What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-08 compared with 2022-08-05 · 265 added, 247 removed, 1050 unchanged (33% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

June 30, 2022 December 31, 2021 As Adjusted (1)

September 30, 2022 December 31, 2021 As Adjusted (1)

Current assets:

32 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, 88,610,583 shares and 91,772,080 shares issued at June 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 87,228,503 shares and 91,772,080 shares issued at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,125.7 1,206.5

Accumulated other comprehensive loss ( 4.0 ) ( 3.8 )

Treasury stock, 17,575,527 shares, at cost, as of June 30, 2022 and December 31, 2021

Treasury stock, 17,575,527 shares, at cost, as of September 30, 2022 and December 31, 2021

( 694.1 ) ( 694.1 )

10 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 As Adjusted (1)

14 unchanged sentences

Income from equity method investments ( 17.8 ) ( 2.9 ) ( 44.4 ) ( 14.5 )

Other (income) expense, net ( 3.6 ) 6.8 ( 2.3 ) 5.8

Other income, net ( 0.7 ) ( 21.8 ) ( 3.0 ) ( 16.0 )

Total non-operating expense, net 32.2 12.8 85.3 69.5

13 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 As Adjusted (1)

16 unchanged sentences

(In millions, except share data)

Three Months Ended June 30, 2022

Three Months Ended September 30, 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 March 31, 2022

Balance at June 30, 2022

88,610,583 $ 0.9 $ 1,159.1 $ ( 3.9 ) $ 753.0 ( 17,575,527 ) $ ( 694.1 ) $ 122.4 $ 1,337.4

Net income — — — — 7.4 — — 9.4 16.8

Common stock dividends ($ 0.40 per share)

— — — — ( 28.3 ) — — — ( 28.3 )

Distributions to non-controlling interests — — — — — — — ( 9.2 ) ( 9.2 )

Equity-based compensation expense — — 7.7 — — — — 0.1 7.8

Repurchase of common stock ( 1,435,602 ) — ( 40.0 ) — — — — — ( 40.0 )

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

1 unchanged sentence

Other — — — ( 0.1 ) ( 0.3 ) — — — ( 0.4 )

Balance at June 30, 2022

Balance at September 30, 2022

87,228,503 $ 0.9 $ 1,125.7 $ ( 4.0 ) $ 731.8 ( 17,575,527 ) $ ( 694.1 ) $ 122.7 $ 1,283.0

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

2 unchanged sentences

Shares Amount Shares Amount

Balance at March 31, 2021

Balance at June 30, 2021

91,637,661 $ 0.9 $ 1,192.6 $ ( 7.4 ) $ 386.3 ( 17,575,527 ) $ ( 694.1 ) $ 118.4 $ 996.7

Net (loss) income — — — — ( 56.7 ) — — 8.6 ( 48.1 )

Net income — — — — 11.8 — — 8.8 20.6

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

3 unchanged sentences

Other — — 0.2 — — — — ( 0.2 ) —

Balance at June 30, 2021, As Adjusted (1)

Balance at September 30, 2021

91,700,464 $ 0.9 $ 1,199.2 $ ( 7.4 ) $ 398.1 ( 17,575,527 ) $ ( 694.1 ) $ 118.9 $ 1,015.6

3 unchanged sentences

(In millions, except share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

3 unchanged sentences

Net income — — — — 375.8 — — 24.4 400.2

Common stock dividends ($ 0.40 per share)

— — — — ( 28.3 ) — — — ( 28.3 )

Distributions to non-controlling interests — — — — — — — ( 26.9 ) ( 26.9 )

Equity-based compensation expense — — 20.1 — — — — 0.3 20.4

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

Repurchase of common stock ( 1,435,602 ) — ( 40.0 ) — — — — — ( 40.0 )

Sale of Delek Logistics 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 )

2 unchanged sentences

Other — — — ( 0.2 ) ( 0.4 ) — — — ( 0.6 )

Balance at June 30, 2022

Balance at September 30, 2022

87,228,503 $ 0.9 $ 1,125.7 $ ( 4.0 ) $ 731.8 ( 17,575,527 ) $ ( 694.1 ) $ 122.7 $ 1,283.0

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

12 unchanged sentences

Other — — 0.2 — ( 0.3 ) — — ( 0.2 ) ( 0.3 )

Balance at June 30, 2021, As Adjusted (1)

Balance at September 30, 2021

91,700,464 $ 0.9 $ 1,199.2 $ ( 7.4 ) $ 398.1 ( 17,575,527 ) $ ( 694.1 ) $ 118.9 $ 1,015.6

6 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

2022 As Adjusted (1)

25 unchanged sentences

Proceeds from sale of property, plant and equipment 1.2 11.6

Insurance proceeds — 4.4

Net cash used in investing activities ( 819.9 ) ( 143.2 )

7 unchanged sentences

Taxes paid due to the net settlement of equity-based compensation ( 5.4 ) ( 3.4 )

Repurchase of common stock ( 40.0 ) —

Distribution to non-controlling interest ( 26.9 ) ( 24.1 )

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

Dividends paid ( 28.3 ) —

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

7 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

2022 As Adjusted (1)

5 unchanged sentences

Non-cash investing activities:

(Decrease) increase in accrued capital expenditures $ ( 4.8 ) $ 0.1

Decrease in accrued capital expenditures $ ( 10.5 ) $ ( 1.5 )

Non-cash financing activities:

28 unchanged sentences

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.

As of January 1, 2022, we changed our method for accounting for inventory held at the Tyler Refinery to the first-in, first-out ("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.

15 unchanged sentences

This guidance is effective for all entities at any time beginning on March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU.

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

We expect to adopt this guidance on or before the effective date and do not expect the adoption to have a material impact on our condensed consolidated financial statements and related disclosures.

Note 2 - Acquisitions

1 unchanged sentence

Delek Logistics completed the 3 Bear Acquisition on June 1, 2022 (the "Acquisition Date"), in which it acquired crude oil and natural gas gathering, processing and transportation and storage operations, as well as water disposal and recycling operations, located in the Delaware Basin of New Mexico.

The base purchase price for 3 Bear was $ 624.7 million, subject to adjustments for net working capital and closing indebtedness, as defined in the 3 Bear Purchase Agreement.

The 3 Bear Acquisition was financed through a combination of cash on hand and borrowings under the Delek Logistics' Credit Facility (as defined in Note 9 of the condensed consolidated financial statements in Item 1.

Financial Statements).

For the three and six months ended June 30, 2022, we incurred $ 6.2 million and $ 6.4 million, respectively, in incremental direct acquisition and integration costs that principally consist of legal, advisory and other professional fees.

The purchase price for 3 Bear was $ 628.1 million.

The 3 Bear Acquisition was financed through a combination of cash on hand and borrowings under the Delek Logistics' Credit Facility (as defined in Note 9 of these condensed consolidated financial statements).

For the three and nine months ended September 30, 2022, we incurred $ 4.2 million and $ 10.6 million, respectively, in incremental direct acquisition and integration costs that principally consist of legal, advisory and other professional fees.

