016
, respectively, and
27,048
bpd and
302
of produced finished product sold to the Krotz Springs and Big Spring refineries, respectively, for the year ended
December 31, 2018
. There were
140
bpd of produced finished product sold to the logistics segment and
17
bpd sold to the retail segment during the year ended
December 31, 2018
. In addition,
406
and
2,247
bpd of produced finished product was sold to Alon Asphalt Company during the years ended
December 31, 2018
and
2017
, respectively. Total sales volume excludes
47,422
,
25,750
and
20,329
bpd of wholesale activity during the years ended
December 31, 2018
,
2017
and
2016
, respectively.
|
(3)
|
Total sales volume includes
13,967
and
15,190
bpd sold to the retail segment,
10,005
and
176
bpd sold to the logistics segment and
1,688
and
1,510
bpd sold to Alon Asphalt Company during the years ended
December 31, 2018
and
2017
, respectively.
|
(4)
|
Sales volume includes
19,039
and
728
bpd sold to the El Dorado refinery and
606
and
60
bpd sold to the Tyler refinery during the years ended
December 31, 2018
and
2017
, respectively.
|
(5)
|
For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur diesel, and for our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil, Gulf Coast 87 Conventional gasoline and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and east Texas, while the El Dorado refinery's crude input is primarily combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland. The Big Spring and Krotz Springs refineries were acquired July 1, 2017 as part of the Delek/Alon Merger, so Gulf Coast 3-2-1 and 2-1-1 crack spreads, LLS and WTS statistics are presented only for the period Delek owned these refineries.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of
2017
; and
|
•
|
increases in the price of U.S. Gulf Coast gasoline, ULSD and HSD, where increases in sales volume at he Tyler, Big Spring and Krotz Springs refineries were offset by a decrease in sales volumes at the El Dorado refinery.
|
•
|
increase in net revenues included the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of
2017
; and
|
•
|
increases in the price of U.S. Gulf Coast gasoline, ULSD and HSD.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
an increase in the cost of WTI- Cushing crude oil from an average of
$50.78
per barrel for
2017
to an average of
$65.20
during
2018
; and
|
•
|
an increase in the cost of WTI - Midland crude oil, from an average of
$50.44
per barrel for
2017
to an average of
$57.84
during
2018
.
|
•
|
a reduction of our RINs Obligation and related cost of materials and other of approximately
$59.3 million
and
$47.5 million
for the
year ended
December 31, 2018
and
2017
, respectively, related to the receipt of small refinery exemptions from the requirements of the renewable fuel standard at our El Dorado refinery for the
2018
and
2017
calendar years, respectively. In March 2018, the Krotz Springs refinery received such approval as well, which resulted in a reduction of our RINs Obligation and related cost of materials and other of approximately
$31.6 million
for the
year ended
December 31, 2018
.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of
2017
;
|
•
|
an increase in the cost of WTI- Cushing crude oil from an average of
$43.33
per barrel for 2016 to an average of
$50.78
during
2017
,; and
|
•
|
an increase in the cost of WTI - Midland crude oil, from an average of
$43.25
per barrel for 2016 to an average of
$50.44
during
2017
.
|
•
|
$47.5 million reduction in RINs expense associated with the RINs waiver received by the El Dorado refinery in the first quarter of
2017
.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
wider discounts between WTI Cushing crude oil compared to Brent and WTI Midland crude oil compared to WTI Cushing which impact refining margin at the Tyler and El Dorado Refineries where, during the
year ended
December 31, 2018
, the average WTI Cushing crude oil differential to Brent crude oil was
$6.49
per barrel compared to
$3.95
during the
year ended
December 31, 2017
, and the average WTI Midland crude oil differential to WTI Cushing crude oil was
$7.36
per barrel compared to
$0.34
during the
year ended
December 31, 2017
;
|
•
|
a
1.5%
improvement in the average Gulf Coast 5-3-2 crack spread; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
a
41.6%
improvement in the average Gulf Coast 5-3-2 crack spread; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of
2017
;
|
•
|
additional costs associated with various spills at the El Dorado refinery;
|
•
|
higher maintenance and other costs associated with outages at the refineries; and
|
•
|
higher employee costs due to overtime and incentive bonuses.
|
•
|
addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of
2017
.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger on July 1, 2017;
|
•
|
a
1.5%
improvement in the average Gulf Coast 5-3-2 crack spread;
|
•
|
improvements in crude oil differentials as described above; and
|
•
|
the cost of materials and other benefit attributable to the RIN waivers.
|
•
|
the addition of the Big Spring and Krotz Springs refineries in connection with the Delek/Alon Merger in the second half of 2017;
|
•
|
a
41.6%
improvement in the average Gulf Coast 5-3-2 crack spread in 2017 as compared to 2016, which favorably impacted the period-over- period margins at all refineries; and
|
•
|
reduction in RINs expense, primarily associated with the $47.5 million reduction in RINs expense associated with the RINs waiver received by the El Dorado refinery in the first quarter of 2017.
|
•
|
the recognition of the inventory fair value adjustment associated with purchase accounting as an increase in cost of materials and other during 2017 totaling $33.2 million, as the inventory acquired was sold; and
|
•
|
business interruption insurance proceeds of $42.4 million associated with a settlement of litigation received in the first quarter of 2016.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
657.6
|
|
|
538.1
|
|
|
$
|
448.1
|
|
|
Cost of materials and other
|
|
429.1
|
|
|
372.9
|
|
|
302.2
|
|
|||
Operating expenses (excluding depreciation and amortization)
|
|
58.7
|
|
|
43.3
|
|
|
37.2
|
|
|||
Contribution margin
|
|
$
|
169.8
|
|
|
$
|
121.9
|
|
|
$
|
108.7
|
|
Operating Information:
|
|
|
|
|
|
|
||||||
East Texas - Tyler Refinery sales volumes (average bpd)
(1)
|
|
77,487
|
|
|
73,655
|
|
|
68,131
|
|
|||
Big Spring wholesale marketing throughputs (average bpd)
(2)
|
|
81,117
|
|
|
—
|
|
|
—
|
|
|||
West Texas wholesale marketing throughputs (average bpd)
|
|
13,323
|
|
|
13,817
|
|
|
13,257
|
|
|||
West Texas wholesale marketing margin per barrel
|
|
$
|
5.57
|
|
|
$
|
4.03
|
|
|
$
|
1.43
|
|
Terminalling throughputs (average bpd)
(3)
|
|
161,284
|
|
|
124,488
|
|
|
122,350
|
|
|||
Throughputs (average bpd):
|
|
|
|
|
|
|
||||||
Lion Pipeline System:
|
|
|
|
|
|
|
||||||
Crude pipelines (non-gathered)
|
|
51,992
|
|
|
59,362
|
|
|
56,555
|
|
|||
Refined products pipelines to Enterprise Systems
|
|
45,728
|
|
|
51,927
|
|
|
52,071
|
|
|||
SALA Gathering System
|
|
16,571
|
|
|
15,871
|
|
17,756
|
|
||||
East Texas Crude Logistics System
|
|
15,696
|
|
|
15,780
|
|
12,735
|
•
|
increases in the average sales prices per gallon of gasoline and diesel sold in our west Texas marketing operations. The average sales prices per gallon of gasoline and diesel sold increased
$0.29
per gallon and
$0.45
per gallon, respectively, amounting to an increase of
$78.7 million
of the
$119.5 million
increase in net revenues; and
|
•
|
net revenues generated under the agreements executed in connection with the Big Spring Logistics Assets Acquisition, which were effective
March 1, 2018
. Refer to
Note 6
to our accompanying condensed consolidated financial statements for additional information about the agreements executed in connection with the Big Spring Logistic Assets Acquisition; and
|
•
|
increased net revenue related to the Paline Pipeline as a result of volume increases on the pipeline.
|
•
|
increases in the average sales prices per gallon of gasoline and diesel s
old in our west Texas marketing operations. The average sales prices increased
$0.32
per gallon and
$0.39
per gallon, respectively;
|
•
|
a net increase of 8.0 million gallons in the volume of gasoline and diesel sold in west Texas during the year ended
December 31, 2017
compared to gallons sold during the year ended
December 31, 2016
;
|
•
|
increased fees under our marketing agreement with Delek Holdings as a result of increased throughput due to higher demand following product supply disruptions associated with Hurricane Harvey, partially offset by a decline in fees on our Paline Pipeline System; and
|
•
|
decreases in revenues on our Paline Pipeline System. During the year ended
December 31, 2017
, the Paline Pipeline System was FERC regulated pipeline with a tariff established for potential shippers, compared to the year ended
December 31, 2016
, when the pipeline capacity was under contract with two third parties for a monthly fee.
|
•
|
increases in the average cost per gallon of gasoline and diesel purchased in our west Texas marketing operations. The average cost per gallon of gasoline and diesel purchased
increased
$0.23
per gallon and
$0.45
per gallon, respectively, which amounted to an increase of
$72.6 million
in cost of materials and other. The increase in the average cost per gallon of gasoline and diesel was partially offset by a decrease in volumes sold amounting to
$13.5 million
and hedging gains of $4.8 million.
|
•
|
increases in the average cost per gallon of gasoline and diesel purchased in our west Texas marketing operations. The average cost per gallon of gasoline and diesel increased $0.27 per gallon and $0.31 per gallon, respectively; and
|
•
|
a net increase of 8.0 million gallons in the volume of gasoline and diesel purchased in west Texas during the year ended
December 31, 2017
compared to gallons purchased during the year ended
December 31, 2016
.
|
•
|
higher operating costs associated with the logistics assets acquired in the Big Spring Logistic Assets Acquisition, including maintenance expenses, allocated employee costs, variable expenses such as utilities, and professional services fees incurred in connection with the transaction, which accounted for the majority of the increase in operating increases;
|
•
|
higher employee costs, primarily payroll expense, allocated to us as a result of increases in allocated employee headcount and employee incentive costs;
|
•
|
higher costs associated with operating certain of our terminals as a result of volume increases at such terminals; and
|
•
|
increases in outside services expenses related to maintenance projects on certain of our pipelines and tanks.
|
•
|
increases in labor and utilities costs associated with certain of our pipelines as a result of increased usage;
|
•
|
higher maintenance costs associated with certain of our tanks at our tank farms; and
|
•
|
employee incentive costs incurred during the year ended
December 31, 2017
, with no comparable costs incurred during the year ended
December 31, 2016
.
|
•
|
reduction in operating expenses for one of our terminal locations at which we incurred increased costs related to internal tank contamination during the year ended
December 31, 2016
that were not incurred during the year ended
December 31, 2017
.
|
•
|
improved contribution margin in our west Texas operations as a result of continued increased drilling activity in the region and favorable market price movements; and
|
•
|
increases in revenue generated under the agreements executed in connection with the Big Spring Logistic Assets Acquisition as described above.
|
•
|
improved contribution margin in our west Texas operations as a result of increased drilling activity in the region, which has improved market conditions and increased demand;
|
•
|
improvements in our west Texas wholesale marketing margin per barrel as a result of a period of product supply disruptions associated with Hurricane Harvey; and
|
•
|
increased fees associated with the marketing agreement as described above.
|
•
|
a decline in fees on our Paline Pipeline System as described above.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Net revenues
|
|
$
|
915.4
|
|
|
426.7
|
|
|
Cost of materials and other
|
|
755.8
|
|
|
350.3
|
|
||
Operating expenses (excluding depreciation and amortization)
|
|
100.7
|
|
|
49.6
|
|
||
Contribution margin
|
|
$
|
58.9
|
|
|
$
|
26.8
|
|
Operating Information:
|
|
|
|
|
||||
Number of stores (end of period)
|
|
279
|
|
|
302
|
|
||
Average number of stores
|
|
295
|
|
|
302
|
|
||
Retail fuel sales
|
|
$
|
571.6
|
|
|
$
|
251.8
|
|
Retail fuel sales (thousands of gallons)
|
|
217,118
|
|
|
107,599
|
|
||
Average retail gallons per average number of stores (in thousands)
|
|
801
|
|
|
367
|
|
||
Average retail sales price per gallon sold
|
|
$
|
2.63
|
|
|
$
|
2.34
|
|
Retail fuel margin ($ per gallon)
(1)
|
|
$
|
0.239
|
|
|
$
|
0.190
|
|
Merchandise sales
|
|
$
|
339.0
|
|
|
$
|
174.6
|
|
Merchandise sales per average number of stores
|
|
$
|
1.1
|
|
|
$
|
0.6
|
|
Merchandise margin %
|
|
30.9
|
%
|
|
30.7
|
%
|
||
Operating expense/merchandise sales plus total gallons
|
|
11.1
|
%
|
|
11.9
|
%
|
(1)
|
Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
improvements in average sales price of retail fuel per gallon to
$2.63
during the year ended
December 31, 2018
compared to
$2.34
during the six months ended
December 31, 2017
.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
increases in cost per gallon of fuel sold to
$2.39
during the year ended
December 31, 2018
compared to
$2.15
during the six months ended
December 31, 2017
.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results.
