What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 368 added, 430 removed, 744 unchanged (52% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021 As Adjusted (1)

Current assets:

24 unchanged sentences

Long-term debt, net of current portion 2,130.7 2,125.8

Obligation under Supply and Offtake Agreements 329.8 224.9

Environmental liabilities, net of current portion 109.2 109.5

6 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, 91,700,464 shares and 91,356,868 shares issued at September 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 88,320,612 shares and 91,772,080 shares issued at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,156.0 1,206.5

Accumulated other comprehensive loss ( 3.9 ) ( 3.8 )

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

Treasury stock, 17,575,527 shares, at cost, as of March 31, 2022 and December 31, 2021

( 694.1 ) ( 694.1 )

3 unchanged sentences

Total liabilities and stockholders’ equity $ 7,946.7 $ 6,812.6

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

2022 As Adjusted (1)

Net revenues $ 4,459.1 $ 2,392.2

10 unchanged sentences

Operating income (loss) 46.7 ( 47.4 )

Interest expense 37.7 31.9 100.5 98.0

Interest income ( 0.2 ) ( 0.9 ) ( 0.5 ) ( 3.1 )

Interest expense, net 38.4 29.4

Income from equity method investments ( 10.9 ) ( 4.8 )

Loss (gain) on sale of non-operating refinery — 0.1 — ( 56.8 )

Other income, net ( 21.8 ) ( 1.0 ) ( 16.0 ) ( 3.4 )

Other expense (income), net 1.3 ( 1.0 )

Total non-operating expense, net 28.8 23.6

6 unchanged sentences

Diluted income (loss) per share $ 0.09 $ ( 0.95 )

Dividends declared per common share outstanding $ — $ 0.31 $ — $ 0.93

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

See accompanying notes to condensed consolidated financial statements

1 unchanged sentence

Delek US Holdings, Inc.

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

(In millions, except share and per share data)

Three Months Ended September 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 June 30, 2021

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

Net income — — — — 18.1 — — 8.8 26.9

Distributions to non-controlling interests — — — — — — — ( 8.2 ) ( 8.2 )

Equity-based compensation expense — — 6.8 — — — — 0.1 6.9

Taxes paid due to the net settlement of equity-based compensation — — ( 0.4 ) — — — — — ( 0.4 )

Exercise of equity-based awards 62,803 — — — — — — — —

Other — — 0.2 — — — — ( 0.2 ) —

Balance at September 30, 2021

91,700,464 $ 0.9 $ 1,199.2 $ ( 7.4 ) $ 360.1 ( 17,575,527 ) $ ( 694.1 ) $ 118.9 $ 977.6

Three Months Ended September 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 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

Net (loss) income — — — — ( 88.1 ) — — 11.2 ( 76.9 )

Other comprehensive loss related to commodity contracts, net — — — ( 0.5 ) — — — — ( 0.5 )

Common stock dividends ($ 0.31 per share)

— — — — ( 23.0 ) — — — ( 23.0 )

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

Equity-based compensation expense — — 6.7 — — — — — 6.7

Repurchases of non-controlling interests — — ( 23.5 ) — — — — 0.4 ( 23.1 )

Impact from IDR Simplification transaction of Delek Logistics LP — — 37.2 — — — — ( 50.8 ) ( 13.6 )

Taxes paid due to the net settlement of equity-based compensation — — ( 0.4 ) — — — — — ( 0.4 )

Exercise of equity-based awards 68,265 — — — — — — — —

Balance at September 30, 2020

91,301,229 $ 0.9 $ 1,180.1 $ — $ 815.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.1 $ 1,420.3

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

Three Months Ended

2022 As Adjusted (1)

Net income (loss) $ 14.8 $ ( 62.7 )

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Comprehensive loss on commodity contracts designated as cash flow hedges, net of taxes — ( 0.2 )

Other loss , net of taxes ( 0.1 ) —

Total other comprehensive loss ( 0.1 ) ( 0.2 )

Comprehensive income (loss) 14.7 ( 62.9 )

Comprehensive income attributable to non-controlling interest 8.2 7.3

Comprehensive income (loss) attributable to Delek $ 6.5 $ ( 70.2 )

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

See accompanying notes to condensed consolidated financial statements

Financial Statements

2 unchanged sentences

(In millions, except share and per share data)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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 December 31, 2021, As Adjusted (1)

91,772,080 $ 0.9 $ 1,206.5 $ ( 3.8 ) $ 384.7 ( 17,575,527 ) $ ( 694.1 ) $ 119.8 $ 1,014.0

Net (loss) income — — — — ( 161.6 ) — — 24.7 ( 136.9 )

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

Net income — — — — 6.6 — — 8.2 14.8

Distributions to non-controlling interests — — — — — — — ( 8.7 ) ( 8.7 )

Equity-based compensation expense — — 5.3 — — — — 0.1 5.4

Sale of Delek Logistic common limited partner units, net — — 8.5 — — — — 5.1 13.6

Purchase of Delek common stock from IEP Energy Holding LLC ( 3,497,268 ) — ( 64.0 ) — — — — — ( 64.0 )

Taxes paid due to the net settlement of equity-based compensation — — ( 0.3 ) — — — — — ( 0.3 )

1 unchanged sentence

Other — — — ( 0.1 ) — — — — ( 0.1 )

Balance at September 30, 2021

Balance at March 31, 2022

88,320,612 $ 0.9 $ 1,156.0 $ ( 3.9 ) $ 391.3 ( 17,575,527 ) $ ( 694.1 ) $ 124.5 $ 974.7

Nine Months Ended September 30, 2020

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

Three Months Ended March 31, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings As Adjusted (1)

Treasury Stock Non-Controlling Interest in Subsidiaries Total Stockholders' Equity

As Adjusted (1)

Shares Amount Shares Amount

1 unchanged sentence

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

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

Cumulative effect of change in accounting method for certain inventory from LIFO to FIFO, net — — — — ( 8.7 ) — — — ( 8.7 )

Net (loss) income — — — — ( 70.0 ) — — 7.3 ( 62.7 )

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

Common stock dividends ($ 0.93 per share)

— — — — ( 69.0 ) — — — ( 69.0 )

Distribution to non-controlling interest — — — — — — — ( 8.0 ) ( 8.0 )

Equity-based compensation expense — — 4.6 — — — — — 4.6

Repurchase of common stock — — — — — ( 58,713 ) ( 1.9 ) — ( 1.9 )

Repurchases of non-controlling interests — — ( 24.3 ) — — — — ( 4.6 ) ( 28.9 )

Impact from IDR Simplification transaction of Delek Logistics LP — — 37.2 — — — — ( 50.8 ) ( 13.6 )

Taxes paid due to the net settlement of equity-based compensation — — ( 1.1 ) — — — — — ( 1.1 )

1 unchanged sentence

Other — — — — ( 0.2 ) — — — ( 0.2 )

Balance at September 30, 2020

Balance at March 31, 2021, As Adjusted (1)

91,450,724 $ 0.9 $ 1,188.6 $ ( 7.4 ) $ 443.1 ( 17,575,527 ) $ ( 694.1 ) $ 117.7 $ 1,048.8

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

See accompanying notes to condensed consolidated financial statements

3 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 As Adjusted (1)

Cash flows from operating activities:

Net loss $ ( 136.9 ) $ ( 285.4 )

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

Net income (loss) $ 14.8 $ ( 62.7 )

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

Depreciation and amortization 68.3 68.5

4 unchanged sentences

Non-cash lower of cost or market/net realizable value adjustment ( 8.5 ) 0.8

Gain on sale of non-operating refinery — ( 56.8 )

Equity-based compensation expense 5.4 4.6

Other 4.7 3.9

13 unchanged sentences

Proceeds from sale of property, plant and equipment 1.0 0.2

Proceeds from sale of non-operating refinery — 39.9

Insurance proceeds 0.1 —

3 unchanged sentences

Payments on long-term revolvers ( 409.0 ) ( 568.1 )

Proceeds from term debt 400.0 185.0

Payments on term debt ( 13.3 ) ( 23.3 )

2 unchanged sentences

Taxes paid due to the net settlement of equity-based compensation ( 0.3 ) ( 1.1 )

Repurchase of common stock — ( 1.9 )

Repurchase of non-controlling interest — ( 28.9 )