Such costs are included in general and administrative expenses in the accompanying condensed consolidated statements of income for these periods.

Our consolidated financial and operating results reflect the 3 Bear Acquisition operations beginning June 1, 2022.

Our results of operations included revenue and net income of $ 20.6 million and $ 1.5 million, respectively, for the period from June 1, 2022 through June 30, 2022 related to these operations.

The 3 Bear Acquisition was accounted for using the acquisition method of accounting, whereby the preliminary purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values.

Our results of operations included revenue and net income of $ 60.9 million and $ 8.3 million, respectively, for the three months ended September 30, 2022 and $ 81.5 million and $ 9.8 million, respectively, for the nine months ended September 30, 2022.

The 3 Bear Acquisition was accounted for using the acquisition method of accounting, whereby the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their fair values.

The excess of the consideration paid over the fair value of the net assets acquired was recorded as goodwill.

Determination of Purchase Price

The table below represents the estimated purchase price (in millions):

The table below represents the purchase price (in millions):

Base purchase price:

3 unchanged sentences

Cash paid to payoff 3 Bear credit agreement (as defined in the 3 Bear Purchase Agreement) 80.6

Preliminary purchase price $ 624.4

(1) These amounts are based upon estimates at closing, but are subject to a subsequent review and revision period pursuant to the 3 Bear Purchase Agreement at which time final settlements for these components will be determined.

Such subsequent adjustments may result in changes to the preliminary purchase price.

Purchase price $ 628.1

Notes to Condensed Consolidated Financial Statements (Unaudited)

22 unchanged sentences

• Customer relationship intangible that is subject to amortization with a preliminary fair value of $ 210.0 million, which will be amortized over an 11.6 -year useful life.

We recognized amortization expense for the three and six months ended June 30, 2022 of $ 1.5 million.

We recognized amortization expense for the three and nine months ended September 30, 2022 of $ 4.5 million and $ 6.0 million, respectively.

The estimated amortization is $ 18.0 million for each of the five succeeding fiscal years.

• Rights-of-way intangible valued at $ 13.6 million, which has an indefinite life.

• Rights-of-way intangible that is subject to amortization with a preliminary fair value of $ 13.5 million, which will be amortized over the weighted-average useful life of 25.4 years.

We recognized amortization expense for the three and nine months ended September 30, 2022 of $ 0.2 million and $ 0.2 million, respectively..

The estimated amortization is $ 0.6 million for each of the five succeeding fiscal years.

These fair value estimates are preliminary and therefore, the final fair value of assets acquired and liabilities assumed and the resulting effect on our financial position may change once all necessary information has become available, the final working capital adjustment is complete, and we finalize our valuations.

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of June 30, 2022.

To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of September 30, 2022.

We will continue to evaluate these items until they are satisfactorily resolved and adjust our purchase price allocation accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805").

17 unchanged sentences

Actual results may differ significantly from the unaudited pro forma financial information.

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

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

(in millions, except per share data) 2022 2021 2022 2021

18 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 June 30, 2022, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2022, including the following:

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

8 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

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.

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 June 30, 2022.

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

7 unchanged sentences

Retail Segment

Our retail segment consists of 248 owned and leased convenience store sites as of June 30, 2022, located primarily in West Texas and New Mexico.

Our retail segment consists of 248 owned and leased convenience store sites as of September 30, 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.

12 unchanged sentences

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Refining Logistics Retail Corporate,

14 unchanged sentences

Capital spending (excluding business combinations) $ 22.7 $ 32.2 $ 13.6 $ 12.3 $ 80.8

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Logistics Retail Corporate,

9 unchanged sentences

Segment contribution margin $ 82.1 $ 66.9 $ 17.9 $ ( 16.9 ) 150.0

Income from equity method investments 0.1 6.7 — —

Income (loss) from equity method investments 0.2 7.3 — ( 4.6 )

Segment contribution margin and income (loss) from equity method investments $ 82.3 $ 74.2 $ 17.9 $ ( 21.5 )

2 unchanged sentences

Other operating income, net ( 1.7 )

Operating loss $ ( 50.2 )

Operating income $ 37.9

Capital spending (excluding business combinations)

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Refining Logistics Retail Corporate,

14 unchanged sentences

Capital spending (excluding business combinations) $ 56.0 $ 68.0 $ 22.6 $ 27.5 $ 174.1

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Logistics Retail Corporate,

8 unchanged sentences

Segment contribution margin $ 106.6 $ 188.0 $ 56.5 $ ( 72.3 ) 278.8

Income from equity method investments 0.3 10.7 — 0.6

Income (loss) from equity method investments 0.5 18.0 — ( 4.0 )

Segment contribution margin and income (loss) from equity method investments $ 107.1 $ 206.0 $ 56.5 $ ( 76.3 )

6 unchanged sentences

See Note 7 for further discussion.

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

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Segment Information

Total assets by segment were as follows as of June 30, 2022 (in millions):

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Total assets $ 8,235.6 $ 1,609.3 $ 258.5 $ ( 1,178.8 ) $ 8,924.6

Inter-segment notes receivable ( 1,026.8 ) — — 1,026.8 —

Inter-segment right of use lease assets ( 220.4 ) — — 220.4 —

Total assets, excluding inter-segment notes receivable and right of use assets $ 6,988.4 $ 1,609.3 $ 258.5 $ 68.4 $ 8,924.6

Property, plant and equipment and accumulated depreciation as of June 30, 2022 and depreciation expense by reporting segment for the three and six months ended June 30, 2022 are as follows (in millions):

Refining Logistics Retail Corporate,

Other and Eliminations Consolidated

Property, plant and equipment $ 2,696.8 $ 1,141.8 $ 175.8 $ 92.7 $ 4,107.1

Accumulated depreciation ( 1,043.4 ) ( 288.0 ) ( 64.6 ) ( 51.1 ) ( 1,447.1 )

Property, plant and equipment, net $ 1,653.4 $ 853.8 $ 111.2 $ 41.6 $ 2,660.0

Depreciation expense for the three months ended June 30, 2022 $ 48.5 $ 11.8 $ 3.0 $ 1.6 $ 64.9

Depreciation expense for the six months ended June 30, 2022 $ 99.6 $ 22.2 $ 6.3 $ 3.2 $ 131.3

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 June 30, 2022.

Assets by segment are not a measure used to assess the performance of the company by the chief operating decision maker and thus are not disclosed .

Note 4 - Earnings (Loss) Per Share

5 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 (1)

18 unchanged sentences

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

As of June 30, 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.

As of September 30, 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 June 1, 2022, DKL Delaware Gathering, LLC, a subsidiary of Delek Logistics, completed the 3 Bear Acquisition related to crude oil and natural gas gathering, processing and transportation businesses, as well as water disposal and recycling operations, in the Delaware Basin in New Mexico.

The purchase price was $ 624.7 million, subject to customary closing adjustments.

The purchase price was $ 628.1 million.

See Note 2 - Acquisitions for additional information.

1 unchanged sentence

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.

