What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 187 added, 156 removed, 774 unchanged (31% of the section changed)

3 unchanged sentences

(In millions, except share and per share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

33 unchanged sentences

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 83,150,295 shares and 84,509,517 shares issued at June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 110,000,000 shares authorized, 82,241,519 shares and 84,509,517 shares issued at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,116.4 1,134.1

Accumulated other comprehensive loss ( 5.3 ) ( 5.2 )

Treasury stock, 17,575,527 shares, at cost, at June 30, 2023 and December 31, 2022, respectively

Treasury stock, 17,575,527 shares, at cost, at September 30, 2023 and December 31, 2022, respectively

( 694.1 ) ( 694.1 )

8 unchanged sentences

(In millions, except share and per share data)

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

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

2023 2022 2023 2022

15 unchanged sentences

Total non-operating expense, net 57.1 32.2 167.3 85.3

(Loss) income before income tax (benefit) expense ( 5.3 ) 469.0 82.7 486.9

Income tax (benefit) expense ( 3.8 ) 100.4 12.0 103.5

Net (loss) income ( 1.5 ) 368.6 70.7 383.4

Income before income tax expense 167.6 20.8 250.3 507.7

Income tax expense 31.5 4.0 43.5 107.5

Net income 136.1 16.8 206.8 400.2

Net income attributed to non-controlling interests 7.4 9.4 22.1 24.4

Net (loss) income attributable to Delek $ ( 8.3 ) $ 361.8 $ 56.0 $ 368.4

Basic (loss) income per share $ ( 0.13 ) $ 5.11 $ 0.84 $ 5.12

Diluted (loss) income per share $ ( 0.13 ) $ 5.05 $ 0.84 $ 5.07

Net income attributable to Delek $ 128.7 $ 7.4 $ 184.7 $ 375.8

Basic income per share $ 1.98 $ 0.11 $ 2.80 $ 5.26

Diluted income per share $ 1.97 $ 0.10 $ 2.78 $ 5.21

Weighted average common shares outstanding:

6 unchanged sentences

(In millions)

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

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

2023 2022 2023 2022

Net (loss) income $ ( 1.5 ) $ 368.6 $ 70.7 $ 383.4

Net income $ 136.1 $ 16.8 $ 206.8 $ 400.2

Other comprehensive loss:

1 unchanged sentence

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

Comprehensive (loss) income $ ( 1.6 ) $ 368.5 $ 70.6 $ 383.2

Comprehensive income $ 136.1 $ 16.7 $ 206.7 $ 400.0

Comprehensive income attributable to non-controlling interest 7.4 9.4 22.1 24.4

Comprehensive (loss) income attributable to Delek $ ( 8.4 ) $ 361.7 $ 55.9 $ 368.2

Comprehensive income attributable to Delek $ 128.7 $ 7.3 $ 184.6 $ 375.6

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

(In millions, except share and per share data)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

Shares Amount Shares Amount

Balance at March 31, 2023

Balance at June 30, 2023

83,150,295 $ 0.8 $ 1,121.8 $ ( 5.3 ) $ 518.1 ( 17,575,527 ) $ ( 694.1 ) $ 121.6 $ 1,062.9

Net (loss) income — — — — ( 8.3 ) — — 6.8 ( 1.5 )

Net income — — — — 128.7 — — 7.4 136.1

Common stock dividends ($ 0.235 per share)

6 unchanged sentences

Other 24,760 — 0.6 — — — — 0.1 0.7

Balance at June 30, 2023

Balance at September 30, 2023

82,241,519 $ 0.8 $ 1,116.4 $ ( 5.3 ) $ 619.9 ( 17,575,527 ) $ ( 694.1 ) $ 119.3 $ 1,157.0

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss 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

3 unchanged sentences

(In millions, except share and per share data)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

10 unchanged sentences

Other 115,326 — 4.1 ( 0.1 ) ( 0.2 ) — — 0.1 3.9

Balance at June 30, 2023 83,150,295 $ 0.8 $ 1,121.8 $ ( 5.3 ) $ 518.1 ( 17,575,527 ) $ ( 694.1 ) $ 121.6 $ 1,062.9

Six Months Ended June 30, 2022

Balance at September 30, 2023 82,241,519 $ 0.8 $ 1,116.4 $ ( 5.3 ) $ 619.9 ( 17,575,527 ) $ ( 694.1 ) $ 119.3 $ 1,157.0

Nine Months Ended September 30, 2022

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

2 unchanged sentences

Net income — — — — 375.8 — — 24.4 400.2

Common stock dividends ($ 0.40 per share)

— — — — ( 28.3 ) — — — ( 28.3 )

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

Distribution to non-controlling interest — — — — — — — ( 17.7 ) ( 17.7 )

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

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

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

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

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

See accompanying notes to the condensed consolidated financial statements

3 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

25 unchanged sentences

Proceeds from sale of property, plant and equipment 1.3 1.2

Insurance proceeds 1.5 —

Net cash used in investing activities ( 338.6 ) ( 819.9 )

15 unchanged sentences

Net cash (used in) provided by financing activities ( 523.8 ) 401.1

Net (decrease) increase in cash and cash equivalents ( 19.7 ) 388.1

Net increase in cash and cash equivalents 60.4 297.3

Cash and cash equivalents at the beginning of the period 841.3 856.5

3 unchanged sentences

(In millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental disclosures of cash flow information:

1 unchanged sentence

Interest, net of capitalized interest of $ 3.2 million and $ 1.5 million in the 2023,and 2022 periods, respectively

$ 232.3 113.5

Income taxes $ 8.3 $ 26.5

30 unchanged sentences

Certain prior period amounts have been reclassified in order to conform to the current period presentation.

