What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-08 · 288 added, 429 removed, 608 unchanged (54% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is management’s analysis of our financial performance and of significant trends that may affect our future performance.

The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 1, 2023 (the "Annual Report on Form 10-K").

Those statements in the MD&A that are not historical in nature should be deemed forward-looking statements that are inherently uncertain.

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You should read the following discussion of our financial condition and results of operations in conjunction with our historical condensed consolidated financial statements and notes thereto.

The Company announces material information to the public about the Company, its products and services and other matters through a variety of means, including filings with the SEC, press releases, public conference calls, the Company’s website ( www.delekus.com ), the investor relations section of its website ( ir.delekus.com ), the news section of its website ( www.delekus.com/news ), and/or social media, including its Twitter account ( @DelekUSHoldings ).

The Company encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information.

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These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities.

Forward-looking statements include, among other things, statements that refer to the acquisition of 3 Bear Delaware Holding – NM, LLC ("3 Bear") (subsequently renamed to Delek Delaware Gathering ("Delaware Gathering")) (the "Delaware Gathering Acquisition"), including any statements regarding the expected benefits, synergies, growth opportunities, impact on liquidity and prospects, and other financial and operating benefits thereof, the information concerning possible future results of operations, business and growth strategies, including as the same may be impacted by any ongoing military conflict, such as the war between Russia and Ukraine ("the Russia-Ukraine War"), financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Forward-looking statements include, among other things, statements that refer to the acquisition of 3 Bear (subsequently renamed to Delek Delaware Gathering ("Delaware Gathering")) (the "Delaware Gathering Acquisition"), including any statements regarding the expected benefits, synergies, growth opportunities, impact on liquidity and prospects, and other financial and operating benefits thereof, the information concerning possible future results of operations, business and growth strategies, including as the same may be impacted by any ongoing military conflict, such as the war between Russia and Ukraine ("the Russia-Ukraine War"), financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts.

Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements.

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• the impact on commercial activity and other economic effects of any widespread public health crisis, including uncertainty regarding the timing, pace and extent of economic recovery following any such crisis;

• general economic and business conditions affecting the southern, southwestern and western U.S., particularly levels of spending related to travel and tourism;

• general economic and business conditions affecting the southern, southwestern and western United States ("U.S")., particularly levels of spending related to travel and tourism;

• volatility under our derivative instruments;

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• increases in our debt levels or costs;

• possibility of accelerated repayment on a portion of our Inventory Intermediation Obligation if the purchase price adjustment feature triggers a change on the re-pricing dates;

• possibility of accelerated repayment on a portion of our Inventory Intermediation Agreement obligation if the purchase price adjustment feature triggers a change on the re-pricing dates;

• changes in our ability to continue to access the credit markets;

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• seasonality;

• earthquakes, hurricanes, tornadoes, and other weather events, which can unforeseeably affect the price or availability of electricity, natural gas, crude

• earthquakes, hurricanes, tornadoes, and other weather events, which can unforeseeably affect the price or availability of electricity, natural gas, crude oil, and other feedstocks, critical supplies, refined petroleum products and ethanol;

Management's Discussion and Analysis

oil, and other feedstocks, critical supplies, refined petroleum products and ethanol;

• increases in costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements;

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• acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities;

• impacts of global conflicts such as the war between Israel and Hamas (the "Israel-Hamas War") and the Russia-Ukraine War;

• future decisions by the Organization of Petroleum Exporting Countries ("OPEC") and the members of other leading oil producing countries (together with OPEC, “OPEC+”) regarding production and pricing and disputes between OPEC+ members regarding the same;

• disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;

• impacts of global conflicts such as the war between Israel and Hamas and the Russia-Ukraine War;

• future decisions by the Organization of Petroleum Exporting Countries ("OPEC") and the members of other leading oil producing countries

(together with OPEC, “OPEC+”) regarding production and pricing and disputes between OPEC+ members regarding the same;

• disruption, failure, or cybersecurity breaches affecting or targeting our i nformation technology ("IT"), systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;

• changes in the cost or availability of transportation for feedstocks and refined products;

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Our operating segments consist of refining, logistics, and retail, and are discussed in the sections that follow.

During the fourth quarter 2022, we realigned our reportable segments for financial reporting purposes to reflect changes in the manner in which our chief operating decision maker, or CODM, assesses financial information for decision-making purposes.

The change primarily represents reporting the operating results of wholesale crude operations within the refining segment.

Prior to this change, wholesale crude operations were reported as part of corporate, other and eliminations.

In addition, during the fourth quarter 2022, the CODM determined that EBITDA is the key performance measure for planning and forecasting purposes and discontinued the use of contribution margin as a measure of performance.

We define EBITDA for any period as net income (loss) to add back interest expense, income tax expense (benefit), depreciation and amortization.

While these reporting changes did not change our consolidated results, segment data for previous years has been restated and is consistent with the current year presentation throughout the financial statements and the accompanying notes.

Business and Economic Environment Overview

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We continue to identify opportunities to mitigate market risk and focus on efforts that improve our overall cost structure while not compromising operational excellence.

Although average crack spreads were lower than the third quarter of 2022, refining margins remain strong and demand for refined products has been robust despite a rise in crude oil prices driven by the continued constrained supply in the markets we serve.

During the third quarter 2023, given the strong refining margins, we made a strategic decision to optimize our inventory levels to reduce carrying costs and improve working capital efficiency.

As a result of the decreased inventory levels, we had to rebalance our hedging positions which resulted in realizing hedging positions that were in loss positions due to the increased price environment.

Although overall average crack spreads were lower than the first quarter of 2023, crack spreads increased from the end of 2023.

Refining margins remained strong and demand for refined products continues to be robust driven by the continued constrained supply in the markets we serve.

We will continue to identify opportunities for operational efficiency improvements.

The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable during the third quarter of 2023, while the WTI Midland differential to Cushing premium increased compared to the second quarter 2023.

Further impacting the favorability of our current quarter results were record refinery throughput rates driven by safe and reliable operations.

Additionally, our logistics segment contributed strong results and our integration of Delek Delaware Gathering (formally 3 Bear) has expanded our existing crude oil gathering throughput capacity in the Permian while also extending our product offering to include natural gas gathering and processing as well as wastewater recycling and disposal.

Our retail operations have benefited from seasonal demand from U.S.

drivers and present several high-growth opportunities to capitalize on growing consumer demand for convenient and accessible fueling options which will complement our existing operations and build brand equity.

In September 2023, we opened a new-to-industry retail location in Tyler, TX.

Our first store in this market, which features expanded food service and leading digital technology.

The near term economic outlook is uncertain, and as a result we continue to position the Company for potential economic headwinds that coincide with a potential global downturn in the economy.

We continue to progress our business transformation focused on enterprise-wide opportunities to improve the efficiency of our cost structure.

The expectation of reduction in the reliance of liquid fuels, a tightening of capital markets, increased regulatory pressures, and volatility in the commodity markets, are considerations that Delek must balance as we move forward with our strategic initiatives.

The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, but the WTI Midland to Cushing remained consistent in comparison to the first quarter of 2023.

Our logistics segment again contributed strong results driven by increased volumes from the Delaware Basin and rate increases.

Logistics also continues to benefit from strong performance amongst our pipeline joint venture investments.

Retail stores experienced normal seasonal results and performed well and we are realizing the benefit of store optimization activities as margins have increased, and we expect to begin seeing benefits from successful re-branding.

The near term economic outlook still has some uncertainty with geopolitical instability, and as a result we continue to progress our business transformation focused on enterprise-wide opportunities to improve the efficiency of our cost structure.

The expectation of reduction in the reliance of liquid fuels, increased regulatory pressures, and volatility in the commodity markets, are considerations that Delek must balance as we move forward with our strategic initiatives.

The energy-related legislation passed with the Inflation Reduction Act ("IRA") encompasses clean energy financial incentives that are expected to increase capital investment opportunities that focus on the development of production capacity for liquid fuels with lower GHG.

Gulf coast industries should be well positioned for growth, particularly if global trade becomes tied to environmental attributes.

Following the enactment of the IRA, Delek is also investing in carbon capture technology and continuing our production of biodiesel fuel to meet the world’s growing demand for low-carbon energy.

We were selected by the Department of Energy's ("DOE") Office of Clean Energy Demonstrations to negotiate a cost-sharing agreement in support of a carbon capture pilot project at the Big Spring refinery.

The DOE Carbon Capture Large-Scale Pilot Project program provides 70% cost-share for up to $95 million of federal funding to support project development.

The project will deploy carbon capture technology at the Big Spring refinery's FCC unit, while maintaining existing production capabilities and turnaround schedule.

Expectations for the project are to capture 145,000 metric tons of carbon dioxide per year, as well as reduce health-harming pollutants, such as sulfur oxide and particulate matter.

Carbon dioxide is expected to be transported by existing pipelines for permanent storage or utilization.

Our focus on reduction of GHG is a key objective as we strive to be a leader in the transition to a carbon neutral future.

Delek formed the Sustainable Operations Team ("SOT") in 2022 which is led by our Executive Vice President, Operations.

The SOT will coordinate execution of our sustainability improvement plans (beginning with GHG reduction targets) ensuring enterprise strategies, business unit operations, capital spending plans, supply chain and personnel pipeline are in alignment and operating as needed to meet established goals.

Delek's Sustainable Operations Team ("SOT") which is led by our Executive Vice President, Operations coordinates execution of our sustainability objectives including ensuring enterprise strategies, business unit operations, capital spending plans, supply chain and personnel pipeline are in alignment and operating as needed to meet established goals.

Delek prioritizes stewardship of the environment, and we focus on how to positively impact our shareholders, employees, customers, and the communities where we operate.

Our near-term focus is centered around safe and reliable operations, shareholder returns including debt reductions and unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to enhance the Company's scale and diversify revenue streams, including in the alternative energy markets and creating a long-term sustainable business model.

We believe these strategic priorities will maximize the value of our shareholders while optimizing our asset portfolio and balance sheet.

See further discussion on macroeconomic factors and market trends, including the impact on 2023 and the outlook for the rest of the year, in the ‘Market Trends’ section below.