For the six months ended June 30, 2022, we sold 385,522 units for gross proceeds of $ 16.4 million or $ 13.6 million net of taxes, all of which was received in the first quarter.

For the nine months ended September 30, 2022, we sold 385,522 units for gross proceeds of $ 16.4 million or $ 13.6 million net of taxes, all of which was completed in the first quarter.

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 under this registration as of June 30, 2022.

No units were sold under this registration in 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.

4 unchanged sentences

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).

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 14.9 $ 4.3

Accounts receivable 53.4 15.4

Accounts receivable from related parties — —

Inventory 2.5 2.4

28 unchanged sentences

The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV.

On October 13, 2022, we received a $ 7.9 million excess distribution in accordance with financing arrangements and the W2W Holdings LLC Agreement.

The Company evaluated Delek Energy's investment in W2W Holdings LLC ("HoldCo") and determined that HoldCo is a VIE.

4 unchanged sentences

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

As of June 30, 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 June 30, 2022 and December 31, 2021, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 53.5 million and $ 49.3 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

In addition on the investment, we recognized income of $ 2.1 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively, and a loss of $ 3.9 million and $ 4.1 million for the three and six months ended June 30, 2021, respectively.

As of September 30, 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.

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 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, 2022 and December 31, 2021, Delek's investment balance in WWP Project Financing Joint Venture totaled $ 54.7 million and $ 49.3 million, respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

In addition on the investment, we recognized income of $ 1.2 million and $ 5.4 million for the three and nine months ended September 30, 2022, respectively, and a loss of $ 8.8 million and $ 12.9 million for the three and nine months ended September 30, 2021, respectively.

Delek Logistics Investments

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 June 30, 2022 and December 31, 2021, Delek's investment balance in Red River totaled $ 144.8 million and $ 144.0 million, respectively.

We made no capital contributions during the six months ended June 30, 2022 and made $ 1.4 million in capital contributions during the six months ended June 30, 2021 based on capital calls.

We recognized income on the investment totaling $ 4.6 million and $ 9.9 million for the three and six months ended June 30, 2022, respectively, and $ 3.7 million and $ 6.0 million for the three and six months ended June 30, 2021, respectively.

As of September 30, 2022 and December 31, 2021, Delek's investment balance in Red River totaled $ 143.7 million and $ 144.0 million, respectively.

We made no capital contributions during the nine months ended September 30, 2022 and made $ 1.4 million in capital contributions during the nine months ended September 30, 2021 based on capital calls.

We recognized income on the investment totaling $ 4.7 million and $ 14.6 million for the three and nine months ended September 30, 2022, respectively, and $ 3.9 million and $ 9.9 million for the three and nine months ended September 30, 2021, respectively.

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

2 unchanged sentences

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 June 30, 2022 and December 31, 2021, Delek Logistics' investment balances in these joint ventures totaled $ 103.9 million and $ 106.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 2.4 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively, and $ 2.9 million and $ 4.6 million for the three and six months ended June 30, 2021, respectively.

As of September 30, 2022 and December 31, 2021, Delek Logistics' investment balances in these joint ventures totaled $ 104.3 million and $ 106.0 million, respectively, and were accounted for using the equity method.

We recognized income on these investments totaling $ 3.9 million and $ 8.1 million for the three and nine months ended September 30, 2022, respectively, and $ 3.4 million and $ 8.0 million for the three and nine months ended September 30, 2021, respectively.

Other Investments

In addition to our pipeline joint ventures, we also have a 50 % interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S., as well as a 50 % interest in a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in Arkansas.

As of June 30, 2022 and December 31, 2021, Delek's investment balance in these joint ventures was $ 52.4 million and $ 44.8 million, respectively.

We recognized income on these investments totaling $ 6.6 million and $ 8.3 million for the three and six months ended June 30, 2022, respectively, and $ 4.1 million and $ 5.1 million for the three and six months ended June 30, 2021, respectively.

As of September 30, 2022 and December 31, 2021, Delek's investment balance in these joint ventures was $ 57.9 million and $ 44.8 million, respectively.

We recognized income on these investments totaling $ 8.0 million and $ 16.3 million for the three and nine months ended September 30, 2022, respectively, and $ 4.4 million and $ 9.5 million for the three and nine months ended September 30, 2021, respectively.

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

7 unchanged sentences

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.

This change resulted in a

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

December 31, 2021

(in millions) June 30, 2022 As Adjusted (1)

(in millions) September 30, 2022 As Adjusted (1)

Refinery raw materials and supplies $ 756.9 $ 516.0

6 unchanged sentences

(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 for the three and six months ended June 30, 2021, our Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2021 and our Consolidated Condensed Balance Sheet as of December 31, 2021, were retrospectively adjusted as follows:

Three Months Ended June 30, 2021

In addition, certain financial statement line items in our Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2021, our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 and our Consolidated Condensed Balance Sheet as of December 31, 2021, were retrospectively adjusted as follows:

Three Months Ended September 30, 2021

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

2 unchanged sentences

Total cost of sales $ 2,828.1 $ 7.9 $ 2,836.0

Loss before income tax benefit $ ( 118.5 ) $ 35.2 $ ( 83.3 )

Income tax benefit $ ( 46.0 ) $ 10.8 $ ( 35.2 )

Net loss $ ( 72.5 ) $ 24.4 $ ( 48.1 )

Net loss attributable to Delek $ ( 81.1 ) $ 24.4 $ ( 56.7 )

Net loss per share attributable to Delek

Income before income tax expense $ 33.0 $ ( 7.9 ) $ 25.1

Income tax expense $ 6.1 $ ( 1.6 ) $ 4.5

Net income $ 26.9 $ ( 6.3 ) $ 20.6

Net income attributable to Delek $ 18.1 $ ( 6.3 ) $ 11.8

Net income per share attributable to Delek

Basic $ 0.24 $ ( 0.08 ) $ 0.16

Diluted $ 0.24 $ ( 0.08 ) $ 0.16

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

19 unchanged sentences

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

6 unchanged sentences

$ ( 186.0 ) $ ( 53.1 ) $ ( 239.1 )

Non-current assets and liabilities, net $ ( 6.1 ) $ ( 10.2 ) $ ( 16.3 )

Accounts payable and other current liabilities $ 662.2 $ ( 29.5 ) $ 632.7

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

8 unchanged sentences

Diluted $ 1.42 $ 0.10 $ 1.32

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

2 unchanged sentences

Total cost of sales $ 14,917.0 $ 14,869.3 $ 47.7

(Loss) income before income tax (benefit) expense $ 320.4 $ 486.9 $ ( 166.5 )

Income tax (benefit) expense $ 68.1 $ 103.5 $ ( 35.4 )

Net (loss) income attributable to Delek $ 237.3 $ 368.4 $ ( 131.1 )

Net (loss) income per share attributable to Delek

Income before income tax expense $ 460.0 $ 507.7 $ ( 47.7 )

Income tax expense $ 97.4 $ 107.5 $ ( 10.1 )

Net income attributable to Delek $ 338.2 $ 375.8 $ ( 37.6 )

Net income per share attributable to Delek

Basic $ 4.73 $ 5.26 $ ( 0.53 )

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2022

September 30, 2022

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

8 unchanged sentences

Total liabilities and stockholders' equity $ 8,290.5 $ 8,396.8 $ ( 106.3 )

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

Condensed Consolidated Statements of Cash Flows

Net (loss) income

$ 362.6 $ 400.2 $ ( 37.6 )

5 unchanged sentences

Accounts payable and other current liabilities $ 545.5 $ 524.8 $ 20.7

At June 30, 2022, we recorded a pre-tax inventory valuation reserve of $ 8.1 million due to a market price decline below our cost of certain inventory products.