New Accounting Pronouncements Adopted During 2023

ASU 2023 -03 , Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718)

In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718) (“ASU 2023-03”).

This ASU amends or supersedes various SEC paragraphs within the FASB Accounting Standards Codification to conform to past SEC announcements and guidance issued by the SEC.

ASU 2023-03 does not provide any new guidance, so there is no transition or effective date.

We adopted ASU 2023-03 in July 2023.

There was no material impact on our condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

ASU 2023-06, Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06 Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06").

The main provision of ASU 2023-06 is to clarify or improve disclosure and presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the FASB accounting standard codification with the SEC's regulations.

The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

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

Notes to Condensed Financial Statements (Unaudited)

Delek Delaware Gathering (formally 3 Bear)

2 unchanged sentences

The Delaware Gathering Acquisition was financed through a combination of cash on hand and borrowings under the Delek Logistics' Revolving Facility (as discussed in Note 9 of these consolidated financial statements).

For the three and six months ended June 30, 2023, we incurred no incremental direct acquisition and integration costs.

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.

For the three and nine months ended September 30, 2023, we incurred no incremental direct acquisition and integration costs.

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.

1 unchanged sentence

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

Notes to Condensed Financial Statements (Unaudited)

Determination of Purchase Price

30 unchanged sentences

• 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.

Notes to Condensed Financial Statements (Unaudited)

The fair value of property, plant and equipment was based on the combination of the cost and market approaches.

8 unchanged sentences

Goodwill related to the Delaware Gathering Acquisition is included in the logistics segment.

Notes to Condensed Financial Statements (Unaudited)

Unaudited Pro Forma Financial Information

5 unchanged sentences

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

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

(in millions, except per share data)

20 unchanged sentences

Segment EBITDA, as determined and measured by us, should also not be compared to similarly titled measures reported by other companies.

Notes to Condensed Financial Statements (Unaudited)

Assets by segment are not a measure used to assess the performance of the Company by the CODM and thus are not disclosed.

1 unchanged sentence

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, 2023, including the following:

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2023, including the following:

• Tyler, Texas refinery (the "Tyler refinery");

3 unchanged sentences

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

Notes to Condensed Financial Statements (Unaudited)

Logistics Segment

3 unchanged sentences

Retail Segment

Our retail segment consists of 247 owned and leased convenience store sites as of June 30, 2023, located primarily in West Texas and New Mexico.

Our retail segment consists of 250 owned and leased convenience store sites as of September 30, 2023, located primarily in West Texas and New Mexico.

These convenience stores typically offer various grades of fuel, food and beverage products, general merchandise, and certain food and other services.

2 unchanged sentences

The following is a summary of business segment operating performance as measured by EBITDA attributable to Delek for the period indicated (in millions):

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In millions) Refining Logistics Retail Corporate,

6 unchanged sentences

Interest expense, net ( 12.0 ) ( 37.0 ) 0.1 ( 33.4 ) ( 82.3 )

Income tax benefit 3.8

Net loss attributable to Delek $ ( 8.3 )

Income tax expense ( 31.5 )

Net income attributable to Delek $ 128.7

Income from equity method investments $ 0.2 $ 9.3 $ — $ 17.5 $ 27.0

Capital spending (excluding business combinations) $ 20.2 $ 13.1 $ 8.0 $ 7.0 $ 48.3

Three Months Ended June 30, 2022

Notes to Condensed Financial Statements (Unaudited)

Three Months Ended September 30, 2022

(In millions) Refining Logistics Retail Corporate,

8 unchanged sentences

Net income attributable to Delek $ 7.4

Income from equity method investments $ 0.1 $ 8.6 $ — $ 9.1 $ 17.8

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

Notes to Condensed Financial Statements (Unaudited)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In millions) Refining Logistics Retail Corporate,

8 unchanged sentences

Net income attributable to Delek $ 184.7

Income from equity method investments $ 0.7 $ 22.9 $ — $ 43.5 $ 67.1

Capital spending (excluding business combinations) $ 197.3 $ 68.6 $ 16.0 $ 19.7 $ 301.6

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In millions) Refining Logistics Retail Corporate,

8 unchanged sentences

Net income attributable to Delek $ 375.8

Income from equity method investments $ 0.5 $ 22.7 $ — $ 21.2 $ 44.4

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

Notes to Condensed Financial Statements (Unaudited)

Earnings Per Share

3 unchanged sentences

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

Notes to Condensed Financial Statements (Unaudited)

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

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

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

2023 2022 2023 2022

Numerator for EPS

Net (loss) income $ ( 1.5 ) $ 368.6 $ 70.7 $ 383.4

Net income $ 136.1 $ 16.8 $ 206.8 $ 400.2

Income attributed to non-controlling interest 7.4 9.4 22.1 24.4

3 unchanged sentences

Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS) 65,464,970 71,109,364 66,372,335 72,148,638

Basic (loss) income per share $ ( 0.13 ) $ 5.11 $ 0.84 $ 5.12

Diluted (loss) income per share $ ( 0.13 ) $ 5.05 $ 0.84 $ 5.07

Basic income per share $ 1.98 $ 0.11 $ 2.80 $ 5.26

Diluted income per share $ 1.97 $ 0.10 $ 2.78 $ 5.21

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

Antidilutive stock-based compensation (because average share price is less than exercise price) 1,254,610 2,138,130 1,756,314 2,380,376

Antidilutive due to loss 464,170 — — —

Total antidilutive stock-based compensation 3,036,938 1,450,184 2,149,803 2,853,904

Delek Logistics

1 unchanged sentence

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

As of June 30, 2023, we owned a 78.7 % interest in Delek Logistics, consisting of 34,311,278 common limited partner units and the non-economic general partner interest.