We want to reward our shareholders with a disciplined and balanced capital allocation framework.

As we strengthen our relative financial position, we believe a balanced approach between shareholder returns and balance sheet improvement is appropriate.

In 2024, we returned $15.7 million of capital to shareholders through dividends.

Our near-term focus is centered around the following:

(1) operations excellence, (2) financial strength and flexibility and (3) strategic initiatives which includes unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to enhance the Company's scale and diversify revenue streams.

In 2024, we took steps to refinance the Delek Logistics long term debt, ending the quarter with a more attractive maturity profile.

Delek Logistics also completed a public equity offering of its common units in March 2024.

We believe each of these steps is consistent with our focus on strategic initiatives which includes unlocking the "sum of the parts".

See further discussion in the "Strategic Objectives" section below.

See further discussion on macroeconomic factors and market trends, including the impact on 2024, in the ‘Market Trends’ section below.

Other 2024 Developments

On March 12, 2024, Delek Logistics completed a public offering of its common units in which it sold 3,584,416 common units (including an overallotment option of 467,532 common units) to the underwriters of the offering at a price to the public of $38.50 per unit.

The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.3 million and were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029 (the “Delek Logistics 2029 Notes”), at par.

Net proceeds were used to redeem the Delek Logistics 2025 Notes including accrued interest, pay off the Delek Logistics Term Loan Facility including accrued interest and to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

Management's Discussion and Analysis

On March 29, 2024, Delek Logistics entered into a fourth amendment to the Delek Logistics Revolving Facility which among other things increased the U.S.

Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $100.0 million resulting in aggregate lender commitments under the Delek Logistics Revolving Credit Facility in an amount of $1,150.0 million.

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 (the “Additional 2029 Notes”), at 101.25%.

The Additional 2029 Notes were issued under the same indenture as the Delek Logistics 2029 Notes and formed a part of the same series of notes as the Delek Logistics 2029 Notes.

The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

These steps improved availability under the Delek Logistics Revolving Facility to approximately $800 million and helped create the foundation for a "sum of the parts" initiative.

Refining Overview

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

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

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd') as of March 31, 2024.

A high-level summary of the refinery activities is presented below:

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Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.

(2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the WTI Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.

(2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the West Texas Intermediate ("WTI") Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.

(3) The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products.

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It is comprised of the consolidated balance sheet and results of operations of Delek Logistics (NYSE:

DKL), where we owned a 78.7% interest at September 30, 2023.

DKL), where we owned a 72.7% interest at March 31, 2024.

Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.

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

The logistics segment's gathering and processing business owns or leases capacity on approximately 400 miles of crude oil transportation pipelines, approximately 450 miles of refined product pipelines, and an approximately 1,120-mile crude oil gathering system.

The logistics segment's gathering and processing business owns or leases capacity on approximately 398 miles of crude oil transportation pipelines, approximately 406 miles of refined product pipelines, and an approximately 1,400-mile crude oil gathering system of which 489 miles is decommissioned.

The storage and transportation business owns or leases associated crude oil storage tanks with an aggregate of approximately 10.0 million barrels of active shell capacity.

It also owns and operates ten light product terminals and markets light products using third-party terminals.

It also owns and operates nine light product terminals and markets light products using third-party terminals.

Logistics has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations.

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Retail Overview

Our retail segment (or "Retail") at September 30, 2023 includes the operations of 250 owned and leased convenience store sites located primarily in West Texas and New Mexico.

Our convenience stores typically offer various grades of gasoline and diesel under the DK or Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and DK or Alon brand names pursuant to a license agreement with 7-Eleven, Inc.

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

and the terms of such termination and subsequent amendments require the removal of all 7-Eleven branding on a store-by-store basis by December 31, 2023.

Merchandise at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed pursuant to the termination.

As of September 30, 2023, we have removed the 7-Eleven brand name at 180 of our store locations.

Our retail segment (or "Retail") at March 31, 2024 includes the operations of 250 owned and leased convenience store sites located primarily in West Texas and New Mexico.

Management's Discussion and Analysis

public, primarily under the DK or Alon brand names.

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

Corporate and Other Overview

Our corporate activities, results of certain immaterial operating segments, and intercompany eliminations are reported in 'corporate, other and

Management's Discussion and Analysis

eliminations' in our segment disclosures.

Our corporate activities, results of certain immaterial operating segments, and intercompany eliminations are reported in 'corporate, other and eliminations' in our segment disclosures.

Additionally, our corporate activities include certain of our commodity and other hedging activities.

Strategic Overview

A New Framework:

Long-Term Sustainability

The emphasis on environmental responsibility and long-term economic and environmental sustainability is accelerating, with increased demand for transparency evolving out of the Environmental, Social and Governance ("ESG") movement.

As we evaluate our current ESG positioning in the market, we also must integrate a broader sustainability view to all of our activities, both operational and strategic.

For these reasons, we have developed a Long-Term Sustainability Framework , which will help us to formulate our strategic objectives and initiatives.

Long-Term Sustainability Framework:

Overarching Objectives

Certain fundamental principles are foundational to our Long-Term Sustainability Framework, and direct us as we develop our guiding objectives.

With that in mind, we have initially identified the following overarching objectives:

Redirect Corporate Culture towards Innovation, Excellence, and Operating Discipline.

Focus on Operational Optimization and Improved Margin Capture.

Implement Digital Transformation Strategy.

Identify ESG-Conscious Investments with Clear Value Propositions and Sustainable Returns.

Evaluate Strategic Priorities and Redefine Long-term Sustainable Business Model.

Management's Discussion and Analysis

Long-Term Sustainability Framework:

Key Initiatives

Safe and Reliable Operations

We are committed to maintaining safe, reliable, and environmentally responsible operations.

We are continuously looking to reduce costs, increase reliability and safety, improve efficiency, and pursue operational improvements.

Strategic Objectives

It is vitally important that our strategic objectives, especially in view of the evolutionary direction of our macroeconomic and geopolitical environment, involves a process of continuous evaluation of our business model in terms of cost structure, as well as long-term economic and operational sustainability.

More consolidation in our industry is expected from increased cost pressures due in part to the regulatory environment continuing to move towards reducing carbon emissions and transitioning to renewable energy in the long-term.

However, we believe we are uniquely positioned as a leader in operating and excelling in niche markets and could continue capitalizing on and growing our integrated business model.

To compete under historic environmental and regulatory changes, companies in our industry will need to be adaptive, forward-thinking and strategic in their approach to long-term sustainability.

The emphasis on environmental responsibility and long-term economic and environmental sustainability has increased.

Demand for additional transparency continues to evolve.

As we evaluate our current sustainability and Environmental, Social and Governance ("ESG") positioning in the market, we also must integrate a broader sustainability view into all of our activities, both operational and strategic.

We have developed overarching key objectives that guide us when we formulate our strategic plans.

Key Objectives

Certain fundamental principles are foundational to our long-term strategy and direct us as we develop our strategic objectives.

With that in mind, we have identified the following overarching key objectives:

Operational Excellence

Financial Strength and Flexibility

Strategic Initiatives

Operational Excellence

We are committed to operational excellence which includes maintaining safe, reliable, and environmentally responsible operations.

It also encompasses the dedication and drive for constant improvement across our operations in reliability, safety, and efficiency.

Delek prioritizes stewardship of the environment, and we focus on how to positively impact our shareholders, employees, customers, and the communities where we operate.

We understand that if our assets run reliably and safely, it is better for the safety of our employees, communities, and environment.

We believe that focusing on people, processes and equipment will lead to improved utilization and yields and ultimately better employee retention and lower costs, which translates to improved returns for our shareholders.

For 2024, we will be focused on the following:

• Focus on operational excellence by implementing and sustaining a low operating cost model through spending discipline, supply chain management, and innovative solutions.

• Improve discipline around outage spend and optimizing downtimes.

• Prioritize safety and environmental compliance by implementing foundational best practices to increase operations ability to provide safe, compliant, and reliable operations.

• Focus on operational excellence by building out our operations centric area business teams, frontline supervisor training as well as other key competency training.

• Execute a major turnaround at the Krotz Springs refinery, focusing on outage spend and optimizing downtime and implementing margin enhancement .

• Identify and evaluate organic growth projects that improve yield and increase utilization.

• Continue our progression of digital system implementations that will improve our ability to understand all aspects of our business as well as our ability to make real-time and forward-looking operational decisions.

Automate processes and shift operational roles to higher value-added activities.

Financial Flexibility & Shareholder Returns

We believe shareholder value is strengthened through, among other things, a stable dividend complemented by share repurchases and debt reductions.

We also want to reward our shareholders with a competitive long-term capital allocation framework.

One of our near-term initiatives is centered around unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to enhance the Company's scale and diversify revenue streams, including in the alternative energy markets.

We are also committed to lowering costs and improving the efficiency of our cost structure in all aspects of our business and will continue to focus on operational excellence.

We are continuously looking to improve our operating and general and administrative cost structure.

Financial Strength and Flexibility

In our industry, as with many volatile businesses, it is very important to make capital investments with accretive returns and maintain a debt balance at a comfortable leverage ratio.

We want to reward our shareholders and investors with a disciplined and balanced capital allocation framework, which we believe will strengthen shareholder value by, among other things, a stable dividend complemented by opportunistic share repurchases.

We are also committed to lowering costs and improving the efficiency of our cost structure in all aspects of our business.

For 2024, we will be focused on the following:

• Explore opportunities to monetize our retail operations or some of our investment in Delek Logistics, which will help us to better capture tangible value in the Delek valuation, while also improving liquidity in the market for DKL units without dilution of overall DKL market capitalization.

• Reward our shareholders with a competitive long-term capital allocation framework including share repurchases and an evaluation of debt reductions which will continue to strengthen our balance sheet.

• Monitor performance of our first phase of a zero-based budget for 2023 by setting clear mechanisms for tracking costs, including how to address variances and reallocate funds.

Long-Term Sustainable Business Model

It is vitally important that our strategic process, especially in view of the evolutionary direction of our macroeconomic and geopolitical environment, involves a continuous evaluation of our business model in terms of long-term economic and operational sustainability.

We are operating in a mature industry, with increasingly difficult operational and regulatory challenges and, likewise, pressure on operating costs/gross margins as well as the availability and cost of capital.