Distribution to non-controlling interest ( 8.7 ) ( 8.0 )

Impact of IDR Simplification transaction of Delek Logistics LP — ( 2.1 )

Dividends paid — ( 69.0 )

Deferred financing costs paid ( 6.2 ) ( 0.7 )

Net cash (used in) provided by financing activities ( 23.9 ) 415.4

Net increase (decrease) in cash and cash equivalents 43.1 ( 147.4 )

Proceeds from sale of Delek Logistics LP common limited partner units 16.4 —

Purchase of Delek common stock from IEP Energy Holding LLC ( 64.0 ) —

Net cash provided by financing activities 1.0 86.4

Net (decrease) increase in cash and cash equivalents ( 2.4 ) 6.0

Cash and cash equivalents at the beginning of the period 856.5 787.5

3 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 As Adjusted (1)

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest, net of capitalized interest of $ 0.4 million and $ 0.2 million in the 2021 and 2020 periods, respectively

Interest, net of capitalized interest of $ 0.4 million in both the 2022 and 2021 periods

$ 24.4 $ 142.1

1 unchanged sentence

Non-cash investing activities:

Decrease in accrued capital expenditures $ ( 1.5 ) $ ( 33.9 )

Increase in accrued capital expenditures $ 3.4 $ 18.8

Non-cash financing activities:

Non-cash lease liability arising from obtaining right of use assets during the period $ 1.5 $ 19.6

See accompanying notes to condensed consolidated financial statements

Financial Statements

Delek US Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net income (loss) $ 26.9 $ ( 76.9 ) $ ( 136.9 ) $ ( 285.4 )

Other comprehensive income (loss):

Commodity contracts designated as cash flow hedges:

Net loss related to commodity cash flow hedges — ( 0.6 ) ( 0.2 ) ( 0.3 )

Income tax benefit — ( 0.1 ) — ( 0.1 )

Net comprehensive loss on commodity contracts designated as cash flow hedges — ( 0.5 ) ( 0.2 ) ( 0.2 )

Other (loss) income, net of taxes — — — 0.1

Total other comprehensive loss — ( 0.5 ) ( 0.2 ) ( 0.1 )

Comprehensive income (loss) 26.9 ( 77.4 ) ( 137.1 ) ( 285.5 )

Comprehensive income attributable to non-controlling interest 8.8 11.2 24.7 29.4

Comprehensive income (loss) attributable to Delek $ 18.1 $ ( 88.6 ) $ ( 161.8 ) $ ( 314.9 )

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

See accompanying notes to condensed consolidated financial statements

9 unchanged sentences

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States ("U.S.") Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted, although management believes that the disclosures herein are adequate to make the financial information presented not misleading.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 1, 2021 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC.

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP applied on a consistent basis with those of the annual audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 25, 2022 (the "Annual Report on Form 10-K") and in accordance with the rules and regulations of the SEC.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K.

10 unchanged sentences

With the exception of the policy updates below, there have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Risks and Uncertainties Arising from the COVID-19 Pandemic

economic activity continued on a recovery trend during the quarter ended September 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 nine months ended September 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 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 nine months ended September 30, 2021.

Risks and Uncertainties Related to the COVID-19 Pandemic

During the quarter ended March 31, 2022, the economic environment in which we operate continued to improve as a result of the widespread availability of vaccines and testing in the U.S.

over recent months which, in turn, has contributed to return to work, return to schools, and increased travel, with a corresponding increase in the demand for vehicle motor fuel and jet fuel.

While we continue to face uncertainties around the COVID-19 Pandemic in terms of new variants, these stabilization trends as well as other factors impacting demand for our products, such as the global supply constraints caused by the military conflict between Russia and the Ukraine have mitigated the risks that remaining Pandemic-related uncertainties could have a material adverse impact on our financial position or results of operations.

While these remaining uncertainties did not have a material impact on the preparation of our unaudited financial statements as of and for the three months ended March 31, 2022, to the extent these uncertainties were identified and were believed to have had a material impact on our prior year 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, 2022.

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

3 unchanged sentences

• The evaluation of derivatives and hedge accounting for counterparty risk and changes in forecasted transactions, as provided for under GAAP;

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, for first-in, first-out (“FIFO”), and the lower of cost or market analysis, for last-in, first-out ("LIFO"), pursuant to GAAP;

Notes to Condensed Consolidated Financial Statements (Unaudited)

• The evaluation of inventory valuation allowances that may be warranted under the lower of cost or net realizable value analysis, for first-in, first-out (“FIFO”) costing method, pursuant to GAAP;

• The consideration of debt modifications and/or covenant requirements, as applicable;

2 unchanged sentences

• The interim evaluation of our ability to continue as a going concern.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Change in Accounting Principle

As of January 1, 2022, we changed our method for accounting for inventory held at the Tyler Refinery to the FIFO costing method from the last-in, first-out ("LIFO") costing method, which will conform the Company’s refining inventory to a single method of accounting.

Total inventories accounted for using LIFO, prior to the accounting method change, comprised 28.0 % of the Company’s total inventories as of December 31, 2021.

This change in accounting method is preferable because it provides better consistency across our refineries and improves transparency, and results in recognition that better reflects the physical flow of inventory and more accurately reflects the current value of inventory.

The effects of this change have been retrospectively applied to all periods presented with a cumulative effect adjustment reflected in the January 1, 2021 beginning retained earnings.

See Note 6 - Inventory for additional information.

Reclassifications

1 unchanged sentence

New Accounting Pronouncements Adopted During 2022

ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

In January 2020, the Financial Account Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-01 which is intended to clarify interactions between the guidance to account for certain equity securities under Topics 321, 323 and 815, and improve current GAAP by reducing diversity in practice and increasing comparability of accounting.

ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity.

The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021.

We adopted this guidance on January 1, 2022 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2019-12, Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within Accounting Standards Codification ("ASC") 740, Income Taxes (“ASC 740”) and clarify certain aspects of the current guidance to promote consistency among reporting entities.

The pronouncement is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2020.

We adopted this guidance on January 1, 2021 and the adoption did not have a material impact on our business, financial condition or results of operations.

ASU 2018-14, Compensation - Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued guidance related to disclosure requirements for defined benefit plans.

The pronouncement eliminates, modifies and adds disclosure requirements for defined benefit plans.

The pronouncement is effective for fiscal years beginning after December 15, 2020.

We adopted this guidance on January 1, 2021 and the adoption did not have a material impact on our business, financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted

ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued ASU 2020-06, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity's own equity.

The guidance allows for either full retrospective adoption or modified retrospective adoption.

The pronouncement is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, and early adoption is permitted.

The Company is evaluating the impact of this guidance but does not currently expect adopting this new guidance will have a material impact on its condensed consolidated financial statements and related disclosures.

ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)

2 unchanged sentences

The Company is currently evaluating the impact this guidance may have on its condensed consolidated financial statements and related disclosures.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 2 - Segment Data

12 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 September 30, 2021, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of March 31, 2022, including the following:

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

2 unchanged sentences

• 74,000 bpd Krotz Springs, Louisiana refinery (the "Krotz Springs refinery").

Notes to Condensed Consolidated Financial Statements (Unaudited)

The refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi.

4 unchanged sentences

On May 7, 2020, we sold our equity interests in Alon Bakersfield Property, Inc., an indirect wholly-owned subsidiary that owned our non-operating refinery located in Bakersfield, California, to a subsidiary of Global Clean Energy Holdings, Inc.

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

As a result of this sale, we recognized a gain of $ 56.8 million, 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 September 30, 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 March 31, 2022.

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

6 unchanged sentences

Retail Segment

Our retail segment consists of 250 owned and leased convenience store sites as of September 30, 2021, located primarily in Central and West Texas and New Mexico.

Our retail segment consists of 248 owned and leased convenience store sites as of March 31, 2022, located primarily in 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

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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.

In November 2018, we terminated the license agreement with 7-Eleven, Inc.