As of September 30, 2023, we owned a 78.7 % 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 consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying consolidated balance sheets.

6 unchanged sentences

Notes to Condensed Financial Statements (Unaudited)

As of June 30, 2023

As of September 30, 2023

As of December 31, 2022

34 unchanged sentences

The obligations of the HoldCo members under the W2W Holdings LLC Agreement are guaranteed by the parents of the member entities.

As of June 30, 2023, except for the guarantee of member obligations under the joint venture, we do not have other guarantees with or to HoldCo, nor any third-party associated with HoldCo contracted work.

As of September 30, 2023, except for the guarantee of member obligations under the joint venture, we do not have other guarantees with or to HoldCo, nor any third-party associated with HoldCo contracted work.

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

As of June 30, 2023 and December 31, 2022, Delek's HoldCo investment balance totaled $ 55.0 million and $ 49.0 million, respectively, and is included in total assets in corporate, other and eliminations in our segment disclosure.

In addition, on the investment, we recognized income of $ 6.8 million and $ 11.3 million for the three and six months ended June 30, 2023, respectively, and $ 2.1 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, Delek's HoldCo investment balance totaled $ 56.2 million and $ 49.0 million, respectively, and is included in total assets in corporate, other and eliminations in our segment disclosure.

In addition, on the investment, we recognized income of $ 6.9 million and $ 18.2 million for the three and nine months ended September 30, 2023, respectively, and $ 1.2 million and $ 5.4 million for the three and nine months ended September 30, 2022, respectively.

Notes to Condensed Financial Statements (Unaudited)

1 unchanged sentence

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, 2023 and December 31, 2022, Delek's investment balance in Red River totaled $ 140.9 million and $ 149.6 million, respectively.

We recognized income on the investment totaling $ 4.0 million and $ 7.8 million for the three and six months ended June 30, 2023, respectively, and $ 4.6 million and $ 9.9 million for the three and six months ended June 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, Delek's investment balance in Red River totaled $ 140.9 million and $ 149.6 million, respectively.

We recognized income on the investment totaling $ 5.5 million and $ 13.3 million for the three and nine months ended September 30, 2023, respectively, and $ 4.7 million and $ 14.6 million for the three and nine months ended September 30, 2022, 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, 2023 and December 31, 2022, Delek Logistics' investment balance in these joint ventures was $ 101.8 million and $ 107.4 million, respectively, and are accounted for using the equity method.

We recognized income on these investments totaling $ 3.3 million and $ 5.8 million for the three and six months ended June 30, 2023, respectively, and $ 2.4 million and $ 4.2 million for the three and six months ended June 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, Delek Logistics' investment balance in these joint ventures was $ 101.0 million and $ 107.4 million, respectively, and are accounted for using the equity method.

We recognized income on these investments totaling $ 3.8 million and $ 9.6 million for the three and nine months ended September 30, 2023, respectively, and $ 3.9 million and $ 8.1 million for the three and nine months ended September 30, 2022, 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, 2023 and December 31, 2022, Delek's investment balance in these joint ventures was $ 65.9 million and $ 53.7 million, respectively.

We recognized income on these investments totaling $ 11.4 million and $ 15.2 million for the three and six months ended June 30, 2023, respectively, and $ 6.6 million and $ 8.3 million for the three and six months ended June 30, 2022, respectively.

As of September 30, 2023 and December 31, 2022, Delek's investment balance in these joint ventures was $ 73.1 million and $ 53.7 million, respectively.

We recognized income on these investments totaling $ 10.8 million and $ 26.0 million for the three and nine months ended September 30, 2023, respectively, and $ 8.0 million and $ 16.3 million for the three and nine months ended September 30, 2022, respectively.

Both investments are accounted for using the equity method.

The investment in asphalt terminal operations is included as part of total assets in corporate, other and eliminations in our segment disclosure while the ethanol terminal operations is reflected in the refining segment.

Combined summarized financial information for our equity method investees (with the exception of our interest in a joint venture that owns asphalt terminals) on a 100% basis is shown below (in millions):

As of June 30, 2023 As of December 31, 2022

Combined summarized financial information for our equity method investees on a 100% basis is shown below (in millions):

As of September 30, 2023 As of December 31, 2022

Current assets $ 184.5 $ 54.5

2 unchanged sentences

Non-current liabilities $ 552.3 $ 548.5

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

2023 2022 2023 2022

Revenues $ 32.0 $ 34.9 $ 63.7 $ 72.1

Gross profit $ 19.9 $ 22.7 $ 39.6 $ 47.9

Operating income $ 19.6 $ 21.6 $ 37.9 $ 46.0

Net income $ 32.9 $ 19.0 $ 57.6 $ 41.5

Summarized financial information for our interest in a joint venture that owns asphalt terminals on a 100% basis is shown below (in millions):

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

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

2023 2022 2023 2022

3 unchanged sentences

Net income $ 61.9 $ 40.1 $ 148.6 $ 97.3

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

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

2 unchanged sentences

Titled Inventory Inventory Intermediation Agreement (1)

June 30, 2023

September 30, 2023

Feedstocks, raw materials and supplies $ 371.6 $ 156.7 $ 528.3

8 unchanged sentences

(1) Refer to Note 8 - Inventory Intermediation Obligations for further information.