More consolidation in our industry is expected as the regulatory environment continues to move towards reducing carbon emissions and transitions to renewable energy in the long-term.

Additionally, evolving consumer and capital markets sentiment, regulations, supply chain constraints and customer demand are expected to cause disruption and increasing pressure in the intermediate term.

In order to compete under historic environmental and regulatory changes, companies in our industry will need to be adaptive, forward-thinking and strategic in their approach to long-term sustainability.

• Reward our shareholders and investors with a disciplined and balanced capital allocation framework, including opportunities to strengthen our balance sheet by reducing debt or opportunistically repurchasing shares with excess cash.

• Pursue strategic investments and acquisitions with a focus on geographic and revenue stream diversity.

Management's Discussion and Analysis

• Build upon the zero-based budget foundation set in 2022 by implementing phase 2, which includes further improvements to our operating and general and administrative cost structure.

Strategic Initiatives

One of our near-term strategic initiatives is centered around unlocking the "sum of the parts" value of our existing business while identifying growth opportunities to diversify the Company’s geographic footprint and revenue stream, including in the alternative energy markets, as well as enhance its scale, compensate investors and develop other areas of its business.

For 2024, we will be focused on the following:

• Continue our retail rebranding efforts and retail growth plans with additional new-to-industry locations in the planning phase.

In addition, invest in industry leading digital technology which will improve brand image and customer experience.

• Execute on our strategic initiatives, which may include opportunities to monetize our retail operations or some of our investment in Delek Logistics.

The goal being, to help unlock value embedded in the Delek valuation, while also improving liquidity in the market for Delek Logistics units without diluting overall Delek Logistics market capitalization.

• Identify and evaluate investment opportunities that fit our sustainability view and integrate into our current asset footprint, including strategic investments or joint ventures in renewables, incubator investments in new technologies, and other core-business investments that could improve our scalability and agility.

• Deploy integrated solutions to simplify architecture, data management and cybersecurity.

• Pursuit of strategic investments and acquisitions with a focus on diversifying revenue streams.

Management's Discussion and Analysis

2024 Strategic Developments

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2024 Strategic Developments

Safe & Reliable Operations Financial Flexibility & Shareholder Returns Long Term Sustainable Business Model

Improving Discipline Around Outage Spend and Optimizing Downtime:

Successfully completed the Tyler refinery turnaround in the first quarter of 2023 with zero process or safety incidents.

The turnaround was completed substantially on time and on budget and positions us to capture market opportunities.

Implementing Phase 1 of Our Zero-Based Budget:

We have taken steps to improve the efficiency of our cost structure and to align with our strategic priorities to drive cost efficiencies, which include cost reductions in general and administrative expenses.

We are targeting $100 million run-rate cost reduction in 2024.

Reducing Debt to Provide Shareholder Value:

During the nine months ended September 30, 2023, we reduced our long-term obligations by approximately $422.4 million.

Focus on Leadership:

In March 2023, Joseph Israel was named Executive Vice President, Operations and will be responsible for refining operations at Delek and for logistics operations at Delek Logistics.

Israel has 25 years of energy experience and a proven track record of driving operational excellence.

Also in March 2023, Patrick Reilly was appointed Executive Vice President and Chief Commercial Officer.

Reilly will work closely with Delek's management team to lead the Company's strategies to achieve its short and long-term objectives.

Reilly has over 20-years of energy oil refining and trading experience.

In April 2023, Tommy Chavez who has over three decades of refining experience was named Senior Vice President, Refining Operations.

Improving Safety Through a Safety Action Plan:

As part of an ongoing review of safety practices across our refining system, we have developed a Safety Action Plan which will require previously un-budgeted capital expenditures and additional labor resources and subject matter experts.

The execution of the Safety Action Plan will address a broad range of items, some of which were delayed in implementation due to the pandemic, or for other reasons.

Increasing Shareholder Value through Payment of Dividends:

We increased our quarterly cash dividend to $0.240 per share of our common stock which was declared by our Board of Directors on November 1, 2023 and payable on November 20, 2023.

In addition, a cash dividend of $0.230 per share of our common stock was paid on May 22, 2023 and a cash dividend of $0.235 per share of our common stock was paid on August 21, 2023.

Increasing Shareholder Value through Share Repurchases:

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

Subsequent to September 30, 2023, 769,450 shares of our common stock were repurchased for a total of $20.0 million .

Executing Retail Growth Plans:

In September 2023, we opened a new-to-industry retail location in Tyler, TX.

Our first store in this market, which features expanded food serviced and leading digital technology.

Operational Excellence Financial Strength & Flexibility Strategic Initiatives

Investing in Energy Transition:

We were selected by the DOE Office of Clean Energy Demonstrations to negotiate a cost-sharing agreement in support of a carbon capture pilot project at the Big Spring refinery.

The DOE Carbon Capture Large-Scale Pilot Project program provides 70% cost-share for up to $95 million of federal funding to support project development.

Extending Long Term Debt Maturities:

On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029, at par.

Net proceeds were used to redeem the Delek Logistics 2025 Notes including accrued interest, pay off the Delek Logistics Term Loan Facility including accrued interest and to repay borrowings under the Delek Logistics Revolving Facility.

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 (the “Additional 2029 Notes”), at 101.25%.

The Additional 2029 Notes were issued under the same indenture as the Delek Logistics 2029 Notes and formed a part of the same series of notes as the Delek Logistics 2029 Notes.

The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

Strengthening the Balance Sheet:

The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.3 million and were used to repay borrowings under the Delek Logistics Revolving Facility.

Market Trends

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Additionally, our refining margin profitability is impacted by regulatory factors, including the cost of renewable identification numbers ("RINs").

Market Outlook for the Remainder of 2023

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near or above nameplate capacity while leveraging our new Delek Delaware Gathering lines of business with an eye towards the One Delek vision.

We have positioned the Company to continue to run safely, reliably and environmentally responsibly at near or above nameplate capacity while leveraging our Delek Logistics and retail lines of business with an eye towards the One Delek vision.

Increased geopolitical risks and general elevated tensions in the Middle East have put upward pressure on crude oil prices.

Many uncertainties remain with respect to the global supply and demand of the crude oil and refined products markets and it is difficult to predict the ultimate economic impacts this may have on our operations.

Gasoline and diesel demand have returned to pre-pandemic levels and we expect gasoline and diesel demand to continue to follow typical seasonal patterns after the summer driving season.

Crude oil and refined product supply continues to be restricted and should support the continued increased utilization of refining capacity which we expect to result in continued strong market conditions in downstream refining.

We expect gasoline and diesel demand to continue to follow typical seasonal patterns as we continue into the spring and summer driving season.

Management's Discussion and Analysis

See below for further discussion on how certain key market trends impact our operating results.

Management's Discussion and Analysis

WTI crude oil represents the largest component of our crude slate at all of our refineries, and can be sourced through our gathering channels or optimization efforts from Midland, Texas or Cushing, Oklahoma or other locations.

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We manage market price risk on crude oil through financial derivative hedges, in accordance with our risk management strategies.

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in 2023 and for the first quarterly period in 2024.

Crude Pricing Differentials

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Conversely, as these price discounts widen, so does our competitive advantage, created specifically by our access to WTI Midland crude sourced through our gathering systems.

The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and Louisiana Light Sweet crude oil ("LLS") to WTI Cushing for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Management's Discussion and Analysis

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(1) in terms of the prices we are able to sell our refined product for in our refining segment, and (2) in terms of the cost to acquire the refined products to meet Refining production shortfalls (e.g., when we have outages), or to acquire refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment.

These prices largely depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

These prices largely depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

Our refineries produce the following products:

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High Sulfur Diesel ("HSD") and U.S.

Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Ultra Low Sulfur Diesel ("ULSD") for each of the quarterly periods in 2023 and for the first quarterly period in 2024.

Management's Discussion and Analysis

Crack Spreads

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Generally, a crack spread represents the approximate refining margin resulting from processing one barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Management's Discussion and Analysis

The table below reflects the quarterly average Gulf Coast 5-3-2 ULSD, 3-2-1 ULSD and 2-1-1 HSD/LLS crack spreads for each of the quarterly periods in 2023 and for the one quarterly period in 2024.

RIN Volatility

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Because of the volatility in RINs prices, it is not possible to predict future RINs cost with certainty, and movements in RINs prices can have significant and unanticipated adverse effects on our refining margins that are outside of our control.

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Energy costs are a significant element of our Refining EBITDA and can significantly impact our ability to capture crack spreads, with natural gas representing the largest component.

The chart below illustrates the volatility in RINs for each of the quarterly periods in 2023 and for the one quarterly period in 2024.

Management's Discussion and Analysis

Energy costs are a significant element of our Refining Earnings before interest, taxes, depreciation and amortization ("EBITDA") and can significantly impact our ability to capture crack spreads, with natural gas representing the largest component.

Natural gas prices are driven by supply-side factors such as amount of natural gas production, level of natural gas in storage and import and export activity, while demand-side factors include variability of weather, economic growth and the availability and price of other fuels.

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We manage our risk around natural gas prices by entering into variable and fixed-price supply contracts in both the Gulf and Permian Basin or by entering into derivative hedges based on forecasted consumption and forward curve prices, as appropriate, in accordance with our risk policy.

The chart below illustrates the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) per million British Thermal Units ("MMBtu") for each of the quarterly periods in 2022 and for the three quarterly periods in 2023.

Management's Discussion and Analysis

The chart below illustrates the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) per million British Thermal Units ("MMBtu") beginning with the first quarter of 2023 through the first quarter of 2024.

Non-GAAP Measures

Our management uses certain “non-GAAP” operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S.

Our management uses certain non-Generally Accepted Accounting Principles (“non-GAAP”) operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S.

These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

• Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income (loss) attributable to Delek adjusted to add back interest expense, income tax expense, depreciation and amortization;

• EBITDA - calculated as net income (loss) attributable to Delek adjusted to add back interest expense, income tax expense, depreciation and amortization;

• Refining margin - calculated as gross margin (which we define as sales minus cost of sales) adjusted for operating expenses and depreciation and amortization included in cost of sales.

