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Delek US Holdings (DK) Q4 Earnings & Revenues Beat Estimates

Delek US Holdings DK reported fourth-quarter 2022 adjusted net income of 88 cents per share, beating the Zacks Consensus Estimate of 82 cents. The bottom line was also better than the year-ago quarter’s loss of 61 cents. The outperformance could be attributed to record contributions from the Refining segment.

The diversified downstream energy company said that its adjusted EBITDA was $220.9 million compared with $32.8 million in the year-ago period.

Meanwhile, Delek’s revenues surged 44.1% year over year to $4.5 billion. It also beat the consensus mark of $3.9 billion, primarily due to the outperformance of the Refining and Logistics segments.

In good news for investors, DK’s board of directors approved an increase of 1 cent per share in the regular dividend, bringing the quarterly dividend to 22 cents per share. The dividend will be paid out on Mar 17, 2023, to shareholders of record as on Mar 10, 2023.

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

Segmental Details

Refining: In the fourth quarter of 2022, this segment of Delek recorded an adjusted EBITDA of $182.0 million, showing a remarkable improvement from the year-ago quarter’s loss of $3.3 million.

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The significant year-over-year surge in earnings can be attributed mainly to the higher refining crack spreads, with Delek’s benchmark crack spreads soaring an average of 76.0% during the period.

Logistics: This unit represents Delek’s majority interest in Delek Logistics Partners, L.P. — a publicly traded master limited partnership that owns, operates, develops, and acquires pipelines and other midstream assets.

During the fourth quarter of 2022, the logistics sector achieved an adjusted EBITDA of $90.6 million, indicating an increase of $22.5 million from the year-ago quarter’s $68.1 million.

This substantial growth is attributed to the exceptional performance of the Delek Permian Gathering system, and the successful acquisition of 3 Bear Delaware, both of which made significant contributions to the sector's overall profitability.

Retail: Adjusted EBITDA for the retail segment in the fourth quarter of 2022 amounted to $7.8 million, indicating a decline from the year-ago quarter’s $10.0 million.

The decrease was largely due to a reduction in volumes and lower average margins during the fourth quarter of 2022, as compared with the year-ago quarter’s levels.

Meanwhile, merchandise sales of $77.4 million were more than the year-ago quarter’s sales of $75.5 million. Sales also beat the Zacks Consensus Estimate by 2.7%. However, the merchandise margin of 32.1% declined from 33.6% in the year-ago period.

In the fourth quarter, DK’s retail stations sold 41,523 thousand gallons of gasoline compared with 42,303 in the year-ago period.

Costs & Balance Sheet

The company’s total operating costs and expenses were $4.59 million in the fourth quarter of 2022, up 48.7% from the year-ago quarter. This rise was primarily due to higher cost of sales.

As of Dec 31, 2022, Delek US Holdings had cash and cash equivalents of $841.3 million and a long-term debt of $2.98 million, with debt-to-total capital of about 73%.

Guidance

For full-year 2023, Delek expects capital expenditures of approximately $350 million as it plans to spend $202 million on Refining, $81 million on Logistics, $31 million on Retail and $36 million on Corporate/Other.

Delek plans to reduce costs and improve processes, expecting a $30-$40 million improvement in the first quarter of 2023 and an additional $50-$60 million in 2023. The annual run rate is projected to be $90-$100 million, possibly through lower costs or better markets.

Zacks Rank and Key Picks

Currently, Delek US Holdings carries a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like NGL Energy Partners (NGL) sporting a Zacks Rank #1 (Strong Buy) and Energy Transfer ET and Helix Energy Solutions Group HLX, both holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NGL Energy Partners: NGL Energy Partners is worth approximately $451.75 million. Its shares have increased 48.8% in the past year.

NGL Energy Partners LP is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.

Energy Transfer LP: Energy Transfer LP is valued at around $38.99 billion. ET delivered an average earnings surprise of 11.43% for the last four quarters, and its current dividend yield is 9.48%.

Energy Transfer LP currently has a forward P/E ratio of 9.17. In comparison, its industry has an average forward P/E of 9.40, which means Energy Transfer LP is trading at a discount to the group.

Helix Energy Solutions Group: Helix Energy Solutions Group is valued at around $1.20 billion. In the past year, HAL stock has increased 63.3%.

Helix Energy Solutions Group currently has a forward P/E ratio of 12.02. In comparison, its industry has an average forward P/E of 12.50, which means Helix Energy Solutions Group is trading at a discount to the group.

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Delek US Holdings, Inc. (DK) : Free Stock Analysis Report

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Helix Energy Solutions Group, Inc. (HLX) : Free Stock Analysis Report

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