At June 30, 2023, we recorded a pre-tax inventory valuation reserve of $ 1.6 million due to a market price decline below our cost of certain inventory products.

At September 30, 2023, we recorded a pre-tax inventory valuation reserve of $ 5.0 million due to a market price decline below our cost of certain inventory products.

At December 31, 2022, we recorded a pre-tax inventory valuation reserve of $ 11.2 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 $ 7.9 million and $ 9.6 million for the three and six months ended June 30, 2023, respectively, and $( 7.3 ) million and $ 1.2 million for the three and six months ended June 30, 2022, respectively.

For the three months ended June 30, 2023, we recorded an immaterial cumulative error correction of approximately $ 8.0 million, which was reflected as an adjustment to total cost of sales.

This adjustment related to spare parts that should have been included in inventories.

The impact of the balance sheet error correction would not have been material to any prior period financial statements and is not material to inventories or total cost of sales in the current period.

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 $( 3.4 ) million and $ 6.2 million for the three and nine months ended September 30, 2023, respectively, and $( 20.3 ) million and $( 19.1 ) million for the three and nine months ended September 30, 2022, respectively.

Inventory Intermediation Obligations

The following table summarizes our outstanding obligations under our Inventory Intermediation Agreement and Supply and Offtake Agreements:

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Obligations under Inventory Intermediation Agreement

9 unchanged sentences

The following table summarizes these fees:

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

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

2023 2022 2023 2022

5 unchanged sentences

("Citi") in connection with DK Trading & Supply, LLC ("DKTS"), an indirect subsidiary of Delek.

Pursuant to the Inventory Intermediation Agreement, Citi will (i) purchase from and sell to DKTS crude oil and other petroleum feedstocks in connection with refining processing operations at El Dorado, Big Spring, and Krotz Springs, (ii) purchase from and sell to DKTS all refined products produced by such refineries other than certain excluded products and (iii) in connection with such purchases and sales, DKTS will enter into certain market risk

Notes to Condensed Financial Statements (Unaudited)

hedges in each case, on the terms and subject to certain conditions.

The Inventory Intermediation Agreement results in up to $ 800 million of working capital capacity for DKTS.

4 unchanged sentences

The Inventory Intermediation Agreement replaced the Supply and Offtake Agreements that expired on December 30, 2022.

On June 21, 2023, DKTS entered into a letter agreement to the Inventory Intermediation Agreement with Citi to temporarily increase its letter of credit issued to Citi by $ 100.0 million which will allow DKTS to defer payments of certain obligations under the Inventory Intermediation Agreement until July 2023.

These deferred obligations will be subject to applicable interest charges.

As of June 30, 2023, we had letters of credit outstanding of $ 195.0 million supporting the Inventory Intermediation Agreement.

Notes to Condensed Financial Statements (Unaudited)

On September 18, 2023, DKTS entered into a letter agreement to the Inventory Intermediation Agreement with Citi to temporarily increase its letter of credit issued to Citi by $ 180.0 million which allowed DKTS to defer payments of certain obligations under the Inventory Intermediation Agreement until October 2023.

These deferred obligations were subject to applicable interest charges.

As of September 30, 2023, we had letters of credit outstanding of $ 260.0 million supporting the Inventory Intermediation Agreement.

The Inventory Intermediation Agreement provides for the lease to Citi of crude oil and refined product storage facilities.

At the inception of the Inventory Intermediation Agreement, we transferred title to a certain number of barrels of crude and other inventories to Citi, and the Inventory Intermediation Agreement requires the repurchase of the remaining inventory (including certain "Base Layer Volumes") at termination.

As of June 30, 2023 and December 31, 2022, the volumes subject to the Inventory Intermediation Agreement totaled 5.8 million barrels and 6.3 million barrels, including Base Layer Volumes associated with our non-current inventory intermediation obligation of 5.5 million barrels.

As of September 30, 2023 and December 31, 2022, the volumes subject to the Inventory Intermediation Agreement totaled 5.4 million barrels and 6.3 million barrels, including Base Layer Volumes associated with our non-current inventory intermediation obligation of 5.5 million barrels.

The Inventory Intermediation Agreement is accounted for as an inventory financing arrangement under the fair value election provided by ASC 815 Derivatives and Hedging ("ASC 815") and ASC 825, Financial Instruments ("ASC 825").

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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 condensed consolidated statements of income.

With respect to the repurchase obligation, we recognized gains attributable to changes in fair value due to commodity-index price totaling $ 26.3 million and $ 39.0 million during the three and six months ended June 30, 2023, respectively.

With respect to the repurchase obligation, we recognized losses attributable to changes in fair value due to commodity-index price totaling $ 83.5 million and $ 44.5 million during the three and nine months ended September 30, 2023, respectively.

Supply & Offtake Agreements

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The Baseline Step-Out Liabilities had a floating component whose fair value reflected changes to commodity price risk with changes in fair value recorded in cost of materials.

For the three and six months ended June 30, 2022, we recognized gains 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, respectively.

For the three and nine months ended September 30, 2022, 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, respectively.

