What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-07 · 353 added, 218 removed, 810 unchanged (41% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets:

33 unchanged sentences

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, 91,450,724 shares and 91,356,868 shares issued at March 31, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 91,637,661 shares and 91,356,868 shares issued at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,192.6 1,185.1

Accumulated other comprehensive loss ( 7.4 ) ( 7.2 )

Treasury stock, 17,575,527 shares, at cost, as of March 31, 2021 and December 31, 2020, respectively

Treasury stock, 17,575,527 shares, at cost, as of June 30, 2021 and December 31, 2020

( 694.1 ) ( 694.1 )

8 unchanged sentences

(In millions, except share and per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net revenues $ 2,191.5 $ 1,535.5 $ 4,583.7 $ 3,356.7

7 unchanged sentences

Depreciation and amortization 5.8 6.0 12.0 11.6

Other operating loss (income), net 1.9 ( 0.7 )

Other operating income, net ( 4.9 ) ( 14.2 ) ( 3.0 ) ( 14.9 )

Total operating costs and expenses 2,276.9 1,512.7 4,749.2 3,695.4

Operating loss ( 80.1 ) ( 361.5 )

Operating (loss) income ( 85.4 ) 22.8 ( 165.5 ) ( 338.7 )

Interest expense 33.2 29.8 62.8 66.1

1 unchanged sentence

Income from equity method investments ( 6.8 ) ( 10.7 ) ( 11.6 ) ( 15.8 )

Other income, net ( 1.0 ) ( 0.9 )

Total non-operating expense, net 23.6 28.6

Loss before income tax benefit ( 103.7 ) ( 390.1 )

Gain on sale on non-operating refinery — ( 56.9 ) — ( 56.9 )

Other expense (income), net 6.8 ( 1.5 ) 5.8 ( 2.4 )

Total non-operating expense (income), net 33.1 ( 39.8 ) 56.7 ( 11.2 )

(Loss) income before income tax benefit ( 118.5 ) 62.6 ( 222.2 ) ( 327.5 )

Income tax benefit ( 46.0 ) ( 35.9 ) ( 58.4 ) ( 119.0 )

Net loss ( 91.3 ) ( 307.0 )

Net (loss) income ( 72.5 ) 98.5 ( 163.8 ) ( 208.5 )

Net income attributed to non-controlling interests 8.6 10.8 15.9 18.2

Net loss attributable to Delek $ ( 98.6 ) $ ( 314.4 )

Basic loss per share $ ( 1.34 ) $ ( 4.28 )

Diluted loss per share $ ( 1.34 ) $ ( 4.28 )

Net (loss) income attributable to Delek $ ( 81.1 ) $ 87.7 $ ( 179.7 ) $ ( 226.7 )

Basic (loss) income per share $ ( 1.10 ) $ 1.19 $ ( 2.43 ) $ ( 3.08 )

Diluted (loss) income per share $ ( 1.10 ) $ 1.18 $ ( 2.43 ) $ ( 3.08 )

Dividends declared per common share outstanding $ — $ 0.31 $ — $ 0.62

4 unchanged sentences

(In millions)

Three Months Ended

Net loss $ ( 91.3 ) $ ( 307.0 )

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net (loss) income $ ( 72.5 ) $ 98.5 $ ( 163.8 ) $ ( 208.5 )

Other comprehensive income (loss):

1 unchanged sentence

Net (loss) gain related to commodity cash flow hedges — ( 1.4 ) ( 0.2 ) 0.3

Income tax expense — 0.4

Income tax benefit — ( 0.3 ) — —

Net comprehensive (loss) income on commodity contracts designated as cash flow hedges — ( 1.1 ) ( 0.2 ) 0.3

Other loss, net of taxes — ( 0.3 )

Other income, net of taxes — 0.4 — 0.1

Total other comprehensive (loss) gain — ( 0.7 ) ( 0.2 ) 0.4

Comprehensive loss ( 91.5 ) ( 305.9 )

Comprehensive (loss) income ( 72.5 ) 97.8 ( 164.0 ) ( 208.1 )

Comprehensive income attributable to non-controlling interest 8.6 10.8 15.9 18.2

Comprehensive loss attributable to Delek $ ( 98.8 ) $ ( 313.3 )

Comprehensive (loss) income attributable to Delek $ ( 81.1 ) $ 87.0 $ ( 179.9 ) $ ( 226.3 )

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(In millions, except share and per share data)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

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, 2020

Balance at March 31, 2021

91,450,724 $ 0.9 $ 1,188.6 $ ( 7.4 ) $ 423.2 ( 17,575,527 ) $ ( 694.1 ) $ 117.7 $ 1,028.9

Net (loss) income — — — — ( 81.1 ) — — 8.6 ( 72.5 )

Other comprehensive loss related to commodity contracts, net — — — ( 0.2 ) — — — — ( 0.2 )

Distributions to non-controlling interests — — — — — — — ( 7.9 ) ( 7.9 )

3 unchanged sentences

Other — — — — ( 0.1 ) — — — ( 0.1 )

Balance at June 30, 2021

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 342.0 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 952.4

Three Months Ended June 30, 2020

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 March 31, 2020

91,089,920 $ 0.9 $ 1,157.4 $ 1.2 $ 861.6 ( 17,575,527 ) $ ( 694.1 ) $ 162.9 $ 1,489.9

Net income — — — — 87.7 — — 10.8 98.5

Other comprehensive loss related to commodity contracts, net — — — ( 1.1 ) — — — — ( 1.1 )

Common stock dividends ($ 0.31 per share)

— — — — ( 22.9 ) — — — ( 22.9 )

Distribution to non-controlling interest — — — — — — — ( 8.2 ) ( 8.2 )

Equity-based compensation expense — — 4.7 — — — — — 4.7

Repurchase of non-controlling interest — — ( 0.8 ) — — — — — ( 0.8 )

Taxes paid due to the net settlement of equity-based compensation — — ( 1.2 ) — — — — — ( 1.2 )

Exercise of equity-based awards 143,044 — — — — — — — —

Other — — — 0.4 — — — — 0.4

Balance at June 30, 2020

91,232,964 $ 0.9 $ 1,160.1 $ 0.5 $ 926.4 ( 17,575,527 ) $ ( 694.1 ) $ 165.5 $ 1,559.3

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Continued)

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

(In millions, except share and per share data)

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

2 unchanged sentences

91,356,868 $ 0.9 $ 1,185.1 $ ( 7.2 ) $ 522.0 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 1,125.1

Net (loss) income — — — — ( 179.7 ) — — 15.9 ( 163.8 )

Other comprehensive loss related to commodity contracts, net — — — ( 0.2 ) — — — — ( 0.2 )

Distributions to non-controlling interests — — — — — — — ( 15.9 ) ( 15.9 )

Equity-based compensation expense — — 10.5 — — — — — 10.5

Taxes paid due to the net settlement of equity-based compensation — — ( 3.0 ) — — — — — ( 3.0 )

Exercise of equity-based awards 280,793 — — — — — — — —

Other — — — — ( 0.3 ) — — — ( 0.3 )

Balance at June 30, 2021

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 342.0 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 952.4

Six Months Ended June 30, 2020

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, 2019

90,987,025 $ 0.9 $ 1,151.9 $ 0.1 $ 1,205.6 ( 17,516,814 ) $ ( 692.2 ) $ 169.0 $ 1,835.3

Cumulative effect of adopting accounting principle regarding measurement of credit losses on financial instruments, net — — — — ( 6.5 ) — — — ( 6.5 )

10 unchanged sentences

Other — — — 0.1 — — — — 0.1

Balance at March 31, 2020

Balance at June 30, 2020

91,232,964 $ 0.9 $ 1,160.1 $ 0.5 $ 926.4 ( 17,575,527 ) $ ( 694.1 ) $ 165.5 $ 1,559.3

4 unchanged sentences

(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 163.8 ) $ ( 208.5 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 134.8 112.2

Other amortization/accretion 3.0 2.2

Non-cash lease expense 28.1 21.9

3 unchanged sentences

Non-cash lower of cost or market/net realizable value adjustment ( 30.1 ) 75.1

Equity-based compensation expense 4.6 6.3

Gain on sale of non-operating refinery — ( 56.9 )

Other 13.9 17.4

6 unchanged sentences

Non-current assets and liabilities, net ( 6.1 ) 0.6

Net cash used in operating activities ( 34.3 ) ( 154.1 )

Net cash provided by (used in) operating activities 134.9 ( 323.1 )

Cash flows from investing activities:

4 unchanged sentences

Proceeds from sale of property, plant and equipment 10.9 0.2

Proceeds from sale of non-operating refinery — 39.9

Net cash used in investing activities ( 118.7 ) ( 155.9 )

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)

(In millions)

Three Months Ended March 31,

Cash flows from financing activities:

1 unchanged sentence

Payments on long-term revolvers ( 1,501.3 ) ( 1,352.1 )

Proceeds from term debt 400.0 185.0

Payments on term debt ( 26.7 ) ( 31.2 )

11 unchanged sentences

Cash and cash equivalents at the end of the period $ 833.0 $ 849.0

Delek US Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)

(In millions)

Six Months Ended June 30,

Supplemental disclosures of cash flow information:

4 unchanged sentences

Non-cash investing activities:

Increase in accrued capital expenditures $ 18.8 $ 1.1

Increase (decrease) in accrued capital expenditures $ 0.1 $ ( 33.1 )

Non-cash financing activities:

26 unchanged sentences

Risks and Uncertainties Arising from the COVID-19 Pandemic

The outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic" or the "Pandemic") continues to have an on-going impact.