7 unchanged sentences

• logistics segment crude transportation, terminalling and storage fee revenue from our refining segment for the utilization of pipeline, terminal and storage assets.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Business Segment Operating Performance

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

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Refining Logistics Retail Corporate,

7 unchanged sentences

Segment contribution margin $ 96.9 $ 62.3 $ 13.8 $ ( 33.3 ) 139.7

Income from equity method investments 0.2 7.0 — 3.7

Segment contribution margin and income (loss) from equity method investments $ 97.1 $ 69.3 $ 13.8 $ ( 29.6 )

Depreciation and amortization $ 52.8 $ 10.4 $ 3.5 $ 1.6 68.3

3 unchanged sentences

Capital spending (excluding business combinations) $ 14.3 $ 9.1 $ 3.0 $ 6.5 $ 32.9

Three Months Ended September 30, 2020

Refining Logistics Retail Corporate,

Three Months Ended March 31, 2021

Logistics Retail Corporate,

Other and Eliminations Consolidated (1)

7 unchanged sentences

Segment contribution margin $ 10.4 $ 56.9 $ 16.7 $ ( 19.9 ) 64.1

Income from equity method investments 0.2 4.0 — 0.6

Segment contribution margin and income (loss) from equity method investments $ 10.6 $ 60.9 $ 16.7 $ ( 19.3 )

Depreciation and amortization $ 52.1 $ 10.7 $ 3.2 $ 2.5 68.5

3 unchanged sentences

Capital spending (excluding business combinations) $ 57.8 $ 7.8 $ 0.8 $ 0.6 $ 67.0

$ 0.6 $ 3.2 $ 0.7 $ 0.2 $ 4.7

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Nine Months Ended September 30, 2021

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 6,415.1 $ 202.6 $ 590.3 $ 332.2 $ 7,540.2

Inter-segment fees and revenues 555.3 308.4 — ( 863.7 ) —

Operating costs and expenses:

Cost of materials and other 6,609.9 275.0 466.4 ( 479.9 ) 6,871.4

Operating expenses (excluding depreciation and amortization presented below) 310.2 46.9 67.2 8.9 433.2

Segment contribution margin $ 50.3 $ 189.1 $ 56.7 $ ( 60.5 ) 235.6

Depreciation and amortization $ 149.0 $ 30.9 $ 9.6 $ 6.1 195.6

General and administrative expenses

Other operating income, net ( 4.7 )

Operating loss $ ( 119.7 )

Capital spending (excluding business combinations) $ 133.0 $ 14.6 $ 3.2 $ 10.8 $ 161.6

Nine Months Ended September 30, 2020

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Net revenues (excluding inter-segment fees and revenues)

$ 4,021.9 $ 133.4 $ 521.7 $ 742.6 $ 5,419.6

Inter-segment fees and revenues

346.5 289.9 — ( 636.4 ) —

Operating costs and expenses:

Cost of materials and other 4,314.4 205.9 400.0 144.0 5,064.3

Operating expenses (excluding depreciation and amortization presented below) 302.5 41.5 66.8 11.2 422.0

Segment contribution margin $ ( 248.5 ) $ 175.9 $ 54.9 $ ( 49.0 ) ( 66.7 )

Depreciation and amortization $ 132.3 $ 24.4 $ 9.1 $ 11.6 177.4

General and administrative expenses

Other operating income, net ( 14.6 )

Operating loss $ ( 413.9 )

Capital spending (excluding business combinations) $ 180.9 $ 6.9 $ 8.2 $ 12.0 $ 208.0

Other Segment Information

Total assets by segment were as follows as of September 30, 2021 (in millions):

Total assets by segment were as follows as of March 31, 2022 (in millions):

Refining Logistics Retail Corporate,

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Total assets, excluding inter-segment notes receivable and right of use assets $ 6,570.9 $ 935.3 $ 255.4 $ 185.1 $ 7,946.7

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Property, plant and equipment and accumulated depreciation as of March 31, 2022 and depreciation expense by reporting segment for the three months ended March 31, 2022 are as follows (in millions):

Refining Logistics Retail Corporate,

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Property, plant and equipment, net $ 1,682.7 $ 448.3 $ 108.0 $ 35.0 $ 2,274.0

Depreciation expense for the three months ended September 30, 2021 $ 44.2 $ 10.2 $ 2.8 $ 1.7 $ 58.9

Depreciation expense for the nine months ended September 30, 2021 $ 144.0 $ 30.9 $ 9.0 $ 6.1 $ 190.0

In 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.

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

Depreciation expense for the three months ended March 31, 2022 $ 51.1 $ 10.4 $ 3.3 $ 1.6 $ 66.4

In accordance with Accounting Standards Codification ("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.

There were no indicators of impairment related to our property, plant and equipment as of March 31, 2022 (see Note 1 for further discussion on the impact of the COVID-19 Pandemic).

Note 3 - Earnings (Loss) Per Share

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

Three Months Ended Nine Months Ended

September 30, September 30,

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended

2022 2021 (1)

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Total antidilutive stock-based compensation 3,088,678 3,367,062

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories.

See Note 6 for further discussion.

Note 4 - Delek Logistics

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

As of September 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.

As of March 31, 2022, we owned a 78.9 % interest in Delek Logistics, consisting of 34,311,278 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.

On August 13, 2020, Delek Logistics completed a transaction to eliminate the incentive distribution rights ("IDRs") held by Delek Logistics GP, LLC, the general partner, and convert the economic general partner interest into a non-economic general partner interest in exchange for total consideration consisting of $ 45.0 million cash and 14.0 million newly issued common limited partner units.

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.

On April 14, 2022, Delek Logistics filed a shelf registration statement with the SEC registering for the potential sale, from time to time by Delek Logistics, of up to $ 200.0 million of common limited partner units of Delek Logistics.

On December 20, 2021, Delek commenced a program to sell up to 434,590 common limited partner units representing limited partner interests in Delek Logistics over the next three months in open market transactions conducted pursuant to Rule 144 under the Securities Act of 1933, as amended, and a Rule 10b5-1 trading plan all of which were sold as of March 18, 2022.

For the three months ended March 31, 2022, we sold 385,522 units for gross proceeds of $ 16.4 million;

$ 13.6 million net of taxes.

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 September 30, 2021.

No units were sold as of March 31, 2022.

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.

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The assets of Delek Logistics can only be used to settle its own obligations and its creditors have no recourse to our assets.

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).

September 30, 2021 December 31, 2020

Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are

Notes to Condensed Consolidated Financial Statements (Unaudited)

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, 2022 December 31, 2021

Cash and cash equivalents $ 2.7 $ 4.3

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Total liabilities and deficit $ 935.3 $ 935.1

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.

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).

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.

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.

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.

Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from an investor pursuant to a Common Unit Purchase Agreement between Delek Marketing & Supply, LLC and such investor.

The purchase price of the units amounted to approximately $ 5.0 million.

Note 5 - Equity Method Investments

Wink to Webster Pipeline

On July 30, 2019, we, through our wholly-owned direct subsidiary Delek Energy, entered into a limited liability company agreement (the “LLCA”) and related agreements with multiple joint venture members of Wink to Webster Pipeline LLC (“WWP”).

Pursuant to the LLCA, Delek Energy acquired a 15 % ownership interest in WWP ("WWP Joint Venture").

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).

During the nine months ended September 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").

The WWP Project Financing JV was created for the specific purpose of obtaining financing to fund our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt.

In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15 % ownership interests to the WWP Project Financing JV as collateral for and in service of the related project financing.

In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15 % ownership interests in WWP to the WWP Project Financing JV as collateral for and in service of the related project financing.

Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed under the project financing debt.

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

As of September 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.

On September 30, 2021 WWP made the decision to buy Delek out of the Midland Connector Financing Commitment Agreement which provided an interest-free commitment to fund us up to $ 65.0 million upon completion of a connector to connect the WWP long-haul pipeline to our Big Spring Gathering System, with repayment over 14 years.

The buy-out totaled $ 27.5 million and represented the estimated incremental cost of capital to fund the $ 65.0 million in expenditures over a 14 -year term, and enabled us to recover approximately $ 18.0 million of capital expenditures that we may not have incurred had it not been for the financing commitment, including approximately $ 6.6

As of March 31, 2022, 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 for work contracted with it.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 51.4 million and $ 49.3 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Notes to Condensed Consolidated Financial Statements (Unaudited)

million that was written off during the third quarter.

As a result of the transaction, we recognized $ 20.9 million of other non-operating income in the third quarter, representing the excess over our current period recognized write-offs.