Notes to Condensed Financial Statements (Unaudited)

Long-Term Obligations

Outstanding borrowings under debt instruments are as follows (in millions):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Delek Revolving Credit Facility $ 0.3 $ 450.0

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Long-term debt, net of current portion $ 2,608.5 $ 2,979.2

Notes to Condensed Financial Statements (Unaudited)

Delek Term Loan Credit Facility

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At Delek’s option, borrowings bear interest at either the Adjusted Term Secured Overnight Financing Rate ("SOFR") or base rate as defined by the agreement, plus an applicable margin of 2.50 % per annum with respect to base rate borrowings and 3.50 % per annum with respect to SOFR borrowings.

At June 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.70 % and 7.92 %;

At September 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.92 % and 7.92 %;

respectively.

The effective interest rate was 9.95 % as of June 30, 2023.

The effective interest rate was 10.16 % as of September 30, 2023.

Delek Logistics Term Loan Facility

The Delek Logistics Term Loan Facility principal of $ 300.0 million was drawn on October 13, 2022.

This senior secured facility requires four quarterly amortization payments of $ 3.8 million in 2023 and three quarterly amortization payments of $ 7.5 million in 2024 with final maturity and principal due on October 13, 2024.

On November 6, 2023, Delek Logistics entered into a First Amendment, a Second Amendment and a Third Amendment to the Delek Logistics Credit Facility (together, the “Amendments”) to extend the maturity of the Term Loan Facility to April 15, 2025.

In addition, the Amendments added a maturity acceleration clause which will accelerate the maturity of the Delek Logistics Term Loan Facility to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date.

This senior secured facility requires four quarterly amortization payments of $ 3.8 million in 2023, four quarterly amortization payments of $ 7.5 million in 2024 and one quarterly amortization payment of $ 7.5 million in 2025 with final maturity and principal due on April 15, 2025.

At Delek Logistics' option, borrowings bear interest at either the SOFR or U.S.

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SOFR borrowings include a credit spread adjustment of 0.10 % to 0.25 % plus an applicable margin of 3.50 % for the first year and 4.00 % for the second year.

At June 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.41 % and 7.92 %, respectively.

The effective interest rate was 9.98 % as of June 30, 2023.

At September 30, 2023 and December 31, 2022, the weighted average borrowing rate was approximately 8.92 % and 7.92 %, respectively.

The effective interest rate was 9.48 % as of September 30, 2023.

Notes to Condensed Financial Statements (Unaudited)

Revolving Credit Facilities

Available capacity and amounts outstanding for each of our revolving credit facilities as of June 30, 2023 are shown below (in millions):

Available capacity and amounts outstanding for each of our revolving credit facilities as of September 30, 2023 are shown below (in millions):

Total Capacity

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Interest is measured at either the SOFR, base rate, or Canadian dollar bankers’ acceptances rate (“CDOR”), plus an applicable margin of 0.25 % to 0.75 % per annum with respect to base rate borrowings or 1.25 % to 1.75 % per annum with respect to SOFR and CDOR.

As of June 30, 2023 and December 31, 2022, the weighted average interest rate was 6.45 % and 5.67 %, respectively.

As of September 30, 2023 and December 31, 2022, the weighted average interest rate was 6.68 % and 5.67 %, respectively.

(2) The Delek Logistics Revolving Facility's maturity date will accelerate to 180 days prior to the stated maturity date of the Delek Logistics 2025 Notes if any of the Delek Logistics 2025 Notes remain outstanding on that date.

Total capacity includes letters of credit up to $ 115.0 million and $ 25.0 million for swing line loans.

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dollar prime rate plus an applicable margin of 1.00 % to 2.00 % depending on Delek Logistics’ leverage ratio, or a SOFR rate plus a credit spread adjustment of 0.10 % to 0.25 % and an applicable margin ranging from 2.00 % to 3.00 % depending on the leverage ratio.

As of June 30, 2023 and December 31, 2022, the weighted average interest rate was 7.95 % and 7.55 %, respectively.

As of September 30, 2023 and December 31, 2022, the weighted average interest rate was 8.45 % and 7.55 %, respectively.

(3) Requires a quarterly fee of 0.50 % per year on the average unused revolving commitment.

The weighted average borrowing rate as of June 30, 2023 and December 31, 2022 was 7.50 % and 6.75 %, respectively.

The weighted average borrowing rate as of September 30, 2023 and December 31, 2022 was 7.75 % and 6.75 %, respectively.

Delek Logistics Revolving Credit Facility

On November 6, 2023, Delek Logistics entered into the Amendments which among other things:

(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 Revolving Credit Facility in an amount of $ 1.050 billion and (ii) increased the limit allowed for general unsecured debt (as defined in the Delek Logistics Credit Facility) by an amount equal to $ 95.0 million, resulting in an unsecured general debt limit of $ 150.0 million.

United Community Bank Revolver

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Interest is payable semi-annually in arrears on May 15 and November 15.

As of June 30, 2023, the effective interest rate was 7.17 %.

As of September 30, 2023, the effective interest rate was 7.18 %.

Delek Logistics 2028 Notes

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Interest is payable semi-annually in arrears on June 1 and December 1.

As of June 30, 2023, the effective interest rate was 7.39 %.

Notes to Condensed Financial Statements (Unaudited)

As of September 30, 2023, the effective interest rate was 7.39 %.

