Delek US Holdings, Inc. (NYSE:DK) Q2 2018 Earnings Conference Call - Final Transcript

Aug 08, 2018 • 10:00 am ET

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Delek US Holdings, Inc. (NYSE:DK) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. My name is Don and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek US Holdings Inc. Q2 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Johnson, the floor is yours.

Executive
Keith Johnson

Thank you, Don. I would like to thank everyone for joining us on today's conference call and webcast to discuss Delek US's second quarter 2018 financial results. Joining me on today's call is Uzi Yemin, our Chairman, President and CEO; Kevin Kremke, EVP and CFO, as well as other members of our management team.

(Forward-Looking Cautionary Statements)

In addition to reporting financial results in accordance with generally accepted accounting principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to our comparable GAAP results, which can be found in the press release, which is posted on the IR section of our website. On today's call, Kevin will begin with a review of the financial performance of the quarter before turning it over to Uzi, who will offer a few closing strategic comments.

With that, I'll turn the call over to Kevin.

Executive
Kevin Kremke

Thanks, Keith. For the second quarter 2018, Delek US reported net income of $79.1 million or $0.89 per diluted share, compared to a net loss of $37.9 million or $0.61 per basic share in the second quarter of 2017. On an adjusted basis for the second quarter, Delek US reported net income of $89 million or $1.03 per diluted share, compared to an adjusted net loss of $25 million or $0.40 per basic share in the prior year period.

Our adjusted EBITDA was $199.1 million in the second quarter of 2018, compared to $4.2 million in the prior year period. A reconciliation of reported results to adjusted results is included in the financial tables of our press release. During the second quarter of 2018, results were affected by approximately $60.3 million or $0.52 per share after tax of noncash items.

This consisted of approximately $38.5 million or $0.33 per share after tax related to a noncash inventory timing effect between the purchase price of Permian Basin crude oil and when it is realized as finished products are sold. In addition, results were reduced by a noncash charge of approximately $21.8 million or $0.19 per share after tax related to a mark-to-market of our RIN's inventory position.

This net long inventory position was the result of the previously announced waiver received for the El Dorado and Krotz Springs refineries in March of 2018. Taking these amounts into consideration, results would have been higher by $60.3 million or $0.52 per share, which would equate to approximately $259 million of EBITDA and $1.55 per share.

On a consolidated basis, line items such as operating expenses, G&A and interest increased on a year-over-year basis, primarily due to the addition of Alon.