As of September 30, 2021 and December 31, 2020, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 53.9 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 nine months ended September 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 $ 8.8 million and $ 12.9 million for the three and nine months ended September 30, 2021, respectively, and income totaling $ 0.2 million and a loss of $ 1.8 million for the three and nine months ended September 30, 2020, respectively.

addition on the investment, we recognized an income (loss) of $ 2.1 million and $( 0.3 ) million for the three months ended March 31, 2022 and 2021, respectively.

Delek Logistics Investments

In May 2019, Delek Logistics, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P.

(“Plains”) and Red River Pipeline Company LLC (“Red River”).

Pursuant to the Contribution Agreement, DKL Pipeline contributed $ 124.7 million, substantially all of which was financed under the Delek Logistics Credit Facility (as defined in Note 8), to Red River in exchange for a 33 % membership interest in Red River and DKL Pipeline’s admission as a member of Red River (the "Red River Pipeline Joint Venture").

Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas.

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

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

As of September 30, 2021 and December 31, 2020, Delek's investment balance in Red River totaled $ 143.4 million and $ 141.8 million, respectively.

We recognized income on the investment totaling $ 3.9 million and $ 9.9 million and for the three and nine months ended September 30, 2021, respectively, and $ 2.0 million and $ 6.8 million for the three and nine months ended September 30, 2020, respectively.

Delek Logistics has a 33 % membership interest in Red River Pipeline Company LLC (“Red River”), which owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, Texas.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in Red River totaled $ 144.6 million and $ 144.0 million, respectively.

During the three months ended March 31, 2022 and 2021, respectively, we made no capital contributions and $1.4 million in capital contributions based on capital calls received.

We recognized income on the investment totaling $ 5.2 million and $ 2.2 million for the three months ended March 31, 2022 and 2021, 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 September 30, 2021 and December 31, 2020, Delek Logistics' investment balances in these joint ventures totaled $ 108.5 million and $ 111.9 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 3.4 million and $ 8.0 million for the three and nine months ended September 30, 2021, respectively, and $ 2.9 million and $ 10.1 million for the three and nine months ended September 30, 2020, respectively.

As of March 31, 2022 and December 31, 2021, Delek Logistics' investment balances in these joint ventures totaled $ 105.3 million and $ 106.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 1.8 million for both the three months ended March 31, 2022 and 2021.

Other Investments

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

As of September 30, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $ 44.1 million and $ 39.3 million, respectively.

We recognized income on this investment totaling $ 4.2 million and $ 9.0 million for the three and nine months ended September 30, 2021, respectively, and $ 7.5 million and $ 13.0 million for the three and nine months ended September 30, 2020, respectively.

As of March 31, 2022 and December 31, 2021, Delek's investment balance in this joint venture was $ 43.2 million and $ 41.6 million, respectively.

We recognized income on this investment totaling $ 1.6 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, 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 September 30, 2021 and December 31, 2020, Delek Renewables, LLC's investment balance in this joint venture was $ 4.5 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 $ 0.5 million for the three and nine months ended September 30, 2021, respectively, and $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2020, respectively.

As of March 31, 2022 and December 31, 2021, Delek Renewables, LLC's investment balance in this joint venture was $ 3.3 million and $ 3.2 million, respectively, and was accounted for using the equity method.

We recognized income on this investment totaling $ 0.2 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively.

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

Note 6 - Inventory

Crude oil, work in process, refined products, blendstocks and asphalt inventory for all of our operations, excluding the Tyler refinery and merchandise inventory in our retail segment, are stated at the lower of cost determined using FIFO basis or net realizable value.

Cost of all inventory at the Tyler refinery is determined using the LIFO inventory valuation method and inventory is stated at the lower of cost or market.

Crude oil, work in process, refined products, blendstocks and asphalt inventory for all of our operations, excluding merchandise inventory in our retail segment, are stated at the lower of cost determined using FIFO basis or net realizable value.

Retail merchandise inventory consists of cigarettes, beer, convenience merchandise and food service merchandise and is stated at estimated cost as determined by the retail inventory method.

Effective January 1, 2022, we changed our method for valuing the inventory held at the Tyler Refinery to the FIFO inventory valuation method from the LIFO inventory valuation method.

Total inventories accounted for using LIFO, prior to the accounting method change, comprised 28.0 % of the Company’s total inventories as of December 31, 2021.

This change in accounting method is preferable because it provides better consistency across our refineries and improved transparency, and results in recognition that better reflects the physical flow of inventory and more accurately reflects the current value of inventory.

After this change, we no longer utilize the LIFO valuation method and the majority of our inventories are now valued using the FIFO cost method, with the remainder valued using the Retail method for the retail segment inventory.

The effects of this change have been retrospectively applied to all periods presented.

This change resulted in a decrease to retained earnings of $ 8.7 million as of January 1, 2021 in accordance with ASC 250 , Accounting Changes and Error Corrections.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

September 30, 2021 December 31, 2020

The following table presents the components of inventory for each period presented reflecting the accounting method change discussed above:

(In millions):

December 31, 2021

March 31, 2022 As Adjusted (1)

Refinery raw materials and supplies $ 774.1 $ 516.0

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Total inventories $ 1,624.2 $ 1,260.7

At September 30, 2021, we recorded a pre-tax inventory valuation reserve of $ 1.1 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 $( 0.2 ) million and $ 29.9 million for the three and nine months ended September 30, 2021, respectively, and $ 9.5 million and $( 65.6 ) million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, we recorded an immaterial cumulative error correction relating to prior periods to capitalize manufacturing overhead costs that should have been included in refining finished goods totaling $ 21.5 million.

The impact of the balance sheet error correction would not have been material to the prior period financial statements and is not material to total inventory.

Of that amount, $ 14.0 million was recognized as a reduction of operating expenses and $ 7.5 million was recognized as a reduction of depreciation in the refining segment during the three and nine months ended September 30, 2021.

(1) Adjusted to reflect the retrospective change in accounting policy from LIFO to FIFO for certain inventories, as described above.

In addition, certain financial statement line items in our Condensed Consolidated Statement of Income and our Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2021 and our Consolidated Condensed Balance Sheet as of December 31, 2021, were retrospectively adjusted as follows:

Three Months Ended March 31, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

Condensed Consolidated Statements of Income

Cost of materials and other $ 2,205.5 $ ( 32.7 ) $ 2,172.8

Total cost of sales 2,397.7 ( 32.7 ) 2,365.0

Loss before income tax benefit ( 103.7 ) 32.7 ( 71.0 )

Income tax benefit ( 12.4 ) 4.1 ( 8.3 )

Net loss ( 91.3 ) 28.6 ( 62.7 )

Net loss attributable to Delek ( 98.6 ) 28.6 ( 70.0 )

Net loss per share attributable to Delek

Basic $ ( 1.34 ) $ 0.39 $ ( 0.95 )

Diluted $ ( 1.34 ) $ 0.39 $ ( 0.95 )

December 31, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

Condensed Consolidated Balance Sheet

Inventories, net of inventory valuation reserves $ 1,176.1 $ 84.6 $ 1,260.7

Total Assets 6,728.0 84.6 6,812.6

Deferred tax liabilities

196.4 18.1 214.5

Retained Earnings 318.2 66.5 384.7

Total liabilities and stockholders' equity 6,728.0 84.6 6,812.6

Three Months Ended March 31, 2021

(In millions) As Reported (using LIFO) Adjustment As Adjusted (using FIFO)

Condensed Consolidated Statements of Cash Flows

$ ( 91.3 ) $ 28.6 $ ( 62.7 )

Non-cash lower of cost or market/net realizable value adjustment

( 20.4 ) 21.2 0.8

Deferred income taxes 5.1 3.8 8.9

Inventories and other current assets

( 304.2 ) ( 39.4 ) ( 343.6 )

Accounts payable and other current liabilities 524.5 ( 14.2 ) 510.3

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following tables reflect the effect of the change in the accounting principle on the current period Condensed Consolidated Financial Statements:

Three Months Ended March 31, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

Condensed Consolidated Statements of Income

Cost of materials and other $ 4,273.6 $ 4,152.5 $ 121.1

Total cost of sales 4,475.8 4,354.7 121.1

(Loss) income before income tax (benefit) expense ( 103.2 ) 17.9 ( 121.1 )

Income tax (benefit) expense ( 21.2 ) 3.1 ( 24.3 )