At September 30, 2022, we recorded a pre-tax inventory valuation reserve of $ 28.4 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 $( 7.3 ) million and $ 1.2 million for the three and six months ended June 30, 2022, respectively, and $ 0.8 million and $( 0.1 ) million for the three and six months ended June 30, 2021, respectively.

We recognized a net reduction (increase) in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of $( 20.3 ) million and $( 19.1 ) million for the three and nine months ended September 30, 2022, respectively, and $( 0.2 ) million and $( 0.3 ) million for the three and nine months ended September 30, 2021, 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.

Note 8 - Crude Oil Supply and Inventory Purchase Agreement

15 unchanged sentences

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 June 30, 2022 (1)

Barrels of inventory consigned under the respective Supply and Offtake Agreements as of September 30, 2022 (1)

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

3 unchanged sentences

Aron has the sole discretion to further extend the three Supply and Offtake Agreements to May 30, 2025 by giving notice at least 6 months prior to the current maturity date;

As of June 30, 2022, J.

Aron did not provide notice to further extend to May 30, 2025.

7 unchanged sentences

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.

As of June 30, 2022, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 72.8 million.

As of September 30, 2022, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $ 72.8 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 $ 58.1 million and $ 206.9 million during the three and six months ended June 30, 2022, respectively, and $ 41.8 million and $ 104.1 million during the three and six months ended June 30, 2021, respectively.

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 $ 124.2 million and $( 82.6 ) million during the three and nine months ended September 30, 2022, respectively, and $( 0.8 ) million and $( 104.9 ) million during the three and nine months ended September 30, 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 June 30, 2022:

Balances as of September 30, 2022:

Baseline Step-Out Liability $ 200.1 $ 86.1 $ 126.8 $ 413.0

Revolving over/short inventory financing liability 161.1 59.3 12.7 233.1

Revolving over/short inventory financing liability (receivable) 120.8 77.4 ( 15.0 ) 183.2

Total Obligations Under Supply and Offtake Agreements - Current portion $ 320.9 $ 163.5 $ 111.8 $ 596.2

9 unchanged sentences

El Dorado Big Spring Krotz Springs Total

Recurring cash fees paid during the three months ended June 30, 2022

Recurring cash fees paid during the three months ended September 30, 2022

$ 3.6 $ 1.3 $ 1.0 $ 5.9

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

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 six months ended June 30, 2022

Recurring cash fees paid during the nine months ended September 30, 2022

$ 9.5 $ 3.3 $ 3.3 $ 16.1

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

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

$ 7.7 $ 2.4 $ 3.2 $ 13.3

We maintained letters of credit under the Supply and Offtake Agreements as follows (in millions):

Letters of credit outstanding as of June 30, 2022

Letters of credit outstanding as of September 30, 2022

Letters of credit outstanding as of December 31, 2021

1 unchanged sentence

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Revolving Credit Facility $ — $ —

5 unchanged sentences

Delek Logistics 2028 Notes (5)

Reliant Bank Revolver 50.0 50.0

United Community Bank Revolver 50.0 50.0

2,733.6 2,218.0

1 unchanged sentence

$ 2,670.6 $ 2,125.8

(1) Net of deferred financing costs of $ 1.9 million and $ 2.2 million at June 30, 2022 and December 31, 2021, respectively and debt discount of $ 15.0 million and $ 17.8 million at June 30, 2022 and December 31, 2021, respectively.

(2) Net of deferred financing costs of $ 0.1 million and $ 0.1 million at June 30, 2022 and December 31, 2021, respectively and a nominal debt discount and $ 0.1 million debt discount at June 30, 2022 and December 31, 2021, respectively.

(3) Net of deferred financing costs of $ 0.6 million at June 30, 2022.

(4) Net of deferred financing costs of $ 2.1 million and $ 2.5 million at June 30, 2022 and December 31, 2021, respectively and debt discount of $ 0.7 million and $ 0.8 million at June 30, 2022 and December 31, 2021, respectively.

(5) Net of deferred financing costs of $ 5.3 million and $ 5.7 million at June 30, 2022 and December 31, 2021, respectively.

(1) Net of deferred financing costs of $ 1.7 million and $ 2.2 million at September 30, 2022 and December 31, 2021, respectively and debt discount of $ 13.7 million and $ 17.8 million at September 30, 2022 and December 31, 2021, respectively.

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

(3) Net of deferred financing costs of $ 0.5 million at September 30, 2022.

(4) Net of deferred financing costs of $ 2.0 million and $ 2.5 million at September 30, 2022 and December 31, 2021, respectively and debt discount of $ 0.6 million and $ 0.8 million at September 30, 2022 and December 31, 2021, respectively.

(5) Net of deferred financing costs of $ 5.0 million and $ 5.7 million at September 30, 2022 and December 31, 2021, respectively.

Delek Revolver and Term Loan

8 unchanged sentences

Pursuant to the Incremental Amendment, the Company borrowed $ 250.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) at an original issue discount of 0.75 %.

On November 12, 2019 (the "Second Incremental Effective Date"), we amended the Term Loan Credit facility agreement pursuant to the terms of the Second Incremental Amendment to the Term Loan Credit Agreement (the "Second Incremental Amendment") and borrowed $ 150.0 million in aggregate principal amount of incremental term loans (the "Incremental

Notes to Condensed Consolidated Financial Statements (Unaudited)

"Second Incremental Amendment") and borrowed $ 150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21 %.

Loans") at an original issue discount of 1.21 %.

The terms of the Incremental Term Loans and Incremental Loans are substantially identical to the terms applicable to the initial term loans under the Term Loan Credit Facility borrowed in March 2018.

14 unchanged sentences

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 June 30, 2022, the unused line fee was 0.375 % per annum.

As of September 30, 2022, the unused line fee was 0.375 % per annum.

Maturity and Repayments

8 unchanged sentences

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

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

The Term Loan Credit Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the Revolving Priority Collateral, all in accordance with an intercreditor agreement between the Term Administrative Agent and the Revolver Administrative Agent and acknowledged by Delek and the subsidiary guarantors.

1 unchanged sentence

Additional Information

At June 30, 2022, the borrowing rate for base rate loans under the Revolving Credit Facility was 5.00 % and there was a nominal principal amount outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 363.9 million as of June 30, 2022 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of June 30, 2022, were approximately $ 636.1 million.

At June 30, 2022, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 4.42 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,253.5 million.