|
•
|
the addition of 302 convenience stores on July 1, 2017 in connection with the Delek/Alon Merger, where 2018 has twelve months of retail operating results and 2017 has only six months of retail operating results; and
|
•
|
improvements in average sales price of retail fuel per gallon to
$2.63
during the year ended
December 31, 2018
compared to
$2.34
during the six months ended
December 31, 2017
, or an increase of
12.5%
, where cost per gallon of fuel sold increased to
$2.39
during the year ended
December 31, 2018
compared to
$2.15
during the six months ended
December 31, 2017
, an increase of
11.2%
.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flow Data:
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
560.3
|
|
|
$
|
319.7
|
|
|
$
|
248.0
|
|
Investing activities
|
|
(125.3
|
)
|
|
37.6
|
|
|
200.7
|
|
|||
Financing activities
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(61.7
|
)
|
|||
Net increase
|
|
$
|
137.4
|
|
|
$
|
252.7
|
|
|
$
|
387.0
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019 Forecast
|
|
2018
Actual
|
||||
Refining:
|
|
|
|
|
||||
Sustaining maintenance, including turnaround activities
|
|
$
|
112.3
|
|
|
$
|
88.7
|
|
Regulatory
|
|
82.9
|
|
|
38.0
|
|
||
Discretionary projects
|
|
28.5
|
|
|
77.2
|
|
||
Refining segment total
|
|
223.7
|
|
|
203.9
|
|
||
Logistics:
|
|
|
|
|
||||
Regulatory
|
|
8.1
|
|
|
1.2
|
|
||
Sustaining maintenance
|
|
8.8
|
|
|
5.4
|
|
||
Discretionary projects
|
|
0.6
|
|
|
5.0
|
|
||
Logistics segment total
|
|
17.5
|
|
|
11.6
|
|
||
Retail:
|
|
|
|
|
||||
Regulatory
|
|
—
|
|
|
0.2
|
|
||
Sustaining maintenance
|
|
3.3
|
|
|
4.0
|
|
||
Discretionary projects
|
|
14.9
|
|
|
5.8
|
|
||
Retail segment total
|
|
18.2
|
|
|
10.0
|
|
||
Other
|
|
|
|
|
||||
Regulatory
|
|
2.2
|
|
|
0.3
|
|
||
Sustaining maintenance
|
|
3.4
|
|
|
1.4
|
|
||
Discretionary projects
|
|
85.1
|
|
|
90.0
|
|
||
Other total
|
|
90.7
|
|
|
91.7
|
|
||
Total capital spending
|
|
$
|
350.1
|
|
|
$
|
317.2
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
<
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
>5 Years
|
|
Total
|
||||||||||
Long term debt and notes payable obligations
|
|
$
|
32.0
|
|
|
$
|
89.0
|
|
|
$
|
770.7
|
|
|
$
|
909.8
|
|
|
$
|
1,801.5
|
|
Interest
(1)
|
|
97.3
|
|
|
187.0
|
|
|
163.4
|
|
|
65.1
|
|
|
512.8
|
|
|||||
Operating lease commitments
(2)
|
|
48.1
|
|
|
81.6
|
|
|
51.9
|
|
|
77.9
|
|
|
259.5
|
|
|||||
Purchase commitments
(3)
|
|
577.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
577.3
|
|
|||||
Transportation agreements
(4)
|
|
126.8
|
|
|
195.3
|
|
|
89.1
|
|
|
126.9
|
|
|
538.1
|
|
|||||
Total
|
|
$
|
881.5
|
|
|
$
|
552.9
|
|
|
$
|
1,075.1
|
|
|
$
|
1,179.7
|
|
|
$
|
3,689.2
|
|
|
|
Total Outstanding
|
|
Notional Contract Volume by
Year of Maturity
|
|
|
||||||||||||||||
Contract Description
|
|
Fair Value
|
|
Notional Contract Volume
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||
Contracts not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Crude oil price swaps - long
(1)
|
|
$
|
(1.6
|
)
|
|
480,000
|
|
|
—
|
|
|
480,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Crude oil price swaps - short
(1)
|
|
0.5
|
|
|
480,000
|
|
|
—
|
|
|
480,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - long
(1)
|
|
(8.9
|
)
|
|
9,265,000
|
|
|
6,225,000
|
|
|
3,040,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - short
(1)
|
|
19.2
|
|
|
10,207,000
|
|
|
4,967,000
|
|
|
5,000,000
|
|
|
240,000
|
|
|
—
|
|
|
—
|
|
|
RIN commitment contracts - long
(2)
|
|
0.3
|
|
|
74,000,000
|
|
|
74,000,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
RIN commitment contracts - short
(2)
|
|
6.5
|
|
|
63,750,000
|
|
|
63,750,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
16.0
|
|
|
158,182,000
|
|
|
148,942,000
|
|
|
9,000,000
|
|
|
240,000
|
|
|
—
|
|
|
—
|
|
Contracts designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Inventory, refined product and crack spread swaps - long
(1)
|
|
27.0
|
|
|
15,811,000
|
|
|
15,811,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Inventory, refined product and crack spread swaps - short
(1)
|
|
17.6
|
|
|
650,000
|
|
|
350,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
$
|
44.6
|
|
|
16,461,000
|
|
|
16,161,000
|
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Contract Description
|
|
Less than 1 year
|
||
Over the counter forward sales contracts
|
|
|
||
Notional contract volume
(1)
|
|
1,454,109
|
|
|
Weighted-average market price (per barrel)
|
|
$
|
28.87
|
|
Contractual volume at fair value (in millions)
|
|
$
|
42.0
|
|
Over the counter forward purchase contracts
|
|
|
||
Notional contract volume
(1)
|
|
930,713
|
|
|
Weighted-average market price (per barrel)
|
|
$
|
29.06
|
|
Contractual volume at fair value (in millions)
|
|
$
|
27.0
|
|
(1)
|
Volume in barrels
|
i.
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
ii.
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures recorded by us are being made only in accordance with authorizations of our management and Board of Directors; and
|
iii.
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
1.
|
Financial Statements. The accompanying Index to Financial Statements and Schedule on page F-1 of this Annual Report on Form 10-K is provided in response to this item.
|
2.
|
List of Financial Statement Schedules:
|
3.
|
Exhibits - See below.
|
Exhibit No.
|
|
Description
|
||
2.1
|
|
|
|
|
2.2
|
|
<
|
|
|
2.3
|
|
<
|
|
|
2.4
|
|
|
|
|
2.5
|
|
|
|
|
2.6
|
|
|
|
|
2.7
|
|
|
|
|
3.1
|
|
|
|
|
3.2
|
|
|
|
|
4.1
|
|
|
|
|
4.2
|
|
|
|
|
4.3
|
|
|
|
|
10.1
|
|
*
|
|
|
10.2(a)
|
|
*
|
|
|
10.2(b)
|
|
*
|
|
|
10.2(c)
|
|
*
|
|
|
10.2(d)
|
|
*
|
|
|
10.2(e)
|
|
*
|
|
|
10.2(f)
|
|
*
|
|
|
10.2(g)
|
|
*
|
|
|
10.3
|
|
|
|
|
10.4
|
|
|
|
|
10.5
|
|
|
|
10.6
|
|
++
|
|
|
10.7(a)
|
|
|
|
|
10.7(b)
|
|
|
|
|
10.7(c)
|
|
|
|
|
10.8(a)
|
|
*
|
|
|
10.8(b)
|
|
*
|
|
|
10.9
|
|
|
|
|
10.10(a)
|
|
|
|
|
10.10(b)
|
|
|
|
|
10.11(a)
|
|
|
|
|
10.11(b)
|
|
|
|
|
10.12(a)
|
|
*
|
|
|
10.12(b)
|
|
*
|
|
|
10.12(c)
|
|
*
|
|
|
10.12(d)
|
|
*
|
|
|
10.12(e)
|
|
*
|
|
|
10.13(a)
|
|
*
|
|
|
10.13(b)
|
|
*
|
|
10.13(c)
|
|
*
|
|
|
10.13(d)
|
|
*
|
|
|
10.13(e)
|
|
*
|
|
|
10.13(f)
|
|
*
|
|
|
10.13(g)
|
|
*
|
|
|
10.13(h)
|
|
*
|
|
|
10.14(a)
|
|
*
|
|
|
10.14(b)
|
|
*
|
|
|
10.14(c)
|
|
*
|
|
|
10.14(d)
|
|
*
|
|
|
10.15
|
|
|
|
|
10.16
|
|
|
|
|
10.17
|
|
|
|
|
10.18(a)
|
|
|
|
|
10.18(b)
|
|
|
|
|
10.19
|
|
|
|
|
10.20(a)
|
|
++
|
|
|
10.20(b)
|
|
|
|
|
10.21(a)
|
|
++
|
|
|
10.21(b)
|
|
~#
|
|
|
10.22
|
|
++
|
|
|
10.23(a)
|
|
|
|
|
10.23(b)
|
|
|
|
|
10.24(a)
|
|
|
|
|
10.24(b)
|
|
|
|
|
10.25
|
|
*
|
|
|
10.26
|
|
*
|
|
|
10.27
|
|
*
|
|
|
10.28
|
|
*
|
|
|
10.29
|
|
*
|
|
|
10.30
|
|
|
|
|
10.31
|
|
|
|
|
10.32
|
|
|
|
|
10.33
|
|
|
|
|
10.34
|
|
|
|
|
10.35
|
|
|
|
|
10.36
|
|
|
|
|
10.37
|
|
|
|
|
10.38
|
|
* #
|
|
|
21.1
|
|
#
|
|
|
23.1
|
|
#
|
|
|
31.1
|
|
#
|
|
|
31.2
|
|
#
|
|
|
32.1
|
|
##
|
|
|
32.2
|
|
##
|
|
|
101
|
|
|
|
The following materials from Delek US Holdings, Inc.’s Annual Report on Form 10-K for the annual period ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2018, 2017 and 2016, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 and (vi) Notes to Consolidated Financial Statements.
|
*
|
Management contract or compensatory plan or arrangement.
|
#
|
Filed herewith.
|
##
|
Furnished herewith.
|
<
|
Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to supplementally furnish a copy of any of the omitted schedules to the United States Securities and Exchange Commission upon request.
|
++
|
Confidential treatment has been requested and granted with respect to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. Omitted portions have been filed separately with the United States Securities and Exchange Commission.
|
Audited Financial Statements:
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
Accounts receivable, net
|
|
514.4
|
|
|
579.6
|
|
||
Accounts receivable from related parties
|
|
—
|
|
|
2.1
|
|
||
Inventories, net of inventory valuation reserves
|
|
690.9
|
|
|
808.4
|
|
||
Assets held for sale
|
|
—
|
|
|
160.0
|
|
||
Other current assets
|
|
135.7
|
|
|
129.9
|
|
||
Total current assets
|
|
2,420.3
|
|
|
2,611.8
|
|
||
Property, plant and equipment:
|
|
|
|
|
||||
Property, plant and equipment
|
|
2,999.6
|
|
|
2,772.5
|
|
||
Less: accumulated depreciation
|
|
(804.7
|
)
|
|
(631.7
|
)
|
||
Property, plant and equipment, net
|
|
2,194.9
|
|
|
2,140.8
|
|
||
Goodwill
|
|
857.8
|
|
|
816.6
|
|
||
Other intangibles, net
|
|
104.4
|
|
|
101.1
|
|
||
Equity method investments
|
|
130.3
|
|
|
138.1
|
|
||
Other non-current assets
|
|
52.9
|
|
|
126.8
|
|
||
Total assets
|
|
$
|
5,760.6
|
|
|
$
|
5,935.2
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
1,009.7
|
|
|
$
|
973.4
|
|
|
Accounts payable to related parties
|
|
1.5
|
|
|
1.7
|
|
||
Current portion of long-term debt
|
|
32.0
|
|
|
590.2
|
|
||
Obligation under Supply and Offtake Agreements
|
|
312.6
|
|
|
435.6
|
|
||
Liabilities associated with assets held for sale
|
|
—
|
|
|
105.9
|
|
||
Accrued expenses and other current liabilities
|
|
307.7
|
|
|
564.9
|
|
||
Total current liabilities
|
|
1,663.5
|
|
|
2,671.7
|
|
||
Non-current liabilities:
|
|
|
|
|
||||
Long-term debt, net of current portion
|
|
1,751.3
|
|
|
875.4
|
|
||
Obligation under Supply and Offtake Agreements
|
|
49.6
|
|
|
—
|
|
||
Environmental liabilities, net of current portion
|
|
139.5
|
|
|
68.9
|
|
||
Asset retirement obligations
|
|
75.5
|
|
|
72.1
|
|
||
Deferred tax liabilities
|
|
210.2
|
|
|
199.9
|
|
||
Other non-current liabilities
|
|
62.9
|
|
|
83.0
|
|
||
Total non-current liabilities
|
|
2,289.0
|
|
|
1,299.3
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 110,000,000 shares authorized, 90,478,075 shares and 81,533,548 shares issued at December 31, 2018 and 2017, respectively
|
|
0.9
|
|
|
0.8
|
|
||
Additional paid-in capital
|
|
1,135.4
|
|
|
900.1
|
|
||
Accumulated other comprehensive income
|
|
28.6
|
|
|
6.9
|
|
||
Treasury stock, 12,477,780 shares and 762,623 shares, at cost, as of December 31, 2018 and 2017, respectively
|
|
(514.1
|
)
|
|
(25.0
|
)
|
||
Retained earnings
|
|
981.8
|
|
|
767.8
|
|
||
Non-controlling interests in subsidiaries
|
|
175.5
|
|
|
313.6
|
|
||
Total stockholders’ equity
|
|
1,808.1
|
|
|
1,964.2
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
5,760.6
|
|
|
$
|
5,935.2
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net revenues
|
|
$
|
10,233.1
|
|
|
$
|
7,267.1
|
|
|
$
|
4,197.9
|
|
Cost of sales:
|
|
|
|
|
|
|
||||||
Cost of materials and other
|
|
8,560.5
|
|
|
6,327.6
|
|
|
3,812.9
|
|
|||
Operating expenses (excluding depreciation and amortization presented below)
|
|
538.5
|
|
|
375.7
|
|
|
247.0
|
|
|||
Depreciation and amortization
|
|
161.3
|
|
|
132.1
|
|
|
106.2
|
|
|||
Total cost of sales
|
|
9,260.3
|
|
|
6,835.4
|
|
|
4,166.1
|
|
|||
Insurance proceeds — business interruption
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
|||
Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below)
|
|
106.5
|
|
|
53.3
|
|
|
2.3
|
|
|||
General and administrative expenses
|
|
247.6
|
|
|
175.9
|
|
|
106.1
|
|
|||
Depreciation and amortization
|
|
38.1
|
|
|
21.2
|
|
|
10.2
|
|
|||
Other operating (income) expense, net
|
|
(31.3
|
)
|
|
1.0
|
|
|
4.8
|
|
|||
Total operating costs and expenses
|
|
9,621.2
|
|
|
7,086.8
|
|
|
4,247.1
|
|
|||
Operating income (loss)
|
|
611.9
|
|
|
180.3
|
|
|
(49.2
|
)
|
|||
Interest expense
|
|
125.9
|
|
|
93.8
|
|
|
54.4
|
|
|||
Interest income
|
|
(5.8
|
)
|
|
(4.0
|
)
|
|
(1.5
|
)
|
|||
(Income) loss from equity method investments
|
|
(9.7
|
)
|
|
(12.6
|
)
|
|
43.4
|
|
|||
Loss on impairment of equity method investment
|
|
—
|
|
|
—
|
|
|
245.3
|
|
|||
Gain on remeasurement of equity method investment
|
|
—
|
|
|
(190.1
|
)
|
|
—
|
|
|||
Gain on sale of business
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment loss on assets held for sale
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|||
Other (income) expense, net
|
|
(7.3
|
)
|
|
(6.1
|
)
|
|
0.4
|
|
|||
Total non-operating expenses (income), net
|
|
126.4
|
|
|
(119.0
|
)
|
|
342.0
|
|
|||
Income (loss) from continuing operations before income tax expense (benefit)
|
|
485.5
|
|
|
299.3
|
|
|
(391.2
|
)
|
|||
Income tax expense (benefit)
|
|
101.9
|
|
|
(29.2
|
)
|
|
(171.5
|
)