The restrictions imposed to prevent its spread, the challenges with the vaccination rollout, and the spread of new variants of the virus, continue to cause significant economic disruption globally, including in the U.S.

and specific geographic areas where we operate.

Compared to the prior year, the first quarter of 2021 has witnessed economic recovery trends including a resumption of flights by major airlines and increased motor vehicle use.

As a result, there has also been an increase in the demand for, and thus also the market prices of, crude oil and certain of our products.

Uncertainty about the duration of the COVID-19 Pandemic has caused storage constraints in the United States resulting from over-supply of produced oil.

Therefore, downward pressure on commodity prices could exist for the foreseeable future.

economic activity continued on a recovery trend during the quarter ended June 30, 2021, albeit remaining subject to heightened levels of uncertainty related to the on-going impact of the COVID-19 outbreak that developed into a pandemic in March 2020 (the “COVID-19 Pandemic” or the “Pandemic”), and the spread of new variants of the virus.

Most of the restrictions imposed in the prior year to prevent its spread have been eased and government vaccination campaigns continue.

Compared to the prior year, the economic recovery trends in the three and six months ended June 30, 2021 included a resumption of flights by major airlines and increased motor vehicle use.

This has in turn resulted in increased demand and market prices for crude oil and certain of our products.

Nonetheless, there remains continued uncertainty about the duration and future impact of the COVID-19 Pandemic.

Uncertainties related to the impact of the COVID-19 Pandemic and other events exist that could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown.

To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three months ended March 31, 2021.

To the extent these uncertainties have been identified and are believed to have had a material impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under GAAP, we have considered them in the preparation of our unaudited financial statements as of and for the three and six months ended June 30, 2021.

The application of accounting policies impacted by such considerations include (but are not necessarily limited to) the following:

51 unchanged sentences

The refining segment processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals.

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of March 31, 2021, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of June 30, 2021, including the following:

• 75,000 bpd Tyler, Texas refinery (the "Tyler refinery");

9 unchanged sentences

(“GCE”) for total cash consideration of $ 40.0 million.

As a result of this sale, we recognized a gain of $ 56.8 million during 2020, none of which was recognized during the first quarter, largely due to the buyer assuming substantially all of the asset retirement obligations and environmental liabilities associated with this refinery.

As a result of this sale, we recognized a gain of $ 56.9 million during the second quarter of 2020, largely due to the buyer assuming substantially all of the asset retirement obligations and environmental liabilities associated with this refinery.

As part of the transaction, GCE granted a call option to Delek to acquire up to a 33 1/3% limited member interest in the acquiring subsidiary of GCE for up to $ 13.3 million, subject to certain adjustments.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined, which has not yet occurred as of March 31, 2021.

Such option is exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined, which has not yet occurred as of June 30, 2021.

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States.

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Retail Segment

Our retail segment consists of 253 owned and leased convenience store sites as of March 31, 2021, located primarily in Central and West Texas and New Mexico.

These convenience stores typically offer various grades of gasoline and diesel primarily under the Alon or Delek brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and Alon brand names.

Our retail segment consists of 252 owned and leased convenience store sites as of June 30, 2021, located primarily in Central and West Texas and New Mexico.

These convenience stores typically offer various grades of gasoline and diesel primarily under the Alon or Delek brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money grams to the public, primarily under the 7-Eleven and DK or Alon brand names.

Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information.

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The following is a summary of business segment operating performance as measured by contribution margin for the period indicated (in millions):

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Other and Eliminations (1)

Consolidated (1)

Net revenues (excluding inter-segment fees and revenues)

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General and administrative expenses

Other operating expense, net 1.9

Other operating income, net ( 4.9 )

Operating loss $ ( 85.4 )

Capital spending (excluding business combinations) $ 60.7 $ 2.6 $ 0.5 $ 1.9 $ 65.7

Three Months Ended June 30, 2020

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 1,001.9 $ 27.3 $ 165.4 $ 340.9 $ 1,535.5

Three Months Ended March 31, 2020

Inter-segment fees and revenues

75.1 90.4 — ( 165.5 ) —

Operating costs and expenses:

Cost of materials and other 928.6 43.9 119.6 185.7 1,277.8

Operating expenses (excluding depreciation and amortization presented below) 88.7 12.4 21.5 5.2 127.8

Segment contribution margin $ 59.7 $ 61.4 $ 24.3 $ ( 15.5 ) 129.9

Depreciation and amortization $ 44.8 $ 8.7 $ 3.3 $ 2.8 59.6

General and administrative expenses

Other operating income, net ( 14.2 )

Operating income $ 22.8

Capital spending (excluding business combinations)

$ 12.2 $ 0.7 $ 1.3 $ 0.8 $ 15.0

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2021

(In millions) Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 3,811.4 $ 122.8 $ 383.8 $ 265.7 $ 4,583.7

Inter-segment fees and revenues 344.4 198.6 — ( 543.0 ) —

Operating costs and expenses:

Cost of materials and other 3,969.5 169.9 301.2 ( 239.3 ) 4,201.3

Operating expenses (excluding depreciation and amortization presented below) 227.4 29.6 43.8 9.6 310.4

Segment contribution margin $ ( 41.1 ) $ 121.9 $ 38.8 $ ( 47.6 ) 72.0

Depreciation and amortization $ 103.1 $ 20.7 $ 6.6 $ 4.4 134.8

General and administrative expenses

Other operating income, net ( 3.0 )

Operating loss $ ( 165.5 )

Capital spending (excluding business combinations) $ 118.5 $ 10.4 $ 1.3 $ 2.5 $ 132.7

Six Months Ended June 30, 2020

Refining Logistics Retail Corporate,

13 unchanged sentences

Capital spending (excluding business combinations) $ 180.3 $ 3.7 $ 7.5 $ 11.8 $ 203.3

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Reflects an adjustment to net down year-to-date net revenues and cost of materials and other of approximately $ 362 million related to certain crude wholesale net settled transactions included in corporate, other and eliminations that occurred during the three months ended March 31, 2021, which was not reflected in the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2021, as filed on our March 31, 2021 Quarterly Report on Form 10-Q on May 6, 2021.

Such uncorrected adjustment, as well as the subsequent out-of-period correction reflected above, did not relate to any of our reportable segments, had no impact on segment contribution margin, consolidated contribution margin or consolidated operating loss, and are not considered material to the condensed consolidated financial statements in either period.

Other Segment Information

Total assets by segment were as follows as of March 31, 2021:

Total assets by segment were as follows as of June 30, 2021:

Refining Logistics Retail Corporate,

4 unchanged sentences

Total assets, excluding inter-segment notes receivable and right of use assets $ 4,928.8 $ 935.5 $ 257.5 $ 666.6 $ 6,788.4

Property, plant and equipment and accumulated depreciation as of March 31, 2021 and depreciation expense by reporting segment for the three months ended March 31, 2021 are as follows (in millions):

Notes to Condensed Consolidated Financial Statements (Unaudited)

Property, plant and equipment and accumulated depreciation as of June 30, 2021 and depreciation expense by reporting segment for the three and six months ended June 30, 2021 are as follows (in millions):

Refining Logistics Retail Corporate,

3 unchanged sentences

Property, plant and equipment, net $ 1,767.5 $ 454.7 $ 111.3 $ 29.1 $ 2,362.6

Depreciation expense for the three months ended March 31, 2021 $ 50.4 $ 10.7 $ 3.0 $ 2.5 $ 66.6

Depreciation expense for the three months ended June 30, 2021 $ 49.4 $ 10.0 $ 3.2 $ 1.9 $ 64.5

Depreciation expense for the six months ended June 30, 2021 $ 99.8 $ 20.7 $ 6.2 $ 4.4 $ 131.1

I n accordance with ASC 360, Property, Plant and Equipment ("ASC 360"), Delek evaluates the realizability of property, plant and equipment as events occur that might indicate potential impairment.