As of June 30, 2022, the effective interest rate related to the Term Loan Credit Facility was 4.96 %.

At September 30, 2022, the borrowing rate for base rate loans under the Revolving Credit Facility was 6.50 % and there was no principal amount outstanding thereunder.

Additionally, there were letters of credit issued of approximately $ 212.6 million as of September 30, 2022 under the Revolving Credit Facility.

Unused credit commitments under the Revolving Credit Facility, as of September 30, 2022, were approximately $ 787.4 million.

At September 30, 2022, the weighted average borrowing rate under the Term Loan Credit Facility was approximately 5.87 % comprised entirely of LIBOR borrowings, and the principal amount outstanding thereunder was $ 1,250.2 million.

As of September 30, 2022, the effective interest rate related to the Term Loan Credit Facility was 6.41 %.

Delek Hapoalim Term Loan

7 unchanged sentences

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

At June 30, 2022, the weighted average borrowing rate under the term loan was approximately 4.67 % comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was $ 9.0 million.

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

As of June 30, 2022, the effective interest rate related to the BHI Term Loan was 6.52 %.

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

A final voluntary principal prepayment of $ 9.0 million was made on September 30, 2022, thereby repaying the BHI Term Loan in full.

Delek Logistics Credit Facility

1 unchanged sentence

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.

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

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

The Delek Logistics Credit Facility has a maturity date of September 28, 2023.

2 unchanged sentences

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 June 30, 2022, the weighted average borrowing rate was approximately 3.35 %.

At September 30, 2022, the weighted average borrowing rate was approximately 5.64 %.

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 June 30, 2022, this fee was 0.30 % on an annualized basis.

As of September 30, 2022, this fee was 0.50 % 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.

1 unchanged sentence

On May 13, 2022, Delek Logistics entered into a Second Amendment to the Delek Logistics Credit Facility which, among other things, provided for the transition from a LIBOR benchmark to Term SOFR with credit spread adjustments for 1-month and 3-month Term SOFR loans and provided consent and flexibility related to the previously announced 3 Bear Acquisition with respect to certain covenants in the Delek Logistics Credit Facility.

On May 26, 2022, Delek Logistics entered into a Third Amendment to the Delek Logistics Credit Facility which, among other things,

Notes to Condensed Consolidated Financial Statements (Unaudited)

provides for certain changes to the Delek Logistics Credit Facility in connection with the previously announced acquisition of 3 Bear in respect of pro forma calculations and certain other requirements under the Delek Logistics Credit Facility.

On May 26, 2022, Delek Logistics entered into a Third Amendment to the Delek Logistics Credit Facility which, among other things, provides for certain changes to the Delek Logistics Credit Facility in connection with the previously announced acquisition of 3 Bear in respect of pro forma calculations and certain other requirements under the Delek Logistics Credit Facility.

Further, on May 26, 2022, Delek Logistics entered into a Fourth Amendment (the “Fourth Amendment”) to the Delek Logistics Credit Facility.

1 unchanged sentence

(i) increased the U.S.

Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $ 150.0 million, resulting in aggregate lender commitments under the Delek Logistics Credit Facility in an amount of $ 1.0 billion, (ii) increased the U.S.

Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $ 150.0 million, resulting in aggregate lender commitments under the Delek Logistics Credit

Notes to Condensed Consolidated Financial Statements (Unaudited)

Facility in an amount of $ 1.0 billion, (ii) increased the U.S.

L/C Sublimit (as defined in the Delek Logistics Credit Facility) to an aggregate amount equal to $ 90.0 million and (iii) increased the U.S.

Swing Line Sublimit (as defined in the Delek Logistics Credit) to an aggregate amount equal to $ 18.0 million.

As of June 30, 2022, Delek Logistics had $ 880.9 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 June 30, 2022, were $ 119.1 million.

As of September 30, 2022, Delek Logistics had $ 806.9 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, 2022, were $ 193.1 million.

Delek Logistics 2025 Notes

4 unchanged sentences

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

Interest on the Delek Logistics 2025 Notes is payable semi-annually in arrears on each May 15 and November 15.

The Delek Logistics 2025 Notes will mature on May 15, 2025 and i nterest on the Delek Logistics 2025 Notes is payable semi-annually in arrears on each May 15 and November 15.

In May 2018, the Delek Logistics 2025 Notes were exchanged for new notes with terms substantially identical in all material respects with the Delek Logistic 2025 Notes except the new notes do not contain terms with respect to transfer restrictions.

1 unchanged sentence

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 June 30, 2022, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.19 %.

As of September 30, 2022, we had $ 250.0 million in outstanding principal amount under the Delek Logistics 2025 Notes, and the effective interest rate was 7.19 %.

Delek Logistics 2028 Notes

10 unchanged sentences

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

As of June 30, 2022, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.40 %.

As of September 30, 2022, we had $ 400.0 million in outstanding principal amount under the Delek Logistics 2028 Notes, and the effective interest rate was 7.40 %.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Reliant Bank Revolver

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver") with a maximum borrowing commitment of $ 50.0 million.

On June 30, 2022, among other things, we amended the Reliant Bank Revolver to extend the maturity date to June 30, 2023 and change the fixed interest rate of 4.50 % per annum to a variable rate loan equal to the Wall Street Journal Prime Rate plus 0.75% effective July 1, 2022.

United Community Bank Revolver

Delek has an unsecured revolving credit agreement with United Community Bank (formally Reliant Bank) (the "United Community Bank Revolver") with a maximum borrowing commitment of $ 50.0 million.

On June 30, 2022, among other things, we amended the United Community Bank Revolver to extend the maturity date to June 30, 2023 and change the interest rate per annum to a variable rate equal to the Wall Street Journal Prime Rate plus 0.75 % effective July 1, 2022.

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 June 30, 2022, we had $ 50.0 million outstanding and had no unused credit commitments under the Reliant Bank Revolver.

As of September 30, 2022, the interest rate was 7.00 % under the United Community Revolver and we had $ 50.0 million outstanding, with no unused credit commitments available.

Restrictive Covenants

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

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

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

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

We believe we were in compliance with all covenant requirements under each of our credit facilities as of June 30, 2022.

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

20 unchanged sentences

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 and six months ended June 30, 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.

Additionally, as of and for the three and nine months ended September 30, 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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

underlying transactions are reflected.

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation.

1 unchanged sentence

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 June 30, 2022, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

As of September 30, 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 June 30, 2022 and December 31, 2021.

The following table presents the fair value of our derivative instruments as of September 30, 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.

2 unchanged sentences

See Note 11 for further information regarding the fair value of derivative instruments (in millions).

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

16 unchanged sentences

Total net fair value of derivatives $ 74.4 $ ( 21.2 ) $ 23.6 $ ( 26.7 )

(1) As of June 30, 2022 and December 31, 2021, we had open derivative positions representing 112,028,194 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 June 30, 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.

(2) As of June 30, 2022 and December 31, 2021, we had open RINs commitment contracts representing 117,750,000 and 16,325,000 RINs, respectively.