|
|||
Income (loss) from continuing operations, net of tax
|
|
383.6
|
|
|
328.5
|
|
|
(219.7
|
)
|
|||
Discontinued operations:
|
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations, including gain (loss) on sale of discontinued operations
|
|
(10.9
|
)
|
|
(8.6
|
)
|
|
144.2
|
|
|||
Income tax (benefit) expense
|
|
(2.2
|
)
|
|
(2.7
|
)
|
|
57.9
|
|
|||
(Loss) income from discontinued operations, net of tax
|
|
(8.7
|
)
|
|
(5.9
|
)
|
|
86.3
|
|
|||
Net income (loss)
|
|
374.9
|
|
|
322.6
|
|
|
(133.4
|
)
|
|||
Net income attributed to non-controlling interests
|
|
34.8
|
|
|
33.8
|
|
|
20.3
|
|
|||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
Basic income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.31
|
|
|
$
|
4.12
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
(0.20
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
|||
Total basic income (loss) per share
|
|
$
|
4.11
|
|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
Diluted income per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.14
|
|
|
$
|
4.08
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
(0.19
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
|||
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
||||||
Basic
|
|
82,797,110
|
|
|
71,566,225
|
|
|
61,921,787
|
|
|||
Diluted
|
|
86,768,401
|
|
|
72,303,083
|
|
|
61,921,787
|
|
|||
Dividends declared per common share outstanding
|
|
$
|
0.96
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income (loss) attributable to Delek
|
|
$
|
340.1
|
|
|
$
|
288.8
|
|
|
$
|
(153.7
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Commodity contracts designated as cash flow hedges:
|
|
|
|
|
|
|
||||||
Unrealized gains (losses), net of ineffectiveness losses (gains) of $0.9 million, $(0.5) million and $(3.1) million for the years ended December 31, 2018, 2017 and 2016, respectively
|
|
31.4
|
|
|
(2.0
|
)
|
|
8.4
|
|
|||
Realized losses reclassified to cost of materials and other
|
|
1.7
|
|
|
38.6
|
|
|
27.8
|
|
|||
Net gains related to commodity cash flow hedges
|
|
33.1
|
|
|
36.6
|
|
|
36.2
|
|
|||
Income tax expense
|
|
(6.9
|
)
|
|
(12.8
|
)
|
|
(12.7
|
)
|
|||
Net comprehensive income on commodity contracts designated as cash flow hedges
|
|
26.2
|
|
|
23.8
|
|
|
23.5
|
|
|||
|
|
|
|
|
|
|
||||||
Interest rate contracts designated as cash flow hedges:
|
|
|
|
|
|
|
||||||
Unrealized (losses) gains
|
|
(1.3
|
)
|
|
0.3
|
|
|
—
|
|
|||
Realized losses reclassified to interest expense
|
|
0.7
|
|
|
0.3
|
|
|
—
|
|
|||
Net (losses) gains related to interest rate cash flow hedges
|
|
(0.6
|
)
|
|
0.6
|
|
|
—
|
|
|||
Income tax (expense) benefit
|
|
0.1
|
|
|
(0.2
|
)
|
|
—
|
|
|||
Net comprehensive (loss) income on interest rate contracts designated as cash flow hedges
|
|
(0.5
|
)
|
|
0.4
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Foreign currency translation (loss) gain (net of taxes)
|
|
(0.9
|
)
|
|
0.1
|
|
|
0.2
|
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive income from equity method investments, net of tax expense of $0.0 million and $2.2 million for the years ended December 31, 2018 and 2017, respectively
|
|
—
|
|
|
4.1
|
|
|
0.8
|
|
|||
|
|
|
|
|
|
|
||||||
Postretirement benefit plans:
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) arising during the year related to:
|
|
|
|
|
|
|
||||||
Net actuarial loss
|
|
(6.5
|
)
|
|
(0.8
|
)
|
|
—
|
|
|||
Curtailment and settlement gains
|
|
2.5
|
|
|
6.3
|
|
|
—
|
|
|||
(Gain) loss reclassified to earnings:
|
|
|
|
|
|
|
||||||
Recognized due to curtailment and settlement
|
|
(2.5
|
)
|
|
(6.1
|
)
|
|
—
|
|
|||
Amortization of net actuarial loss
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||
Loss related to postretirement benefit plans, net
|
|
(6.0
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Income tax benefit
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|||
Net comprehensive loss on postretirement benefit plans
|
|
(4.7
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Total other comprehensive income
|
|
20.1
|
|
|
27.8
|
|
|
24.5
|
|
|||
Comprehensive income (loss) attributable to Delek
|
|
$
|
360.2
|
|
|
$
|
316.6
|
|
|
$
|
(129.2
|
)
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2015
|
66,946,721
|
|
|
$
|
0.7
|
|
|
$
|
639.2
|
|
|
$
|
(45.3
|
)
|
|
$
|
713.5
|
|
|
(4,809,701
|
)
|
|
$
|
(154.8
|
)
|
|
$
|
200.6
|
|
|
$
|
1,353.9
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(153.7
|
)
|
|
—
|
|
|
—
|
|
|
20.3
|
|
|
(133.4
|
)
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
23.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.5
|
|
||||||||
Other comprehensive income from equity method investments
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|||||||||||||||
Foreign currency translation gain
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||||
Common stock dividends ($0.60 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.5
|
)
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
16.4
|
|
||||||||
Distribution to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.1
|
)
|
|
(24.1
|
)
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(386,090
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
(6.0
|
)
|
||||||||
Repurchase of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.9
|
)
|
|
(6.9
|
)
|
||||||||
Income tax benefit from equity-based compensation expense
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
||||||||
Taxes paid due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
||||||||
Exercise of equity-based awards
|
203,631
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at
|
December 31, 2016
|
67,150,352
|
|
|
$
|
0.7
|
|
|
$
|
650.5
|
|
|
$
|
(20.8
|
)
|
|
$
|
522.3
|
|
|
(5,195,791
|
)
|
|
$
|
(160.8
|
)
|
|
$
|
190.6
|
|
|
$
|
1,182.5
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2016
|
67,150,352
|
|
|
$
|
0.7
|
|
|
$
|
650.5
|
|
|
$
|
(20.8
|
)
|
|
$
|
522.3
|
|
|
(5,195,791
|
)
|
|
$
|
(160.8
|
)
|
|
$
|
190.6
|
|
|
$
|
1,182.5
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
288.8
|
|
|
—
|
|
|
—
|
|
|
33.8
|
|
|
322.6
|
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
23.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23.8
|
|
||||||||
Other comprehensive income from equity method investments
(1)
|
|
|
|
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|||||||||||
Other comprehensive income related to postretirement benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
||||||||
Other comprehensive income related to interest rate contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
||||||||
Foreign currency translation gain
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||||
Common stock dividends ($0.60 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(44.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.0
|
)
|
|||||||||
Issuance of equity in connection with Delek/Alon Merger
|
19,250,795
|
|
|
0.1
|
|
|
399.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131.6
|
|
|
530.7
|
|
||||||||
Retirement of Treasury shares in connection with Delek/Alon Merger
|
(5,195,791
|
)
|
|
—
|
|
|
(160.8
|
)
|
|
—
|
|
|
—
|
|
|
5,195,791
|
|
|
160.8
|
|
|
—
|
|
|
—
|
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
16.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
17.5
|
|
||||||||
Distribution to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.7
|
)
|
|
(35.7
|
)
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(762,623
|
)
|
|
(25.0
|
)
|
|
(7.3
|
)
|
|
(32.3
|
)
|
||||||||
Issuance costs in connection with Delek/Alon Merger
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||||||
Taxes paid due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
||||||||
Exercise of equity-based awards
|
328,192
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Other
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||||
Balance at
|
December 31, 2017
|
81,533,548
|
|
|
$
|
0.8
|
|
|
$
|
900.1
|
|
|
$
|
6.9
|
|
|
$
|
767.8
|
|
|
(762,623
|
)
|
|
$
|
(25.0
|
)
|
|
$
|
313.6
|
|
|
$
|
1,964.2
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Non-Controlling Interest in Subsidiaries
|
|
Total Stockholders' Equity
|
||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance at
|
December 31, 2017
|
81,533,548
|
|
|
$
|
0.8
|
|
|
$
|
900.1
|
|
|
$
|
6.9
|
|
|
$
|
767.8
|
|
|
(762,623
|
)
|
|
$
|
(25.0
|
)
|
|
$
|
313.6
|
|
|
$
|
1,964.2
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
340.1
|
|
|
—
|
|
|
—
|
|
|
34.8
|
|
|
374.9
|
|
||||||||
Other comprehensive income related to commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
26.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.2
|
|
||||||||
Other comprehensive loss related to postretirement benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.7
|
)
|
||||||||
Other comprehensive loss related to interest rate contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||||||
Foreign currency translation loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||||||
Common stock dividends ($0.96 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80.1
|
)
|
||||||||
Distributions to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.7
|
)
|
|
(27.7
|
)
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
20.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
21.4
|
|
||||||||
Issuance of stock for non-controlling interest repurchase, net of tax
|
5,649,373
|
|
|
0.1
|
|
|
140.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127.0
|
)
|
|
13.5
|
|
||||||||
De-recognition of non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18.7
|
)
|
|
(18.7
|
)
|
||||||||
Reclassification for stranded tax effects resulting from the the Tax Reform Act (see Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cumulative effect of adopting accounting principle regarding income tax effect of intra-equity transfers (see Note 2)
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.4
|
)
|
||||||||
Shares issued in connection with settlement of Convertible Notes
|
2,692,218
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
||||||||
Shares received in connection with exercise of Call Options
|
—
|
|
|
—
|
|
|
124.2
|
|
|
—
|
|
|
—
|
|
|
(2,692,771
|
)
|
|
(123.9
|
)
|
|
—
|
|
|
0.3
|
|
||||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,022,386
|
)
|
|
(365.3
|
)
|
|
—
|
|
|
(365.3
|
)
|
||||||||
Warrant reclassification to liability award
|
—
|
|
|
—
|
|
|
(35.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.9
|
)
|
||||||||
Taxes due to the net settlement of equity-based compensation
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.5
|
)
|
||||||||
Exercise of equity-based awards
|
602,936
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(2.4
|
)
|
||||||||
Balance at
|
December 31, 2018
|
90,478,075
|
|
|
$
|
0.9
|
|
|
$
|
1,135.4
|
|
|
$
|
28.6
|
|
|
$
|
981.8
|
|
|
(12,477,780
|
)
|
|
$
|
(514.1
|
)
|
|
$
|
175.5
|
|
|
$
|
1,808.1
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
374.9
|
|
|
$
|
322.6
|
|
|
$
|
(133.4
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
199.4
|
|
|
153.3
|
|
|
116.4
|
|
|||
Amortization of above and below market leases, net
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization of deferred financing costs and debt discount
|
|
8.6
|
|
|
8.3
|
|
|
4.4
|
|
|||
Accretion of environmental liabilities and asset retirement obligations
|
|
3.3
|
|
|
1.2
|
|
|
0.3
|
|
|||
Amortization of unfavorable contract liability
|
|
(2.2
|
)
|
|
(5.8
|
)
|
|
(0.7
|
)
|
|||
Deferred income taxes
|
|
(26.8
|
)
|
|
(48.0
|
)
|
|
(153.2
|
)
|
|||
(Income) loss from equity method investments
|
|
(9.7
|
)
|
|
(12.6
|
)
|
|
43.4
|
|
|||
Dividends from equity method investments
|
|
8.8
|
|
|
5.9
|
|
|
—
|
|
|||
(Gain) loss on disposal of assets
|
|
(0.9
|
)
|
|
1.0
|
|
|
4.8
|
|
|||
Impairment of equity method investment
|
|
—
|
|
|
—
|
|
|
245.3
|
|
|||
Gain on remeasurement of equity method investment
|
|
—
|
|
|
(190.1
|
)
|
|
—
|
|
|||
Loss on extinguishment of debt
|
|
9.1
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of business
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment of assets held for sale
|
|
27.5
|
|
|
—
|
|
|
—
|
|
|||
Equity-based compensation expense
|
|
21.4
|
|
|
17.5
|
|
|
16.4
|
|
|||
Income tax benefit of equity-based compensation
|
|
(2.2
|
)
|
|
(1.4
|
)
|
|
(1.2
|
)
|
|||