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The following table provides a reconciliation of segment EBITDA to the most directly comparable U.S.

GAAP measure, net income attributable to Delek:

Reconciliation of segment EBITDA to net income attributable to Delek (in millions)

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

2023 2022 2023 2022

GAAP measure, net (loss) income attributable to Delek:

Reconciliation of segment EBITDA to net (loss) income attributable to Delek (in millions)

Management's Discussion and Analysis

Three Months Ended March 31,

Refining segment EBITDA $ 101.1 $ 192.1

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Interest expense, net (87.7) (76.5)

Income tax expense (31.5) (4.0) (43.5) (107.5)

Income tax benefit (expense) 7.2 (15.8)

Depreciation and amortization (95.2) (83.4)

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

Net (loss) income attributable to Delek $ (32.6) $ 64.3

The following table provides a reconciliation of refining margin to the most directly comparable U.S.

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Refining Segment

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

2023 2022 2023 2022

Three Months Ended March 31,

Total revenues $ 3,108.3 $ 3,794.5

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Summary Statement of Operations Data (1)

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

2023 2022 (2)

Three Months Ended March 31,

Net revenues $ 3,227.6 $ 3,924.3

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Total cost of sales 3,097.5 3,687.2

Insurance proceeds — —

Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below) 25.8 27.0

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Income from equity method investments (21.9) (14.6)

Other expense (income), net 1.8 (0.7) (4.8) (3.0)

Other income, net (0.7) (7.1)

Total non-operating expenses, net 65.1 54.8

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

(Loss) income before income tax (benefit) expense (32.4) 88.0

Income tax (benefit) expense (7.2) 15.8

Net (loss) income (25.2) 72.2

Net income attributed to non-controlling interests 7.4 7.9

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

Net (loss) income attributable to Delek $ (32.6) $ 64.3

(1) This information is presented at a summary level for your reference.

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to this Quarterly Report on Form 10-Q for more detail regarding our results of operations and net income per share.

(2) In the first quarter 2023, we reassessed the classification of certain expenses and made certain reclassification adjustments to better represent the nature of those expenses.

Accordingly, we have made reclassifications to the prior period in order to conform to this revised current period classification, which resulted in a decrease in the prior period general and administrative expenses and an increase in the prior period operating expenses of approximately $3.1 million and $10.2 million for the three and nine months ended September 30, 2022.

We report operating results in three reportable segments:

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Results of Operations

Consolidated Results of Operations — Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Consolidated net income for the third quarter of 2023 was $136.1 million compared to net income of $16.8 million for the third quarter of 2022.

Consolidated net income attributable to Delek for the third quarter of September 30, 2023 was $128.7 million, or $1.98 per basic share, compared to a net income of $7.4 million, or $0.11 per basic share, for the third quarter 2022.

Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below.

Consolidated Results of Operations — Comparison of the Three Months Ended March 31, 2024 versus the Three Months Ended March 31, 2023.

Net (Loss) Income

Consolidated net loss for the three months ended March 31, 2024 was $25.2 million compared to a net income of $72.2 million for the three months ended March 31, 2023.

Consolidated net loss attributable to Delek for the three months ended March 31, 2024 was $32.6 million, or $(0.51) per basic share, compared to income of $64.3 million, or $0.96 per basic share, for the three months ended March 31, 2023.

Explanations for significant drivers impacting net (loss) income as compared to the comparable period of the prior year are discussed in the sections below.

Management's Discussion and Analysis

Consolidated net income for the nine months ended September 30, 2023 was $206.8 million compared to a net income of $400.2 million for the nine months ended September 30, 2022.

Consolidated net income attributable to Delek for the nine months ended September 30, 2023 was $184.7 million, or $2.80 per basic share, compared to income of $375.8 million, or $5.26 per basic share, for the nine months ended September 30, 2022.

Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below.

In the third quarter of 2023 and 2022, we generated net revenues of $4,748.4 million and $5,324.9 million, respectively, a decrease of $576.5 million, or 10.8%.

The decrease in net revenues was primarily driven by the following factors:

• in our refining segment, decreases in the average price of U.S.

Gulf Coast gasoline of 2.5%, ULSD of 14.9%, and HSD of 28.7%, partially offset by an increase in sales volume (including purchased product);

• in our logistics segment, decreases in the average volumes of gasoline sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations, partially offset by increased volumes from the Midland Gathering operations and Delaware Gathering operations;

• in our retail segment, a decrease in total fuel sales primarily attributable to a decrease of $0.24 in average price charged per gallon sold and a decrease in merchandise sales primarily driven by the same-store sales decrease of 1.9%.

We generated net revenues of $12,868.3 million and $15,766.6 million during the nine months ended September 30, 2023 and 2022, respectively, a decrease of $2,898.3 million, or 18.4%.

We generated net revenues of $3,227.6 million and $3,924.3 million during the three months ended March 31, 2024 and 2023, respectively, a decrease of $696.7 million, or 17.8%.

The decrease in net revenues was primarily due to the following:

• in our refining segment, decreases in the average price of U.S.

Gulf Coast gasoline of 16.4%, ULSD of 21.5%, and HSD of 39.6% and decreases in wholesale activity, partially offset by an increase in sales volume (including purchased product);

• in our retail segment, a decrease in total fuel sales primarily attributable to a $0.53 decrease in average price charged per gallon sold, partially offset by an increase in merchandise sales primarily driven by the same-store sales increase of 1.1%;

• in our logistics segment, increased volumes from the Midland Gathering operations and incremental revenues from the Delaware Gathering Acquisition, partially offset by decreases in the average volumes of diesel sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations.

Gulf Coast gasoline of 7.1% and ULSD of 8.7%,and decreases in wholesale activity, partially offset by an increase in sales volume and an increase in the average price of U.S.

Gulf Coast HSD of 1.6%;

• in our logistics segment, an increase in terminalling and marketing fees due to rate increases as well as higher volumes associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities, partially offset by decreases in our West Texas marketing operations;

• in our retail segment, a decrease in total fuel sales primarily attributable to a $0.19 decrease in average price charged per gallon sold and a decrease in merchandise sales primarily driven by the same-store sales decrease of 4.1%.

Total Operating Costs and Expenses

Cost of Materials and Other

Cost of materials and other was $4,122.1 million for the third quarter of 2023 compared to $4,916.0 million for the third quarter of 2022, a decrease of $793.9 million, or 16.1%.

The net decrease in cost of materials and other was primarily driven by the following:

• decreases in cost of crude oil feedstocks at the refineries, including a 10.0% decreases in the average cost of WTI Cushing crude oil and a 10.2% decrease in the average cost of WTI Midland crude oil;

• decreases in the average diesel volumes sold and average cost per gallon of gasoline and diesel sold in our logistics segment;

• a decrease in retail cost of materials and other due to 9.0% decrease in average cost per gallon sold applied to lower fuel sales volumes.

Cost of materials and other was $11,328.3 million for the nine months ended September 30, 2023, compared to $14,151.1 million for nine months ended September 30, 2022, a decrease of $2,822.8 million, or 19.9%.

Cost of materials and other was $2,797.3 million for the three months ended March 31, 2024, compared to $3,439.6 million for three months ended March 31, 2023, a decrease of $642.3 million, or 18.7%.

The net decrease in cost of materials and other primarily related to the following:

• a decrease in the cost of crude oil feedstocks at the refineries, including a 21.5% decrease in the average cost of WTI Cushing crude oil and a 21.3% decrease in the average cost of WTI Midland crude oil and decreased wholesale activity;

• decreases in the average diesel volumes sold and average cost per gallon of gasoline and diesel sold, partially offset by incremental cost of materials and other from the Delaware Gathering Acquisition in our logistics segment;

• a decrease in retail cost of materials and other due to 15.4% decrease in average cost per gallon sold applied to lower fuel sales volumes.

Management's Discussion and Analysis

• decreased wholesale activity and decreased RINs pricing, partially offset by an increase in the cost of crude oil feedstocks at the refineries, including a 1.4% increase in the average cost of WTI Cushing crude oil and a 1.4% increase in the average cost of WTI Midland crude oil and an increase in sales volume;

• decrease in logistics costs due to lower natural gas costs partially offset by an increases in the average volumes of gasoline and diesel sold;

• a decrease in retail cost of materials and other due to 7.0% decrease in average cost per gallon sold.

Operating Expenses

Operating expenses (included in both cost of sales and other operating expenses) were $240.4 million for the third quarter of 2023 compared to $229.5 million for the third quarter of 2022, an increase of $10.9 million, or 4.7%.

The increase in operating expenses was primarily driven by the following:

• an increase in maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023;

• an additional $8.0 million expense for uncovered litigation, claims and assessments associated with the 2021 El Dorado refinery fire.

These increases were partially offset by the following:

• lower natural gas prices in 2023.

Operating expenses (included in both cost of sales and other operating expenses) were $658.0 million for the nine months ended September 30, 2023 compared to $626.0 million in nine months ended September 30, 2022, an increase of $32.0 million, or 5.1%.

Operating expenses (included in both cost of sales and other operating expenses) were $239.6 million for the three months ended March 31, 2024 compared to $197.8 million in three months ended March 31, 2023, an increase of $41.8 million, or 21.1%.

The increase in operating expenses was primarily driven by the following:

• an increase in maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023;

• an additional $8.0 million expense for uncovered litigation, claims and assessments associated with the 2021 El Dorado refinery fire;

• an increase in maintenance costs;

• an increase in employee costs.

These increases were partially offset by the following:

• lower natural gas prices in 2023.

• lower natural gas prices.

General and Administrative Expenses

General and administrative expenses were $72.0 million for the third quarter of 2023 compared to $59.3 million for the third quarter of 2022, an increase of $12.7 million, or 21.4%.

The increase was primarily driven by an increase in employee costs including incentive compensation costs and restructuring costs, partially offset by no transaction costs related to the Delaware Gathering Acquisition in the 2023 period.

General and administrative expenses were $219.3 million for the nine months ended September 30, 2023 compared to $231.8 million in nine months ended September 30, 2022, a decrease of $12.5 million, or 5.4%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs and no transaction costs related to the Delaware Gathering Acquisition in the 2023 period, partially offset by restructuring costs.