Guarantees Under Revolver and Term Facilities

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

Notes to Condensed Financial Statements (Unaudited)

Restrictive Terms and Covenants

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Certain of our debt facilities contain limitations on future transactions such as incurrence of additional indebtedness, investments, affiliate transactions, asset acquisitions or dispositions, and dividends or distributions.

As of June 30, 2023, we were in compliance with covenants on all of our debt instruments.

As of September 30, 2023, we were in compliance with covenants on all of our debt instruments.

Some of Delek's subsidiaries have restrictions in their respective credit facilities limiting their use of assets.

As of June 30, 2023, we had no subsidiaries with restricted net assets which would prohibit earnings from being transferred to the parent company for its use.

As of September 30, 2023, we had no subsidiaries with restricted net assets which would prohibit earnings from being transferred to the parent company for its use.

Derivative Instruments

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• managing our exposure to market crack spread fluctuations;

• managing the cost of our credits required by the U.S.

• managing the cost of our Renewable Identification Numbers ("RINs") credits required by the U.S.

Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs Obligation") using future commitments to purchase or sell RINs at fixed prices and quantities;

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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, 2023, 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 condensed consolidated statements of income in our refining segment, and are included in our disclosures of commodity derivatives in the tables below.

Additionally, as of and for the three and nine months ended September 30, 2023, 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 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.

Notes to Condensed Financial Statements (Unaudited)

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.

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

As of June 30, 2023, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

The following table presents the fair value of our derivative instruments as of June 30, 2023 and December 31, 2022.

As of September 30, 2023, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

The following table presents the fair value of our derivative instruments as of September 30, 2023 and December 31, 2022.

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

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

June 30, 2023 December 31, 2022

Notes to Condensed Financial Statements (Unaudited)

September 30, 2023 December 31, 2022

Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities

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Total net fair value of derivatives $ 14.3 $ ( 4.3 ) $ 22.7 $ ( 21.3 )

(1) As of June 30, 2023 and December 31, 2022, we had open derivative positions representing 152,606,574 and 158,307,020 barrels, respectively, of crude oil and refined petroleum products.

Additionally, as of June 30, 2023 and December 31, 2022, we had open derivative positions representing 6,787,500 and 2,310,000 million British Thermal Units ("MMBTU"), respectively, of natural gas products.

(2) As of June 30, 2023 and December 31, 2022, we had open RINs commitment contracts representing 81,100,000 and 259,022,967 RINs, respectively.

(3) As of June 30, 2023 and December 31, 2022, $ 12.9 million and $ 13.8 million, respectively, of cash collateral held by counterparties has been netted with the derivatives with each counterparty.

(1) As of September 30, 2023 and December 31, 2022, we had open derivative positions representing 86,907,586 and 158,307,020 barrels, respectively, of crude oil and refined petroleum products.

Additionally, as of September 30, 2023 and December 31, 2022, we had open derivative positions representing 1,705,000 and 2,310,000 million British Thermal Units ("MMBTU"), respectively, of natural gas products.

(2) As of September 30, 2023 and December 31, 2022, we had open RINs commitment contracts representing 17,000,000 and 259,022,967 RINs, respectively.

(3) As of September 30, 2023 and December 31, 2022, $ 21.8 million and $ 13.8 million, respectively, of cash collateral 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) (2) :

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

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

2023 2022 2023 2022

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Total gains (losses) $ ( 97.1 ) 78.3 $ ( 88.8 ) $ ( 24.3 )

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 6.6 ) million and $ 23.3 million for the three and six months ended June 30, 2023 , respectively, and $ 66.1 million and $( 4.6 ) million for the three and six months ended June 30, 2022, respectively.

(1) Gains (losses) on commodity derivatives that are economic hedges but not designated as hedging instruments include unrealized gains (losses) of $( 78.8 ) million and $( 55.5 ) million for the three and nine months ended September 30, 2023 , respectively, and $ 24.8 million and $ 20.2 million for the three and nine months ended September 30, 2022, respectively.

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

Notes to Condensed Financial Statements (Unaudited)

Total gains (losses) on our trading derivatives (none of which were designated as hedging instruments) recorded in other operating (income) expense, 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,

2023 2022 2023 2022

Trading Physical Forward Contract Commodity Derivatives

Realized gains $ 5.9 $ 2.9 $ 7.2 $ 20.9

Realized (losses) gains $ 0.8 $ 1.2 $ 8.0 $ 19.7

Unrealized gains (losses) — — 0.1 ( 0.3 )

1 unchanged sentence

Trading Hedging Commodity Derivatives

Realized (loses) gains $ ( 3.1 ) $ ( 3.0 ) $ ( 1.7 ) $ 11.9

Realized (losses) gains $ ( 0.4 ) $ ( 0.3 ) $ ( 2.1 ) $ 11.6

Unrealized gains (losses) 0.2 0.7 2.5 ( 15.8 )

Total $ ( 0.2 ) $ 0.4 $ 0.4 $ ( 4.2 )

Notes to Condensed Financial Statements (Unaudited)

Fair Value Measurements

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The environmental credits obligation surplus or deficit is categorized as Level 2, if measured at fair value either directly through observable inputs or indirectly through market-corroborated inputs, 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 $( 2.1 ) million and $( 1.8 ) million for the three and six months ended June 30, 2023, respectively, and $( 39.8 ) million and $( 41.0 ) million for the three and six months ended June 30, 2022, respectively, primarily attributable to changes in the market prices of the underlying credits that occurred at the end of each quarter.