Net (loss) income attributable to Delek ( 90.2 ) 6.6 ( 96.8 )

Net (loss) income per share attributable to Delek

Basic $ ( 1.23 ) $ 0.09 $ ( 1.32 )

Diluted $ ( 1.23 ) $ 0.09 $ ( 1.32 )

March 31, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

Condensed Consolidated Balance Sheet

Inventories, net inventory valuation reserves $ 1,449.2 $ 1,624.2 $ ( 175.0 )

Total Assets 7,771.7 7,946.7 ( 175.0 )

Accrued expenses and other current

1,057.0 1,032.3 24.7

Deferred tax liabilities

182.3 218.7 ( 36.4 )

Retained Earnings 228.0 391.3 ( 163.3 )

Total liabilities and stockholders' equity 7,771.7 7,946.7 ( 175.0 )

Three Months Ended March 31, 2022

(In millions) As Computed (using LIFO) As Reported (using FIFO) Effect of Change

Condensed Consolidated Statements of Cash Flows

Net (loss) income

( 82.0 ) $ 14.8 $ ( 96.8 )

Non-cash lower of cost or market/net realizable value adjustment

( 8.0 ) ( 8.5 ) 0.5

Deferred income taxes ( 7.9 ) 10.4 ( 18.3 )

Inventories and other current assets

( 375.3 ) ( 465.2 ) 89.9

Accounts payable and other current liabilities 1,013.3 988.6 24.7

At March 31, 2022, we recorded a pre-tax inventory valuation reserve of $ 0.8 million due to a market price decline below our cost of certain inventory products.

At December 31, 2021, we recorded a pre-tax inventory valuation reserve of $ 9.3 million.

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 $ 8.5 million and $( 0.9 ) million for the three months ended March 31, 2022 and 2021, 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 September 30, 2021 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2022 (1)

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

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The Supply and Offtake Agreements have certain termination provisions, which may include requirements to negotiate with third parties for the assignment to us of certain contracts, commitments and arrangements, including procurement contracts, commitments for the sale of product, and pipeline, terminalling, storage and shipping arrangements.

In January 2020, we amended our three Supply and Offtake Agreements so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") was based on market-indexed prices subject to commodity price risk.

As a result of the amendment, such Baseline Step-Out Liabilities continued to be recorded at fair value under the fair value election provided by ASC 815 and ASC 825, where the fair value now reflected changes in commodity price risk rather than interest rate risk with subsequent changes in fair value being recorded in cost of materials and other.

We recognized a loss in the first quarter of 2020 of $ 1.5 million on the change in fair value resulting from the modification.

In April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022, with J.

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As part of this amendment, there were changes to the underlying market index, annual fee, the crude purchase fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments").

The Baseline Step-Out Liabilities continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825.

The repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825.

The Baseline Step-Out Liabilities have a floating component whose fair value reflects changes to commodity price risk with changes in fair value recorded in cost of materials and other and a fixed component whose fair value reflects changes to interest rate risk with changes in fair value recorded in interest expense.

There was no amendment date change in fair value resulting from the modification.

The Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months.

The Baseline Step-Out Liabilities are reflected as non-current liabilities on our condensed consolidated balance sheet to the extent that they are not contractually due within twelve months.

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

Pursuant to the Periodic Price Adjustments provision in the Supply and Offtake Agreements, the Company may be required to pay down all or a portion of the fixed component of the Baseline Step-Out Liabilities or may receive additional proceeds depending on the change in fair value of the inventory collateral subject to a threshold at certain specified periodic pricing dates (the "Periodic Pricing Dates"), which occur on October 1st and May 1st, annually, not to extend beyond expiration of the Supply and Offtake Agreements.

Additionally, at the Periodic Pricing Dates, if a Periodic Price Adjustment is triggered, the prospective pricing underlying the fixed component of the Baseline Step-Out Liabilities will be adjusted to reflect either the pay-down or the incremental proceeds, accordingly.

On October 1, 2020, the provision was triggered and a paydown amounting to $ 20.8 million was made to J.

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.

Contemporaneous with the payment, J.

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

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 Agreements.

As of September 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.

As of March 31, 2022, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 39.2 million.

Some portion of that amount may become due or payable if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other in the consolidated statements of income.

With respect to the Baseline Step-Out liabilities, we recognized gains (losses) in cost of materials and other attributable to changes in fair value due to commodity-index price totaling $ 148.8 million and $ 62.3 million for the three months ended March 31, 2022 and 2021, respectively.

Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates (in millions):

El Dorado Big Spring Krotz Springs Total

Balances as of September 30, 2021:

Balances as of March 31, 2022:

Baseline Step-Out Liability $ 232.4 $ 97.8 $ 149.1 $ 479.3

Revolving over/short inventory financing liability 101.9 32.8 ( 24.7 ) 110.0

Total Obligations Under Supply and Offtake Agreements 258.3 117.7 102.5 478.5

Current portion 99.0 49.4 0.3 148.7

Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 159.3 $ 68.3 $ 102.2 $ 329.8

Other current receivable for monthly activity true-up $ ( 2.0 ) $ ( 5.5 ) $ ( 4.9 ) $ ( 12.4 )

Total Obligations Under Supply and Offtake Agreements - Current portion $ 334.3 $ 130.6 $ 124.4 $ 589.3

Other payable for monthly activity true-up $ 20.5 $ 3.7 $ 3.3 $ 27.5

El Dorado Big Spring Krotz Springs Total

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Revolving over/short inventory financing liability (receivable) 120.9 41.1 ( 4.9 ) 157.1

Total Obligations Under Supply and Offtake Agreements 208.3 73.2 66.2 347.7

Current portion (1)

102.0 25.3 ( 4.5 ) 122.8

Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 106.3 $ 47.9 $ 70.7 $ 224.9

Other current payable for monthly activity true-up $ 6.6 $ 7.0 $ — $ 13.6

(1) Current portion for Krotz Springs includes $ 1.9 million of current portion of obligations under Supply and Offtake Agreements and $ 6.4 million of current assets presented in our condensed consolidated balance sheet.

The Supply and Offtake Agreements require payments of fixed annual fees which are factored into the interest rate yield under the fair value accounting model.

Total Obligations Under Supply and Offtake Agreements - Current portion $ 280.5 $ 109.5 $ 97.5 $ 487.5

Other (receivable) payable for monthly activity true-up $ ( 2.7 ) $ 1.0 $ 7.0 $ 5.3

The Supply and Offtake Agreements require payments of fixed annual fees which are factored into the interest rate yield under the fair value accounting model and recorded in interest expense.

Recurring cash fees paid during the periods presented were as follows (in millions):

El Dorado Big Spring Krotz Springs Total

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

$ 2.5 $ 0.9 $ 1.0 $ 4.4

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

$ 1.5 $ 0.7 $ 1.1 $ 3.3

Recurring cash fees paid during the nine months ended September 30, 2021

$ 7.7 $ 2.4 $ 3.2 $ 13.3

Recurring cash fees paid during the nine months ended September 30, 2020

$ 7.4 $ 2.8 $ 3.1 $ 13.3

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.

Total interest expense incurred during the periods presented was as follows (in millions):

El Dorado Big Spring Krotz Springs Total

Interest expense for the three months ended September 30, 2021

$ 2.5 $ 0.9 $ 1.0 $ 4.4

Interest expense for the three months ended September 30, 2020

$ 1.5 $ 0.7 $ 1.1 $ 3.3

Interest expense for the nine months ended September 30, 2021

Recurring cash fees paid during the three months ended March 31, 2022

$ 2.9 $ 1.0 $ 1.1 $ 5.0

Interest expense for the nine months ended September 30, 2020

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

$ 2.4 $ 0.7 $ 1.1 $ 4.2

Reflected in interest expense are losses totaling $ 3.9 million for the nine months ended September 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 nine months ended September 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 September 30, 2021

Letters of credit outstanding as of March 31, 2022

Letters of credit outstanding as of December 31, 2021

$ 195.0 $ 10.0

Note 8 - Long-Term Obligations and Notes Payable

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Revolving Credit Facility $ — $ —

6 unchanged sentences

Reliant Bank Revolver 50.0 50.0

Promissory Notes — 20.0

2,212.8 2,218.0

1 unchanged sentence

$ 2,130.7 $ 2,125.8

(1) Net of deferred financing costs of $ 2.4 million and $ 2.9 million and debt discount of $ 19.2 million and $ 23.3 million at September 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 September 30, 2021 and December 31, 2020, respectively.