General and administrative expenses were $64.4 million for the three months ended March 31, 2024 compared to $71.5 million in three months ended March 31, 2023, a decrease of $7.1 million, or 9.9%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $91.3 million for the third quarter of 2023 compared to $72.9 million for the third quarter of 2022, an increase of $18.4 million, or 25.2%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $264.1 million and $209.2 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $54.9 million, or 26.2%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed since the first quarter of 2022 and depreciation and amortization attributable to the Delaware Gathering Acquisition.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $95.2 million and $83.4 million for the three months ended March 31, 2024 and 2023, respectively, an increase of $11.8 million, or 14.1%.

The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed.

Other Operating Income, Net

Other operating income, net decreased by $3.7 million in the third quarter of 2023 to $2.1 million compared to $5.8 million in the third quarter of 2022.

The decrease was primarily due to a $5.1 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021 and fire event that occurred in the fourth quarter 2022.

Other operating income, net was $1.6 million and $10.8 million for the three months ended March 31, 2024 and 2023, respectively, a decrease of $9.2 million, primarily due to decreased hedge gains associated with our derivatives.

Management's Discussion and Analysis

Other operating income, net was $19.0 million and $44.5 million for the nine months ended September 30, 2023 and 2022, respectively, a decrease of $25.5 million, primarily due to a $13.9 million decrease in insurance recoveries related to the fire and freeze events that occurred during the first quarter 2021 and fire event that occurred in the fourth quarter 2022 and decreased hedge gains realized in 2023 compared to 2022 associated with our trading derivatives.

Non-Operating Expenses, Net

Interest Expense, Net

Interest expense, net increased by $31.6 million, or 62.3%, to $82.3 million in the third quarter of 2023 compared to $50.7 million in the third quarter of 2022, primarily driven by the following:

• an increase in the average effective interest rate of 485 basis points in the third quarter of 2023 compared to the third quarter of 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• a decrease in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $256.8 million in the third quarter of 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the third quarter of 2022.

Interest expense, net was $239.2 million in the nine months ended September 30, 2023, compared to $132.7 million for nine months ended September 30, 2022, an increase of $106.5 million, or 80.3% primarily due to the following:

• an increase in the average effective interest rate of 611 basis points during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $350.2 million during the nine months ended September 30, 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the nine months ended September 30, 2022.

Interest expense, net was $87.7 million in the three months ended March 31, 2024, compared to $76.5 million for three months ended March 31, 2023, an increase of $11.2 million, or 14.6% primarily due to the following:

• an increase in the average effective interest rate of 257 basis points during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• a decrease in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $454.8 million during the three months ended March 31, 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the three months ended March 31, 2023;

• debt extinguishment costs of $3.6 million in the three months ended March 31, 2024 related to the payoff of the Delek Logistics Term Loan Facility and Delek Logistics 2025 Notes with proceeds from the Delek Logistics 2029 Notes issued in March 2024.

Results from Equity Method Investments

We recognized income from equity method investments of $27.0 million during the third quarter of 2023, compared to $17.8 million for the third quarter of 2022, an increase of $9.2 million.

This increase was primarily driven by the following:

• an increase in income from our asphalt terminal equity method investment due to improved margins;

• an increase in income from our investment in W2W Holdings LLC to $6.9 million in the third quarter of 2023 from $1.2 million in the third quarter of 2022.

We recognized income from equity method investments of $67.1 million for the nine months ended September 30, 2023, compared to $44.4 million for the nine months ended September 30, 2022, an increase of $22.7 million.

We recognized income from equity method investments of $21.9 million for the three months ended March 31, 2024, compared to $14.6 million for the three months ended March 31, 2023, an increase of $7.3 million.

This increase was primarily driven by the following:

• an increase in income from our asphalt terminal equity method investment due to higher volumes and resulting revenue increases;

• an increase in income from our investment in W2W Holdings LLC to $18.2 million during the nine months ended September 30, 2023 from $5.4 million in the nine months ended September 30, 2022.

For the third quarter of 2023, we recorded income tax expense of $31.5 million compared to $4.0 million for the third quarter of 2022, primarily driven by the following:

• an increase in pre-tax net income of $146.8 million;

Management's Discussion and Analysis

• Our effective tax rates were 18.8% and 19.2% for the three months ended September 30, 2023 and 2022, respectively, due to the impact of fixed dollar permanent differences on the tax rate and changes to valuation allowances on state attributes.

For the nine months ended September 30, 2023, we recorded income tax expense of $43.5 million compared to $107.5 million for the nine months ended September 30, 2022, primarily driven by the following:

• an increase in income from our investment in W2W Holdings LLC to $9.4 million during the three months ended March 31, 2024 from $4.5 million in the three months ended March 31, 2023.

For the three months ended March 31, 2024, we recorded an income tax benefit of $7.2 million compared to expense of $15.8 million for the three months ended March 31, 2023, primarily driven by the following:

• a decrease in pre-tax net income of $120.4 million, and

• Our effective tax rates were 17.4% and 21.2% for the nine months ended September 30, 2023 and 2022, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate.

• Our effective tax rates were 22.2% and 18.0% for the three months ended March 31, 2024 and 2023, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate and changes in valuation allowance on state attributes when calculating a year-to-date effective tax rate to approximate the estimated annual effective tax rate.

Management's Discussion and Analysis

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Selected Refining Financial Information

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenues $ 3,108.3 $ 3,794.5

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For this reason, unfavorable Gulf Coast (Henry Hub) differentials can impact our crack spread capture.

Management's Discussion and Analysis

refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

The cost to acquire the refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment largely depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation.

In addition to the above, it continues to be a strategic and operational objective to manage price and supply risk related to crude oil that is used in refinery production, and to develop strategic sourcing relationships.

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Refinery Statistics

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

2023 2022 2023 2022

Three Months Ended March 31,

Total Refining Segment

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Refinery Statistics (continued)

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

2023 2022 2023 2022

Three Months Ended March 31,

Tyler, TX Refinery

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Operating expenses $ 5.28 $ 8.70

$ 4.74 $ 7.06 $ 5.06 $ 5.99

(% based on amount received in period)

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Operating expenses $ 4.72 $ 4.47

$ 4.36 $ 4.83 $ 4.60 $ 4.70

(% based on amount received in period)

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Refinery Statistics (continued)

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

2023 2022 2023 2022

Three Months Ended March 31,

Big Spring, TX Refinery

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Other feedstocks

3,865 (3,189) 3,834 (866)

Total throughput 64,853 72,614

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Operating expenses $ 8.08 $ 5.80

$ 8.37 $ 7.32 $ 7.61 $ 7.02

(% based on amount received in period)

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28,244 32,783

5,461 944 4,239 1,439

Petrochemicals, LPG, NGLs

6,079 6,768 6,510 6,948

902 5,960 446 5,881

Total production

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Other feedstocks

3,628 3,287 4,686 3,216

Total throughput

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Operating expenses $ 5.94 $ 5.21

$ 5.00 $ 5.97 $ 5.00 $ 5.41

(% based on amount received in period)

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See tables below.

(2) Reflects the prior period conforming reclassification adjustment between operating expenses and general and administrative expenses.

Management's Discussion and Analysis

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Refinery Sales to Other Segments

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

Three Months Ended March 31,

(in barrels per day) 2024 2023

El Dorado refined product sales to other Delek segments — — — 5

Big Spring refined product sales to other Delek segments 20,326 19,433

Pricing Statistics (average for the period presented)

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

2023 2022 2023 2022

Three Months Ended March 31,

WTI — Cushing crude oil (per barrel) $ 77.01 $ 75.96

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Brent (per barrel) $ 81.76 $ 82.10

Gulf Coast 5-3-2 crack spread (per barrel) - utilizing HSD $ 16.80 $ 23.07 $ 14.41 $ 25.08

Gulf Coast 5-3-2 crack spread (per barrel) (1)

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Natural gas, per MMBTU

$ 2.10 $ 2.73

(1) For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of (Argus pricing) WTI Cushing crude, U.S.

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Gulf Coast CBOB gasoline and Gulf Coast ultra-low sulfur diesel.

Starting in Q1 2023, for our Krotz Springs refinery, we compare our per barrel refining margin to the Gulf Coast 2-1-1 crack spread consisting of (Argus pricing) LLS crude oil, (Argus pricing) U.S.

For 2023, for our Krotz Springs refinery, we compare our per barrel refining margin to the Gulf Coast 2-1-1 crack spread consisting of (Argus pricing) LLS crude oil, (Argus pricing) U.S.

Gulf Coast CBOB gasoline and 50% of (Argus pricing) U.S.

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2 heating oil (high sulfur diesel).

Historical Gulf Coast 2-1-1 crack spread measures have been revised to conform to current period presentation.

For 2024, for our Krotz Springs refinery, we compare our per barrel refining margin to the Gulf Coast 2-1-1 crack spread consisting of (Argus pricing) LLS crude oil, (Argus pricing) U.S.

Gulf Coast CBOB gasoline and (Platts pricing) U.S.

Gulf Coast Pipeline No.

2 heating oil (high sulfur diesel).

The Tyler refinery's crude oil input is primarily WTI Midland and East Texas, while the El Dorado refinery's crude input is primarily a combination of WTI Midland, local Arkansas and other domestic inland crude oil.

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Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues for the refining segment decreased by $542.9 million, or 10.5%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

• a decrease in the average price of U.S.

Gulf Coast gasoline of 2.5%, ULSD of 14.9%, and HSD of 28.7%;

• a decrease in wholesale activity.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Net revenues included sales to our retail segment of $117.0 million and $132.1 million, sales to our logistics segment of $115.1 million and $124.7 million, and sales to our other segment of $0.0 million and $6.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively.

We eliminate this intercompany revenue in consolidation.

Revenues for the refining segment decreased $2,963.1 million, or 19.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Refining Segment Operational Comparison of the Three Months Ended March 31, 2024 versus the Three Months Ended March 31, 2023

Revenues for the refining segment decreased $686.2 million, or 18.1%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The decrease was primarily driven by the following:

• a decrease in the average price of U.S.