Loss from discontinued operations
|
|
8.7
|
|
|
5.9
|
|
|
(86.3
|
)
|
|||
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
112.7
|
|
|
(155.8
|
)
|
|
(48.1
|
)
|
|||
Inventories and other current assets
|
|
138.7
|
|
|
(191.1
|
)
|
|
(56.5
|
)
|
|||
Fair value of derivatives
|
|
(52.6
|
)
|
|
39.2
|
|
|
44.2
|
|
|||
Accounts payable and other current liabilities
|
|
(128.1
|
)
|
|
290.9
|
|
|
223.8
|
|
|||
Obligation under Supply and Offtake Agreement
|
|
(84.3
|
)
|
|
113.0
|
|
|
12.8
|
|
|||
Non-current assets and liabilities, net
|
|
(1.1
|
)
|
|
(32.2
|
)
|
|
2.3
|
|
|||
Cash provided by operating activities - continuing operations
|
|
590.4
|
|
|
321.8
|
|
|
234.7
|
|
|||
Cash (used in) provided by operating activities - discontinued operations
|
|
(30.1
|
)
|
|
(2.1
|
)
|
|
13.3
|
|
|||
Net cash provided by operating activities
|
|
560.3
|
|
|
319.7
|
|
|
248.0
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|||||
Business combinations, net of cash acquired
|
|
—
|
|
|
196.2
|
|
|
—
|
|
|||
Equity method investment contributions
|
|
(0.2
|
)
|
|
(5.8
|
)
|
|
(61.6
|
)
|
|||
Distributions from equity method investments
|
|
1.2
|
|
|
12.4
|
|
|
20.2
|
|
|||
Purchases of property, plant and equipment
|
|
(322.0
|
)
|
|
(172.0
|
)
|
|
(46.3
|
)
|
|||
Purchase of intangible assets
|
|
(1.7
|
)
|
|
(5.5
|
)
|
|
(0.7
|
)
|
|||
Proceeds from sale of property, plant and equipment
|
|
11.1
|
|
|
0.1
|
|
|
0.2
|
|
|||
Proceeds from sale of business
|
|
110.8
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sales of discontinued operations
|
|
55.5
|
|
|
—
|
|
|
—
|
|
|||
Cash (used in) provided by investing activities - continuing operations
|
|
(145.3
|
)
|
|
25.4
|
|
|
(88.2
|
)
|
|||
Cash provided by investing activities - discontinued operations
|
|
20.0
|
|
|
12.2
|
|
|
288.9
|
|
|||
Net cash (used in) provided by investing activities
|
|
(125.3
|
)
|
|
37.6
|
|
|
200.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|||||
Proceeds from long-term revolvers
|
|
2,124.6
|
|
|
1,122.1
|
|
|
369.0
|
|
|||
Payments on long-term revolvers
|
|
(1,679.8
|
)
|
|
(1,239.8
|
)
|
|
(327.9
|
)
|
|||
Proceeds from term debt
|
|
690.6
|
|
|
286.2
|
|
|
40.3
|
|
|||
Payments on term debt
|
|
(826.3
|
)
|
|
(103.6
|
)
|
|
(55.0
|
)
|
|||
Proceeds from product financing agreements
|
|
—
|
|
|
52.5
|
|
|
56.5
|
|
|||
Repayments of product financing agreements
|
|
(72.4
|
)
|
|
(98.7
|
)
|
|
(50.4
|
)
|
|||
Settlement of warrants unwind agreement
|
|
(35.9
|
)
|
|
—
|
|
|
—
|
|
|||
Taxes paid due to the net settlement of equity-based compensation
|
|
(11.5
|
)
|
|
(5.0
|
)
|
|
(1.5
|
)
|
|||
Income tax benefit of equity-based compensation
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|||
Repurchase of common stock
|
|
(365.3
|
)
|
|
(25.0
|
)
|
|
(6.0
|
)
|
|||
Repurchase of non-controlling interest
|
|
—
|
|
|
(7.3
|
)
|
|
(6.9
|
)
|
|||
Distribution to non-controlling interest
|
|
(27.7
|
)
|
|
(35.7
|
)
|
|
(24.1
|
)
|
|||
Dividends paid
|
|
(80.1
|
)
|
|
(44.0
|
)
|
|
(37.5
|
)
|
|||
Deferred financing costs paid
|
|
(13.8
|
)
|
|
(6.3
|
)
|
|
(1.9
|
)
|
|||
Cash used in financing activities - continuing operations
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(44.2
|
)
|
|||
Cash used in financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
|
(17.5
|
)
|
|||
Net cash used in financing activities
|
|
(297.6
|
)
|
|
(104.6
|
)
|
|
(61.7
|
)
|
|||
Net increase in cash and cash equivalents
|
|
137.4
|
|
|
252.7
|
|
|
387.0
|
|
|||
Cash and cash equivalents at the beginning of the period
|
|
941.9
|
|
|
689.2
|
|
|
302.2
|
|
|||
Cash and cash equivalents at the end of the period
|
|
1,079.3
|
|
|
941.9
|
|
|
689.2
|
|
|||
Less cash and cash equivalents of discontinued operations at the end of the period
|
|
—
|
|
|
10.1
|
|
|
—
|
|
|||
Cash and cash equivalents of continuing operations at the end of the period
|
|
$
|
1,079.3
|
|
|
$
|
931.8
|
|
|
$
|
689.2
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|||||
Cash paid during the period for:
|
|
|
|
|
|
|
|
|||||
Interest, net of capitalized interest of $0.8 million, and $0.3 million and $0.2 million in 2018, 2017 and 2016, respectively
|
|
$
|
120.1
|
|
|
$
|
82.1
|
|
|
$
|
51.9
|
|
Income taxes
|
|
$
|
103.9
|
|
|
$
|
70.5
|
|
|
$
|
1.7
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
||||||
Common stock issued in connection with the buyout of Alon Partnership non-controlling interest
|
|
$
|
127.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(Decrease) increase in accrued capital expenditures
|
|
$
|
(4.8
|
)
|
|
$
|
9.4
|
|
|
$
|
(3.7
|
)
|
Non-cash financing activities:
|
|
|
|
|
|
|
||||||
Common stock issued in connection with settlement of Convertible Notes
|
|
$
|
123.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Treasury shares received in connection with exercise of Call Options
|
|
$
|
(123.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock issued in connection with the Delek/Alon Merger
|
|
$
|
—
|
|
|
$
|
509.0
|
|
|
$
|
—
|
|
Equity instruments issued in connection with the Delek/Alon Merger
|
|
$
|
—
|
|
|
$
|
21.7
|
|
|
$
|
—
|
|
|
Years
|
Building and building improvements
|
15-40
|
Refinery machinery and equipment
|
5-40
|
Pipelines and terminals
|
15-40
|
Retail store equipment and site improvements
|
7-40
|
Refinery turnaround costs
|
4-6
|
Automobiles
|
3-5
|
Computer equipment and software
|
3-10
|
Furniture and fixtures
|
5-15
|
Asset retirement obligation assets
|
15-50
|
|
|
December 31, 2017
|
||||||||||
(in millions)
|
|
As Reported
|
|
Adjustment
|
|
As Adjusted
|
||||||
General and administrative expenses
|
|
$
|
169.8
|
|
|
$
|
6.1
|
|
|
$
|
175.9
|
|
Other income, net
|
|
$
|
—
|
|
|
$
|
(6.1
|
)
|
|
$
|
(6.1
|
)
|
Delek common stock issued
|
19,250,795
|
|
|
|||
Ending price per share of Delek Common Stock immediately before the Effective Time
|
$
|
26.44
|
|
|
||
Total value of common stock consideration
|
|
$
|
509.0
|
|
||
Additional consideration
(1)
|
|
21.7
|
|
|||
Fair value of Delek's pre-existing equity method investment in Alon
(2)
|
|
449.0
|
|
|||
|
|
$
|
979.7
|
|
Cash
|
|
$
|
215.3
|
|
Receivables
|
|
176.8
|
|
|
Inventories
|
|
266.3
|
|
|
Prepaids and other current assets
|
|
38.7
|
|
|
Property, plant and equipment
(1)
|
|
1,130.3
|
|
|
Equity method investments
|
|
31.0
|
|
|
Acquired intangible assets
(2)
|
|
86.7
|
|
|
Goodwill
(3)
|
|
870.7
|
|
|
Other non-current assets
|
|
37.0
|
|
|
Accounts payable
|
|
(263.4
|
)
|
|
Obligation under Supply & Offtake Agreements
|
|
(208.9
|
)
|
|
Current portion of environmental liabilities
|
|
(7.9
|
)
|
|
Other current liabilities
|
|
(308.6
|
)
|
|
Environmental liabilities and asset retirement obligations, net of current portion
|
|
(226.7
|
)
|
|
Deferred income taxes
|
|
(194.0
|
)
|
|
Debt
|
|
(568.0
|
)
|
|
Other non-current liabilities
(4)
|
|
(95.6
|
)
|
|
Fair value of net assets acquired
|
|
$
|
979.7
|
|
•
|
Third-party fuel supply agreement intangible that is subject to amortization with a fair value of
$49.0 million
, which is being amortized over a
10
-year useful life. We recognized amortization expense for the year ended
December 31, 2018
of
$4.9 million
. The estimated annual amortization is
$4.9 million
for the four succeeding fiscal years.
|
•
|
Fuel trade name intangible valued at
$4.0 million
, which will be amortized over
5
years. We recognized amortization expense for the year ended
December 31, 2018
of
$0.8 million
. The estimated annual amortization is
$0.8 million
for the three succeeding fiscal years, with
$0.4 million
in the fourth succeeding year.
|
•
|
License agreements intangible valued at
$2.6 million
, which is being amortized over
8.7 years
. We recognized amortization expense for the year ended
December 31, 2018
of
$0.1 million
, as this intangible was sold in the first quarter of 2018.
|
•
|
Rights-of-way intangible valued at
$9.5 million
, which has an indefinite life.
|
•
|
Liquor license intangible valued at
$8.5 million
, which has an indefinite life.
|
•
|
Colonial Pipeline shipping rights intangible valued at
$1.7 million
, which has an indefinite life.
|
•
|
Refinery permits valued at
$3.1 million
, which have an indefinite life.
|
•
|
Below-market lease intangibles valued at
$8.3 million
, which is being amortized over the remaining lease term.
|
|
Year Ended
|
||||||
|
December 31,
|
||||||
(in millions, except per share data)
|
2017
(1) (2)
|
|
2016
(1) (2)
|
||||
|
(unaudited)
|
||||||
Net revenues
|
$
|
9,477.8
|
|
|
$
|
8,100.9
|
|
Net income attributable to Delek
|
223.6
|
|
|
16.3
|
|
||
Earnings per share:
|
|
|
|
||||
Basic
|
$
|
2.75
|
|
|
$
|
0.20
|
|
Diluted
|
$
|
2.73
|
|
|
$
|
0.20
|
|
(2)
|
The unaudited pro forma statements of operations reflect the following adjustments:
|
•
|
T
o eliminate transactions between Delek and Alon for purchases and sales of refined products, reducing revenue and the associated cost of materials and other. Such pro forma eliminations resulted in a decrease to combined pro forma revenues by
$59.0 million
and
$10.4 million
million for the years ended
December 31, 2017
and
2016
, respectively.
|
•
|
To eliminate the non-recurring transaction costs incurred during the historical periods. Such adjustments to general and administrative expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling
$32.2 million
and
$13.7 million
million for the years ended
December 31, 2017
and
2016
.
|
•
|
To retrospectively reflect depreciation of property, plant and equipment and amortization of intangibles based on the fair value of the assets as of the acquisition date, as if that fair value had been reflected beginning January 1, 2016, and to retrospectively eliminate the amortization of any previously recorded intangibles. Such adjustments to depreciation and amortization have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling
$34.7 million
and
$70.8 million
million for the years ended
December 31, 2017
and
2016
, respectively.
|
•
|
To retrospectively reflect the accretion of asset retirement obligations and certain environmental liabilities. Such adjustments to general and administrative expense have been estimated to result in a decrease to pro forma pre-tax income attributable to Delek totaling
$0.8 million
and
$1.6 million
million for the years ended
December 31, 2017
and
2016
, respectively.
|
•
|
To retrospectively reflect adjustments to interest expense, including the impact of discounts or premiums created by the difference in fair value and outstanding amounts as of the acquisition date (collectively, the “new effective yield”), by applying the new effective yield to historical outstanding amounts in the pro forma period and reversing previously recognized interest expense. Such net adjustments to interest expense have been estimated to result in an increase to pro forma pre-tax income attributable to Delek totaling
$9.4 million
and
$20.7 million
million for the years ended
December 31, 2017
and
2016
, respectively.
|
•
|
To eliminate Delek’s equity income previously recorded on its equity method investment in Alon, prior to the Merger. Such pro forma elimination resulted in an (increase) decrease to pro forma pre-tax income totaling
$3.2 million
and
$(42.2) million
million for the years ended
December 31, 2017
and
2016
, respectively.
|
•
|
To eliminate the impairment charge on the equity method investment in Alon totaling
$245.3 million
recognized in the year ended
December 31, 2016
, and to eliminate the gain on remeasurement of the equity method investment in Alon totaling
$190.1 million
recognized during the year ended
December 31, 2017
.
|
•
|
To record the tax effect on pro forma adjustments and additional tax benefit associated with dividends received from Alon at a combined U.S. (federal and state) income tax statutory blended rate of approximately
37%
for the year ended
December 31, 2017
, and approximately
35%
for the year ended
December 31, 2016
.
|
•
|
To adjust the weighted average number of shares outstanding based on
0.504
of a share of Delek common stock for each share of Alon common stock outstanding as of July 1, 2017, as if they were outstanding for the entire year ended
December 31, 2017
, reflecting the elimination of Alon historical weighted average shares outstanding and the addition of the estimated New Delek incremental shares issued.
