Delek US Holdings, Inc. 10-Q

ITEM 1A. RISK FACTORS There were no material changes during the six months ended June 30, 2024 to the risk factors identified in the Company’s fiscal 2023 Annual Report on Form 10-K, except as follows: Failure to complete the pending sale of the Retail Stores could negatively affect us. On July 31, 2024, we entered into the Retail Purchase Agreement with a subsidiary of FEMSA, pursuant to which FEMSA will acquire the Retail Stores, which comprise our retail segment and a portion of our corporate, other and eliminations segment, subject to certain customary closing conditions. There is no assurance that the conditions to the completion of the sale of the Retail Stores will be satisfied. In connection with the sale of the Retail Entities, we and our stockholders will be subject to risks, including the following: • the market price of our common stock may reflect assumptions that the Retail Transaction will occur, and a failure to complete the Retail Transaction could result in a decline in the market price of our common stock; • if the Retail Transaction is not completed, we may not be able to realize the expected proceeds in a subsequent sale transaction; • we and/or FEMSA may be unable to obtain the approvals, consents or authorizations required to complete the Retail Transaction; • the closing of the Retail Transaction may result in disruption to our business and distraction of our management and employees from day-to-day operations because matters related to the Retail Transaction may require substantial commitments of their time and resources, which could adversely affect our business, financial condition, and results of operations; • pending the closing of the Retail Transaction, the Retail Purchase Agreement restricts us from engaging in certain actions without FEMSA’s consent, which could prevent us from pursuing business opportunities that may arise prior to the closing, and we will be subject to business uncertainties that could affect our business, financial condition, and results of operations; • uncertainty about the effect of the Retail Transaction may adversely affect our relationships with our employees, customers, suppliers and other persons with whom we have business relationships; • any event that results in a right for FEMSA to seek indemnity from us could result in a substantial payment from us to FEMSA and could adversely affect our business, financial condition, and results of operations; • certain costs relating to the Retail Transaction, such as legal and accounting fees, are payable by us whether or not the Retail Transaction is completed, and we could incur additional costs in connection with the Retail Transaction; • if we successfully complete the Retail Transaction, certain terms of the Retail Purchase Agreement may preclude us from engaging in or pursuing certain business opportunities; and • if we successfully complete the Retail Transaction, our revenues will decrease accordingly and our business will be subject to an increased concentration of the risks that affect our refining and logistics segments. We may be unsuccessful in integrating the operations of the assets we have acquired or may acquire with our operations, and in realizing all or any part of the anticipated benefits of any such acquisitions. From time to time, we evaluate and acquire assets and businesses that we believe complement our existing assets and businesses. Acquisitions may require substantial capital or the incurrence of substantial indebtedness. Our capitalization and results of operations may change significantly as a result of completed or future acquisitions. Acquisitions and business expansions involve numerous risks, including difficulties in the assimilation of the assets and operations of the acquired businesses, inefficiencies and difficulties that arise because of unfamiliarity with new assets and the businesses associated with them, and new geographic areas and the diversion of management's attention from other business concerns. Further, unexpected costs and challenges may arise whenever businesses with different operations or management are combined, and we may experience unanticipated delays in realizing the benefits of an acquisition. Also, following an 67 | Risk Factors acquisition, we may discover previously unknown liabilities associated with the acquired business or assets for which we have no recourse under applicable indemnification provisions. On August 2, 2024, Delek Logistics entered into the H2O Purchase Agreement for the acquisition of H2O Midstream. Delek Logistics expects the transaction to close by the end of 2024, subject to closing conditions. If these conditions are not satisfied or waived, the acquisition of H2O Midstream will not be consummated. If the closing of the H2O Midstream acquisition is substantially delayed or does not occur at all, or if the terms of the acquisition are required to be modified substantially, we may not realize the anticipated benefits of the acquisition fully or at all, or they may take longer to realize than expected. The H2O Midstream acquisition will require management to devote significant attention and resources to integrating the H2O Midstream business with our business. Potential difficulties that may be encountered in the integration process include, among others: • the inability to successfully integrate the H2O Midstream business into our business in a manner that permits us to achieve the revenue and cost savings that we announced as anticipated from the acquisition; • complexities associated with managing the larger, integrated business; • potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the acquisition; • integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services; • loss of key employees; • integrating relationships with customers, vendors and business partners; • performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the acquisition and integration of H2O Midstream’s operations into Delek Logistics; and • the disruption in each company’s ongoing business or inconsistencies in standards, controls, procedures and policies. Furthermore, delays or difficulties in the integration process could adversely affect our business, financial results, financial condition and stock price. Even if we are able to integrate our business operations successfully, there can be no assurance that the integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that we currently expect or have communicated from this integration or that these benefits will be achieved within the anticipated timeframe.