Gulf Coast gasoline of 16.4%, ULSD of 21.5%, and HSD of 39.6%;

Gulf Coast gasoline of 7.1% and ULSD of 8.7%;

• a decrease in wholesale activity.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Revenues included sales to our retail segment of $331.0 million and $404.0 million, sales to our logistics segment of $298.3 million and $374.5 million and sales to the other segment of $0.0 million and $22.5 million for the nine months ended September 30, 2023 and 2022, respectively.

• an increase in sales volumes primarily associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities;

• an increase in the average price of U.S.

Gulf Coast HSD of 1.6%.

Revenues included sales to our retail segment of $93.9 million and $102.6 million and sales to our logistics segment of $92.9 million and $91.1 million for the three months ended March 31, 2024 and 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other decreased by $745.9 million, or 15.2%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

• decreases in the cost of WTI Cushing crude oil, from an average of $91.63 per barrel to an average of $82.51, or 10.0%, and decreases in the cost of WTI Midland crude oil, from an average of $93.41 per barrel to an average of $83.85, or 10.2%;

• favorable inventory impacts;

• a decrease in wholesale activity.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

Management's Discussion and Analysis

Cost of materials and other decreased $2,790.5 million, or 19.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Cost of materials and other decreased $618.9 million, or 17.9%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

This decrease was primarily driven by the following:

• decreases in the cost of WTI Cushing crude oil, from an average of $98.50 per barrel to an average of $77.37, or 21.5%, and decreases in the cost of WTI Midland crude oil, from an average of $99.87 per barrel to an average of $78.63, or 21.3%;

• a decrease in wholesale activity;

• a decrease in RINs pricing.

These decreases were partially offset by the following:

• an increase in sales volumes (including purchased products).

• increases in the cost of WTI Cushing crude oil, from an average of $75.96 per barrel to an average of $77.01, or 1.4%, and increases in the cost of WTI Midland crude oil, from an average of $77.50 per barrel to an average of $78.55, or 1.4%.

• an increase in sales volumes primarily associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities.

Our refining segment purchases finished product from our logistics segment and has multiple service agreements with our logistics segment which, among other things, require the refining segment to pay terminalling and storage fees based on the throughput volume of crude and finished product in the logistics segment pipelines and the volume of crude and finished product stored in the logistics segment storage tanks, subject to minimum volume commitments.

These costs and fees were $156.0 million and $126.1 million during the three months ended September 30, 2023 and 2022, respectively.

These costs and fees were $413.2 million and $373.3 million during the nine months ended September 30, 2023 and 2022, respectively.

These costs and fees were $139.2 million and $124.6 million during the three months ended March 31, 2024 and 2023, respectively.

We eliminate these intercompany fees in consolidation.

Refining Margin

Refining segment margin increased by $203.0 million, or 80.0%, in the third quarter of 2023 compared to the third quarter of 2022, with a refining margin percentage of 9.9% as compared to 4.9% for the third quarter of 2023 and 2022, respectively, primarily driven by the following:

• an increase in sales volume (including purchased products);

• an increase in utilization;

• favorable inventory impacts;

• lower natural gas prices;

• a 3.7% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 0.1% increase in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery), and a 24.0% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery).

Refining margin decreased by $172.6 million, or 14.0%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, with a refining margin percentage of 8.5% as compared to 8.0% for the nine months ended September 30, 2023 and 2022, respectively, primarily driven by the following:

• a 10.6% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), an 8.8% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and a 36.8% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

Refining margin decreased by $67.3 million, or 20.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, with a refining margin percentage of 8.6% as compared to 8.8% for the three months ended March 31, 2024 and 2023, respectively, primarily driven by the following:

• a 29.1% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery) and a 29.6% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery).

These decreases were partially offset by the following:

• a 1.7% increase in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• an increase in sales volumes primarily associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities;

• lower natural gas prices.

• an increase in sales volume (including purchased products).

Management's Discussion and Analysis

Operating Expenses

Operating expenses decreased by $8.9 million, or 5.1%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease in operating expenses was primarily driven by the following:

• lower natural gas in 2023.

These decreases were partially offset by the following:

• increase in outside service and maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023.

Operating expenses decreased by $8.1 million, or 1.7%, in the nine months ended September 30, 2023, compared to nine months ended September 30, 2022.

The decrease in operating expenses was primarily driven by the following:

• lower natural gas in 2023.

These decreases were partially offset by the following:

• higher employee, outside service and maintenance costs including costs related to our Safety Action Plan, which we expect will continue at least through the end of 2023.

EBITDA increased by $194.8 million, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to an increase in refining margin driven by increased sales volume (including purchased products) and lower natural gas prices, partially offset by decreased crack spreads.

EBITDA decreased by $170.5 million, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by increased sales volume (including purchased products) and lower natural gas prices.

Operating expenses increased by $26.7 million, or 19.2%, in the three months ended March 31, 2024, compared to three months ended March 31, 2023.

The increase in operating expenses was primarily driven by the following:

• higher employee, outside service and maintenance costs.

These increases were partially offset by the following:

• lower natural gas prices in 2024.

EBITDA decreased by $91.0 million, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by an increase in sales volumes primarily associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities.

Management's Discussion and Analysis

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Selected Logistics Financial and Operating Information

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenues $ 252.1 $ 243.5

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Midland Gathering Assets 213,458 222,112

248,443 121,304 230,907 107,699

Plains Connection System 256,844 240,597

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136,614 93,305

(1) Formerly known as the Permian Gathering System.

(2) Formally known as 3 Bear, which was acquired June 1, 2022.

(1) Mcfd - average thousand cubic feet per day.

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Logistics revenue is largely based on fixed-fee or tariff rates charged for throughput volumes running through our logistics network, where many of those volumes are contractually protected by minimum volume commitments ("MVCs").

To the extent that our logistics volumes are not subject to MVCs, our Logistics revenue may be negatively impacted in periods where are customers are experiencing economic pressures or reductions in demand for their products.

To the extent that our logistics volumes are not subject to MVCs, our Logistics revenue may be negatively impacted in periods where our customers are experiencing economic pressures or reductions in demand for their products.

Additionally, certain of our throughput arrangements contain deficiency credit provisions that may require us to defer excess MVC fees collected over actual throughputs to apply toward MVC deficiencies in future periods.

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Management's Discussion and Analysis

Logistics Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues decreased by $18.2 million, or 6.2%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by:

• decrease in revenue in our Delaware Gathering operations of $17.2 million primarily due to decrease in natural gas prices slightly offset by increases in water, crude oil and natural gas volumes;

• decreased revenue of $3.6 million in our West Texas marketing operations primarily driven by a decrease in the average sales prices per gallon of diesel, partially offset by an increase in the volumes sold:

◦ the average sales prices per gallon of diesel sold decreased by $0.56 per gallon;

◦ the volumes of gasoline increased by 5.3 million, partially offset by a decrease of 1.2 million gallons of diesel sold.

These decreases were partially offset by the following:

• increase in throughput associated with Midland Gathering operations primarily due to new connections finalized during 2022;

• increase in terminalling and marketing revenue primarily due to utilization and rate increases.

Net revenues included sales to our refining segment of $156.0 million and $126.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively, and sales to our other segment of $0.4 million and $1.1 million for the three months September 30, 2023 and 2022, respectively.

We eliminate this intercompany revenue in consolidation.

Net revenues decreased by $1.1 million, or 0.1%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily driven by the following:

• decreased revenue of $66.7 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of diesel sold in our West Texas marketing operations:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.39 per gallon and $0.71 per gallon, respectively;

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

These decreases were partially offset by the following:

• increase in revenue as a result of our Delaware Gathering operations, which began in June 2022;

• increase in volumes associated with Midland Gathering operations primarily due to new connections finalized during 2022.

Revenues included sales to our refining segment of $413.2 million and $373.3 million for the nine months ended September 30, 2023 and 2022, respectively, and sales to our other segment of $1.2 million and $2.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Logistics Segment Operational Comparison of the Three Months Ended March 31, 2024 versus the Three Months Ended March 31, 2023

Net revenues increased by $8.6 million, or 3.5%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily driven by the following:

• increase in terminalling and marketing fees due to rate increases as well as higher volumes associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities.

These increases were partially offset by the following:

• decreased revenue of $0.6 million in our West Texas marketing operations primarily driven by decreases in RIN prices.

Revenues included sales to our refining segment of $139.2 million and $124.6 million for the three months ended March 31, 2024 and 2023, respectively, and sales to our other segment of $0.4 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Management's Discussion and Analysis

Cost of Materials and Other

Cost of materials and other for the logistics segment decreased by $27.1 million, or 15.3%, in the third quarter of 2023 compared to the third quarter of 2022.

The decrease was primarily driven by the following:

• decrease of $16.9 million primarily as a result of a decrease in natural gas prices impacting our Delaware Gathering operations;

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon, partially offset by an increase in the gasoline volumes sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.41 per gallon and $0.52 per gallon, respectively;

◦ the average volumes of gasoline increased by 5.3 million, partially offset by a decrease of 1.2 million gallons of diesel sold.

Our logistics segment purchased product from our refining segment of $115.1 million and $124.7 million for the three months ended September 30, 2023 and September 30, 2022, respectively.

We eliminate these intercompany costs in consolidation.

Cost of materials and other for the logistics segment decreased by $75.5 million, or 15.7%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Cost of materials and other for the logistics segment decreased by $2.4 million, or 1.9%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

This decrease was primarily driven by the following:

• decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of diesel sold in our West Texas marketing operations:

• decrease of $5.2 million in our gathering and processing segment driven primarily by lower natural gas costs.

These decrease was partially offset by the following:

• increase in costs of materials and other of $1.8 million in our West Texas marketing operations primarily driven by increases in the average volumes of gasoline and diesel sold, partially offset by decreases in the average cost per gallon:

◦ the volumes of gasoline and diesel sold increased by 4.0 million and 0.5 million gallons, respectively;

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.28 per gallon and $0.22 per gallon, respectively.

◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 1.9 million increase in gallons of gasoline sold.

• partially offset by increase in cost of materials and other as a result of our Delaware Gathering operations, which began in June 2022.