T here were no indicators of impairment related to our property, plant and equipment as of March 31, 2021 (see Note 1 for further discussion on the impact of COVID-19 Pandemic).

T here were no indicators of impairment related to our property, plant and equipment as of June 30, 2021 (see Note 1 for further discussion on the impact of COVID-19 Pandemic).

Note 3 - Earnings (Loss) Per Share

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For those instruments that are indexed to our common stock, they are generally dilutive when the market price of the underlying indexed share of common stock is in excess of the exercise price.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the computation of basic and diluted earnings per share.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Numerator for EPS

Net loss $ ( 91.3 ) $ ( 307.0 )

Net (loss) income $ ( 72.5 ) $ 98.5 $ ( 163.8 ) $ ( 208.5 )

Income attributed to non-controlling interest 8.6 10.8 15.9 18.2

3 unchanged sentences

Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS) 73,911,582 74,028,043 73,857,975 73,492,656

Basic loss per share $ ( 1.34 ) $ ( 4.28 )

Diluted loss per share $ ( 1.34 ) $ ( 4.28 )

Basic (loss) income per share $ ( 1.10 ) $ 1.19 $ ( 2.43 ) $ ( 3.08 )

Diluted (loss) income per share $ ( 1.10 ) $ 1.18 $ ( 2.43 ) $ ( 3.08 )

The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be antidilutive:

2 unchanged sentences

Total antidilutive stock-based compensation 3,642,788 3,922,290 3,481,376 3,701,009

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 4 - Delek Logistics

1 unchanged sentence

A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations.

As of March 31, 2021, we owned an 80.0 % interest in Delek Logistics, consisting of 34,745,868 common limited partner units and the non-economic general partner interest.

As of June 30, 2021, we owned an 80.0 % interest in Delek Logistics, consisting of 34,745,868 common limited partner units and the non-economic general partner interest.

The limited partner interests in Delek Logistics not owned by us are reflected in net income attributable to non-controlling interest in the accompanying condensed consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying condensed consolidated balance sheets.

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Contemporaneously, we repurchased the 5.2 % ownership interest in the general partner from affiliates, who are also members of the general partner's management and board of directors, for $ 23.1 million, increasing our ownership interest in the general partner to 100.0 %.

As a result of these transactions, the non-controlling interest in our consolidated balance sheets decreased by $ 50.8 million, with a $ 37.2 million increase to additional paid-in capital which is net of $ 11.5 million related to deferred income taxes and $ 2.1 million of transaction costs, none of which was recognized during the first quarter of 2020.

In August 2020, Delek Logistics filed a shelf registration statement, which subsequently became effective, with the SEC for the proposed re-sale or other disposition from time to time by Delek of up to 14.0 million common limited partner units representing our limited partner interests in Delek Logistics.

No units were sold as of March 31, 2021.

No units were sold as of June 30, 2021.

We have agreements with Delek Logistics that, among other things, establish fees for certain administrative and operational services provided by us and our subsidiaries to Delek Logistics, provide certain indemnification obligations and establish terms for fee-based commercial logistics and marketing services provided by Delek Logistics and its subsidiaries to us.

The revenues and expenses associated with these agreements are eliminated in consolidation.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek Logistics is a VIE, as defined under GAAP, and is consolidated into our condensed consolidated financial statements, representing our logistics segment.

1 unchanged sentence

Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Cash and cash equivalents $ 2.2 $ 4.2

17 unchanged sentences

Asset retirement obligations 6.2 6.0

Deferred tax liabilities 0.7 0.6

Operating lease liabilities, net of current portion 17.0 15.4

2 unchanged sentences

Total liabilities and deficit $ 935.5 $ 956.4

Notes to Condensed Consolidated Financial Statements (Unaudited)

Effective May 1, 2020, Delek through its wholly owned subsidiaries Lion Oil Company, LLC ("Lion Oil") and Delek Refining, Ltd.

(“Delek Refining”) contributed certain leased and owned tractors and trailers and related assets used in the provision of trucking and transportation services for crude oil, petroleum and certain other products throughout Arkansas, Oklahoma and Texas to Delek Trucking, LLC (“Delek Trucking”), a direct wholly owned subsidiary of Lion Oil.

Following this contribution, Lion Oil sold all of the issued and outstanding membership interests in Delek Trucking (the “Trucking Acquisition”) to DKL Transportation, LLC (“DKL Transportation”), a wholly owned subsidiary of Delek Logistics.

Promptly following the consummation of the Trucking Acquisition, Delek Trucking merged with and into DKL Transportation, with DKL Transportation continuing as the surviving entity.

contributed certain leased and owned tractors and trailers and related assets used in the provision of trucking and transportation services for crude oil, petroleum and certain other products throughout Arkansas, Oklahoma and Texas to Delek Trucking, LLC (“Delek Trucking”).

Lion Oil then sold all of the issued and outstanding membership interests in Delek Trucking (the “Trucking Acquisition”) to DKL Transportation, LLC (“DKL Transportation”).

Promptly following the consummation of the Trucking Acquisition, Delek Trucking merged with and into DKL Transportation, with DKL Transportation, a wholly owned subsidiary of Delek Logistics, continuing as the surviving entity.

Total consideration for the Trucking Acquisition was approximately $ 48.0 million in cash, subject to certain post-closing adjustments, financed primarily with borrowings on the Delek Logistics Credit Facility (as defined in Note 8).

In connection with the Trucking Acquisition, Delek Refining, Lion Oil and DKL Transportation entered into a Transportation Services Agreement pursuant to which DKL Transportation will gather, coordinate the pickup of, transport and deliver petroleum products for Delek Refining and Lion Oil, as well as provide ancillary services as requested.

Prior periods have not been recast in our Note 2 - Segment Data, as these assets did not constitute a business in accordance with ASU 2017-01, Clarifying the Definition of a Business ("ASU 2017-01"), and the transaction was accounted for as an acquisition of assets between entities under common control.

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek, which included the execution of related commercial agreements.

In connection with the closing of the transaction, Delek, Delek Logistics and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “T&D Agreement”).

Under the T&D Agreement, Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services.

The total consideration was subject to certain post-closing adjustments and was comprised of $ 100.0 million in cash and 5.0 million common units representing a limited partner interest in Delek Logistics.

The cash component of this dropdown was financed with borrowings on the Delek Logistics Credit Facility (as defined in Note 8).

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prior periods have not been recast in our Segment Data Note 2, as these assets did not constitute a business in accordance with ASU 2017-01 and the transaction was accounted for as an acquisition of assets between entities under common control.

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WWP intends to construct and operate a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area.

Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP) and, at the date we acquired our ownership interest, it was anticipated that Delek Energy’s capital contributions would total approximately $ 340 million to $ 380 million over the course of construction (expected to be two to three years ).

Construction of the crude oil pipeline system remains ongoing, where the main segment of the pipeline system connecting the Permian Basin to Houston, Texas was completed and began transporting crude oil in October 2020, and where other construction continues to progress.

During the three months ended March 31, 2020, we made capital contributions totaling $ 18.9 million.

Additionally, during the three months ended March 31, 2021, we made additional capital contributions totaling $ 0.1 million based on capital calls received.

Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP).

During the six months ended June 30, 2020, we made capital contributions totaling $ 18.9 million.

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV").

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The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment.

As of March 31, 2021, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of March 31, 2021 and December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 66.4 million and $ 66.6 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

During the three months ended March 31, 2020, we received distributions of $ 69.3 million from WWP Project Financing Joint Venture to return excess contributions made.

In addition, we recognized a loss on the investment totaling $ 0.3 million and $ 1.1 million for the three months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of June 30, 2021 and December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 62.6 million and $ 66.6 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

During the six months ended June 30, 2020, we received distributions of $ 69.3 million from WWP Project Financing Joint Venture to return excess contributions made.