Notes to Condensed Financial Statements (Unaudited)

As of and for the three and six months ended June 30, 2023 and 2022, we elected to account for our Inventory Intermediation step-out liability and our J.

With respect to our Consolidated Net RINs Obligation surplus or deficit, we recognized gains (losses) on changes in fair value totaling $ 3.6 million and $ 1.8 million for the three and nine months ended September 30, 2023, respectively, and $( 12.6 ) million and $( 53.6 ) million for the three and nine months ended September 30, 2022, respectively, primarily attributable to changes in the market prices of the underlying credits that occurred at the end of each quarter.

As of and for the three and nine months ended September 30, 2023 and 2022, we elected to account for our Inventory Intermediation step-out liability and our J.

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

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The fair value of the Delek Logistics 2028 Notes is measured based on quoted market prices in an active market, defined as Level 1 in the fair value hierarchy.

The carrying value (excluding unamortized debt issuance costs) and estimated fair value of these notes was $ 400.0 million and $ 372.1 million, respectively, as of June 30, 2023, and $ 400.0 million and $ 359.7 million, respectively, at December 31, 2022.

The carrying value (excluding unamortized debt issuance costs) and estimated fair value of these notes was $ 400.0 million and $ 365.5 million, respectively, as of September 30, 2023, and $ 400.0 million and $ 359.7 million, respectively, at December 31, 2022.

Notes to Condensed Financial Statements (Unaudited)

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

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

As of June 30, 2023

As of September 30, 2023

Level 1 Level 2 Level 3 Total

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

As of June 30, 2023 and December 31, 2022, $ 12.9 million and $ 13.8 million, respectively, of cash (obligation) collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

As of September 30, 2023 and December 31, 2022, $ 21.8 million and $ 13.8 million, respectively, of cash collateral was held by counterparty brokerage firms and has been netted with the net derivative positions with each counterparty.

See Note 10 for further information regarding derivative instruments.

Notes to Condensed Financial Statements (Unaudited)

Non-Recurring Fair Value Measurements

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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.

Notes to Condensed Financial Statements (Unaudited)

Environmental, Health and Safety

We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the EPA, the United States Department of Transportation and the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies.

We are subject to extensive federal, state and local environmental and safety laws and regulations enforced by various agencies, including the EPA, the U.S.

Department of Transportation and the Occupational Safety and Health Administration, as well as numerous state, regional and local environmental, safety and pipeline agencies.

These laws and regulations govern the discharge of materials into the environment, waste management practices, pollution prevention measures and the composition of the fuels we produce, as well as the safe operation of our plants and pipelines and the safety of our workers and the public.

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

As of June 30, 2023, we have recorded an environmental liability of approximately $ 114.7 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

As of September 30, 2023, we have recorded an environmental liability of approximately $ 114.7 million, primarily related to the estimated probable costs of remediating or otherwise addressing certain environmental issues of a non-capital nature at our refineries, as well as terminals, some of which we no longer own.

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

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

Included in our environmental liabilities as of both June 30, 2023 and December 31, 2022 is a liability totaling $ 78.5 million related to a property that we have historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”).

Included in our environmental liabilities as of both September 30, 2023 and December 31, 2022 is a liability totaling $ 78.5 million related to a property that we have historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”).

The License Agreement, which provided us the license to continue operating our asphalt and marine fuel terminal operations on the property for a term of ten years 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 in connection with the Delek/Alon Merger, effective July 1, 2017.

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, 2023.

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, 2023 and December 31, 2022, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

Notes to Condensed Financial Statements (Unaudited)

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 such, as of September 30, 2023 and December 31, 2022, except for accretion and expenditures, our combined environmental liability related to the terminal and property remained unchanged.

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

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

Notes to Condensed Financial Statements (Unaudited)

El Dorado Refinery Fire

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

We recognized a gain of $ 0.9 million and $ 0.9 million during the three and six months ended June 30, 2023, respectively, and a gain of $ 3.3 million and $ 7.6 million during the three and six months ended June 30, 2022, respectively, related to business interruption claims.

We recognized a gain of $ 0.2 million and $ 1.1 million during the three and nine months ended September 30, 2023, respectively, and a gain of $ 0.5 million and $ 8.1 million during the three and nine months ended September 30, 2022, respectively, related to business interruption claims.

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

Additionally, during the three and nine months ended September 30, 2023, we accrued an additional $ 8.0 million for uncovered litigation, claims and assessments associated with the fire, which are included in operating expenses in the condensed consolidated statements of income.

In October 2023, we entered into a settlement agreement with six employees who were injured in the fire.

Net impact to us after considering insurance coverage is approximately $ 10.0 million.

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

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We incurred repair costs that may be recoverable under property and casualty insurance policies and we submitted a claim in 2023.

We recognized accelerated depreciation in 2022 due to property damaged in the fire, which was recovered during the three and nine months ended September 30, 2023.

An additional $ 3.3 million was recognized as a gain, in excess of these losses, during the three and nine months ended September 30, 2023.

This 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.

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

In addition, we recognized a gain of $ 3.8 million and $ 8.9 million during the three and six months ended June 30, 2023, respectively, and a gain of $ 5.3 million and $ 11.0 million during the three and six months ended June 30, 2022, respectively, related to property and business interruption claims.

In addition, we recognized no gain and a gain of $ 8.9 million during the three and nine months ended September 30, 2023, respectively, and a gain of $ 6.9 million and $ 17.9 million during the three and nine months ended September 30, 2022, respectively, related to property and business interruption claims.