Our logistics segment purchased product from our refining segment of $298.3 million and $374.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Our logistics segment purchased product from our refining segment of $92.9 million and $91.1 million for the three months ended March 31, 2024 and 2023, respectively.

We eliminate these intercompany costs in consolidation.

Management's Discussion and Analysis

Operating Expenses

Operating expenses increased by $7.1 million, or 27.4%, in the third quarter of 2023 compared to the third quarter of 2022, driven by an increase in variable expenses due to higher throughput.

Operating expenses increased by $21.7 million, or 33.4%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by incremental expenses associated with Delaware Gathering Acquisition.

EBITDA increased by $9.2 million, or 10.5%, in the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily driven by the following:

• higher throughput volumes;

• rate increases..

EBITDA increased by $64.7 million, or 30.2%, in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• higher throughput volumes;

• incremental EBITDA from the Delaware Gathering Acquisition.

Operating expenses increased by $7.2 million, or 29.1%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by an increase in contract services.

Management's Discussion and Analysis

EBITDA increased by $8.3 million, or 9.1%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the following:

• higher terminalling and marketing fees due to rate increases as well as higher throughput volumes primarily associated with the Tyler Refinery operations which were negatively impacted in the prior year as a result of turnaround activities.

These increases were partially offset by the following:

• increases in operating expenses primarily due to contract services

Management's Discussion and Analysis

Retail Segment

The tables below set forth certain information concerning our retail segment operations (gross sales $ in millions):

The tables below set forth certain information concerning our retail segment operations ($ in millions):

Selected Retail Financial and Operating Information

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenues $ 193.5 $ 205.0

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Operating Information

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

2023 2022 2023 2022

Three Months Ended March 31,

Number of stores (end of period) 250 249

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Average retail gallons per average number of stores (in thousands)

176 184 526 533

Average retail sales price per gallon sold $ 3.09 $ 3.28

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Same-Store Comparison (2)

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

2023 2022 2023 2022

Three Months Ended March 31,

Change in same-store retail fuel gallons sold 0.7 % (1.7) %

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Management's Discussion and Analysis

Retail Segment Operational Comparison of the Three and Nine Months Ended September 30, 2023 versus the Three and Nine Months Ended September 30, 2022

Net revenues for the retail segment decreased by $16.6 million, or 6.6%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• a decrease in total fuel sales which were $153.0 million in the third quarter of 2023 compared to $169.0 million in the third quarter of 2022, primarily attributable to a decrease of $0.24 in average price charged per gallon sold;

• a decrease in merchandise sales to $83.5 million in the third quarter of 2023 compared to $84.2 million in the third quarter of 2022, primarily driven by the same-store sales decrease of 1.9%.

Revenues for the retail segment decreased by $65.5 million, or 8.9%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• a decrease in total fuel sales which were $432.5 million for the nine months ended September 30, 2023 compared to $502.4 million for the nine months ended September 30, 2022, primarily attributable to a $0.53 decrease in average price charged per gallon sold.

These decreases were partially offset by the following:

• an increase in merchandise sales to $241.7 million for the nine months ended September 30, 2023 compared to $237.3 million for the nine months ended September 30, 2022, primarily driven by the same-store sales increase of 1.1%.

Management's Discussion and Analysis

Retail Segment Operational Comparison of the Three Months Ended March 31, 2024 versus the Three Months Ended March 31, 2023

Revenues for the retail segment decreased by $11.5 million, or 5.6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the following:

• a decrease in total fuel sales which were $122.8 million for the three months ended March 31, 2024 compared to $131.1 million for the three months ended March 31, 2023, primarily attributable to a $0.19 decrease in average price charged per gallon sold;

• a decrease in merchandise sales to $70.7 million for the three months ended March 31, 2024 compared to $73.9 million for the three months ended March 31, 2023, primarily driven by the same-store sales decrease of 4.1% mostly attributable to tobacco sales.

Cost of Materials and Other

Cost of materials and other for the retail segment decreased by $20.7 million, or 9.8%, in the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the following:

• a decrease in average cost per gallon of $0.31, or 9.0%, applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $117.0 million and $132.1 million for the three months ended September 30, 2023 and September 30, 2022, respectively, which is eliminated in consolidation.

Cost of materials and other for the retail segment decreased by $69.0 million, or 11.2%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

Cost of materials and other for the retail segment decreased by $11.7 million, or 6.9%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the following:

• a decrease in average cost per gallon of $0.21, or 7.0%.

Our retail segment purchased finished product from our refining segment of $331.0 million and $404.0 million for the nine months ended September 30, 2023 and 2022, respectively.

Our retail segment purchased finished product from our refining segment of $93.9 million and $102.6 million for the three months ended March 31, 2024 and 2023, respectively.

We eliminate this intercompany cost in consolidation.

Operating Expenses

Retail segment operating expenses increased by $1.0 million, or 3.9%, in the third quarter of 2023 compared to the third quarter of 2022, primarily due to driven by higher employee cost in 2023.

Operating expenses for the retail segment increased by $3.7 million, or 5.1%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily driven by higher employee cost in 2023.

EBITDA for the retail segment increased by $2.7 million, or 20.0%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily driven by the following:

• an increase in average fuel margin of $0.075 per gallon, partially offset by a decrease in fuel sales volume;

• an increase in merchandise margin percentage of 1.8%, partially offset by a 0.9% decrease in merchandise sales.

EBITDA for the retail segment increased by $1.3 million, or 3.6%, for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily driven by the following:

• an increase in average fuel margin of $0.015 per gallon, partially offset by a decrease in fuel sales volume;

• a 1.8% increase in merchandise sales.

These increases were partially offset by the following:

• an increase in operating expenses due to higher employee costs.

Management's Discussion and Analysis

Operating expenses for the retail segment increased by $0.5 million, or 2.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

EBITDA for the retail segment increased by $0.1 million, or 1.6%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the following:

• an increase in average fuel margin of $0.024;

• a 4.3% decrease in merchandise sales.

Management's Discussion and Analysis

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• potential issuances of additional equity and debt securities.

At September 30, 2023 our total liquidity amounted to $1.8 billion comprised primarily of $906.9 million in unused credit commitments under our revolving credit facilities (as discussed in Note 9 of our condensed consolidated financial statements in Item 1.

At March 31, 2024 our total liquidity amounted to $2.2 billion comprised primarily of $1,424.3 million in unused credit commitments under our revolving credit facilities (as discussed in Note 8 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q) and $753.4 million in cash and cash equivalents.

Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash dividends and fund operational capital expenditures.

On November 1, 2023, our Board of Directors approved a quarterly cash dividend of $0.24 per share of our common stock.

On May 2, 2024, our Board of Directors approved a quarterly cash dividend of $0.250 per share of our common stock.

Other funding sources including borrowings under existing credit agreements, and issuance of equity and debt securities have been utilized to meet our funding requirements and support our growth capital projects and acquisitions.

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Additionally, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including oil prices, some of which are beyond our control.

As of September 30, 2023, we believe we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Term Loan Credit Facility (see further discussion in Note 9 of our condensed consolidated financial statements in Item 1.

As of March 31, 2024, we believe we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Term Loan Credit Facility (see further discussion in Note 8 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q).

Additionally, we were in compliance with incurrence covenants to the extent triggered during the quarter ended September 30, 2023.

Additionally, we were in compliance with covenants during the quarter ended March 31, 2024.

Failure to meet the incurrence covenants could impose certain incremental restrictions on our ability to incur new debt and also may limit whether and the extent to which we may pay dividends, as well as impose additional restrictions on our ability to repurchase our stock, make new investments and incur new liens (among others).

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as well as the possibility of obtaining other secured and unsecured debt, raising capital through equity issuance, or taking advantage of transactional financing opportunities such as sale-leasebacks or joint ventures, as otherwise contemplated and allowed under our incurrence covenants.

The following table sets forth a summary of our consolidated cash flows (in millions):

Nine Months Ended September 30,

Cash Flow Data:

Operating activities $ 922.8 $ 716.1

Investing activities (338.6) (819.9)

Financing activities (523.8) 401.1

Net increase $ 60.4 $ 297.3

Cash Flows from Operating Activities

Net cash provided by operating activities was $922.8 million for the nine months ended September 30, 2023, compared to $716.1 million for the comparable period of 2022.

Increases were a result of cash receipts from customers and cash payments to suppliers and for salaries resulting in a net $297.8 million increase in cash provided by operating activities and an increase in dividends received of $9.5 million, partially offset by an increase in cash paid for debt interest of $118.8 million.

Management's Discussion and Analysis

Cash Flows from Investing Activities

Net cash used in investing activities was $338.6 million for the nine months ended September 30, 2023, compared to $819.9 million in the comparable period of 2022.

The decrease in cash flows used in investing activities was primarily due to the $625.4 million Delaware Gathering Acquisition in 2022 and a $8.8 million increase in distributions from equity method investments, partially offset by a $145.5 million increase in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround, other refinery additions and various interconnects associated with Delek Logistics assets, and payments of $11.0 million for equity interests investments.

Cash Flows from Financing Activities

Net cash used in financing activities was $523.8 million for the nine months ended September 30, 2023, compared to cash provided of $401.1 million in the comparable 2022 period.

The decrease in cash provided was primarily due to net payments on long-term revolvers and term debt of $423.7 million during the nine months ended September 30, 2023, compared to net proceeds of $509.3 million in the comparable 2022 period, net payments from product financing arrangements of $14.4 million for the nine months ended September 30, 2023 compared to net proceeds of $40.0 million in the comparable 2022 period, an increase in dividend payments of $16.6 million and proceeds received of $16.4 million in the comparable 2022 period for the sale of Delek Logistics common limited partner units.

These decreases in cash flows were partially offset by a decrease in share repurchases of $38.6 million and the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J.

Aron Supply & Offtake Agreements and origination of the Citi Inventory Intermediation Agreement (as defined in Note 8 of the condensed consolidated financial statements in Item 1.

Financial Statements).

Cash Position and Indebtedness

As of September 30, 2023, our total cash and cash equivalents were $901.7 million and we had total long-term indebtedness of approximately $2,638.0 million.