(3) As of June 30, 2022 and December 31, 2021, $ 66.3 million and $( 24.7 ) million, respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

(1) As of September 30, 2022 and December 31, 2021, we had open derivative positions representing 115,800,264 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 September 30, 2022 and December 31, 2021.

Additionally, as of September 30, 2022 and December 31, 2021, we had open derivative positions representing 7,785,000 and 1,320,000 MMBTU of natural gas products.

(2) As of September 30, 2022 and December 31, 2021, we had open RINs commitment contracts representing 150,800,000 and 16,325,000 RINs, respectively.

(3) As of September 30, 2022 and December 31, 2021, $ 24.2 million and $( 24.7 ) million, respectively, of cash collateral (obligation) held by counterparties has been netted with the derivatives with each counterparty.

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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

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

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

$ 78.0 $ ( 23.2 ) $ ( 27.7 ) $ 56.4

(Losses) gains on non-trading physical forward contract commodity derivatives in cost of materials and other 8.2 ( 4.4 ) 4.8 ( 5.5 )

Gains (losses) on non-trading physical forward contract commodity derivatives in cost of materials and other 0.3 7.5 5.1 7.5

(Losses) gains on hedging derivatives not designated as hedging instruments recognized in operating expenses — — ( 1.7 ) —

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 (losses) gains $ ( 27.9 ) $ 17.8 $ ( 102.7 ) $ 74.3

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $ 66.1 million and $( 4.6 ) million for the three and six months ended June 30, 2022, respectively, and $( 21.2 ) million and $( 9.4 ) million for the three and six months ended June 30, 2021, respectively.

Total gains (losses) $ 78.3 $ ( 15.7 ) $ ( 24.3 ) $ 64.1

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $ 24.8 million and $ 20.2 million for the three and nine months ended September 30, 2022, respectively, and $( 6.8 ) million and $( 16.2 ) million for the three and nine months ended September 30, 2021, respectively.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

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

2022 2021 2022 2021

4 unchanged sentences

Total $ — $ — $ — $ —

For cash flow hedges, no component of the derivative instruments’ gains or losses was excluded from the assessment of hedge effectiveness for the three and six months ended June 30, 2022 or 2021.

There were no gains (losses), net of tax, on settled commodity contracts during the three and six months ended June 30, 2022 and $ 0.2 million during the six months ended June 30, 2021, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of June 30, 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.

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, 2022 or 2021.

There were no gains (losses), net of tax, on settled commodity contracts during the three and nine months ended September 30, 2022 and $ 0.2 million during the nine months ended September 30, 2021, respectively, which were reclassified into cost of materials and other in the condensed consolidated statements of income.

As of September 30, 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

22 unchanged sentences

inputs or indirectly through market-corroborated inputs, and gains (losses) related to changes in fair value are recorded as a component of cost of materials and other in the consolidated statements of income.

With respect to our Consolidated Net RINs Obligation surplus or deficit, we recognized gains (losses) on changes in fair value totaling $( 39.8 ) million and $( 41.0 ) million for three and six months ended June 30, 2022, respectively, and $( 49.8 ) million and $( 104.9 ) million for three and six months ended June 30, 2021, respectively, primarily attributable to changes in the market prices of the underlying credits that occurred at the end of each quarter including changes in volume requirements related to the 2020, 2021 and 2022 RINs Obligation to reflect the June 2022 EPA finalized volume requirements.

As of and for the six months ended June 30, 2022 and 2021, we elected to account for our J.

With respect to our Consolidated Net RINs Obligation surplus or deficit, we recognized gains (losses) on changes in fair value totaling $( 12.6 ) million and $( 53.6 ) million for three and nine months ended September 30, 2022, respectively, and $ 46.6 million and $( 58.3 ) million for three and nine months ended September 30, 2021, respectively, primarily attributable to changes in the market prices of the underlying credits that occurred at the end of each quarter including changes in volume requirements related to the 2020, 2021 and 2022 RINs Obligation to reflect the June 2022 EPA finalized volume requirements.

As of and for the nine months ended September 30, 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.

6 unchanged sentences

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

June 30, 2022

September 30, 2022

Level 1 Level 2 Level 3 Total

22 unchanged sentences

In the table above, derivative assets and liabilities with the same counterparty are not netted where the legal right of offset exists.

This differs from the presentation in the financial statements which reflects our policy, wherein we have elected to offset the fair value amounts

Notes to Condensed Consolidated Financial Statements (Unaudited)

recognized for multiple derivative instruments executed with the same counterparty and where the legal right of offset exists.

As of June 30, 2022 and December 31, 2021, $ 66.3 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.

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, 2022 and December 31, 2021, $ 24.2 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 10 for further information regarding derivative instruments.

6 unchanged sentences

Certain environmental matters that have or may result in penalties or assessments are discussed below in the " Environmental, Health and Safety" section of this note.

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

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

Such amount is included as of June 30, 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.

5 unchanged sentences

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 June 30, 2022 the remaining unpaid balance is $ 0.2 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

As of September 30, 2022 the remaining unpaid balance is $ 0.2 million, and is included in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheet.

Self-insurance

8 unchanged sentences

We believe that our current operations are in substantial compliance with existing environmental and safety requirements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

However, there have been and will continue to be ongoing discussions about environmental and safety matters between us and federal and state authorities, including notices of violations, citations and other enforcement actions, some of which have resulted or may result in changes to operating procedures and in capital expenditures.

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 June 30, 2022, we have recorded an environmental liability of approximately $ 115.4 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.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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, 2022, we have recorded an environmental liability of approximately $ 115.1 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.

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

1 unchanged sentence

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 June 30, 2022 and December 31, 2021 is a liability totaling $ 78.5 million related to a property that we 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”).

Included in our environmental liabilities as of both September 30, 2022 and December 31, 2021 is a liability totaling $ 78.5 million related to a property that we 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 and expired 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 June 30, 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 June 30, 2022 and December 31, 2021, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

As such, as of September 30, 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.

16 unchanged sentences

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

Additionally, we recognized accelerated depreciation of

Notes to Condensed Consolidated Financial Statements (Unaudited)

$ 1.0 million in the six months ended June 30, 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 and six months ended June 30, 2022.

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 2021.

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

No expense was recorded related to the El Dorado refinery fire during the three and nine months ended September 30, 2022.

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

In addition, during the three and six months ended June 30, 2022, we recognized a gain of $ 3.3 million and $ 7.6 million, respectively, related to business interruption claims.

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

In addition, during the three and

Notes to Condensed Consolidated Financial Statements (Unaudited)

nine months ended September 30, 2022, we recognized a gain of $ 0.5 million and $ 8.1 million, respectively, related to business interruption claims.

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

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

3 unchanged sentences

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 $ 6.1 million and $ 15.9 million in the three and six months ended June 30, 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 and six months ended June 30, 2022.

An additional $ 0.1 million was recognized as a gain in excess of losses during the six months ended June 30, 2022.

We recognized additional operating expenses in the amount of $ 0.9 million and $ 16.8 million in the three and nine months ended September 30, 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 and nine months ended September 30, 2022.