(3) Net of deferred financing costs of $ 2.7 million and $ 3.3 million and debt discount of $ 0.9 million and $ 1.0 million at September 30, 2021 and December 31, 2020, respectively.

(4) Net of deferred financing costs of $ 5.9 million at September 30, 2021.

(1) Net of deferred financing costs of $ 2.0 million and $ 2.2 million and debt discount of $ 16.5 million and $ 17.8 million at March 31, 2022 and December 31, 2021, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.1 million and debt discount of $ 0.1 million and $ 0.1 million at March 31, 2022 and December 31, 2021, respectively.

(3) Net of deferred financing costs of $ 2.3 million and $ 2.5 million and debt discount of $ 0.7 million and $ 0.8 million at March 31, 2022 and December 31, 2021, respectively.

(4) Net of deferred financing costs of $ 5.5 million and $ 5.7 million at March 31, 2022 and December 31, 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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The Revolving Credit Facility permits borrowings in Canadian dollars of up to $ 50.0 million.

The Revolving Credit Facility also permits the issuance of letters of credit of up to $ 400.0 million, including letters of credit denominated in Canadian dollars of up to $ 10.0 million.

Effective March 21, 2022, the limits for the issuance of letters of credit for the Revolving Credit Facility increased from of up to $ 400.0 million to up to $ 500.0 million, including letters of credit denominated in Canadian dollars of up to $ 10.0 million.

Delek may designate restricted subsidiaries as additional borrowers under the Revolving Credit Facility.

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The applicable margin for Revolving Credit Facility borrowings is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25 % to 0.75 % per annum with respect to base rate borrowings and from 1.25 % to 1.75 % per annum with respect to LIBOR and CDOR borrowings.

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments

Notes to Condensed Consolidated Financial Statements (Unaudited)

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 September 30, 2021, the unused line fee was 0.375 % per annum.

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 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, 2022, the unused line fee was 0.375 % per annum.

Maturity and Repayments

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Additional Information

At September 30, 2021, the borrowing rate for base rate loans 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 $ 278.3 million as of September 30, 2021 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of September 30, 2021, were approximately $ 721.7 million.

At September 30, 2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 2.98 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,263.3 million.

As of September 30, 2021, the effective interest rate related to the Term Loan Credit Facility was 3.51 %.

At March 31, 2022, the borrowing rate for base rate loans under the Revolving Credit Facility was 3.75 % and there were no principal amounts outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 362.5 million as of March 31, 2022 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of March 31, 2022, were approximately $ 637.5 million.

At March 31, 2022, 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 $ 1,256.8 million.

As of March 31, 2022, the effective interest rate related to the Term Loan Credit Facility was 3.52 %.

Delek Hapoalim Term Loan

On December 31, 2019, Delek entered into a term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M.

On December 31, 2019, Delek entered into an unsecured term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M.

("BHI") as the administrative agent.

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Proceeds may be used for general corporate purposes.

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 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 September 30, 2021, the weighted average borrowing rate under the term loan was approximately 3.08 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 29.3 million.

On July 30, 2021, we elected to voluntarily prepay $10.0 million in principal of the term loan.

As of September 30, 2021, the effective interest rate related to the BHI Term Loan was 3.65 %.

At March 31, 2022, the weighted average borrowing rate under the term loan was approximately 3.46 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 19.1 million.

On July 30, 2021 and January 31, 2022, we elected to voluntarily prepay $ 10.0 million each period in principal of the term loan.

As of March 31, 2022, the effective interest rate related to the BHI Term Loan was 4.33 %.

Delek Logistics Credit Facility

On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third") as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics

The Delek Logistics Credit Facility also contains an accordion feature whereby

Notes to Condensed Consolidated Financial Statements (Unaudited)

Credit Facility") with lender commitments of $ 850.0 million.

The Delek Logistics Credit Facility also contains an accordion feature whereby Delek Logistics can increase the size of the credit facility to an aggregate of $ 1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

Delek Logistics can increase the size of the credit facility to an aggregate of $ 1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the Delek Logistics Credit Facility remain secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets.

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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 September 30, 2021, the weighted average borrowing rate was approximately 2.62 %.

At March 31, 2022, the weighted average borrowing rate was approximately 2.67 %.

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 September 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.

As of March 31, 2022, this fee was 0.30 % on an annualized basis.

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 incentive distribution rights held by Delek Logistics GP, LLC, the general partner.

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 September 30, 2021, Delek Logistics had $ 260.9 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 September 30, 2021, were $ 589.1 million.

As of March 31, 2022, Delek Logistics had $ 264.1 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, 2022, were $ 585.9 million.

Delek Logistics 2025 Notes

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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 September 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 %.

As of March 31, 2022, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.20 %.

Delek Logistics 2028 Notes

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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

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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 September 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 %.

As of March 31, 2022, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.05 %.

Reliant Bank Revolver

5 unchanged sentences

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 September 30, 2021, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek had four notes payable (the "Promissory Notes") for a total of $120.0 million in principal 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.

As of March 31, 2022, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

Restrictive Covenants

2 unchanged sentences

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 September 30, 2021.

We believe we were in compliance with all covenant requirements under each of our credit facilities as of March 31, 2022.

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.

10 unchanged sentences

• limiting the exposure to interest rate fluctuations on our floating rate borrowings.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less,

Notes to Condensed Consolidated Financial Statements (Unaudited)

and from time to time interest rate swaps or caps to achieve these objectives.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate swaps or caps to achieve these objectives.

Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell a commodity at a predetermined price and location at a specified future date.

2 unchanged sentences

Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery.

Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales pursuant to ASC 815.

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.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions,

Notes to Condensed Consolidated Financial Statements (Unaudited)

generally require physical delivery.

Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales ("NPNS") pursuant to ASC 815.

If we elect the NPNS 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 September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and September 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.

Additionally, as of and for the three months ended September 30, 2021, we also had certain fixed price normal course transactions related to crude optimization that included identifiable one-to-one hedges associated with them which are being recognized as derivatives.

We elected to not take the NPNS election on these forward physical transaction so that both the hedged item and the related economic hedge would be recognized together in earnings.

Such transactions are specific to managing crude costs and optimizing crude procurement rather than for trading purposes, are therefore are recognized in cost of materials and other on the accompanying condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Our Canadian crude trading operations are accounted for as derivative instruments, and the related unrealized and realized gains and losses are recognized in other operating income, net on the condensed consolidated statements of income.

Additionally, as of and for the three months ended March 31, 2022, other forward contracts accounted for as derivatives that are specific to managing crude costs rather than for trading purposes are recognized in cost of materials and other on the accompanying condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

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

As of March 31, 2022, 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 September 30, 2021 and December 31, 2020.

The following table presents the fair value of our derivative instruments as of March 31, 2022 and December 31, 2021.

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)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

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Commodity derivatives (1)

Other long-term assets — — 2.4 ( 2.3 )

Commodity derivatives (1)

Other long-term liabilities 2.2 ( 3.6 ) 6.1 ( 6.1 )

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Other current liabilities — ( 7.0 ) — ( 0.7 )

Derivatives designated as hedging instruments:

Commodity derivatives (1)

Other current assets — — 0.5 ( 0.3 )

Total gross fair value of derivatives $ 432.2 $ ( 509.9 ) $ 130.7 $ ( 109.1 )

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Total net fair value of derivatives $ 97.0 $ ( 31.8 ) $ 23.6 $ ( 26.7 )

(1) As of September 30, 2021 and December 31, 2020, we had open derivative positions representing 179,677,948 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 September 30, 2021 and December 31, 2020.

(1) As of March 31, 2022 and December 31, 2021, we had open derivative positions representing 200,455,511 and 182,525,893 barrels, respectively, of crude oil and refined petroleum products.

There were no open positions designated as cash flow hedging instruments as of March 31, 2022 and December 31, 2021.

Additionally, as of December 31, 2021, we had open derivative positions representing and 1,320,000 MMBTU of natural gas products.

