Delek's (DK) Q4 Loss Wider Than Expected, Sales Beat Mark

Zacks Equity Research
·3 min read

Delek US Holdings, Inc.’s DK fourth-quarter 2020results recently reported an adjusted loss of $2.25 a share, wider than the Zacks Consensus Estimate of a loss of $1.84 as well as the year-ago quarterly loss of 11 cents. This underperformance was due to weak contribution from the refining segment.

Quarterly revenues of $1.88 billion compared unfavorably with the year-ago sales of $2.28 billion. However, the top line surpassed the Zacks Consensus Estimate of $1.42 billion. This better-than-expected report was driven by a strong contribution from the logistics segment and a tight leash on operating expenses.

Segmental Performance

Refining: The company reported a negative margin of $82 million for this segment against the positive $127.8 million in the year-ago quarter.Results were hurt by a lower crude differential environment and crack spreads resulting from coronavirus-induced reduced demand.

Logistics: This unit represents the company’s majority interest in Delek Logistics Partners, L.P. DKL, a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. Margin from the Logistics unit was $62.2 million, up 46.4% from $42.5 million in the year-ago period, led by divesting the Big Spring Gathering business and Trucking Assets plus an elevated crude gathering and operating expense reductions.

Retail: Margin for the unit, formed from the acquisition of Alon USA Energy in 2017, declined 5% to $12.7 million from the year-earlier quarter’s level due to lower Retail fuel margin. Delek’s merchandise sales of $75.9 million with a margin of 30.1%, on average, compared favorably with $72.9 million sales carrying a margin of 30.6%, on average, in the prior year. Its retail fuel gallons sale totaled $41.5 million in the December quarter of 2020, the average margin being 33 cents per gallon. This compared unfavorably with $51.5 million sale, the average margin being 29 cents in fourth-quarter 2019.

Delek US Holdings, Inc. Price, Consensus and EPS Surprise

Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Delek US Holdings, Inc. Price, Consensus and EPS Surprise

Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote

Financials

Total operating expenses incurred in the quarter decreased 1.58% from the prior-year period to $2,196.1 million.

In the reported quarter, Delek spent $31.6 million on capital programs (64% on the Refining segment). As of Dec 30, 2020, the company had cash and cash equivalents worth $787.5 million and a long-term debt of $2,315 million with the total debt to total capital of 67.3%.

Guidance

Delek anticipates its 2021 capital expenses to be around $150-$160 million, comprising turnarounds. The capex estimate represents a decline of approximately $85 million from the prior-year levels.

Zacks Rank & Key Picks

Delek currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the energy space are Matador Resources Company MTDR and Denbury Inc. DEN, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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