An additional $ 0.1 million was recognized as a gain in excess of losses during the nine months ended September 30, 2022.

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

In addition, during the three and six months ended June 30, 2022, we recognized a gain of $ 5.3 million and $ 11.0 million, respectively, related to business interruption claims.

In addition, during the three and nine months ended September 30, 2022, we recognized a gain of $ 6.9 million and $ 17.9 million, respectively, related to business interruption claims.

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

2 unchanged sentences

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

There were no material releases that occurred during the six months ended June 30, 2022.

There were no material releases that occurred during the nine months ended September 30, 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.

2 unchanged sentences

Letters of Credit

As of June 30, 2022, we had in place letters of credit totaling approximately $ 363.9 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at June 30, 2022.

As of September 30, 2022, we had in place letters of credit totaling approximately $ 212.6 million with various financial institutions securing obligations primarily with respect to our commodity transactions for the refining segment and certain of our insurance programs.

There were no amounts drawn by beneficiaries of these letters of credit at September 30, 2022.

Note 13 - Income Taxes

Under ASC 740 we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2022 and June 30, 2021.

Our effective tax rate was 21.4 % and 21.3 % for the three and six months ended June 30, 2022, respectively, and 42.3 % and 28.2 % for the three and six months ended June 30, 2021, respectively.

Under ASC 740, Income Taxes (“ASC 740”) we used an estimated annual tax rate to record income taxes for the three and nine months ended September 30, 2022 and September 30, 2021.

Our effective tax rate was 19.2 % and 21.2 % for the three and nine months ended September 30, 2022, respectively, and 17.9 % and 30.2 % for the three and nine months ended September 30, 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 six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021 was primarily due to the impact of credits and permanent differences on the tax rate due to changes in pre-tax income and changes in the second quarter estimated annual effective tax rate applied to year-to-date loss for the six months ended June 30, 2021 .

The change in our effective tax rate for the three and nine months ended September 30, 2022 as compared to the three and nine months ended September 30, 2021 was primarily due to the impact of credits and permanent differences on the tax rate due to changes in pre-tax income and changes in the third quarter estimated annual effective tax rate applied to year-to-date loss for the nine months ended September 30, 2021 .

Note 14 - Related Party Transactions

1 unchanged sentence

Transactions with our related parties were as follows for the periods presented (in millions):

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

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

2022 2021 2022 2021

7 unchanged sentences

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

Other Current Assets June 30, 2022 December 31, 2021

Short-term derivative assets (see Note 10) $ 92.9 $ 23.6

Other Current Assets September 30, 2022 December 31, 2021

Prepaid expenses $ 97.9 $ 44.9

Short-term derivative assets (see Note 10) 73.2 23.6

Investment commodities 9.8 45.0

3 unchanged sentences

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

Accrued Expenses and Other Current Liabilities June 30, 2022 December 31, 2021

Accrued Expenses and Other Current Liabilities September 30, 2022 December 31, 2021

Product financing agreements $ 305.7 $ 249.6

Crude purchase liabilities 204.0 107.4

Consolidated Net RINs Obligation deficit (see Note 11) 168.7 172.2

Income and other taxes payable 90.5 124.8

Crude purchase liabilities 101.7 107.4

Employee costs 76.3 44.4

Short-term derivative liabilities (see Note 10) 21.6 26.8

Deferred revenue 37.1 44.6

Short-term derivative liabilities (see Note 10) 21.3 26.8

Other 66.2 28.0

7 unchanged sentences

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 $ 6.7 million and $ 11.8 million for the three and six months ended June 30, 2022, respectively, and $ 5.7 million and $ 10.1 million for the three and six months ended June 30, 2021, respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 7.3 million and $ 19.1 million for the three and nine months ended September 30, 2022, respectively, and $ 6.5 million and $ 16.7 million for the three and nine months ended September 30, 2021, respectively.

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

As of June 30, 2022, there was $ 55.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.6 years.

We issued net shares of common stock of 289,971 and 335,771 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2022, respectively, and 186,937 and 280,793 for the three and six months ended June 30, 2021, respectively.

These amounts are net of 250,334 and 268,163 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and six months ended June 30, 2022, respectively, and 88,478 and 147,329 shares during the three and six months ended June 30, 2021, respectively.

As of September 30, 2022, there was $ 49.6 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 1.4 years.

We issued net shares of common stock of 53,522 and 389,293 as a result of exercised or vested equity-based awards during the three and nine months ended September 30, 2022, respectively, and 62,803 and 343,596 for the three and nine months ended September 30, 2021, respectively.

These amounts are net of 50,521 and 318,684 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and nine months ended September 30, 2022, respectively, and 11,781 and 159,110 shares during the three and nine months ended September 30, 2021, respectively.

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek US Holdings, Inc.

Employee Stock Purchase Plan

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

Employee Stock Purchase Plan (the "ESPP").

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

Internal Revenue Code of 1986.

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

On each purchase date, eligible employees (as defined in the ESPP) can purchase the Company's stock at a price per share equal to 90.0 % of the closing price of the Company's common stock on the exercise date, but no less than par value.

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

No shares of common stock were issued under the ESPP as of June 30, 2022.

Implementation of the plan became effective June 1, 2022.

Note 17 - Shareholders' Equity

On June 21, 2022, Delek announced that its Board of Directors declared a special cash dividend on its common stock of $ 0.20 per share payable to all shareholders of record of the Company’s common stock as of the close of business on July 12, 2022.

The payment date for the special dividend was July 20, 2022.

On August 1, 2022, our Board of Directors voted to declare a quarterly cash dividend of $ 0.20 per share of our common stock, payable on September 6, 2022 to shareholders of record on August 22, 2022.

In 2022 , our Board of Directors declared the following dividends:

Approval Date Dividend Amount Per Share Record Date Payment Date

June 21, 2022 $ 0.20 July 12, 2022 July 20, 2022

August 1, 2022 $ 0.20 August 22, 2022 September 6, 2022

October 31, 2022 $ 0.21 November 18, 2022 December 2, 2022

Stock Repurchase Program

2 unchanged sentences

The timing, price and size of repurchases are made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations.

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

No repurchases of our common stock were made in the three and six months ended June 30, 2022 or 2021.

As of June 30, 2022, there was $ 229.7 million of authorization remaining under Delek's aggregate stock repurchase program.

In the second quarter of 2020, we elected to suspend the share repurchase program with a $ 229.7 million remaining authorization balance.

On August 1, 2022, the Board of Directors approved an approximately $ 170.3 million increase in its share repurchase authorization, bringing the total amount available for repurchases under current authorizations to $ 400.0 million.

During both the three and nine months ended September 30, 2022, 1,435,602 shares of our common stock were repurchased and cancelled at the time of the transaction for a total of $ 40.0 million.

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

As of September 30, 2022, there was $ 360.0 million of authorization remaining under Delek's aggregate stock repurchase program.

Stock Purchase and Cooperation Agreement

16 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

We 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 June 30, 2022, $ 23.6 million of our net property, plant, and equipment balance is subject to an operating lease.

As of September 30, 2022, $ 23.2 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.