In addition on the investment, we recognized a loss of $ 3.9 million and $ 4.1 million for the three and six

Notes to Condensed Consolidated Financial Statements (Unaudited)

months ended June 30, 2021, respectively, and a loss of $ 0.9 million and $ 2.0 million for the three and six months ended June 30, 2020, respectively.

Delek Logistics Investments

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In August 2020, Red River completed a planned expansion project to increase the pipeline capacity which commenced operations on October 1, 2020.

Delek Logistics contributed an additional $ 3.5 million related to such

Notes to Condensed Consolidated Financial Statements (Unaudited)

expansion project in May 2019 and during 2020 made additional capital contributions of $ 12.2 million based on capital calls received.

During the three months ended March 31, 2021, we made additional capital contributions totaling $ 1.4 million based on capital calls received.

As of March 31, 2021 and December 31, 2020, Delek's investment balance in Red River totaled $ 140.1 million and $ 141.8 million, respectively.

We recognized income on the investment totaling $ 2.7 million and $ 1.8 million for the three months ended March 31, 2021 and 2020, respectively.

Delek Logistics contributed an additional $ 3.5 million related to such expansion project in May 2019 and during 2020 made additional capital contributions of $ 12.2 million based on capital calls received.

During the six months ended June 30, 2021, we made additional capital contributions totaling $ 1.4 million based on capital calls received.

As of June 30, 2021 and December 31, 2020, Delek's investment balance in Red River totaled $ 143.2 million and $ 141.8 million, respectively.

We recognized income on the investment totaling $ 3.7 million and $ 6.0 million and for the three and six months ended June 30, 2021, respectively, and $ 2.9 million and $ 4.7 million for the three and six months ended June 30, 2020, respectively.

This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

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to operate one of these pipeline systems (the "Caddo Pipeline") and a 33 % membership interest in Andeavor Logistics Rio Pipeline LLC which operates the other pipeline system (the "Rio Pipeline").

As of March 31, 2021 and December 31, 2020, Delek Logistics' investment balances in these joint ventures totaled $ 111.8 million and $ 111.9 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 1.8 million and $ 3.8 million for the three months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, Delek Logistics' investment balances in these joint ventures totaled $ 108.9 million and $ 111.9 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 2.9 million and $ 4.6 million for the three and six months ended June 30, 2021, respectively, and $ 3.5 million and $ 7.3 million for the three and six months ended June 30, 2020, respectively.

Other Investments

We have a 50 % interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas.

As of March 31, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $ 38.2 million and $ 39.3 million, respectively.

We recognized income on this investment totaling $ 0.9 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $ 41.8 million and $ 39.3 million, respectively.

We recognized income on this investment totaling $ 3.9 million and $ 4.8 million for the three and six months ended June 30, 2021, respectively, and $ 5.0 million and $ 5.5 million for the three and six months ended June 30, 2020, respectively.

This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in North Little Rock, Arkansas.

As of March 31, 2021 and December 31, 2020, Delek Renewables, LLC's investment balance in this joint venture was $ 4.2 million and $ 4.0 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million for both the three months ended March 31, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, Delek Renewables, LLC's investment balance in this joint venture was $ 4.3 million and $ 4.0 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2021, respectively, and $ 0.2 million and $ 0.3 million for the three and six months ended June 30, 2020, respectively.

The investment in this joint venture is reflected in the refining segment.

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Carrying value of inventories consisted of the following (in millions):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Refinery raw materials and supplies $ 415.0 $ 270.7

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Total inventories $ 1,031.2 $ 727.7

At March 31, 2021, we recorded a pre-tax inventory valuation reserve of $ 10.7 million, $ 8.9 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

Notes to Condensed Consolidated Financial Statements (Unaudited)

At June 30, 2021, we recorded a pre-tax inventory valuation reserve of $ 0.9 million, none of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products.

At December 31, 2020, we recorded a pre-tax inventory valuation reserve of $ 31.1 million, $ 30.3 million of which related to LIFO inventory, which reversed in the first quarter of 2021 due to the sale of inventory quantities that gave rise to the December 31, 2020 reserve.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 20.4 million and $( 280.8 ) million for the three months ended March 31, 2021 and 2020, respectively.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $ 9.7 million and $ 30.1 million for the three and six months ended June 30, 2021, respectively, and $ 203.1 million and $( 75.1 ) million for the three and six months ended June 30, 2020, respectively.

Note 7 - Crude Oil Supply and Inventory Purchase Agreement

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Baseline Volumes pursuant to the respective Supply and Offtake Agreements 2.0 0.8 1.3

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2021 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of June 30, 2021 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2020 (1)

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Aron on October 30, 2020.

The prospective pricing underlying the fixed component of the Baseline Step-Out liabilities was adjusted accordingly to reflect this payment, resulting in a reduction to the fixed differential component of our long-term Supply and Offtake Obligation totaling $ 20.8 million and a prospective contractual reset of the fixed differentials subject to future Periodic Price Adjustments.

The prospective pricing underlying the

fixed component of the Baseline Step-Out liabilities was adjusted accordingly to reflect this payment, resulting in a reduction to the fixed differential component of our long-term Supply and Offtake Obligation totaling $ 20.8 million and a prospective contractual reset of the fixed differentials subject to future Periodic Price Adjustments.

Contemporaneous with the payment, J.

Aron separately refunded to us the $ 10.0 million of deferred additional monthly fees.

As of both March 31, 2021 and December 31, 2020, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 33.1 million.

All or some portion of that amount may

become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

On May 1, 2021 the provision was triggered and on May 28, 2021, $ 15.2 million of incremental proceeds were received from J.

Effective June 4, 2021, J.

Aron terminated our $ 10.0 million letter of credit that was issued to them under the terms of the Supply and Offtake Agreement.

As of June 30, 2021, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 38.6 million.

Some portion of that amount may become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

Monthly activity resulting in over and short volumes continue to be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our condensed consolidated balance sheet.

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(in millions) El Dorado Big Spring Krotz Springs Total

Balances as of March 31, 2021:

Balances as of June 30, 2021:

Baseline Step-Out Liability $ 158.9 $ 68.2 $ 101.9 $ 329.0

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(in millions) El Dorado Big Spring Krotz Springs Total

Recurring cash fees paid during the three months ended March 31, 2021

Recurring cash fees paid during the three months ended June 30, 2021

$ 2.8 $ 0.8 $ 1.1 $ 4.7

Recurring cash fees paid during the three months ended March 31, 2020

Recurring cash fees paid during the three months ended June 30, 2020

$ 2.7 $ 1.1 $ 1.0 $ 4.8

Recurring cash fees paid during the six months ended June 30, 2021

$ 5.2 $ 1.5 $ 2.2 $ 8.9

Recurring cash fees paid during the six months ended June 30, 2020

$ 5.9 $ 2.1 $ 2.0 $ 10.0

Interest expense recognized under the Supply and Offtake Agreements includes the yield attributable to recurring cash fees, one-time cash fees (e.g., in connection with amendments), as well as other changes in fair value, which may increase or decrease interest expense.

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(in millions) El Dorado Big Spring Krotz Springs Total

Interest expense for the three months ended March 31, 2021

Interest expense for the three months ended June 30, 2021

$ 2.8 $ 0.8 $ 1.1 $ 4.7

Interest expense for the three months ended March 31, 2020

Interest expense for the three months ended June 30, 2020

$ 2.7 $ 1.1 $ 1.0 $ 4.8

There were losses totaling $ 3.9 million for the three months ended March 31, 2020, reflected in interest expense related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements.

There were no such losses for the three months ended March 31, 2021.

Interest expense for the six months ended June 30, 2021

$ 5.2 $ 1.5 $ 2.2 $ 8.9

Interest expense for the six months ended June 30, 2020

$ 6.3 $ 5.2 $ 2.4 $ 13.9

Reflected in interest expense are losses totaling $ 3.9 million for the six months ended June 30, 2020, related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations under Supply and Offtake Agreements.

There were no such losses for the three

and six months ended June 30, 2021.

We maintained letters of credit under the Supply and Offtake Agreements as follows:

(in millions) El Dorado Big Spring and Krotz Springs

Letters of credit outstanding as of March 31, 2021

$ 145.0 $ 10.0

Letters of credit outstanding as of June 30, 2021

Letters of credit outstanding as of December 31, 2020

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Outstanding borrowings, net of unamortized debt discounts and certain deferred financing costs, under Delek’s existing debt instruments are as follows (in millions):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Revolving Credit Facility $ — $ —

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Delek Logistics 2025 Notes (3)

Delek Logistics 2028 Notes (4)

Reliant Bank Revolver 33.0 50.0

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$ 2,197.9 $ 2,315.0

(1) Net of deferred financing costs of $ 2.7 million and $ 2.9 million and debt discount of $ 21.9 million and $ 23.3 million at March 31, 2021 and December 31, 2020, respectively.