|
Subsequent increases (decreases) to initial allocation of fair value of net assets acquired:
|
|
|
||
Receivables
(1)
|
|
$
|
10.7
|
|
Inventories
|
|
(0.5
|
)
|
|
Prepaids and other current assets
(2)
|
|
9.7
|
|
|
Property, plant and equipment
|
|
(0.2
|
)
|
|
Acquired intangible assets
(3)
|
|
7.7
|
|
|
Accounts payable
(4)
|
|
6.0
|
|
|
Obligation under Supply & Offtake Agreements
(5)
|
|
10.9
|
|
|
Current portion of environmental liabilities
|
|
0.4
|
|
|
Other current liabilities
(6)
|
|
22.3
|
|
|
Environmental liabilities and asset retirement obligations, net of current portion
(7)
|
|
65.3
|
|
|
Deferred income taxes
(8)
|
|
(8.4
|
)
|
|
Other non-current liabilities
(9)
|
|
(2.8
|
)
|
|
Resulting increase to goodwill
|
|
$
|
66.3
|
|
Land
|
|
$
|
0.2
|
|
Property, plant and equipment
|
|
6.4
|
|
|
Intangible assets
(1)
|
|
6.4
|
|
|
Total
|
|
$
|
13.0
|
|
|
|
As of and For the Year Ended December 31, 2018
|
||||||||||||||||||
(In millions)
|
|
Refining
|
|
Retail
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
8,771.4
|
|
|
$
|
915.4
|
|
|
$
|
416.8
|
|
|
$
|
129.5
|
|
|
$
|
10,233.1
|
|
Intercompany fees and sales
|
|
839.0
|
|
|
—
|
|
|
240.8
|
|
|
(1,079.8
|
)
|
|
—
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of materials and other
|
|
8,279.9
|
|
|
755.8
|
|
|
429.1
|
|
|
(904.3
|
)
|
|
8,560.5
|
|
|||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
465.4
|
|
|
100.7
|
|
|
58.7
|
|
|
20.2
|
|
|
645.0
|
|
|||||
Segment contribution margin
|
|
$
|
865.1
|
|
|
$
|
58.9
|
|
|
$
|
169.8
|
|
|
$
|
(66.2
|
)
|
|
1,027.6
|
|
|
Depreciation and amortization
|
|
133.7
|
|
|
24.6
|
|
|
26.0
|
|
|
15.1
|
|
|
199.4
|
|
|||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
247.6
|
|
|||||||||
Other operating income, net
|
|
|
|
|
|
|
|
|
|
(31.3
|
)
|
|||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
$
|
611.9
|
|
||||||||
Total assets
|
|
$
|
5,430.1
|
|
|
$
|
310.6
|
|
|
$
|
624.6
|
|
|
$
|
(604.7
|
)
|
|
$
|
5,760.6
|
|
Capital spending (excluding business combinations)
(1)
|
|
$
|
203.9
|
|
|
$
|
10.0
|
|
|
$
|
11.6
|
|
|
$
|
91.7
|
|
|
$
|
317.2
|
|
|
|
As of and For the Year Ended December 31, 2017
|
||||||||||||||||||
(In millions)
|
|
Refining
|
|
Retail
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
6,364.5
|
|
|
$
|
426.7
|
|
|
$
|
382.3
|
|
|
$
|
93.6
|
|
|
$
|
7,267.1
|
|
Intercompany fees and sales
|
|
256.1
|
|
|
—
|
|
|
155.8
|
|
|
(411.9
|
)
|
|
—
|
|
|||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of materials and other
|
|
5,852.2
|
|
|
350.3
|
|
|
372.9
|
|
|
(247.8
|
)
|
|
6,327.6
|
|
|||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
317.7
|
|
|
49.6
|
|
|
43.3
|
|
|
18.4
|
|
|
429.0
|
|
|||||
Segment contribution margin
|
|
$
|
450.7
|
|
|
$
|
26.8
|
|
|
$
|
121.9
|
|
|
$
|
(88.9
|
)
|
|
510.5
|
|
|
Depreciation and amortization
|
|
109.2
|
|
|
7.0
|
|
|
21.9
|
|
|
15.2
|
|
|
153.3
|
|
|||||
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
175.9
|
|
||||||||
Other operating expense, net
|
|
|
|
|
|
|
|
|
|
1.0
|
|
|||||||||
Operating income
|
|
|
|
|
|
|
|
|
|
$
|
180.3
|
|
||||||||
Total assets
(2)
|
|
$
|
4,846.5
|
|
|
$
|
331.4
|
|
|
$
|
443.5
|
|
|
$
|
313.8
|
|
|
$
|
5,935.2
|
|
Capital spending (excluding business combinations)
(3)
|
|
$
|
128.2
|
|
|
$
|
11.7
|
|
|
$
|
18.4
|
|
|
$
|
19.2
|
|
|
$
|
177.5
|
|
|
|
As of and For the Year Ended December 31, 2016
|
||||||||||||||
(In millions)
|
|
Refining
|
|
Logistics
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||
Net revenues (excluding intercompany fees and sales)
|
|
$
|
3,605.1
|
|
|
$
|
301.3
|
|
|
$
|
(0.6
|
)
|
|
$
|
3,905.8
|
|
Intercompany fees and sales
(4)
|
|
318.1
|
|
|
146.8
|
|
|
(172.8
|
)
|
|
292.1
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of materials and other
|
|
3,614.1
|
|
|
302.2
|
|
|
(103.4
|
)
|
|
3,812.9
|
|
||||
Operating expenses (excluding depreciation and amortization presented below)
|
|
212.4
|
|
|
37.2
|
|
|
(0.3
|
)
|
|
249.3
|
|
||||
Insurance proceeds - business interruption
|
|
(42.4
|
)
|
|
—
|
|
|
—
|
|
|
(42.4
|
)
|
||||
Segment contribution margin
|
|
$
|
139.1
|
|
|
$
|
108.7
|
|
|
$
|
(69.7
|
)
|
|
178.1
|
|
|
Depreciation and amortization
|
|
88.2
|
|
|
20.8
|
|
|
7.4
|
|
|
116.4
|
|
||||
General and administrative expenses
|
|
|
|
|
|
|
|
106.1
|
|
|||||||
Other operating expense, net
|
|
|
|
|
|
|
|
4.8
|
|
|||||||
Operating loss
|
|
|
|
|
|
|
|
$
|
(49.2
|
)
|
||||||
Capital spending (excluding business combinations)
(3)
|
|
$
|
27.9
|
|
|
$
|
11.8
|
|
|
$
|
6.6
|
|
|
$
|
46.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Numerator for EPS - continuing operations
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
383.6
|
|
|
$
|
328.5
|
|
|
$
|
(219.7
|
)
|
Less: Income from continuing operations attributed to non-controlling interest
|
|
26.7
|
|
|
33.8
|
|
|
20.3
|
|
|||
Income (loss) from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)
|
|
356.9
|
|
|
294.7
|
|
|
(240.0
|
)
|
|||
Interest on convertible debt, net of tax
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|||
Numerator for diluted EPS - continuing operations attributable to Delek
|
|
$
|
359.5
|
|
|
$
|
294.7
|
|
|
$
|
(240.0
|
)
|
|
|
|
|
|
|
|
||||||
Numerator for EPS - discontinued operations
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations
|
|
$
|
(8.7
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
86.3
|
|
Less: Income from discontinued operations attributed to non-controlling interest
|
|
8.1
|
|
|
—
|
|
|
—
|
|
|||
Income (loss) from discontinued operations attributable to Delek
|
|
$
|
(16.8
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
86.3
|
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (denominator for basic EPS)
|
|
82,797,110
|
|
|
71,566,225
|
|
|
61,921,787
|
|
|||
Dilutive effect of convertible debt
|
|
1,525,846
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of warrants
|
|
967,352
|
|
|
—
|
|
|
—
|
|
|||
Dilutive effect of stock-based awards
|
|
1,478,093
|
|
|
736,858
|
|
|
—
|
|
|||
Weighted average common shares outstanding, assuming dilution
|
|
86,768,401
|
|
|
72,303,083
|
|
|
61,921,787
|
|
|||
|
|
|
|
|
|
|
||||||
EPS:
|
|
|
|
|
|
|
||||||
Basic income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.31
|
|
|
$
|
4.12
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
$
|
(0.20
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
||
Total basic income (loss) per share
|
|
$
|
4.11
|
|
|
$
|
4.04
|
|
|
$
|
(2.49
|
)
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
|
$
|
4.14
|
|
|
$
|
4.08
|
|
|
$
|
(3.88
|
)
|
(Loss) income from discontinued operations
|
|
$
|
(0.19
|
)
|
|
(0.08
|
)
|
|
1.39
|
|
||
Total diluted income (loss) per share
|
|
$
|
3.95
|
|
|
$
|
4.00
|
|
|
$
|
(2.49
|
)
|
|
|
|
|
|
|
|
||||||
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be anti-dilutive:
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Antidilutive stock-based compensation (because average share price is less than exercise price)
|
|
1,462,112
|
|
|
|
|
|
2,297,127
|
|
|||
Antidilutive due to loss
|
|
—
|
|
|
|
|
276,094
|
|
||||
Total antidilutive stock-based compensation
|
|
1,462,112
|
|
|
—
|
|
|
2,573,221
|
|
|||
|
|
|
|
|
|
|
||||||
Antidilutive convertible debt instruments (because average share price is less than exercise price)
|
|
—
|
|
|
2,811,652
|
|
|
—
|
|
|||
Total antidilutive convertible debt instruments
|
|
—
|
|
|
2,811,652
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Antidilutive warrants (because average share price is less than exercise price)
|
|
—
|
|
|
2,806,291
|
|
|
—
|
|
|||
Total antidilutive warrants
|
|
—
|
|
|
2,806,291
|
|
|
—
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
4.5
|
|
|
$
|
4.7
|
|
Accounts receivable
|
|
21.6
|
|
|
23.0
|
|
||
Accounts receivable from related parties
|
|
—
|
|
|
1.1
|
|
||
Inventory
|
|
5.5
|
|
|
20.9
|
|
||
Other current assets
|
|
1.0
|
|
|
0.7
|
|
||
Property, plant and equipment, net
|
|
312.6
|
|
|
255.1
|
|
||
Equity method investments
|
|
104.8
|
|
|
106.5
|
|
||
Goodwill
|
|
12.2
|
|
|
12.2
|
|
||
Intangible assets, net
|
|
154.0
|
|
|
15.9
|
|
||
Other non-current assets
|
|
8.4
|
|
|
3.4
|
|
||
Total assets
|
|
$
|
624.6
|
|
|
$
|
443.5
|
|
LIABILITIES AND DEFICIT
|
|
|
|
|
||||
Accounts payable
|
|
$
|
14.2
|
|
|
$
|
19.1
|
|
Accounts payable to related parties
|
|
7.8
|
|
|
—
|
|
||
Accrued expenses and other current liabilities
|
|
14.5
|
|
|
12.6
|
|
||
Long-term debt
|
|
700.4
|
|
|
422.6
|
|
||
Asset retirement obligations
|
|
5.2
|
|
|
4.1
|
|
||
Other non-current liabilities
|
|
17.3
|
|
|
14.3
|
|
||
Deficit
|
|
(134.8
|
)
|
|
(29.2
|
)
|
||
Total liabilities and deficit
|
|
$
|
624.6
|
|
|
$
|
443.5
|
|
Income Statement Information
|
|
For the period January 1, 2017 to June 30, 2017
|
|
Year Ended December 31, 2016
|
||||
Net revenues
|
|
$
|
2,269.7
|
|
|
$
|
3,913.4
|
|
Gross profit
|
|
351.2
|
|
|
536.6
|
|
||
Pre-tax income (loss)
|
|
20.0
|
|
|
(126.6
|
)
|
||
Net income (loss)
|
|
15.0
|
|
|
(79.8
|
)
|
||
Net income (loss) attributable to Alon
|
|
9.5
|
|
|
(82.8
|
)
|
|
|
|
December 31, 2017
|
||
Assets held for sale:
|
|
|
|
||
Cash and cash equivalents
|
|
|
$
|
10.1
|
|
Accounts receivable
|
|
|
7.9
|
|
|
Inventory
|
|
|
1.9
|
|
|
Other current assets
|
|
|
1.3
|
|
|
Property, plant & equipment, net
|
|
|
130.0
|
|
|
Other intangibles, net
|
|
|
6.6
|
|
|
Other non-current assets
|
|
|
2.2
|
|
|
Assets held for sale
|
|
|
$
|
160.0
|
|
Liabilities associated with assets held for sale:
|
|
|
|
||
Accrued expenses and other current liabilities
|
|
|
$
|
9.5
|
|
Deferred tax liabilities
|
|
|
63.9
|
|
|
Other non-current liabilities
|
|
|
32.5
|
|
|
Liabilities associated with assets held for sale
|
|
|
$
|
105.9
|
|
|
|
Year Ended
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Net revenues
|
|
$
|
32.5
|
|
|
$
|
82.4
|
|
Cost of sales:
|
|
|
|
|
||||
Cost of materials and other
|
|
3.8
|
|
|
(68.7
|
)
|
||
Operating expenses (excluding depreciation and amortization)
|
|
(9.4
|
)
|
|
(14.4
|
)
|
||
Total cost of sales
|
|
(5.6
|
)
|
|
(83.1
|
)
|
||
General and administrative expenses
|
|
(1.1
|
)
|
|
(6.0
|
)
|
||
Other operating income, net
|
|
0.3
|
|
|
(0.2
|
)
|
||
Interest expense
|
|
—
|
|
|
(1.7
|
)
|
||
Interest income
|
|
3.0
|
|
|
—
|
|
||
Other expense, net
|
|
—
|
|
|
—
|
|
||
Loss on sale of California Discontinued Entities
|
|
(40.0
|
)
|
|
—
|
|
||
Loss from discontinued operations before taxes
|
|
(10.9
|
)
|
|
(8.6
|
)
|
||
Income tax benefit
|
|
(2.2
|
)
|
|
(2.7
|
)
|
||
Loss from discontinued operations, net of tax
|
|
$
|
(8.7
|
)
|
|
$
|
(5.9
|
)
|
|
|
Year Ended
|
||
|
|
December 31, 2016
|
||
Net revenues
|
|
$
|
1,216.3
|
|
Cost of materials and other
|
|
(1,041.2
|
)
|
|
Operating expenses
|
|
(116.4
|
)
|
|
General and administrative expenses
|
|
(21.8
|
)
|
|
Depreciation and amortization
|
|
(20.4
|
)
|
|
Interest expense
|
|
(6.4
|
)
|
|
Gain on sale of Retail Entities
|
|
134.1
|
|
|
Income from discontinued operations before taxes
|
|
144.2
|
|
|
Income tax expense
|
|
57.9
|
|
|
Income from discontinued operations, net of tax
|
|
$
|
86.3
|
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Refinery raw materials and supplies
|
|
$
|
289.0
|
|
|
$
|
308.0
|
|
Refinery work in process
|
|
58.9
|
|
|
79.2
|
|
||
Refinery finished goods
|
|
304.1
|
|
|
366.4
|
|
||
Retail fuel
|
|
8.0
|
|
|
8.3
|
|
||
Retail merchandise
|
|
25.4
|
|
|
25.6
|
|
||
Logistics refined products
|
|
5.5
|
|
|
20.9
|
|
||
Total inventories
|
|
$
|
690.9
|
|
|
$
|
808.4
|
|
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Revolving Credit Facility
|
|
$
|
300.0
|
|
|
$
|
—
|
|
Term Loan Credit Facility
(1)
|
|
682.9
|
|
|
—
|
|
||
Delek Logistics Credit Facility
|
|
456.7
|
|
|
179.9
|
|
||
Delek Logistics Notes
(2)
|
|
243.7
|
|
|
242.7
|
|
||
Wells Term Loan
(3)
|
|
—
|
|
|
40.5
|
|
||
Wells Revolving Loan
|
|
—
|
|
|
45.0
|
|
||
Reliant Bank Revolver
|
|
30.0
|
|
|
17.0
|
|
||
Promissory Notes
|
|
70.0
|
|
|
95.1
|
|
||
Lion Term Loan
(4)
|
|
—
|
|
|
203.4
|
|
||
Alon Partnership Credit Facility
|
|
—
|
|
|
100.0
|
|
||
Alon Partnership Term Loan
|
|
—
|
|
|
237.5
|
|
||
Convertible Notes
(5)
|
|
—
|
|
|
146.0
|
|
||
Alon Term Loan Credit Facilities
(6)
|
|
—
|
|
|
72.4
|
|
||
Alon Retail Credit Facilities
(7)
|
|
—
|
|
|
86.1
|
|
||
|
|
1,783.3
|
|
|
1,465.6
|
|
||
Less: Current portion of long-term debt and notes payable
|
|
32.0
|
|
|
590.2
|
|
||
|
|
$
|
1,751.3
|
|
|
$
|
875.4
|
|
(1)
|
The Term Loan Credit Facility is net of deferred financing costs of
$3.5 million
and debt discount of
$8.4 million
at
December 31, 2018
.