As of March 31, 2024, our total cash and cash equivalents were $753.4 million and we had total long-term indebtedness of approximately $2,496.9 million.

The total long-term indebtedness is net of deferred financing costs and debt discount of $61.4 million.

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Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $1,424.3 million.

The decrease of $422.4 million in total long-term indebtedness as of September 30, 2023 compared to December 31, 2022 resulted primarily from a decrease in net borrowings under the Delek Revolving Credit Facility and the United Community Bank Revolver, partially offset by an increase in net borrowings under the Delek Logistics Revolving Facility.

As of September 30, 2023, our total long-term indebtedness (as defined in Note 9 of the condensed consolidated financial statements in Item 1.

Financial Statements) consisted of the following:

• aggregate principal of $0.3 million under the Delek Revolving Credit Facility (maturity of October 26, 2027 and average borrowing rate of 6.68%);

The decrease of $99.0 million in total long-term principle indebtedness as of March 31, 2024 compared to December 31, 2023 resulted primarily from a decrease in net borrowings under the Delek Revolving Credit Facility and the United Community Bank Revolver, partially offset by an increase in net borrowings under the Delek Logistics Revolving Facility.

As of March 31, 2024, our total long-term indebtedness (as defined in Note 8 of the condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q) consisted of the following:

• the Delek Revolving Credit Facility with no outstanding borrowings (maturity of October 26, 2027);

• aggregate principal of $938.1 million under the Delek Term Loan Credit Facility (maturity of November 19, 2029 and effective interest of 10.15%);

• aggregate principal of $811.2 million under the Delek Logistics Revolving Facility, (maturity of October 13, 2027 (which 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) and average borrowing rate of 8.45%);

• aggregate principal of $288.7 million under the Delek Logistics Term Loan Facility (maturity of April 15, 2025 (which 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) and average borrowing rate of 8.92%);

• aggregate principal of $565.2 million under the Delek Logistics Revolving Facility (maturity of October 13, 2027 and average borrowing rate of 8.18%);

• aggregate principal of $400.0 million under the Delek Logistics 2028 Notes (due in 2028, with effective interest rate of 7.39%);

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• aggregate principal of $5.0 million under the United Community Bank Revolver (maturity of June 30, 2024 and average borrowing rate of 7.75%).

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”).

The Amendments, (i) increased the Delek Logistics Revolving Credit Facility's Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $150.0 million to provide for an aggregate Revolving Credit Commitments amount of $1.050 billion, (ii) increased Delek Logistics' ability to incur certain indebtedness and (iii) extended the Delek Logistics Term Loan maturity date from October 13, 2024, to the earlier of (i) April 15, 2025, and (ii) six months prior to the earliest maturity date of any outstanding Permitted Note Indebtedness (as defined in the Delek Logistics Credit Facility).

Management's Discussion and Analysis

On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029, at par.

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 (the “Additional 2029 Notes”), at 101.25%.

The Additional 2029 Notes were issued under the same indenture as the Delek Logistics 2029 Notes and formed a part of the same series of notes as the Delek Logistics 2029 Notes.

The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility.

See Note 8 to our accompanying condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q for additional information about our separate debt and credit facilities.

Management's Discussion and Analysis

Additionally, we utilize other financing arrangements to finance operating assets and/or, from time to time, to monetize other assets that may not be needed in the near term, when internal cost of capital and other criteria are met.

Such arrangements include our inventory intermediation arrangement, which finances a significant portion of our first-in, first-out inventory at the refineries and, from time to time, RINs or other non-inventory product financing liabilities.

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.

Our inventory intermediation obligation with Citi was $502.2 million at September 30, 2023, none of which was current.

Our inventory intermediation obligation with Citigroup Energy Inc.

("Citi") was $492.7 million at March 31, 2024.

See Note 7 of the accompanying condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q for additional information about our inventory intermediation agreement.

Our product financing liabilities consisted primarily of RIN financings as of September 30, 2023, and totaled $260.8 million, all of which is due in the next 12 months.

Our product financing liabilities consisted primarily of RIN financings as of March 31, 2024, and totaled $31.0 million, all of which is due in the next 12 months.

See further description of these types of arrangements in the Environmental Credits and Related Regulatory Obligations accounting policy disclosed in Note 2 to our accompanying consolidated financial statements included in Item 8.

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Additionally, any rating downgrades may increase the likelihood of us having to post additional letters of credit or cash collateral under certain contractual arrangements.

The following table sets forth a summary of our consolidated cash flows (in millions):

Three Months Ended March 31,

Cash Flow Data:

Operating activities $ 166.7 $ 395.1

Investing activities (41.6) (222.1)

Financing activities (193.9) (149.3)

Net (decrease) increase $ (68.8) $ 23.7

Cash Flows from Operating Activities

Net cash provided by operating activities was $166.7 million for the three months ended March 31, 2024, compared to $395.1 million for the comparable period of 2023.

Decreases were a result of cash receipts from customers and cash payments to suppliers and for salaries resulting in a net $259.8 million decrease in cash provided by operating activities, partially offset by a decrease in cash paid for debt interest of $30.5 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $41.6 million for the three months ended March 31, 2024, compared to $222.1 million in the comparable period of 2023.

The decrease in cash flows used in investing activities was primarily due to a $164.0 million decrease in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround in 2023, $3.6 million of insurance proceeds in 2024 and payments of $12.3 million for equity interests investments and other in 2023.

Cash Flows from Financing Activities

Net cash used in financing activities was $193.9 million for the three months ended March 31, 2024, compared to $149.3 million in the

Management's Discussion and Analysis

comparable 2023 period.

The increase in cash used was primarily due to net payments from product and other financing arrangements of $189.7 million for the three months ended March 31, 2024 compared to net proceeds of $98.9 million in the comparable 2023 period, the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J.

Aron Supply & Offtake Agreements and origination of the Citi Inventory Intermediation Agreement (as defined in Note 7 of the condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q) and payment of $10.9 million of deferred financing costs primarily related to the issuance of the Delek Logistics 2029 Notes.

These increases in cash flows were partially offset by the receipt of net proceeds of $132.3 million from the Delek Logistics' public offering of common units in the three months ended March 31, 2024 and net proceeds from term debt of $116.3 million for the three months ended March 31, 2024 compared to net payments on term debt of $6.1 million in the comparable 2023 period, primarily related to the issuance of the Delek Logistics 2029 Notes and the related repayment of the Delek Logistics Term Loan Facility and Delek Logistics 2025 Notes and a decrease in net payments on long-term revolvers of $59.6 million.

Capital Spending

A key component of our long-term strategy is our capital expenditure program.

The following table summarizes our actual capital expenditures for the nine months ended September 30, 2023, by segment, as well as planned capital expenditures for the full year 2023 by operating segment and major category (in millions):

Nine Months Ended September 30, 2023 Actual

The following table summarizes our actual capital expenditures for the three months ended March 31, 2024, by operating segment and major category (in millions):

2024 Forecast Three Months Ended March 31, 2024 Actual

Regulatory $ 42 $ 5.9

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Logistics segment total 70 15.2

Regulatory — —

Sustaining maintenance 5 1.8

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Total capital spending $ 330 $ 45.9

The 2023 full year capital expenditure forecast is expected to be between $380.0 million to $390.0 million.

In addition, we expect to receive estimated insurance and other proceeds of $20.0 million in 2023 that are not reflected in the full year forecast.

Management's Discussion and Analysis

The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects and subject to the changes and uncertainties discussed under the 'Forward-Looking Statements' section of Item 2.

Management Discussion and Analysis, of this Quarterly Report on Form 10-Q.

Management's Discussion and Analysis, of this Quarterly Report on Form 10-Q.

For further information, please refer to our discussion in Item 1A.

Risk Factors, of our December 31, 2023 Annual Report on Form 10-K.

Management's Discussion and Analysis

Cash Requirements

Long-Term Cash Requirements Under Contractual Obligations

Information regarding our known cash requirements under contractual obligations of the types described below as of September 30, 2023, is set forth in the following table (in millions):

Information regarding our known cash requirements under contractual obligations of the types described below as of March 31, 2024, is set forth in the following table (in millions):

Payments Due by Period

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Total $ 996.9 $ 929.4 $ 2,228.6 $ 1,249.7 $ 5,404.6

(1) Expected interest payments on debt outstanding at September 30, 2023.

Floating interest rate debt is calculated using September 30, 2023 rates.

(1) Expected interest payments on debt outstanding at March 31, 2024.

Floating interest rate debt is calculated using March 31, 2024 rates.

For additional information, see Note 8 to the condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of September 30, 2023.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of March 31, 2024.

(3) We have purchase commitments to secure certain quantities of crude oil, finished product and other resources used in production at both fixed and market prices.

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Other Cash Requirements

Our material short-term cash requirements under contractual obligations are presented above, and we e xpect to fund the majority of those requirements with cash flows from operations.

Our material short-term cash requirements under contractual obligations are presented above, and we expect to fund the majority of those requirements with cash flows from operations.

Our other cash requirements consisted of operating activities and capital expenditures.

Operating activities include cash outflows related to payments to suppliers for crude and other inventories (which are largely reflected in our contractual purchase commitments in the table above) and payments for salaries and other employee related costs.

Cash outlays in 2023 included incentive compensation payments that were earned and accrued in 2022.

Cash outlays in the first quarter of 2024 are planned to include incentive compensation payments that were earned and accrued in 2023.

In line with our long-term sustainable strategy, future cash requirements will include initiatives to build on our long-term sustainable business model, ESG initiatives and sum of the parts initiatives.

Refer to the cash flow section for our operating activities spend during the nine months ended September 30, 2023.

Refer to the cash flow section for our operating activities spend during the three months ended March 31, 2024.

While many of the expenses related to the operating activities are variable in nature, some of the expenditures can be somewhat fixed in the short-term due to forward planning on our level of activity.

Refer to the 'Capital Spending' section for our capital expenditures for nine months ended September 30, 2023 and our anticipated cash requirements for planned capital expenditures for the full year 2023.

Refer to the 'Capital Spending' section for our capital expenditures for the three months ended March 31, 2024 and our anticipated cash requirements for planned capital expenditures for the full year 2024.

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 2. Management’s Discussion and Analysis