(2) Net of deferred financing costs of $ 0.2 million and $ 0.2 million and debt discount of $ 0.1 million and $ 0.1 million at March 31, 2021 and December 31, 2020, respectively.

(3) Net of deferred financing costs of $ 3.1 million and $ 3.3 million and debt discount of $ 1.0 million and $ 1.0 million at March 31, 2021 and December 31, 2020, respectively.

(1) Net of deferred financing costs of $ 2.5 million and $ 2.9 million and debt discount of $ 20.6 million and $ 23.3 million at June 30, 2021 and December 31, 2020, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.2 million and debt discount of $ 0.1 million and $ 0.1 million at June 30, 2021 and December 31, 2020, respectively.

(3) Net of deferred financing costs of $ 2.9 million and $ 3.3 million and debt discount of $ 0.9 million and $ 1.0 million at June 30, 2021 and December 31, 2020, respectively.

(4) Net of deferred financing costs of $ 6.3 million at June 30, 2021.

Delek Revolver and Term Loan

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The Third Incremental Term Loan constitutes a separate class of term loans (the "Class B Loans") under the Term Loan Credit Facility from those initially borrowed in March 2018 and the incremental term loans borrowed in May 2019 and November 2019 (collectively, the "Class A Loans").

Delek will be required to pay a make-whole prepayment fee if the Third Incremental Term Loan is prepaid pursuant to an optional prepayment, in connection with a non-permitted debt issuance or in connection with an acceleration within one year of the incurrence of the Third Incremental Term Loan.

Delek may voluntarily prepay the outstanding Third Incremental Term Loan at any time subject to customary breakage costs with respect to LIBOR loans and subject to a prepayment premium of 1.00 % in connection with certain customary repricing events that may occur during the period from the day after the first anniversary of the Third Incremental Term Loan through the second anniversary of the Third Incremental Term Loan.

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In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which the fee is at a rate of 0.25 % or 0.375 % per annum, depending on average commitment usage for such quarter.

As of March 31, 2021, the unused line fee was 0.375 % per annum.

As of June 30, 2021, the unused line fee was 0.375 % per annum.

Maturity and Repayments

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The Third Incremental Term Loan requires quarterly payments on the Class B Loans of $ 0.5 million commencing June 30, 2020.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Guarantee and Security

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Borrowings under the New Credit Facilities are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of Delek.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, renewable identification numbers ("RINs"), instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the "Revolving Priority Collateral"), and a second priority lien over substantially all of Delek's and each guarantor's other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

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Additional Information

At March 31, 2021, the weighted average borrowing rate under the Revolving Credit Facility was 3.50 % and was comprised entirely of a base rate borrowing, and the principal amount outstanding thereunder was $ 50.0 million.

Additionally, there were letters of credit issued of approximately $ 314.6 million as of March 31, 2021 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of March 31, 2021, were approximately $ 635.4 million.

At March 31, 2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.00 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,269.8 million.

As of March 31, 2021, the effective interest rate related to the Term Loan Credit Facility was 3.61 %.

At June 30, 2021, the weighted average borrowing rate under the Revolving Credit Facility was 3.50 % and there were no principal amounts outstanding thereunder .

Additionally, there were letters of credit issued of approximately $ 305.9 million as of June 30, 2021 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of June 30, 2021, were approximately $ 694.1 million.

At June 30, 2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 3.00 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,266.5 million.

As of June 30, 2021, the effective interest rate related to the Term Loan Credit Facility was 3.53 %.

Delek Hapoalim Term Loan

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Proceeds may be used for general corporate purposes.

The Agreement has an accordion feature that allows increasing the term loan to maximum size of $ 100.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The Agreement has an accordion feature that allows increasing the term loan by up to an additional $ 60.0 million in principal, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

Any such additional borrowings must be completed by December 31, 2021.

On December 30, 2020, we amended the BHI Term Loan to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of this amendment.

At March 31, 2021, the weighted average borrowing rate under the term loan was approximately 3.11 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 39.5 million.

As of March 31, 2021, the effective interest rate related to the BHI Term Loan was 3.54 %.

On December 30, 2020 and June 28, 2021, we amended the BHI Term Loan to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of these amendments.

At June 30, 2021, the weighted average borrowing rate under the term loan was approximately 3.10 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 39.4 million.

As of June 30, 2021, the effective interest rate related to the BHI Term Loan was 3.53 %.

Delek Logistics Credit Facility

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The applicable margin in each case and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility.

At March 31, 2021, the weighted average borrowing rate was approximately 2.45 %.

At June 30, 2021, the weighted average borrowing rate was approximately 2.50 %.

Additionally, the Delek Logistics Credit Facility requires Delek Logistics to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment.

As of March 31, 2021, this fee was 0.35 % on an annualized basis.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2021, this fee was 0.35 % on an annualized basis.

In connection with the elimination of IDRs in August 2020, Delek Logistics entered into a First Amendment to the Delek Logistics Credit Facility which, among other things, permitted the transfer of cash and equity consideration for the elimination of IDRs.

It also modified the total leverage ratio and the senior leverage ratio (each as defined in the Delek Logistics Credit Facility) calculations to reduce the total funded debt (as defined in the Delek Logistics Credit Facility) component thereof by the total amount of unrestricted consolidated cash and cash equivalents on the balance sheet of the Delek Logistics and its subsidiaries up to $ 20.0 million.

As of March 31, 2021, Delek Logistics had $ 737.5 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of March 31, 2021, were $ 112.5 million.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of June 30, 2021, Delek Logistics had $ 288.8 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place.

Unused credit commitments under the Delek Logistics Credit Facility, as of June 30, 2021, were $ 561.2 million.

Delek Logistics 2025 Notes

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The Delek Logistics 2025 Notes are general unsecured senior obligations of the Issuers.

The Delek Logistics Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries.

The Delek Logistics 2025 Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp.) and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries.

The Delek Logistics 2025 Notes rank equal in right of payme nt with all existing and future senior indebtedness of the Issuers, and senior in right of payment to any future subordinated indebtedness of the Issuers.

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All or part of the Delek Logistics 2025 Notes are currently redeemable, subject to certain conditions and limitations, at a redemption price of 103.375 % of the redeemed principal, plus accrued and unpaid interest, if any.

Beginning on May 15, 2021, th e Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics Notes, at a redemption price of 103.375 % of the redeemed principal for the twelve-month period beginning on May 15, 2021, 101.688 % for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

Beginning on May 15, 2022, th e Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics 2025 Notes, at a redemption price of 101.688 % of the redeemed principal for the twelve-month period beginning on May 15, 2022, and 100.00 % beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the Delek Logistics 2025 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of March 31, 2021, we had $ 250.0 million in outstanding principal amount under the Delek Logistics Notes, and the effective interest rate was 7.25 %.

As of June 30, 2021, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.21 %.

Delek Logistics 2028 Notes

On May 24, 2021, Delek Logistics and its wholly owned subsidiary Delek Logistics Finance Corp.

(“Finance Corp.” and together with Delek Logistics, the “Co-issuers”), sold $ 400.0 million in aggregate principal amount of the Co-issuers 7.125 % Senior Notes due 2028 (the “Delek Logistics 2028 Notes”), at par, pursuant to an indenture with U.S.

Bank, National Association as trustee.

The Delek Logistics 2028 Notes are general unsecured senior obligations of the Co-issuers and are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics’ subsidiaries other than Finance Corp.

and will be unconditionally guaranteed on the same basis by certain of Delek Logistics’ future subsidiaries.

The Delek Logistics 2028 Notes rank equal in right of payment with all existing and future senior indebtedness of the Co-issuers, and senior in right of payment to any future subordinated indebtedness of the Co-issuers.

The Delek Logistics 2028 Notes will mature on June 1, 2028, and interest is payable semi-annually in arrears on each June 1 and December 1, commencing December 1, 2021.

At any time prior to June 1, 2024, the Co-issuers may redeem up to 35 % of the aggregate principal amount of the Delek Logistics 2028 Notes with the net cash proceeds of one or more equity offerings by Delek Logistics at a redemption price of 107.125 % of the redeemed principal amount, plus accrued and unpaid interest, if any, subject to certain conditions and limitations.