The agreement includes a one-year renewal option and certain variable payment based on usage.

Notes to Condensed Consolidated Financial Statements (Unaudited)

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

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

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

(in millions) 2022 2021 2022 2021

11 unchanged sentences

Leased assets obtained in exchange for new financing lease liabilities $ — $ 3.2 $ — $ 15.6

June 30, 2022 June 30, 2021

September 30, 2022 September 30, 2021

Weighted-average remaining lease term (years) operating leases 4.3 4.8

5 unchanged sentences

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

Note 19 - Subsequent Events

Delek Logistics Credit Facility

On October 13, 2022, Delek Logistics entered into a fourth amended and restated senior secured revolving credit agreement with Fifth Third, as administrative agent and a syndicate of lenders (the “Amended and Restated Delek Logistics Credit Facility”).

The Amended and Restated Delek Logistics Credit Facility, among other things, (i) increased total aggregate commitments to $ 1.2 billion, comprised of (A) senior secured revolving commitments of $ 900.0 million in aggregate (eliminating the Canadian dollar tranche), with sublimit of up to $ 115.0 million for letters of credit and $ 25.0 million for swing line loans (the “Delek Logistics Revolving Facility”) with an extended maturity date of October 13, 2027, and (B) a new senior secured term loan facility for a term loan in the original principal amount of $ 300.0 million (the “Delek Logistics Term Facility”), (ii) reset the accordion feature under the Delek Logistics Revolving Facility, such that aggregate revolving commitments can be increased to up to $ 1.15 billion upon the agreement of Delek Logistics and one or more existing or new lenders and (ii) provided for the Delek Logistics Term Facility be drawn in full on October 13, 2022, with a maturity date of October 13, 2024 and with a prepayment requirement for the proceeds obtained from certain senior unsecured notes issuances.

The Delek Logistics Term Facility requires four quarterly amortization payments of $3.8 million in 2023 and three quarterly amortization payments of $7.5 million in 2024.

Borrowings under the Delek Logistics Revolving Facility bear interest at the election of Delek Logistics at either a U.S.

dollar prime rate, plus an applicable margin ranging from 1.00 % to 2.00 % depending on Delek Logistics’s Total Leverage Ratio (as defined in the Delek Logistics Credit Agreement), or a SOFR rate plus a credit spread adjustment of 0.10 % for one-month interest periods and 0.25 % for three-month interest periods plus an applicable margin ranging from 2.00 % to 3.00 % depending on Delek Logistic’s Total Leverage Ratio.

Unused revolving commitments under the Delek Logistics Revolving Facility incur a commitment fee that ranges from 0.30 % to 0.50 % depending on Delek Logistics’s Total Leverage Ratio.

Borrowings under the Delek Logistics Term Facility bear interest at the election of Delek Logistics at either a U.S.

dollar prime rate, plus an applicable margin of 2.50 % for the first year of the Delek Logistics Term Facility and 3.00 % for the second year of the Delek Logistics Term Facility, or a SOFR rate plus a credit spread adjustment of 0.10 % for one-month interest periods and 0.25 % for three-month interest periods plus an applicable margin of 3.50 % for the first year of the Delek Logistics Term Facility and 4.00 % for the second year of the Delek Logistics Term Facility.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Amended and Restated Delek Logistics Credit Facility contains affirmative and negative covenants and events of default which, Delek Logistics considers customary and are similar to those in the Delek Logistics Credit Facility.

Under the financial covenants in the Amended and Restated Delek Logistics Credit Facility, Delek Logistics cannot:

• permit, as of the last day of each fiscal quarter, the Total Leverage Ratio (as defined in the Amended and Restated Delek Logistics Credit Facility) to be greater than 5.25 to 1.00;

provided, that during any Temporary Increase Period (as defined in the Amended and Restated Delek Logistics Credit Facility), Delek Logistics cannot permit the foregoing ratio to be greater than 5.50 to 1.00 (a Temporary Increase Period with respect to the 3 Bear Acquisition (as defined in the Amended and Restated Delek Logistics Credit Facility) is in effect through March 31, 2023);

• permit, as of the last day of each fiscal quarter, the Senior Leverage Ratio (as defined in the Amended and Restated Delek Logistics Credit Facility) to be greater than 3.75 to 1.00;

• permit, as of the last day of each fiscal quarter, the interest coverage ratio to be equal to or less than 2.00 to 1.00.

The obligations under the Amended and Restated Delek Logistics Credit Facility remain secured by a first priority lien on substantially all of Delek Logistics' and its subsidiaries’ tangible and intangible assets.

Delek Revolver

On October 26, 2022, Delek entered into a third amended and restated credit agreement with Wells Fargo Bank, as administrative agent, Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the other lenders party thereto, providing for a senior secured asset-based revolving credit facility with an initial commitment of $ 1.1 billion with an extended maturity date of October 26, 2027 (the “Amended and Restated Revolving Credit Facility”).

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

The Amended and Restated Revolving Credit Facility also permits the issuance of letters of credit of 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.

The interest rates applicable to borrowings under the Amended and Restated Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at Delek’s option, (i) a base rate, plus an applicable margin, or (ii) SOFR, plus an applicable margin (or, in the case of borrowings denominated in Canadian dollars, CDOR).

The initial applicable margin for Amended and Restated Revolving Credit Facility borrowings is 0.25 % per annum with respect to base rate borrowings and 1.25 % per annum with respect to SOFR and CDOR borrowings, and the applicable margin for such borrowings after December 31, 2022 will be based on Delek’s quarterly average 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 SOFR and CDOR borrowings.

In addition, the Amended and Restated Revolving Credit Facility will require Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which fee will be at a rate of 0.25 % or 0.30 %, depending on average commitment usage for such quarter.

The Amended and Restated Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor’s Revolving Priority Collateral, and a second priority lien over substantially all of Delek’s and each guarantor’s other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain unrestricted subsidiaries, excluded subsidiaries and MLP Subsidiaries) subject to certain customary exceptions, but excluding real property.

The Amended and Restated Revolving Credit Facility contains a springing financial covenant that requires the Delek after excess availability under the Amended and Restated Revolving Credit Facility falls below the greater of (x) $ 90.0 million and (y) 0.10 % of the loan limit, to comply with a minimum fixed charge coverage ratio of 1.00 to 1.00 until excess availability is greater than such threshold for a period of 30 consecutive days.

In addition, the Amended and Restated Revolving Credit Facility is subject to negative covenants that, among other things and subject to certain exceptions, limit Delek’s ability and the ability of its restricted subsidiaries to:

(i) incur indebtedness or make guarantees of indebtedness;

(ii) incur liens;

(iii) make investments, loans and acquisitions;

(iv) merge, liquidate or dissolve;

(v) sell assets, including capital stock of subsidiaries;

(vi) pay dividends on capital stock or redeem, repurchase or retire capital stock;

(vii) alter Delek’s business;

(viii) engage in transactions with Delek’s affiliates;

(ix) enter into agreements limiting subsidiary dividends and distributions;

and (x) enter into certain hedging transactions.

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