|
(2)
|
The Delek Logistics Notes are net of deferred financing costs of
$4.8 million
and
$5.6 million
, respectively, and debt discount of
$1.5 million
and
$1.7 million
, respectively, at
December 31, 2018
and
December 31, 2017
.
|
(3)
|
The Wells Term Loan was extinguished on March 30, 2018, as further discussed below, and was net of deferred financing costs of a nominal amount and debt discount
$0.3 million
at
December 31, 2017
.
|
(4)
|
The Lion Term Loan Facility was extinguished on March 30, 2018, as further discussed below, and was net of deferred financing costs of
$2.1 million
and debt discount of
$0.8 million
at
December 31, 2017
.
|
(5)
|
The Convertible Notes were extinguished on September 17, 2018, as further discussed below, and were net of debt discount of
$4.0 million
at
December 31, 2017
.
|
(6)
|
The Alon Term Loan Credit Facilities were extinguished on March 30, 2018, as further discussed below, and were net of debt discount of
$0.6 million
at
December 31, 2017
.
|
(7)
|
The Alon Retail Credit Facilities were extinguished on March 30, 2018, as further discussed below, and were net of debt discount of
$2.4 million
at
December 31, 2017
.
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Revolving Credit Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300.0
|
|
|
$
|
—
|
|
|
$
|
300.0
|
|
Term Loan Credit Facility
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
7.0
|
|
|
659.8
|
|
|
694.8
|
|
|||||||
Delek Logistics Credit Facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
456.7
|
|
|
—
|
|
|
456.7
|
|
|||||||
Delek Logistics Notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250.0
|
|
|
250.0
|
|
|||||||
Reliant Bank Revolver
|
|
—
|
|
|
30.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30.0
|
|
|||||||
Promissory Notes
|
|
25.0
|
|
|
25.0
|
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70.0
|
|
|||||||
Total
|
|
$
|
32.0
|
|
|
$
|
62.0
|
|
|
$
|
27.0
|
|
|
$
|
7.0
|
|
|
$
|
763.7
|
|
|
$
|
909.8
|
|
|
$
|
1,801.5
|
|
•
|
limiting the exposure to price fluctuations of commodity inventory above or below target levels at each of our segments;
|
•
|
managing our exposure to commodity price risk associated with the purchase or sale of crude oil, feedstocks and finished grade fuel products at each of our segments;
|
•
|
managing the cost of our RINs Obligation using future commitments to purchase or sell RINs at fixed prices and quantities; and
|
•
|
limiting the exposure to interest rate fluctuations on our floating rate borrowings.
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
Derivative Type
|
Balance Sheet Location
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives
(1)
|
Other current assets
|
|
$
|
158.3
|
|
|
$
|
(142.4
|
)
|
|
$
|
164.6
|
|
|
$
|
(162.0
|
)
|
Commodity derivatives
(1)
|
Other current liabilities
|
|
—
|
|
|
(8.4
|
)
|
|
13.4
|
|
|
(28.3
|
)
|
||||
Commodity derivatives
(1)
|
Other long-term assets
|
|
2.1
|
|
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
||||
Commodity derivatives
(1)
|
Other long-term liabilities
|
|
93.0
|
|
|
(94.0
|
)
|
|
—
|
|
|
—
|
|
||||
RIN commitment contracts
(2)
|
Other current assets
|
|
2.0
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
||||
RIN commitment contracts
(2)
|
Other current liabilities
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
(24.0
|
)
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|||||||||
Commodity derivatives
(1)
|
Other current assets
|
|
200.3
|
|
|
(157.0
|
)
|
|
—
|
|
|
—
|
|
||||
Commodity derivatives
(1)
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.6
|
)
|
||||
Commodity derivatives
(1)
|
Other long-term assets
|
|
6.1
|
|
|
(4.8
|
)
|
|
—
|
|
|
—
|
|
||||
Interest rate derivatives
|
Other long-term liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||
Total gross fair value of derivatives
|
|
461.8
|
|
|
(415.7
|
)
|
|
179.4
|
|
|
(228.8
|
)
|
|||||
Less: Counterparty netting and cash collateral
(3)
|
|
399.9
|
|
|
(399.5
|
)
|
|
163.5
|
|
|
(173.6
|
)
|
|||||
Total net fair value of derivatives
|
|
$
|
61.9
|
|
|
$
|
(16.2
|
)
|
|
$
|
15.9
|
|
|
$
|
(55.2
|
)
|
(1)
|
As of
December 31, 2018
and
2017
, we had open derivative positions representing
39,277,822
and
35,978,000
barrels, respectively, of crude oil and refined petroleum products. Of these open positions, contracts representing
16,461,000
and
575,000
barrels were designated as cash flow hedging instruments as of
December 31, 2018
and
2017
, respectively.
|
(2)
|
As of
December 31, 2018
and
2017
, we had open RIN commitment contracts representing
137,750,000
and
163,361,320
RINs, respectively.
|
(3)
|
As of
December 31, 2018
and
2017
,
$(0.4) million
and
$10.0 million
, respectively, of cash (obligation) collateral held by counterparties has been netted with the derivatives with each counterparty.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gains (losses) on commodity derivatives not designated as hedging instruments recognized in cost of materials and other
(1)
|
|
$
|
0.9
|
|
|
$
|
(33.1
|
)
|
|
$
|
(21.7
|
)
|
Gains on commodity derivatives not designated as hedging instruments recognized in other operating income (expenses), net
(1) (2)
|
|
7.7
|
|
|
—
|
|
|
—
|
|
|||
Realized losses reclassified out of OCI on commodity derivatives designated as cash flow hedging instruments
|
|
(1.7
|
)
|
|
(38.6
|
)
|
|
(27.8
|
)
|
|||
Gains recognized on commodity derivatives due to cash flow hedging ineffectiveness
|
|
0.9
|
|
|
0.5
|
|
|
3.1
|
|
|||
Total income (losses)
|
|
$
|
7.8
|
|
|
$
|
(71.2
|
)
|
|
$
|
(46.4
|
)
|
(1)
|
Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of
$32.1 million
,
$(13.0) million
and
$(34.2) million
for the years ended
December 31, 2018
,
2017
and
2016
, respectively. Of these amounts, approximately
$8.1 million
and
$4.6 million
for the years ended
December 31, 2018
and
2017
, respectively, represent unrealized gains where the instrument has matured but where it has not cash settled as of period end, excluding the reversal of prior period settlement differences. Derivative instruments that have matured but not cash settled at the balance sheet date continue to be reflected in derivative assets or liabilities on our balance sheet.
|
(2)
|
See separate table below for disclosures about "trading derivatives."
|
|
|
Year Ended December 31, 2018
|
||
Realized gains
|
|
$
|
23.1
|
|
Unrealized losses
|
|
(3.0
|
)
|
|
Total
|
|
$
|
20.1
|
|
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
$
|
—
|
|
|
$
|
459.8
|
|
|
$
|
—
|
|
|
$
|
459.8
|
|
Commodity investments
|
|
15.8
|
|
|
—
|
|
|
—
|
|
|
15.8
|
|
||||
RIN commitment contracts
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
||||
Total assets
|
|
15.8
|
|
|
461.8
|
|
|
—
|
|
|
477.6
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
—
|
|
|
(409.0
|
)
|
|
—
|
|
|
(409.0
|
)
|
||||
RIN commitment contracts
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
(6.7
|
)
|
||||
RINs obligation deficit
|
|
—
|
|
|
(11.8
|
)
|
|
—
|
|
|
(11.8
|
)
|
||||
J. Aron supply and offtake obligations
|
|
—
|
|
|
(362.2
|
)
|
|
—
|
|
|
(362.2
|
)
|
||||
Total liabilities
|
|
—
|
|
|
(789.7
|
)
|
|
—
|
|
|
(789.7
|
)
|
||||
Net liabilities
|
|
$
|
15.8
|
|
|
$
|
(327.9
|
)
|
|
$
|
—
|
|
|
$
|
(312.1
|
)
|
|
|
As of December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
$
|
—
|
|
|
$
|
178.0
|
|
|
$
|
—
|
|
|
$
|
178.0
|
|
RIN commitment contracts
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
||||
RINs Obligation surplus
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
||||
Total assets
|
|
—
|
|
|
180.5
|
|
|
—
|
|
|
180.5
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Commodity derivatives
|
|
—
|
|
|
(203.9
|
)
|
|
—
|
|
|
(203.9
|
)
|
||||
Interest rate derivatives
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
||||
RIN commitment contracts
|
|
—
|
|
|
(24.0
|
)
|
|
—
|
|
|
(24.0
|
)
|
||||
RINs obligation deficit
|
|
—
|
|
|
(130.8
|
)
|
|
—
|
|
|
(130.8
|
)
|
||||
J. Aron supply and offtake obligations
|
|
—
|
|
|
(435.6
|
)
|
|
—
|
|
|
(435.6
|
)
|
||||
Total liabilities
|
|
—
|
|
|
(795.2
|
)
|
|
—
|
|
|
(795.2
|
)
|
||||
Net liabilities
|
|
$
|
—
|
|
|
$
|
(614.7
|
)
|
|
$
|
—
|
|
|
$
|
(614.7
|
)
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Discounted environmental liabilities
|
|
$
|
58.7
|
|
|
$
|
33.7
|
|
Undiscounted environmental liabilities
|
|
84.6
|
|
|
42.4
|
|
||
Total accrued environmental liabilities
|
|
$
|
143.3
|
|
|
$
|
76.1
|
|
2019
|
|
$
|
2.9
|
|
2020
|
|
3.1
|
|
|
2021
|
|
3.2
|
|
|
2022
|
|
3.7
|
|
|
2023
|
|
2.8
|
|
|
Thereafter
|
|
61.7
|
|
|
Discounted environmental liabilities, gross
|
|
77.4
|
|
|
Less: Discount applied
|
|
18.7
|
|
|
Discounted environmental liabilities
|
|
$
|
58.7
|
|
•
|
Magnolia Station in March 2013 (the "Magnolia Release");
|
•
|
a pipeline segment east of El Dorado, Arkansas in February 2018;
|
•
|
a gathering line release near one of our storage facilities located south of El Dorado, Arkansas in February 2018;
|
•
|
a gathering line release located on property owned by Clean Harbors, Inc. in El Dorado, Arkansas in March 2018;
|
•
|
two gathering line releases near Smackover, Arkansas occurring in November 2018 and December 2018; and
|
•
|
a gathering line release near Norphlet, Arkansas in December 2018.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Beginning balance
|
|
$
|
72.1
|
|
|
$
|
5.2
|
|
Liabilities identified
(1)
|
|
(1.2
|
)
|
|
66.2
|
|
||
Liabilities settled
|
|
(2.2
|
)
|
|
—
|
|
||
Accretion expense
|
|
1.9
|
|
|
0.7
|
|
||
Reclassification from discontinued operations
|
|
4.9
|
|
|
—
|
|
||
Ending balance
|
|
$
|
75.5
|
|
|
$
|
72.1
|
|
2019
|
|
$
|
48.1
|
|
2020
|
|
42.1
|
|
|
2021
|
|
39.5
|
|
|
2022
|
|
28.5
|
|
|
2023
|
|
23.4
|
|
|
Thereafter
|
|
77.9
|
|
|
Total future minimum rentals
|
|
$
|
259.5
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Non-Current Deferred Taxes:
|
|
|
|
||||
Property, plant and equipment, and intangibles
|
$
|
(275.6
|
)
|
|
$
|
(180.9
|
)
|
Partnership and equity investments
|
22.2
|
|
|
(83.7
|
)
|
||
Deferred revenues
|
(5.5
|
)
|
|
(6.5
|
)
|
||
Derivatives and hedging
|
(12.5
|
)
|
|
4.8
|
|
||
Compensation and employee benefits
|
15.5
|
|
|
15.9
|
|
||
Net operating loss carryforwards
|
39.9
|
|
|
26.5
|
|
||
Reserves and accruals
|
63.0
|
|
|
40.8
|
|
||
Inventories
|
1.3
|
|
|
4.4
|
|
||
Valuation allowance
|
(58.5
|
)
|
|
(21.2
|
)
|
||
Total net deferred tax liabilities
|
$
|
(210.2
|
)
|
|
$
|
(199.9