Prior to June 1, 2024, the Co-issuers may also redeem all or part of the Delek Logistics 2028 Notes at a redemption price of the principal amount plus accrued and unpaid interest, if any, plus a "make whole" premium, subject to certain conditions and limitations.

In addition, beginning on June 1, 2024, the Co-issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics 2028 Notes, at a redemption price of 103.563 % of the redeemed principal for the twelve-month period beginning on June 1, 2024, 101.781 % for the twelve-month period beginning on June 1, 2025, and 100.00 % beginning on June 1, 2026 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Co-issuers will be obligated to make an offer for the purchase of the Delek Logistics 2028 Notes from holders at a price equal to 101 % of the principal amount thereof, plus accrued and unpaid interest.

As of June 30, 2021, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.41 %.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Reliant Bank Revolver

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There were no other significant changes to the agreement in connection with this amendment .

On December 9, 2020, we amended the Reliant Bank Revolver to modify one of the required quarterly financial covenant metrics;

there were no other changes as a result of this amendment.

On December 9, 2020 and June 17, 2021, we amended the Reliant Bank Revolver to modify a required quarterly financial covenant metric;

there were no other changes as a result of these amendments.

The revolving credit agreement requires us to pay a quarterly fee of 0.50 % on an annualized basis on the average unused revolving commitment.

As of March 31, 2021, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

As of June 30, 2021, we had $ 33.0 million outstanding and $ 17.0 million of unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek had four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bore interest at a fixed rate of 5.50 % per annum and which, collectively, required annual principal amortization payments of $ 25.0 million to be made each January with a final payment of $ 20.0 million which was paid at maturity on January 4, 2021.

Delek had four notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which bore interest at a fixed rate of 5.50 % per annum and which, collectively, required annual principal amortization payments of $ 25.0 million, with a final payment of $ 20.0 million which was paid at maturity of the Promissory Notes on January 4, 2021.

Restrictive Covenants

Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants.

Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics 2025 Notes, Delek Logistics 2028 Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants.

The terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement.

The Term Loan Credit Facility does not have any financial maintenance covenants.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of March 31, 2021.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of June 30, 2021.

Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates.

These covenants may also limit the payment, in the form of cash or other assets, of dividends or other distributions, or the repurchase of shares with respect to our equity.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Additionally, some of our debt facilities limit our ability to make investments, including extensions of loans or advances to, or acquisitions of equity interests in, or guarantees of obligations of, certain other entities.

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If we elect the normal purchases and normal sales exception, such forward contracts are not accounted for as derivative instruments but rather are accounted for under other applicable GAAP.

Commodity forward contracts accounted for as derivative instruments are recorded at fair value with changes in fair value recognized in earnings in the period of change.

As of March 31, 2021 and December 31, 2020, and for the three months ended March 31, 2021 and March 31, 2020, our commodity fixed-price forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

Commodity forward contracts accounted for as derivative instruments are recorded at fair value with changes in fair value

Notes to Condensed Consolidated Financial Statements (Unaudited)

recognized in earnings in the period of change.

As of June 30, 2021 and December 31, 2020, and for the three and six months ended June 30, 2021 and June 30, 2020, our commodity fixed-price forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations.

Since Canadian crude trading activity is not related to managing supply or pricing risk of the actual inventory that will be used in production, such unrealized and realized gains and losses are recognized in other operating income, net rather than cost of materials and other on the accompanying condensed consolidated statements of income.

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Changes in the fair value of these future RINs commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income.

As of March 31, 2021, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

As of June 30, 2021, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

In accordance with ASC 815, certain of our commodity swap contracts have been designated as cash flow hedges and the change in fair value between the execution date and the end of period has been recorded in other comprehensive income.

The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of March 31, 2021 and December 31, 2020.

The following table presents the fair value of our derivative instruments as of June 30, 2021 and December 31, 2020.

The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties.

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See Note 10 for further information regarding the fair value of derivative instruments (in millions).

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

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Total net fair value of derivatives $ 64.8 $ ( 21.3 ) $ 73.0 $ ( 36.4 )

(1) As of March 31, 2021 and December 31, 2020, we had open derivative positions representing 160,365,527 and 159,682,606 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of March 31, 2021 and December 31, 2020.

(1) As of June 30, 2021 and December 31, 2020, we had open derivative positions representing 212,533,990 and 159,682,606 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of June 30, 2021 and December 31, 2020.

Additionally, as of December 31, 2020, we had open derivative positions representing and 22,130,000 MMBTU of natural gas products.

There were no open natural gas positions as of March 31, 2021.

(2) As of March 31, 2021 and December 31, 2020, we had open RINs commitment contracts representing 281,608,496 and 282,150,000 RINs, respectively.

(3) As of March 31, 2021 and December 31, 2020, $( 1.8 ) million and $ 14.8 million, respectively, of cash (obligation) collateral held by counterparties has been netted with the derivatives with each counterparty.

There were no open natural gas positions as of June 30, 2021.

(2) As of June 30, 2021 and December 31, 2020, we had open RINs commitment contracts representing 83,460,000 and 282,150,000 RINs, respectively.

(3) As of June 30, 2021 and December 31, 2020, $ 8.0 million and $ 14.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

Total gains (losses) on our hedging derivatives and RINs commitment contracts recorded in the condensed consolidated statements of income are as follows (in millions):

Three Months Ended March 31,

Gains on derivatives not designated as hedging instruments recognized in cost of materials and other (1)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Losses on commodity derivatives not designated as hedging instruments recognized in other operating income, net (1) (2)

Gains (losses) on derivatives not designated as hedging instruments recognized in cost of materials and other (1)

$ 22.2 $ ( 156.6 ) $ 79.6 $ ( 91.0 )

(Losses) gains on commodity derivatives not designated as hedging instruments recognized in other operating income, net (1) (2)

( 4.4 ) ( 3.7 ) ( 5.5 ) 7.9

Realized gains reclassified out of accumulated other comprehensive income and into cost of materials and other on commodity derivatives designated as cash flow hedging instruments — 2.2 0.2 2.9

Total gains $ 56.3 $ 77.9

(1) Gains on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains of $ 11.2 million and $ 52.0 million for the three months ended March 31, 2021 and 2020, respectively.

Total gains (losses) $ 17.8 $ ( 158.1 ) $ 74.3 $ ( 80.2 )

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 21.2 ) million and $( 9.4 ) million for the three and six months ended June 30, 2021, respectively, and $( 23.4 ) million and $ 28.6 million for the three and six months ended June 30, 2020, respectively.

(2) See separate table below for disclosures about "trading derivatives."

The effect of cash flow hedge accounting on the condensed consolidated statements of income is as follows (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Gain (loss) on cash flow hedging relationships recognized in cost of materials and other:

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Total $ — $ — $ — $ —

Notes to Condensed Consolidated Financial Statements (Unaudited)

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three months ended March 31, 2021 or 2020.

Gains, net of tax, on settled commodity contracts of $ 0.2 million and $ 0.6 million during the three months ended March 31, 2021 and 2020, respectively, were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of March 31, 2021, we estimate that no amount of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total losses on our trading physical forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating income, net on the condensed consolidated statements of income are as follows (in millions):

Three Months Ended March 31,

Realized losses $ ( 0.4 ) $ ( 1.7 )

Unrealized losses ( 0.4 ) ( 1.0 )

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2021 or 2020.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended June 30, 2021, and $ 0.2 million during the six months ended June 30, 2021, and $ 1.7 million and $ 2.3 million during the three and six months ended June 30, 2020, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of June 30, 2021, we estimate that no amount of deferred gains related to commodity cash flow hedges will be reclassified into cost of materials and other over the next 12 months as a result of hedged transactions that are forecasted to occur.

Total (losses) gains on our trading physical forward contract derivatives (none of which were designated as hedging instruments) recorded in other operating income, net on the condensed consolidated statements of income are as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Realized gains (losses) $ 2.5 $ ( 1.2 ) $ 2.1 $ ( 2.9 )

Unrealized gains (losses) 0.8 0.3 0.4 ( 0.7 )

Total $ 3.3 $ ( 0.9 ) $ 2.5 $ ( 3.6 )

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Level 3 inputs are unobservable inputs for the asset or liability reflecting our assumptions about pricing by market participants.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Our commodity derivative contracts, which consist of commodity swaps, exchange-traded futures, options and physical commodity forward purchase and sale contracts (that do not qualify as normal purchases or normal sales exception under ASC 815), are valued based on exchange pricing and/or price index developers such as Platts or Argus and are, therefore, classified as Level 2.