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

(2) As of September 30, 2021 and December 31, 2020, we had open RINs commitment contracts representing 67,750,000 and 282,150,000 RINs, respectively.

(3) As of September 30, 2021 and December 31, 2020, $ 9.4 million and $ 14.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

(2) As of March 31, 2022 and December 31, 2021, we had open RINs commitment contracts representing 108,950,000 and 16,325,000 RINs, respectively.

(3) As of March 31, 2022 and December 31, 2021, $ 142.8 million and $( 24.7 ) million, respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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

Three Months Ended March 31,

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

$ ( 71.4 ) $ 57.2

Gains (losses) on non-trading physical forward contract commodity derivatives in cost of materials and other 7.5 — 7.5 —

Losses on non-trading physical forward contract commodity derivatives in cost of materials and other ( 3.4 ) ( 1.1 )

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 — 0.2

Total gains (losses) $ ( 15.7 ) $ 5.9 $ 64.1 $ ( 82.1 )

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 6.8 ) million and $( 16.2 ) million for the three and nine months ended September 30, 2021, respectively, and $( 19.4 ) million and $ 9.2 million for the three and nine months ended September 30, 2020, respectively.

Total (losses) gains $ ( 74.8 ) $ 56.3

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 70.7 ) million and $ 11.2 million for the three months ended March 31, 2022 and 2021.

(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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

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 and nine months ended September 30, 2021 or 2020.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended September 30, 2021, and $ 0.2 million during the nine months ended September 30, 2021, and $ 0.7 million and $ 3.0 million during the three and nine months ended September 30, 2020, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of September 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.

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, 2022 or 2021.

There were no gains (losses), net of tax, on settled commodity contracts during the three months ended March 31, 2022, and $ 0.2 million during the three months ended March 31, 2021, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of March 31, 2022, 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 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Trading Physical Forward Contract Commodity Derivatives

Realized gains (losses) $ 18.0 $ ( 0.4 )

Unrealized gains (losses) ( 0.8 ) 0.2 ( 0.4 ) ( 0.5 )

Unrealized losses ( 0.4 ) ( 0.4 )

Total $ 17.6 $ ( 0.8 )

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Realized gains (losses) $ 15.0 $ ( 0.4 )

Unrealized gains (losses) ( 0.9 ) ( 1.6 ) ( 5.9 ) 7.4

Unrealized losses ( 17.2 ) ( 0.6 )

Total $ ( 2.2 ) $ ( 1.0 )

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ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.

Level 1 inputs are quoted prices in active markets for identical assets or liabilities.

Level 1 inputs are quoted prices in active markets for identical assets or

Notes to Condensed Consolidated Financial Statements (Unaudited)

Level 2 inputs are observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly through market-corroborated inputs.

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

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 commodity derivative contracts, which consist of commodity swaps, exchange-traded futures, options and physical commodity forward purchase and sale contracts (that do not qualify for the NPNS 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 our accounting policies in Note 2 to the audited consolidated financial statements included in Item.

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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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

As of and for the three months ended March 31, 2022 and 2021, 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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The fair value hierarchy for our financial assets and liabilities accounted for at fair value on a recurring basis was as follows (in millions):

September 30, 2021

March 31, 2022

Level 1 Level 2 Level 3 Total

Commodity derivatives $ — $ 429.5 $ — $ 429.5

Commodity investments 19.7 — — 19.7

RINs commitment contracts — 2.7 — 2.7

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Net liabilities $ 19.7 $ ( 844.5 ) $ — $ ( 824.8 )

Notes to Condensed Consolidated Financial Statements (Unaudited)

December 31, 2021

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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 September 30, 2021 and December 31, 2020, $ 9.4 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.

As of March 31, 2022 and December 31, 2021, $ 142.8 million and $( 24.7 ) million, respectively, of cash collateral (obligation) 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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 11 - Commitments and Contingencies

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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 September 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, but has been remanded to the district court regarding jurisdictional issues.

Such amount is included as of March 31, 2022 and December 31, 2021 in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

The matter was appealed and has been remanded to the district court regarding jurisdictional issues.

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

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In addition to the $ 2.3 million of the settlement that was not covered by insurance, we accrued $ 4.2 million of estimated unpaid and remaining legal fees.

As of September 30, 2021 the remaining unpaid balance is $ 0.8 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

As of March 31, 2022 the remaining unpaid balance is $ 0.7 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

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We have umbrella liability insurance available to each of our segments in an amount determined reasonable by management.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Environmental, Health and Safety

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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 September 30, 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 March 31, 2022, we have recorded an environmental liability of approximately $ 111.9 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.

Approximately $ 2.7 million of the total liability is expected to be expended over the next 12 months, with most of the balance expended by 2032, although some costs may extend up to 30 years.

In the future, we could be

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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.

Included in our environmental liabilities as of both March 31, 2022 and December 31, 2021 is a liability totaling $ 78.5 million related to a property that we have historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”).

The License Agreement, which provided us the license to continue operating our asphalt and marine fuel terminal operations on the property for a term of ten years (expiring in June 2020), also ascribed a contractual noncontingent indemnification guarantee to certain of our wholly-owned subsidiaries related to certain incremental environmental remediation activities, predicated on the completion of certain property development activities ascribed to the lessor.

Our combined liability, comprised of our environmental liability plus the estimated fair value of the noncontingent guarantee liability, was recorded when Delek acquired the outstanding common stock of Alon, effective July 1, 2017 ("Delek/Alon Merger").

While the License Agreement expired in June 2020, it is currently being disputed in litigation where we have determined that no loss accrual is necessary and that the amount of incremental loss that is reasonably possible is immaterial as of March 31, 2022.

Such ongoing dispute causes sufficient uncertainty around the release of risk and the appropriate joint and several liability allocations thereunder that we cannot currently determine a more reasonable estimate of the potential total contingent liability that is probable, nor do we have sufficient information to better estimate the fair value of any remaining noncontingent guarantee liability.

As such, as of March 31, 2022 and December 31, 2021, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

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 (as defined in our accounting policies in Note 2 to the audited consolidated financial statements included in Item.

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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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Losses and Contingencies

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On February 27, 2021, our El Dorado refinery experienced a fire in its Penex unit.

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

Six employees were injured in the fire.

Contrary to initial assessments, and despite occurring during the early stages of turnaround activity, the facility did suffer operational disruptions as a result of the fire.

During the nine months ended September 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 nine months ended September 30, 2021 due to property damaged in the fire, which was recovered during the three months ended September 30, 2021.

An additional $ 3.4 million was recognized as a gain, in excess of these losses, during the three months ended September 30, 2021.

During the three months ended March 31, 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 three months ended March 31, 2021 due to property damaged in the fire, which was recovered during 2021.

No expense was recorded related to the El Dorado refinery fire during the three months ended March 31, 2022.

We continue to incur repair costs that may be recoverable under property and casualty insurance policies.

In addtion, during the three months ended March 31, 2022, we recognized a gain of $ 4.3 million related to business interruption claims.

Such gain is included in other operating income in the consolidated statements of income.

If applicable, we accrue receivables for probable insurance or other third-party recoveries.

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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.

We recognized additional operating expenses in the amount of $ 28.4 million in the nine months ended September 30, 2021 due to property damaged in the freeze, and we continue to incur repair costs that may be recoverable under property and casualty insurance policies.

We recognized additional operating expenses in the amount of $ 9.8 million in the three months ended March 31, 2021 due to property damaged in the freeze, which was recovered during 2021.

No expense was recorded related to the Winter Storm Uri during the three months ended March 31, 2022.

An additional $ 0.1 million was recognized as a gain, in excess of losses during the three months ended March 31, 2022.

We continue to incur repair costs that may be recoverable under property and casualty insurance policies.

In addtion, during the three months ended March 31, 2022, we recognized a gain of $ 5.7 million related to business interruption claims.

If applicable, we accrue receivables for probable insurance or other third-party recoveries.

During the three months ended September 30, 2021, we recorded $ 17.0 million in receivables from the insurers for those losses.

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

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

There were no material releases that occurred during the nine months ended September 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.

For the release sites that have not yet received regulatory closure, we expect to receive regulatory closure in 2021 and do not anticipate material costs associated with any fines or penalties or the completion of activities that may be needed to achieve regulatory closure.

There were no material releases that occurred during the three months ended March 31, 2022.