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Provision (benefit) for federal income taxes at statutory rate
|
$
|
102.0
|
|
|
$
|
104.7
|
|
|
$
|
(137.0
|
)
|
State income tax expense (benefit), net of federal tax provision
|
5.5
|
|
|
4.9
|
|
|
(10.2
|
)
|
|||
Income tax (benefit) expense attributable to non-controlling interest
|
(7.3
|
)
|
|
(12.0
|
)
|
|
(7.1
|
)
|
|||
Tax credits and incentives
|
(8.3
|
)
|
|
(1.6
|
)
|
|
(9.7
|
)
|
|||
Partnership basis differences not expected to be realized
|
5.5
|
|
|
—
|
|
|
—
|
|
|||
Dividends received deduction
|
—
|
|
|
(2.8
|
)
|
|
(5.7
|
)
|
|||
Executive compensation limitation
|
1.7
|
|
|
1.5
|
|
|
0.3
|
|
|||
Stock compensation
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|||
Amortization - prepaid taxes
|
—
|
|
|
(2.4
|
)
|
|
(3.5
|
)
|
|||
Reversal of deferred taxes related to equity method investment in Alon
|
—
|
|
|
45.3
|
|
|
—
|
|
|||
Impact of Tax Reform Act
|
(0.6
|
)
|
|
(166.9
|
)
|
|
—
|
|
|||
Goodwill write-down
|
5.3
|
|
|
—
|
|
|
—
|
|
|||
Other items
|
0.3
|
|
|
0.1
|
|
|
1.4
|
|
|||
Income tax expense (benefit)
|
$
|
101.9
|
|
|
$
|
(29.2
|
)
|
|
$
|
(171.5
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
$
|
128.7
|
|
|
$
|
18.8
|
|
|
$
|
(18.3
|
)
|
Deferred
|
(26.8
|
)
|
|
(48.0
|
)
|
|
(153.2
|
)
|
|||
|
$
|
101.9
|
|
|
$
|
(29.2
|
)
|
|
$
|
(171.5
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at the beginning of the year
|
$
|
6.1
|
|
|
$
|
1.7
|
|
|
$
|
0.2
|
|
Additions based on tax positions related to current year
|
11.2
|
|
|
0.4
|
|
|
1.5
|
|
|||
Additions for tax positions related to prior years and acquisitions
|
3.4
|
|
|
4.2
|
|
|
—
|
|
|||
Reductions for tax positions related to prior years
|
(0.9
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Settlements with taxing authorities
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at the end of the year
|
$
|
19.2
|
|
|
$
|
6.1
|
|
|
$
|
1.7
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Land
|
|
$
|
66.2
|
|
|
$
|
54.0
|
|
Building and building improvements
|
|
108.7
|
|
|
67.9
|
|
||
Refinery machinery and equipment
|
|
1,801.8
|
|
|
1,823.4
|
|
||
Pipelines and terminals
|
|
412.2
|
|
|
314.3
|
|
||
Retail store equipment and site improvements
|
|
37.8
|
|
|
75.5
|
|
||
Refinery turnaround costs
|
|
166.9
|
|
|
124.8
|
|
||
Other equipment
|
|
124.9
|
|
|
108.2
|
|
||
Construction in progress
|
|
281.1
|
|
|
204.4
|
|
||
|
|
$
|
2,999.6
|
|
|
2,772.5
|
|
|
Less: accumulated depreciation
|
|
(804.7
|
)
|
|
(631.7
|
)
|
||
|
|
$
|
2,194.9
|
|
|
$
|
2,140.8
|
|
|
|
As of and For the Year Ended December 31, 2018
|
||||||||||||||||||
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Property, plant and equipment
|
|
$
|
2,230.6
|
|
|
$
|
452.7
|
|
|
$
|
146.5
|
|
|
$
|
169.8
|
|
|
$
|
2,999.6
|
|
Less: Accumulated depreciation
|
|
(584.2
|
)
|
|
(140.2
|
)
|
|
(29.3
|
)
|
|
(51.0
|
)
|
|
(804.7
|
)
|
|||||
Property, plant and equipment, net
|
|
$
|
1,646.4
|
|
|
$
|
312.5
|
|
|
$
|
117.2
|
|
|
$
|
118.8
|
|
|
$
|
2,194.9
|
|
Depreciation expense
|
|
$
|
124.2
|
|
|
$
|
25.9
|
|
|
$
|
23.8
|
|
|
$
|
15.1
|
|
|
$
|
189.0
|
|
|
|
As of and For the Year Ended December 31, 2017
|
||||||||||||||||||
|
|
Refining
|
|
Logistics
|
|
Retail
|
|
Corporate,
Other and Eliminations |
|
Consolidated
|
||||||||||
Property, plant and equipment
|
|
$
|
2,112.2
|
|
|
$
|
367.2
|
|
|
$
|
141.9
|
|
|
$
|
151.2
|
|
|
$
|
2,772.5
|
|
Less: Accumulated depreciation
|
|
(474.8
|
)
|
|
(112.1
|
)
|
|
(6.7
|
)
|
|
(38.1
|
)
|
|
(631.7
|
)
|
|||||
Property, plant and equipment, net
|
|
$
|
1,637.4
|
|
|
$
|
255.1
|
|
|
$
|
135.2
|
|
|
$
|
113.1
|
|
|
$
|
2,140.8
|
|
Depreciation expense
|
|
$
|
106.8
|
|
|
$
|
20.9
|
|
|
$
|
6.6
|
|
|
$
|
15.2
|
|
|
$
|
149.5
|
|
|
|
|
Refining
|
Logistics
|
Retail
|
Corporate, Other and Eliminations
|
Total
|
||||||||||
Balance,
|
December 31, 2015
|
|
$
|
—
|
|
$
|
12.2
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12.2
|
|
Acquisitions
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Balance,
|
December 31, 2016
|
|
—
|
|
12.2
|
|
—
|
|
—
|
|
12.2
|
|
|||||
Acquisitions
|
|
750.9
|
|
—
|
|
30.8
|
|
22.7
|
|
804.4
|
|
||||||
Balance,
|
December 31, 2017
|
|
750.9
|
|
12.2
|
|
30.8
|
|
22.7
|
|
816.6
|
|
|||||
Finalization of purchase price allocation for 2017 Delek/Alon Merger
|
|
50.4
|
|
—
|
|
13.5
|
|
2.4
|
|
66.3
|
|
||||||
Write-down resulting from asset held for sale impairment
(1)
|
|
—
|
|
—
|
|
—
|
|
(25.1
|
)
|
(25.1
|
)
|
||||||
Balance,
|
December 31, 2018
|
|
$
|
801.3
|
|
$
|
12.2
|
|
$
|
44.3
|
|
$
|
—
|
|
$
|
857.8
|
|
(1)
|
This impairment of goodwill resulted from the write-down of assets held for sale associated with the asphalt business to net realizable value, as discussed in
Note 8
.
|
As of December 31, 2018
|
|
Useful Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Intangible Assets subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Supply contract
|
|
11.5 years
|
|
$
|
12.2
|
|
|
$
|
(12.2
|
)
|
|
$
|
—
|
|
|
Third-party fuel supply agreement
|
|
10 years
|
|
49.0
|
|
|
(7.4
|
)
|
|
41.6
|
|
||||
Capacity contract
|
|
8 years
|
|
9.3
|
|
|
(9.3
|
)
|
|
—
|
|
||||
Fuel trade name
|
|
5 years
|
|
4.0
|
|
|
(1.2
|
)
|
|
2.8
|
|
||||
Below market leases
|
|
13 - 15 years
|
|
8.3
|
|
|
(0.3
|
)
|
|
8.0
|
|
||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Rights-of-way
|
|
Indefinite
|
|
30.0
|
|
|
|
|
30.0
|
|
|||||
Line space history
|
|
Indefinite
|
|
11.3
|
|
|
|
|
11.3
|
|
|||||
Liquor licenses
|
|
Indefinite
|
|
8.5
|
|
|
|
|
8.5
|
|
|||||
Refinery permits
|
|
Indefinite
|
|
2.2
|
|
|
|
|
2.2
|
|
|||||
Total
|
|
|
|
$
|
134.8
|
|
|
$
|
(30.4
|
)
|
|
$
|
104.4
|
|
As of December 31, 2017
|
|
Useful Life
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|||||||
Intangible Assets subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Supply contract
|
|
11.5 years
|
|
$
|
12.2
|
|
|
$
|
(12.2
|
)
|
|
$
|
—
|
|
|
Third-party fuel supply agreement
|
|
10 years
|
|
49.0
|
|
|
(2.4
|
)
|
|
46.6
|
|
||||
Capacity contract
|
|
8 years
|
|
9.3
|
|
|
(9.2
|
)
|
|
0.1
|
|
||||
Fuel trade name
|
|
5 years
|
|
4.0
|
|
|
(0.4
|
)
|
|
3.6
|
|
||||
Below market leases
|
|
13 - 15 years
|
|
0.6
|
|
|
(0.1
|
)
|
|
0.5
|
|
||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|||||||
Rights-of-way
|
|
Indefinite
|
|
30.1
|
|
|
|
|
30.1
|
|
|||||
Line space history
|
|
Indefinite
|
|
9.6
|
|
|
|
|
9.6
|
|
|||||
Liquor licenses
|
|
Indefinite
|
|
8.5
|
|
|
|
|
8.5
|
|
|||||
Refinery permits
|
|
Indefinite
|
|
2.1
|
|
|
|
|
2.1
|
|
|||||
Total
|
|
|
|
$
|
125.4
|
|
|
$
|
(24.3
|
)
|
|
$
|
101.1
|
|
2019
|
|
$
|
5.9
|
|
2020
|
|
5.9
|
|
|
2021
|
|
5.9
|
|
|
2022
|
|
5.5
|
|
|
2023
|
|
5.1
|
|
Other Current Assets
|
December 31,
2018 |
|
December 31,
2017 |
||||
Prepaid expenses
|
$
|
15.8
|
|
|
$
|
17.6
|
|
Short-term derivative assets (see Note 12)
|
61.9
|
|
|
15.9
|
|
||
Income and other tax receivables
|
24.3
|
|
|
74.9
|
|
||
RINs Obligation surplus (see Note 13)
|
—
|
|
|
1.1
|
|
||
Commodity investments
|
15.6
|
|
|
—
|
|
||
Other
|
18.1
|
|
|
20.4
|
|
||
Total
|
$
|
135.7
|
|
|
$
|
129.9
|
|
Other Non-Current Assets
|
December 31,
2018 |
|
December 31,
2017 |
||||
Prepaid tax asset
|
$
|
—
|
|
|
$
|
56.2
|
|
Deferred financing costs
|
10.6
|
|
|
5.9
|
|
||
Long-term income tax receivables
|
—
|
|
|
2.1
|
|
||
Supply and Offtake receivable
|
32.7
|
|
|
46.3
|
|
||
Long-term derivative assets (see Note 12)
|
1.0
|
|
|
—
|
|
||
Other
|
8.6
|
|
|
16.3
|
|
||
Total
|
$
|
52.9
|
|
|
$
|
126.8
|
|
Accrued Expenses and Other Current Liabilities
|
December 31,
2018 |
|
December 31,
2017 |
||||
Income and other taxes payable
|
$
|
126.0
|
|
|
$
|
154.1
|
|
Short-term derivative liabilities (see Note 12)
|
16.2
|
|
|
54.4
|
|
||
Interest payable
|
10.2
|
|
|
13.0
|
|
||
Employee costs
|
46.5
|
|
|
46.6
|
|
||
Environmental liabilities (see Note 14)
|
3.8
|
|
|
7.2
|
|
||
Product financing agreements
|
—
|
|
|
72.3
|
|
||
RINs Obligation deficit (see Note 13)
|
11.8
|
|
|
130.8
|
|
||
Accrued utilities
|
10.6
|
|
|
9.4
|
|
||
Tank inspection liabilities
|
7.0
|
|
|
10.7
|
|
||
Crude liabilities
|
42.3
|
|
|
34.5
|
|
||
Other
|
33.3
|
|
|
31.9
|
|
||
Total
|
$
|
307.7
|
|
|
$
|
564.9
|
|
|
|
2018 Grants
|
|
2017 Grants
|
|
2016 Grants
|
||||||
|
|
(Graded Vesting)
|
|
(Graded Vesting)
|
|
(Graded Vesting)
|
||||||
|
|
4 years
|
|
4 years
|
|
4 years
|
||||||
Expected volatility
|
|
47.52%-49.42%
|
|
47.49%-49.18%
|
|
51.31%-54.12%
|
||||||
Dividend yield
|
|
2.00%-2.33%
|
|
2.41%-3.72%
|
|
1.84%-3.72%
|
||||||
Expected term
|
|
4.38-4.62 years
|
|
4.37-4.82 years
|
|
4.75-4.87 years
|
||||||
Risk free rate
|
|
1.56%-2.92%
|
|
0.60%-2.58%
|
|
0.18%-2.47%
|
||||||
Fair value per share
|
|
$
|
15.00
|
|
|
$
|
8.08
|
|
|
$
|
5.67
|
|
|
|
Number of Options
|
|
Weighted-Average Strike Price
|
|
Weighted-Average Contractual Term (in years)
|
|
Average Intrinsic Value
(in millions) |
|||||
Options outstanding, December 31, 2015
|
3,032,143
|
|
|
$
|
28.60
|
|
|
|
|
|
|||
Granted
|
|
347,800
|
|
|
$
|
16.26
|
|
|
|
|
|
||
Exercised
|
|
(68,510
|
)
|
|
$
|
14.69
|
|
|
|
|
|
||
Forfeited
|
|
(743,050
|
)
|
|
$
|
31.17
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2016
|
2,568,383
|
|
|
$
|
26.56
|
|
|
|
|
|
|||
Granted
|
|
2,460,500
|
|
|
$
|
25.95
|
|
|
|
|
|
||
Exercised
|
|
(303,049
|
)
|
|
$
|
17.04
|
|
|
|
|
|
||
Forfeited
|
|
(534,827
|
)
|
|
$
|
28.00
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2017
|
4,191,007
|
|
|
$
|
26.71
|
|
|
|
|
|
|||
Granted
|
|
1,497,400
|
|
|
$
|
43.49
|
|
|
|
|
|
||
Exercised
|
|
(1,286,527
|
)
|
|
$
|
30.55
|
|
|
|
|
|
||
Forfeited
|
|
(827,775
|
)
|
|
$
|
29.01
|
|
|
|
|
|
||
Options and SARs outstanding, December 31, 2018
|
3,574,105
|
|
|
$
|
32.67
|
|
|
8.4
|
|
$
|
42.7
|
|
|
Vested options and SARs exercisable, December 31, 2018
|
768,955
|
|
|
$
|
26.40
|
|
|
6.7
|
|
$
|
4.7
|
|
|
2018 Grants
|
|
2017 Grants
|
|
2016 Grants
|
||||||
Expected volatility
|
36.11%-44.66%
|
|
|
44.03%-46.54%
|
|
|
41.77
|
%
|
|||
Expected term
|
2.06-2.81
|
|
|
2.06-3.06
|
|
|
2.81
|
|
|||
Risk free rate
|
2.40%-2.73%
|
|
|
1.43%-1.93%
|
|
|
1.08
|
%
|
|||
Fair value per share
|
$
|
57.93
|
|
|
$
|
37.80
|
|
|
$
|
14.31
|
|
|
|
Number of RSUs
|
|
Weighted-Average Grant Date Price
|
|||
Balance
|
December 31, 2015
|
384,567
|
|
|
$
|
33.6
|
|
Granted
|
|
858,296
|
|
|
$
|
12.94
|
|
Vested
|
|
(246,657
|
)
|
|
$
|
21.17
|
|
Forfeited
|
|
(114,393
|
)
|
|
$
|
17.23
|
|
Balance