Our RINs commitment contracts are future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our Consolidated Net RINs Obligation (as defined in the Annual Report on Form 10-K).

8 Financial Statements and Supplementary Data, of our December 31, 2020 Annual Report on Form 10-K).

These RINs commitment contracts (which are forward contracts accounted for as derivatives – see Note 9) are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service.

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The environmental credits obligation surplus or deficit is categorized as Level 2 if measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs.

As of and for the three months ended March 31, 2021 and 2020, we elected to account for our J.

As of and for the six months ended June 30, 2021 and 2020, we elected to account for our J.

Aron step-out liability at fair value in accordance with ASC 825 , as it pertains to the fair value option.

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With respect to the amended and restated Supply and Offtake Agreements, such amendments being effective April 2020 for all the agreements, we apply fair value measurement as follows:

Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the condensed consolidated statements of income;

(1) we determine fair value for our amended variable step-out liability based on changes in fair value related to market volatility based on a floating commodity-index price, and for our amended fixed step-out liability based on changes to interest rates and the timing and amount of expected future cash settlements where such obligation is categorized as Level 2 Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the condensed consolidated statements of income;

and (2) we determine fair value of the commodity-indexed revolving over/short inventory financing liability based on the market prices for the consigned crude oil and refined products collateralizing the financing/funding where such obligation is categorized as Level 2 and is presented in the current portion of the Obligation under Supply and Offtake Agreements on our condensed consolidated balance sheets.

Gains (losses) related to the change in fair value are recorded as a component of cost of materials and other in the condensed consolidated statements of income.

Notes to Condensed Consolidated Financial Statements (Unaudited)

For all other financial instruments, the fair value approximates the historical or amortized cost basis comprising our carrying value and therefore are not included in the table below.

The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):

March 31, 2021

June 30, 2021

Level 1 Level 2 Level 3 Total

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Net assets (liabilities) $ — $ ( 600.6 ) $ — $ ( 600.6 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

December 31, 2020

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This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists.

As of March 31, 2021 and December 31, 2020, $( 1.8 ) million and $ 14.8 million, respectively, of cash (obligation) collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

As of June 30, 2021 and December 31, 2020, $ 8.0 million and $ 14.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

See Note 9 for further information regarding derivative instruments.

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2021-0297-JTL, was filed in the Court of Chancery of the State of Delaware.

The complaint asserts claims arising out of the Company's response to the plaintiff's demand to inspect certain books and records of the Company purportedly pursuant to Section 220 of the Delaware General Corporation Law.

The complaint seeks

Notes to Condensed Consolidated Financial Statements (Unaudited)

an order from the court compelling the Company to provide certain books and records to the plaintiff for purposes of inspection and copying.

The complaint asserted claims arising out of the Company's response to the plaintiff's demand to inspect certain books and records of the Company purportedly pursuant to Section 220 of the Delaware General Corporation Law.

The matter was dismissed on May 13, 2021 by the parties.

One of our Alon subsidiaries was the defendant in a legal action related to an easement dispute arising from a purchase of property that occurred in October 2013.

In June 2019, the court found in favor of the plaintiffs and assessed damages against such subsidiary, which were reduced in the fourth quarter of 2019 to $ 6.4 million.

Such amount is included as of March 31, 2021 and December 31, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Such amount is included as of June 30, 2021 and December 31, 2020 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

The matter is currently under appeal.

On June 19, 2017, the Arkansas Teacher Retirement System filed a lawsuit in the Delaware Court of Chancery (Arkansas Teacher Retirement System v.

Alon USA Energy, Inc., et al., Case No.

2017-0453), asserting claims for breach of fiduciary duty in connection with the business combination of Delek US Holdings, Inc.

and Alon USA Energy, Inc.

Following a mediation, the parties to the litigation have agreed to a settlement and release of all claims of the plaintiff class in exchange for the defendants' agreement to pay $ 44.8 million into a settlement fund, of which our insurance carriers agreed to fund approximately $ 42.5 million under the applicable insurance policies and pursuant to varying limits and limitations.

The settlement, in which the Company and other defendants expressly deny all assertions of wrongdoing or fault, is subject to approval by the court after notice and a fairness hearing, which is scheduled for October 29, 2021.

In addition to the $ 2.3 million of the settlement that is not covered by insurance, we have accrued $ 4.2 million as estimated unpaid and remaining legal fees, for a total accrual of approximately $ 6.5 million as of June 30, 2021.

Such amount is included as of June 30, 2021 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Self-insurance

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While it is often difficult to quantify future environmental or safety related expenditures, we anticipate that continuing capital investments and changes in operating procedures will be required for the foreseeable future to comply with existing and new requirements, as well as evolving interpretations and more strict enforcement of existing laws and regulations.

As of March 31, 2021, we have recorded an environmental liability of approximately $ 112.1 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

As of June 30, 2021, we have recorded an environmental liability of approximately $ 112.0 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

This liability includes estimated costs for ongoing investigation and remediation efforts for known contamination of soil and groundwater.

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In the future, we could be required to extend the expected remediation period or undertake additional investigations of our refineries, pipelines and terminal facilities, which could result in the recognition of additional remediation liabilities.

We are also subject to various regulatory requirements related to carbon emissions and the compliance requirements to remit environmental credit obligations due to the EPA or other regulatory agencies, the most significant of which relates to the RINs Obligation subject to the EPA’s RFS-2 regulations.

8 Financial Statements and Supplementary Data, of our December 31, 2020 Annual Report on Form 10-K).

The RFS-2 regulations are highly complex and evolving, requiring us to periodically update our compliance systems.

As part of our on-going monitoring and compliance efforts, on an annual basis we engage a third party to perform procedures to review our RINs inventory, processes and compliance.

The results of such procedures could include procedural findings but may also include findings regarding the usage of RINs to meet past obligations, the treatment of exported RINs, and the propriety of RINs on-hand.

Based on management’s current review, we have determined that there will likely be adjustments in future periods to current RINs inventory which (to the extent they are valued) offset our RINs Obligation.

The results of such procedures may include procedural findings but may also include findings regarding the usage of RINs to meet past obligations, the treatment of exported RINs, and the propriety of RINs on-hand and related adjustments to our RINs inventory, which (to the extent they are valued) offset our RINs Obligation.

Such adjustments may also require communication with the EPA if they involve reportable non-compliance which could lead to the assessment of penalties.

The total amount of exposure is not yet determinable, but based on management’s analysis of potential exposure, it is not expected to be material in relation to our total RINs Obligation.

Based on management’s review which was completed during the second quarter 2021, we recorded a RINs inventory true-up adjustment during the three and six months ended June 30, 2021 totaling $( 12.3 ) million which increased our recorded RINs Obligation.

We have also self-reported our related instances of non-compliance to the EPA, and while we cannot yet estimate the extent of penalties that may be assessed, it is not expected to be material in relation to our total RINs Obligation.

Other Losses and Contingencies

Delek maintains property damage insurance policies which have varying deductibles.

Delek also maintains business interruption insurance policies, with varying coverage limits and waiting periods.

Covered losses in excess of the deductible and outside of the waiting period will be recoverable under the property and business interruption insurance policies.

El Dorado Refinery Fire

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Six employees were injured in the fire, which is currently being investigated by the Occupational Safety and Health Administration.

The facility was in the process of undergoing turnaround activity, so there were no operational disruptions as a result of the fire.

During the three months ended March 31, 2021, we incurred workers'

Contrary to initial assessments, and despite occurring during the

Notes to Condensed Consolidated Financial Statements (Unaudited)

compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of $ 1.0 million in the three months ended March 31, 2021 due to property damaged in the fire.

Work to determine the full extent of losses and potential insurance claims continues and will continue until all the affected equipment and processes are brought back online and final testing can be completed.

The extent of any incremental losses is not yet determinable and may be subject to insurance recoveries.

Delek maintains property damage insurance policies which have an associated deductible of $ 5.0 million for the El Dorado refinery.

Covered losses in excess of the $ 5.0 million deductible will be recoverable under the property insurance policies.

early stages of turnaround activity, the facility did suffer operational disruptions as a result of the fire.

During the six months ended June 30, 2021, we incurred workers' compensation losses of $ 3.8 million associated with the fire, which is included in operating expenses in the accompanying condensed consolidated statements of income.