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

We expect regulatory closure in 2022 for the release sites that have not yet received it and do not anticipate material costs associated with any fines or penalties or to complete activities that may be needed to achieve regulatory closure.

Expenses incurred for the remediation of these crude oil and other releases are included in operating expenses in our condensed consolidated statements of income.

Letters of Credit

As of September 30, 2021, we had in place letters of credit totaling approximately $ 278.3 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 September 30, 2021.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2022, we had in place letters of credit totaling approximately $ 362.5 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, 2022.

Note 12 - Income Taxes

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

Our effective tax rate was 18.5 % and 27.6 % for the three and nine months ended September 30, 2021, respectively, and 16.9 % and 32.0 % for the three and nine months ended September 30, 2020, respectively.

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three months ended March 31, 2022 and March 31, 2021.

Our effective tax rate was 17.3 % and 11.7 % for the three months ended March 31, 2022 and 2021, 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 and nine months ended September 30, 2021 as compared to the three and nine months ended September 30, 2020 was primarily due to the impact of credits and permanent differences on the tax rate due to changes in pre-tax book income and adjustments reported in 2020 to reflect the 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 coupled with the impact of changes in the third quarter estimated annual effective tax rate applied to year-to date loss for the nine months ended September 30, 2021 and September 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.

The change in our effective tax rate for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily due to net increase in valuation allowance on certain state tax attributes in 2021 and increased 2022 projected pre-tax earnings.

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 (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

$ 16.7 $ 10.4

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

Other Current Assets September 30, 2021 December 31, 2020

Short-term derivative assets (see Note 9) 45.1 72.9

Other Current Assets March 31, 2022 December 31, 2021

Prepaid expenses $ 181.3 $ 44.9

Short-term derivative assets (see Note 9) 97.0 23.6

Investment commodities 19.7 45.0

Income and other tax receivables 1.5 3.6

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

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

Accrued Expenses and Other Current Liabilities March 31, 2022 December 31, 2021

Product financing agreements $ 319.7 $ 249.6

Crude purchase liabilities 227.6 107.4

Income and other taxes payable 99.2 109.5

Consolidated Net RINs Obligation deficit (see Note 10) 177.5 172.2

Income and other taxes payable 129.1 124.8

Deferred revenue 53.7 44.6

Employee costs 44.8 44.4

Short-term derivative liabilities (see Note 9) 30.5 26.8

Inventory reserve 29.5 —

Deferred revenue 12.9 16.5

Other 49.4 28.0

Total $ 1,032.3 $ 797.8

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 15 - Equity-Based Compensation

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2005 Long-Term Incentive Plans (collectively, the "Incentive Plans")

On May 6, 2021, the Company's stockholders approved an amendment to the Delek US Holdings, Inc.

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 $ 6.5 million and $ 16.7 million for the three and nine months ended September 30, 2021, respectively, and $ 6.6 million and $ 17.4 million for the three and nine months ended September 30, 2020, respectively.

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

As of September 30, 2021, there was $ 39.5 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 1.5 years.

We issued net shares of common stock of 62,803 and 343,596 as a result of exercised or vested equity-based awards during the three and nine months ended September 30, 2021, respectively, and 68,265 and 314,204 for the three and nine months ended September 30, 2020, respectively.

These amounts are net of 11,781 and 159,110 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and nine months ended September 30, 2021, and 31,020 and 161,469 for the three and nine months ended September 30, 2020, respectively

The Delek US Holdings, Inc.

2016 Long-Term Incentive Plan has 14,235,000 shares of common stock authorized for issuance;

no awards will be made under this plan after May 5, 2026.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 5.1 million and $ 4.5 million for the three months ended March 31, 2022 and 2021, respectively.

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

As of March 31, 2022, there was $ 39.2 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 1.3 years.

We issued net shares of common stock of 45,800 and 93,856 as a result of exercised or vested equity-based awards during the three months ended March 31, 2022 and 2021, respectively.

These amounts are net of 17,829 and 58,851 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three months ended March 31, 2022 and 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

The LTIP has 912,207 common units representing limited partner interests in Delek Logistics authorized for issuance and expires June 9, 2031.

Delek US Holdings, Inc.

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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 September 30, 2021.

No shares of common stock were issued under the ESPP as of March 31, 2022.

Implementation of the plan will be effective during the second quarter of 2022.

Note 16 - Shareholders' Equity

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

During the nine months ended September 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 third quarter of 2020.

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

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

Stockholder Rights Plan

On March 20, 2020, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Delek’s common stock and adopted a stockholder rights plan (the “Rights Agreement”).

The dividend was distributed in a non-

Notes to Condensed Consolidated Financial Statements (Unaudited)

cash transaction on March 30, 2020 to the stockholders of record on that date.

The Rights traded with Delek’s common stock and expired in accordance with the terms of the Rights Agreement on March 19, 2021.

No repurchases of our common stock were made in the three months ended March 31, 2022 or 2021.

As of March 31, 2022, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

Stock Purchase and Cooperation Agreement

On March 7, 2022, Delek entered into a stock purchase and cooperation agreement (the “Icahn Group Agreement”) with IEP Energy Holding LLC, a Delaware limited liability company, American Entertainment Properties Corp., a Delaware corporation, Icahn Enterprises Holdings L.P., a Delaware limited partnership, Icahn Enterprises G.P.

Inc., a Delaware corporation, Beckton Corp., a Delaware corporation, and Carl C.

Icahn (collectively, the “Icahn Group”), pursuant to which the Company purchased an aggregate of 3,497,268 shares of common stock of the Company, at a price per share of $ 18.30 , the closing price of a share of Company common stock on the New York Stock Exchange on March 4, 2022, the last trading day prior to the execution of the Icahn Group Agreement, which equals an aggregate purchase price of $ 64.0 million.

The Company funded the transaction from cash on hand.

The 3,497,268 shares were cancelled at the time of the transaction.

In addition to the foregoing, under the terms of the Icahn Group Agreement, the Icahn Group withdrew its nomination notice for the nomination of nominees for election to the Company’s board of directors for the Company’s 2022 annual meeting of stockholders.

Under the terms of the Icahn Group Agreement, the Icahn Group agreed to standstill restrictions, which requires, among other things, that until the completion of the Company’s 2023 annual meeting of stockholders, the Icahn Group will refrain from acquiring additional shares of the Company Common Stock.

Note 17 - Leases

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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 September 30, 2021, $ 25.0 million of our net property, plant, and equipment balance is subject to an operating lease.

As of March 31, 2022, $ 24.1 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2022 2021

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Short-term lease costs (2)

7.0 5.4 27.5 19.1

Sublease income ( 0.1 ) ( 1.9 )

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Leased assets obtained in exchange for new financing lease liabilities $ — $ 12.2

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

Weighted-average remaining lease term (years) operating leases 4.5 5.1

Weighted-average remaining lease term (years) financing leases 6.7 N/A

Weighted-average remaining lease term (years) financing leases 6.5 7.7

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

Planned 3 Bear Energy - New Mexico, LLC Acquisition

On April 8, 2022, DKL Delaware Gathering, LLC (the “Purchaser”), a subsidiary of Delek Logistics, entered into a Membership Interest Purchase Agreement with 3 Bear Energy – New Mexico LLC (the “Seller”) to purchase 100 % of the limited liability company interests in 3 Bear Delaware Holding – NM, LLC (the “Purchased Interests”), related to Seller’s crude oil and gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin in New Mexico (the “Purchase Agreement”).

Delek Logistics also entered into a guaranty agreement with the Seller in order to guaranty the payment obligations of the Purchaser under the Purchase Agreement.

The purchase price for the Purchased Interests is $ 624.7 million, subject to customary adjustments under the Purchase Agreement for net working capital and indebtedness.

The Purchaser paid a deposit under the Purchase Agreement of approximately $ 31.2 million.

The deposit may be retained by the Seller upon certain termination events described in the Purchase Agreement.

At closing, the deposit will be applied to the purchase price to be paid under the Purchase Agreement.

The transactions contemplated by the Purchase Agreement are expected to close around mid-year 2022.

The closing is subject to customary closing conditions set forth in the Purchase Agreement, including regulatory approvals.

The Purchase Agreement also contains representations and warranties of the parties, indemnification obligations, termination rights, and other covenants and agreements.

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