|
December 31, 2016
|
881,813
|
|
|
$
|
19.08
|
|
Granted
|
|
614,035
|
|
|
$
|
31.56
|
|
Vested
|
|
(351,713
|
)
|
|
$
|
21.95
|
|
Forfeited
|
|
(78,676
|
)
|
|
$
|
13.44
|
|
Performance Not Achieved
|
|
(5,789
|
)
|
|
$
|
38.03
|
|
Balance
|
December 31, 2017
|
1,059,670
|
|
|
$
|
25.68
|
|
Granted
|
|
440,896
|
|
|
$
|
53.10
|
|
Vested
|
|
(341,774
|
)
|
|
$
|
25.62
|
|
Forfeited
|
|
(154,780
|
)
|
|
$
|
36.96
|
|
Balance
|
December 31, 2018
|
1,004,012
|
|
|
$
|
36.00
|
|
|
2018
|
|
2017
|
||||
Change in projected benefit obligation:
|
|
|
|
||||
Benefit obligation at beginning of the period (July 1, 2017 business combination)
|
$
|
146.9
|
|
|
$
|
145.2
|
|
Service cost
|
0.4
|
|
|
1.2
|
|
||
Interest cost
|
5.2
|
|
|
2.7
|
|
||
Actuarial (gain) loss
|
(9.9
|
)
|
|
6.5
|
|
||
Benefits paid
|
(9.1
|
)
|
|
(2.4
|
)
|
||
Other (effect of curtailment/settlement)
|
(2.5
|
)
|
|
(6.3
|
)
|
||
Projected benefit obligations at end of year
|
$
|
131.0
|
|
|
$
|
146.9
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of the period (July 1, 2017 business combination)
|
$
|
108.8
|
|
|
$
|
96.1
|
|
Actual (loss) gain on plan assets
|
(8.2
|
)
|
|
9.8
|
|
||
Employer contribution
|
24.2
|
|
|
5.3
|
|
||
Benefits paid
|
(9.1
|
)
|
|
(2.4
|
)
|
||
Fair value of plan assets at end of year
|
$
|
115.7
|
|
|
$
|
108.8
|
|
Reconciliation of funded status:
|
|
|
|
||||
Fair value of plan assets at end of year
|
$
|
115.7
|
|
|
$
|
108.8
|
|
Less projected benefit obligations at end of year
|
131.0
|
|
|
146.9
|
|
||
Under-funded status at end of year
|
$
|
(15.3
|
)
|
|
$
|
(38.1
|
)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Net actuarial loss
|
$
|
5.5
|
|
|
$
|
0.8
|
|
Prior service credit
|
—
|
|
|
—
|
|
||
Projected benefit obligations at end of year
|
$
|
5.5
|
|
|
$
|
0.8
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Projected benefit obligation
|
$
|
131.0
|
|
|
$
|
146.9
|
|
Accumulated benefit obligation
|
$
|
131.0
|
|
|
143.8
|
|
|
Fair value of plan assets
|
$
|
115.7
|
|
|
108.8
|
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||
Discount rate
|
4.15
|
%
|
|
3.60
|
%
|
Rate of compensation increase
|
N/A
|
|
|
3.00
|
%
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Discount rate
|
3.60
|
%
|
|
3.80
|
%
|
Expected long-term rate of return on plan assets
|
7.33
|
%
|
|
7.45
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
|
Year Ended December 31,
|
||||||
Components of net periodic benefit cost:
|
|
2018
|
|
2017
|
||||
Service cost
|
|
$
|
0.4
|
|
|
$
|
1.2
|
|
Interest cost
|
|
5.2
|
|
|
2.7
|
|
||
Expected return on plan assets
|
|
(8.0
|
)
|
|
(2.7
|
)
|
||
Recognition of gain due to settlement
|
|
(0.1
|
)
|
|
—
|
|
||
Recognition of gain due to curtailment
|
|
(2.4
|
)
|
|
(6.1
|
)
|
||
Net periodic benefit cost
|
|
$
|
(4.9
|
)
|
|
$
|
(4.9
|
)
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Asset Category:
|
|
|
|
||
Equity securities
|
66.4
|
%
|
|
78.5
|
%
|
Debt securities
|
26.8
|
%
|
|
13.0
|
%
|
Real estate investment trust
|
6.8
|
%
|
|
8.5
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
Quoted Prices in
Active Markets
For Identical
Assets or
Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Consolidated
Total
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. companies
|
$
|
—
|
|
|
$
|
62.8
|
|
|
$
|
—
|
|
|
$
|
62.8
|
|
International companies
|
—
|
|
|
14.0
|
|
|
—
|
|
|
14.0
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Preferred securities
|
—
|
|
|
4.4
|
|
|
—
|
|
|
4.4
|
|
||||
Bond securities
|
—
|
|
|
26.6
|
|
|
—
|
|
|
26.6
|
|
||||
Real estate securities
|
—
|
|
|
7.9
|
|
|
—
|
|
|
7.9
|
|
||||
Total
|
$
|
—
|
|
|
$
|
115.7
|
|
|
$
|
—
|
|
|
$
|
115.7
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. companies
|
$
|
67.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67.1
|
|
International companies
|
18.3
|
|
|
—
|
|
|
—
|
|
|
18.3
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
Preferred securities
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
||||
Bond securities
|
—
|
|
|
9.5
|
|
|
—
|
|
|
9.5
|
|
||||
Real estate securities
|
9.3
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
||||
Total
|
$
|
99.3
|
|
|
$
|
9.5
|
|
|
$
|
—
|
|
|
$
|
108.8
|
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2018
(1)
|
|
June 30, 2018
(2)
|
|
September 30, 2018
(2)
|
|
December 31, 2018
|
||||||||
Net revenues
|
|
$
|
2,353.2
|
|
|
$
|
2,636.9
|
|
|
$
|
2,768.9
|
|
|
$
|
2,474.1
|
|
Operating income
|
|
$
|
38.8
|
|
|
$
|
135.1
|
|
|
$
|
255.2
|
|
|
$
|
182.8
|
|
Net income (loss) from continuing operations
|
|
$
|
(17.3
|
)
|
|
$
|
87.5
|
|
|
$
|
185.8
|
|
|
$
|
127.6
|
|
Net income (loss) attributable to Delek
|
|
$
|
(40.4
|
)
|
|
$
|
79.1
|
|
|
$
|
179.8
|
|
|
$
|
121.6
|
|
Basic income (loss) per share from continuing operations
|
|
$
|
(0.29
|
)
|
|
$
|
0.95
|
|
|
$
|
2.15
|
|
|
$
|
1.50
|
|
Diluted income (loss) per share from continuing operations
|
|
$
|
(0.29
|
)
|
|
$
|
0.90
|
|
|
$
|
2.02
|
|
|
$
|
1.48
|
|
(1)
|
Net loss from continuing operations and net loss attributable to Delek for the quarter ended March 31, 2018 reflect a correction to record additional deferred tax expense totaling
$5.5 million
related to the recognition of a valuation allowance on deferred tax assets previously recognized in connection with the Big Spring Logistic Assets Acquisition (see Note
6
) not previously reported in our March 31, 2018 Quarterly Report on Form 10-Q filed on May 10, 2018. Such amount was not considered material to the financial statements or the trend of earnings for that period.
|
(2)
|
Net revenues for the quarter ended
September 30, 2018
reflects a correction of an intercompany elimination which resulted in an increase in net revenues and cost of materials and other of
$273.7 million
not previously reflected on the unaudited consolidated financial statements in our
September 30, 2018
Quarterly Report on Form 10-Q filed on November 9, 2018, and net revenues for the quarter ended June 30, 2018 reflects a similar correction resulting in an increase in net revenues and cost of materials and other of
$73.4 million
not previously reflected on the unaudited consolidated financial statements in our June 30, 2018 Quarterly Report on Form 10-Q filed on August 9, 2018. Such amounts are not considered material to the financial statements and had no impact to operating income or segment contribution margin for those periods.
|
•
|
Net income from continuing operations for the quarter ended
December 31, 2018
includes an environmental indemnification settlement totaling
$20.0 million
, where
$16.0 million
is attributable to additional recoveries of remediation costs incurred by the Company and is included as a reduction of operating expenses, and
$4.0 million
is considered additional consideration for concessions made under the Settlement Agreement and is included as other income in the accompanying consolidated statements of income for the year ended
December 31, 2018
.
|
|
|
For the Three Month Periods Ended
|
||||||||||||||
|
|
March 31, 2017
|
|
June 30, 2017
|
|
September 30, 2017
|
|
December 31, 2017
|
||||||||
Net revenues
|
|
$
|
1,182.2
|
|
|
$
|
1,230.7
|
|
|
$
|
2,370.6
|
|
|
$
|
2,483.7
|
|
Operating income (loss)
|
|
$
|
29.8
|
|
|
$
|
(46.5
|
)
|
|
$
|
90.8
|
|
|
$
|
112.5
|
|
Net income (loss) from continuing operations
|
|
$
|
15.3
|
|
|
$
|
(32.2
|
)
|
|
$
|
118.5
|
|
|
$
|
226.9
|
|
Net income (loss) attributable to Delek
|
|
$
|
11.2
|
|
|
$
|
(37.9
|
)
|
|
$
|
104.4
|
|
|
$
|
211.1
|
|
Basic income (loss) per share from continuing operations
|
|
$
|
0.18
|
|
|
$
|
(0.61
|
)
|
|
$
|
1.30
|
|
|
$
|
2.62
|
|
Diluted income (loss) per share from continuing operations
|
|
$
|
0.18
|
|
|
$
|
(0.61
|
)
|
|
$
|
1.29
|
|
|
$
|
2.58
|
|
•
|
Net income from continuing operations for the quarter ended September 30, 2017 includes gain on remeasurement of the Alon equity method investment, before tax, of
$190.1 million
(see Note
3
) and the income tax effect of the write-off of deferred taxes in connection with the Delek/Alon Merger of
$46.9 million
;
|
•
|
Net income attributable to Delek for the quarter ended December 31, 2017 includes the income tax effect of the Tax Reform Act of
$166.9 million
.
|
|
|
Three Months Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
|
||||
Numerator for EPS - continuing operations
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
127.6
|
|
|
$
|
226.9
|
|
Less: Income from continuing operations attributed to non-controlling interest
|
|
5.8
|
|
|
14.0
|
|
||
Income (loss) from continuing operations attributable to Delek (numerator for basic EPS - continuing operations attributable to Delek)
|
|
121.8
|
|
|
212.9
|
|
||
Interest on convertible debt, net of tax
|
|
—
|
|
|
0.7
|
|
||
Numerator for diluted EPS - continuing operations attributable to Delek
|
|
$
|
121.8
|
|
|
$
|
213.6
|
|
|
|
|
|
|
||||
Numerator for EPS - discontinued operations
|
|
|
|
|
||||
Income (loss) from discontinued operations
|
|
$
|
(0.2
|
)
|
|
$
|
(1.8
|
)
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
|
||||
Weighted average common shares outstanding (denominator for basic EPS)
|
|
81,321,240
|
|
|
81,338,755
|
|
||
Dilutive effect of convertible debt
|
|
—
|
|
|
526,464
|
|
||
Dilutive effect of warrants
|
|
260,838
|
|
|
—
|
|
||
Dilutive effect of stock-based awards
|
|
946,261
|
|
|
779,841
|
|
||
Weighted average common shares outstanding, assuming dilution
|
|
82,528,339
|
|
|
82,645,060
|
|
||
|
|
|
|
|
||||
EPS:
|
|
|
|
|
||||
Basic income (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
1.50
|
|
|
$
|
2.62
|
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
||
Total basic income (loss) per share
|
|
$
|
1.50
|
|
|
$
|
2.60
|
|
Diluted income (loss) per share:
|
|
|
|
|
||||
Income (loss) from continuing operations
|
|
$
|
1.48
|
|
|
$
|
2.58
|
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
||
Total diluted income (loss) per share
|
|
$
|
1.48
|
|
|
$
|
2.56
|
|
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be anti-dilutive:
|
|
|
|
|
||||
|
|
|
|
|
||||
Antidilutive stock-based compensation
|
|
1,749,569
|
|
|
3,660,354
|
|
||
Antidilutive due to loss
|
|
—
|
|
|
—
|
|
||
Total antidilutive stock-based compensation
|
|
1,749,569
|
|
|
3,660,354
|
|
||
|
|
|
|
|
||||
Antidilutive convertible debt instruments
|
|
—
|
|
|
5,623,304
|
|
||
Antidilutive warrants
|
|
—
|
|
|
5,612,581
|
|
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