Additionally, we recognized accelerated depreciation of $ 1.0 million in the six months ended June 30, 2021 due to property damaged in the fire, and we continue to incur repair costs that may be recoverable under property and casualty insurance polices.

Work to determine the full extent of covered business interruption and property and casualty losses and potential insurance claims is ongoing and may result in the future recognition of insurance recoveries.

The extent of any incremental losses is not yet determinable and may also be subject to insurance recoveries.

Winter Storm Uri

During February 2021, the Company experienced a severe weather event ("Winter Storm Uri") which temporarily impacted operations at all of our refineries.

Due to the extreme freezing conditions, we experienced reduced throughputs at our refineries as there was a disruption in the crude supply, as well as damages to various units at our refineries requiring additional operating and capital expenditures.

The majority of our losses related to Winter Storm Uri resulted from the operational disruptions and related lost profit which are not accruable under ASC 450, Contingencies, but which may be covered under our business interruption insurance policies.

Work to determine the full extent of covered business interruption losses, as well as any property and casualty losses, and potential insurance claims is ongoing and may result in the future recognition of insurance recoveries.

The extent of any incremental losses is not yet determinable and may also be subject to insurance recoveries.

Crude Oil and Other Releases

We have experienced several crude oil and other releases involving our assets.

There were no material releases that occurred during the three months ended March 31, 2021.

There were no material releases that occurred during the six months ended June 30, 2021.

For releases that occurred in prior years, we have received regulatory closure or a majority of the cleanup and remediation efforts are substantially complete.

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Letters of Credit

As of March 31, 2021, we had in place letters of credit totaling approximately $ 314.6 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at March 31, 2021.

As of June 30, 2021, we had in place letters of credit totaling approximately $ 305.9 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at June 30, 2021.

Note 12 - Income Taxes

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three months ended March 31, 2021 and March 31, 2020.

Our effective tax rate was 12.0 % and 21.3 % for the three months ended March 31, 2021 and 2020, respectively.

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2021 and June 30, 2020.

Our effective tax rate was 38.8 % and 26.3 % for the three and six months ended June 30, 2021, respectively, and ( 57.3 )% and 36.3 % for the three and six months ended June 30, 2020, respectively.

The difference between the effective tax rate and the statutory rate is generally attributable to permanent differences and discrete items.

The change in our effective tax rate for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 was primarily due to the first quarter 2020 reversal of a valuation allowance for deferred tax assets in partnership investments due to changes in the future realizability of deferred tax basis differences, change in state income tax footprint for separate state jurisdictions and changes in certain state income tax apportionment rates.

The change in our effective tax rate for the three and six months ended June 30, 2021 as compared to the three and six months ended June 30, 2020 was primarily due to reversal of a valuation allowance for deferred tax assets in partnership investments and federal net operating loss carryback to a prior 35% tax rate year recorded as discrete adjustments during the first and second quarters of 2020 coupled with the impact of changes in the second quarter estimated annual effective tax rate applied to year-to date loss for the six months ended June 30, 2021 and June 30, 2020.

As of December 31, 2020, we recorded a current income tax receivable of $ 135.6 million and a non-current tax receivable of $ 20.6 million, related to the federal net operating loss carryback as allowed per the Coronavirus Aid Relief, and Economic Security Act (the "CARES Act") which was enacted in March 2020.

The full amount of this federal income tax receivable, totaling $ 156.2 million, was received in July and August of 2021.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 13 - Related Party Transactions

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Transactions with our related parties were as follows for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

$ 19.2 $ 22.2 $ 29.6 $ 29.9

Cost of materials and other (2)

$ 9.9 $ 11.4 $ 25.0 $ 20.5

(1) Consists primarily of asphalt sales which are recorded in corporate, other and eliminations segment.

(2) Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 14 - Other Current Assets and Liabilities

The detail of other current assets is as follows (in millions):

Other Current Assets March 31, 2021 December 31, 2020

Other Current Assets June 30, 2021 December 31, 2020

Income and other tax receivables $ 146.7 $ 142.0

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The detail of accrued expenses and other current liabilities is as follows (in millions):

Accrued Expenses and Other Current Liabilities March 31, 2021 December 31, 2020

Accrued Expenses and Other Current Liabilities June 30, 2021 December 31, 2020

Product financing agreements $ 358.8 $ 198.0

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2016 Long-Term Incentive Plan that increased the number of shares of common stock available for issuance under this plan by 3,215,000 shares to 14,235,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 4.5 million and $ 5.8 million for the three months ended March 31, 2021 and 2020, respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 5.7 million and $ 10.1 million for the three and six months ended June 30, 2021, respectively, and $ 5.0 million and $ 10.9 million for the three and six months ended June 30, 2020, respectively.

These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

As of March 31, 2021, there was $ 37.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.6 years.

We issued net shares of common stock of 93,856 and 102,895 as a result of exercised or vested equity-based awards during the three months ended March 31, 2021 and 2020, respectively.

These amounts are net of 58,851 and 61,505 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021, there was $ 45.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.7 years.

Notes to Condensed Consolidated Financial Statements (Unaudited)

We issued net shares of common stock of 186,937 and 280,793 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2021, respectively, and 143,044 and 246,463 for the three and six months ended June 30, 2020, respectively.

These amounts are net of 88,478 and 147,329 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and six months ended June 30, 2021, and 68,944 and 130,449 for the three and six months ended June 30, 2020, respectively

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

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The LTIP is administered by the Conflicts Committee of the board of directors of Delek Logistics' general partner.

On June 9, 2021, the Delek Logistics GP, LLC board of directors amended the LTIP and increased the number of common units representing limited partner interests in Delek Logistics (the "Common Units") authorized for issuance under this plan by 300,000 Common Units to 912,207 Common Units.

The term of the LTIP was also extended to June 9, 2031.

Delek US Holdings, Inc.

Employee Stock Purchase Plan

On June 2, 2021, the Company's board of directors adopted the Delek US Holdings, Inc.

Employee Stock Purchase Plan (the "ESPP").

The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the U.S.

Internal Revenue Code of 1986.

The Company authorized the issuance of 2,000,000 shares of common stock under the ESPP.

On each purchase date, eligible employees (as defined in the ESPP) can purchase the Company's stock at a price per share equal to 85.0 % of the closing price of the Company's common stock on the exercise date, but no less than par value.

There are four offering periods of three months during each fiscal year, beginning each January 1st, April 1st, July 1st, and October 1st.

No shares of common stock were issued under the ESPP as of June 30, 2021.

Note 16 - Shareholders' Equity

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We have elected to suspend dividends beginning in the fourth quarter of 2020 in order to conserve capital.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Repurchase Program

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The repurchase program does not obligate us to acquire any particular amount of stock and does not expire.

During the three months ended March 31, 2020, 58,713 shares of our common stock were repurchased for a total of $ 1.9 million.

No repurchases of our common stock were made in the three months ended March 31, 2021.

As of March 31, 2021, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

In the second quarter of 2020, we elected to suspend the share repurchase program.

During the six months ended June 30, 2020, 58,713 shares of our common stock were repurchased for a total of $ 1.9 million;

none of which were repurchased during the second quarter of 2020.

No repurchases of our common stock were made in the three and six months ended June 30, 2021.

As of June 30, 2021, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

Stockholder Rights Plan

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Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate and equipment to third parties.

Notes to Condensed Consolidated Financial Statements (Unaudited)

rent or sublease certain real estate and equipment to third parties.

Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment.

As of March 31, 2021, $ 26.0 million of our net property, plant, and equipment balance is subject to an operating lease.

As of June 30, 2021, $ 25.5 million of our net property, plant, and equipment balance is subject to an operating lease.

This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants.

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The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2021 2020 2021 2020

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Short-term lease costs (2)

11.0 6.1 20.5 13.7

Sublease income ( 1.9 ) ( 2.0 ) ( 3.8 ) ( 3.9 )

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Leased assets obtained in exchange for new financing lease liabilities $ 0.2 $ — $ 12.4 $ —

March 31, 2021

June 30, 2021 June 30, 2020

Weighted-average remaining lease term (years) operating leases 4.9 6.4

Weighted-average remaining lease term (years) financing leases 7.7

Weighted-average remaining lease term (years) financing leases 7.5 N/A

Weighted-average discount rate operating leases (3)

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(3) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC 842 .

Note 18 - Subsequent Events

In July and August 2021, we received a total of $ 156.2 million in federal income tax refunds related to net operating loss carryback provisions which were enacted under the CARES Act.

See Note 12 for additional information.

Management's Discussion and Analysis

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements