Delek US Holdings, Inc. (NYSE:DK) Q2 2020 Earnings Conference Call - Final Transcript

Aug 05, 2020 • 09:30 am ET

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Delek US Holdings, Inc. (NYSE:DK) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Blake Fernandez

Good morning, and welcome to the Delek US Holdings Second Quarter 2020 Financial Results. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Blake Fernandez, Senior Vice President of Investor Relations. Please go ahead. Good morning. I would like to thank everyone for joining us on today's conference call and webcast to discuss Delek US Holdings' Second Quarter 2020 Financial Results. Joining me on today's call is Uzi Yemin, our Chairman, President and CEO; Reuven Spiegel, EVP and CFO; and Louis Labella, EVP & President of Refining; as well as other members of our management team. The presentation materials used during today's call can be found on the Investor Relations section of the Delek US website. As a reminder, this conference call may contain forward-looking statements as that term is defined under federal securities laws. Please see Slide 2 for the safe harbor statement. In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to comparable GAAP results, which can be found in the press release, which is posted on the Investor Relations segment of the website. Our prepared remarks are being made assuming that the earnings press release has been reviewed, and we're covering less segment and market information than incorporated into the second quarter release. On today's call, Reuven will review financial performance; I will cover capitalization, liquidity and guidance; Louis will cover operations and capex; and then Uzi will offer a few closing strategic comments. With that, I will turn the call over to Reuven.

Executive
Reuven Spiegel

Thank you, Blake. On an adjusted basis, for the second quarter of 2020, Delek US reported a net loss of $111 million or $1.50 per share compared to net income of $98 million or $1.27 per diluted share in the prior year period. Our adjusted EBITDA loss was $85 million in the second quarter of 2020 compared to a $211 million income in the prior year period. Adjusted results include $75 million of after-tax headwinds or $1.02 per share. This is comprised of an after-tax other inventory and purchase product loss of $92 million, realized hedging losses of $104 million after tax, partially offset by a fixed price crude benefit at our Tyler Refinery of $85 million after tax. Lastly, adjusted results reflect a reversal of the $36 million tax headwind disclosed in the first quarter of 2020. I would point out that the other inventory and purchase products mentioned are separate from the LCM inventory impacts that are already excluded from adjusted results.

On Slide 4, we provide the cash flow waterfall. In the second quarter of 2020, we had negative cash flow of approximately $169 million from continuing operations, which include working capital detriment of $363 million. Within working capital is $130 million of income tax credit, where we expect to receive the cash in the first part