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

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

Under ASC 740, Income Taxes (“ASC 740”) we used an estimated annual tax rate to record income taxes for the three and six months ended June 30, 2023 and June 30, 2022.

Our effective tax rate was 71.7 % and 14.5 % for the three and six months ended June 30, 2023, respectively, and 21.4 % and 21.3 % for the three and six months ended June 30, 2022, 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, 2023 and September 30, 2022.

Our effective tax rate was 18.8 % and 17.4 % for the three and nine months ended September 30, 2023, respectively, and 19.2 % and 21.2 % for the three and nine months ended September 30, 2022, 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, 2023 as compared to the three and six months ended June 30, 2022 was primarily due to a decrease in pre-tax earnings and the impact fixed dollar favorable permanent differences on the tax rate, and changes in the second quarter estimated annual effective tax rate applied to year to date earnings.

The change in our effective tax rate for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 was primarily due to a change in pre-tax earnings and the impact fixed dollar favorable permanent differences on the tax rate, and adjustments to the third quarter estimated annual effective tax rate applied to year to date earnings.

Related Party Transactions

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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,

2023 2022 2023 2022

2 unchanged sentences

$ 54.3 $ 34.7 $ 152.4 $ 81.8

Notes to Condensed Financial Statements (Unaudited)

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

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

Notes to Condensed Financial Statements (Unaudited)

Other Current Assets and Liabilities

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

Other Current Assets June 30, 2023 December 31, 2022

Other Current Assets September 30, 2023 December 31, 2022

Prepaid expenses $ 42.5 $ 45.4

Short-term derivative assets (see Note 10)

Income and other tax receivables 9.7 20.9

Investment commodities 11.5 29.8

Income and other tax receivables 9.9 20.9

Other 7.5 4.2

1 unchanged sentence

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

Accrued Expenses and Other Current Liabilities June 30, 2023 December 31, 2022

Accrued Expenses and Other Current Liabilities September 30, 2023 December 31, 2022

Product financing agreements $ 260.8 $ 258.0

El Dorado refinery fire settlement (1)

Crude purchase liabilities 146.9 268.7

Income and other taxes payable 145.2 120.4

Consolidated Net RINs Obligation deficit (see Note 11)

Employee costs 57.1 89.2

Consolidated Net RINs Obligation deficit (see Note 11)

Deferred revenue 13.8 44.6

2 unchanged sentences

Total $ 916.5 $ 1,166.8

(1) Refer to Note 12 - Commitments and Contingencies for further information.

Equity-Based Compensation

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2016 Long-Term Incentive Plan that increased the number of shares of common stock available for issuance under this plan by 2,015,000 shares to 17,010,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 4.9 million and $ 10.8 million for the three and six months ended June 30, 2023, respectively, and $ 6.7 million and $ 11.8 million for the three and six months ended June 30, 2022, respectively.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to $ 7.2 million and $ 18.0 million for the three and nine months ended September 30, 2023, respectively, and $ 7.3 million and $ 19.1 million for the three and nine months ended September 30, 2022, 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, 2023, there was $ 55.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.7 years.

We issued net shares of common stock of 308,196 and 361,839 as a result of exercised or vested equity-based awards during the three and six months ended June 30, 2023, respectively, and 289,971 and 335,771 for the three and six months ended June 30, 2022, respectively.

These amounts are net of 125,645 and 146,108 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and six months ended June 30, 2023, respectively, and 250,334 and 268,163 shares during the three and six months ended June 30, 2022, respectively.

As of September 30, 2023, there was $ 47.5 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.6 years.

We issued net shares of common stock of 48,154 and 409,993 as a result of exercised or vested equity-based awards during the three and nine months ended September 30, 2023, respectively, and 53,522 and 389,293 for the three and nine months ended September 30, 2022, respectively.

These amounts are net of 59,836 and 205,944 shares withheld to satisfy employee tax obligations related to the exercises and vesting during the three and nine months ended September 30, 2023, respectively, and 50,521 and 318,684 shares during the three and nine months ended September 30, 2022, respectively.

Notes to Condensed Financial Statements (Unaudited)

5 unchanged sentences

August 4, 2023 $ 0.235 August 14, 2023 August 21, 2023

November 1, 2023 $ 0.240 November 13, 2023 November 20, 2023

Stock Repurchase Program

2 unchanged sentences

The authorization has no expiration date.

During the three and six months ended June 30, 2023, 1,795,335 and 1,811,627 shares of our common stock were repurchased and cancelled at the time of transaction for a total of $ 40.0 million and $ 40.4 million, respectively.

No repurchases were made during the three and six months ended June 30, 2022.

As of June 30, 2023, there was $ 230.1 million of authorization remaining under Delek's aggregate stock repurchase program.

During the three and nine months ended September 30, 2023, 981,690 and 2,793,317 shares of our common stock were repurchased and cancelled at the time of transaction for a total of $ 25.0 million and $ 65.4 million, respectively.

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

As of September 30, 2023, there was $ 205.1 million of authorization remaining under Delek's aggregate stock repurchase program.

Stock Purchase and Cooperation Agreement

7 unchanged sentences

Subsequent Events

Subsequent to June 30, 2023, we made repurchases of 981,690 shares of our common stock that were cancelled at the time of transaction for approximately $ 25.0 million.

Stock Repurchases

Subsequent to September 30, 2023, we made repurchases of 769,450 shares of our common stock that were cancelled at the time of transaction for approximately $ 20.0 million.

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