What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-07 · 285 added, 314 removed, 805 unchanged (43% of the section changed)

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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 (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 or dispositions, including the planned sale of our Retail Stores and H2O Midstream acquisition, 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 or dispositions, including the sale of our Retail Stores and H2O Midstream acquisition, 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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• changes in, or the failure to comply with, the extensive government regulations applicable to our industry segments, including current and future restrictions on commercial and economic activities in response to future public health crises;

• our ability to execute our long-term sustainability strategy and growth through acquisitions and dispositions such as the planned sale of our Retail Stores, the planned H20 Midstream acquisition, the Delaware Gathering Acquisition and joint ventures, including our ability to successfully integrate acquisitions, complete strategic transactions, safety initiatives and capital projects, realize expected synergies, cost savings and other benefits therefrom, return value to shareholders, or achieve operational efficiencies;

• our ability to execute our long-term sustainability strategy and growth through acquisitions and dispositions such as the sale of our Retail Stores, the H20 Midstream acquisition, the Delaware Gathering Acquisition and joint ventures, including our ability to successfully integrate acquisitions, complete strategic transactions, safety initiatives and capital projects, realize expected synergies, cost savings and other benefits therefrom, return value to shareholders, or achieve operational efficiencies;

• diminishment in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;

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• seasonality;

• the decline in margins impacting current results and forecasts could result in impairments in certain of our long-lived or indefinite-lived assets, including goodwill, or have other financial statement impacts that cannot currently be anticipated;

• 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;

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Management's View of Our Business

We are an integrated downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and convenience store retailing.

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

Prior to July 2024, we aggregated our operating segments into three reportable segments:

refining, logistics, and retail.

However, in July 2024, we entered into a definitive equity purchase agreement (the "Retail Purchase Agreement") with a subsidiary of Fomento Económico Mexicano, S.A.B.

On September 20, 2024, the Retail Transaction closed.

As a result of the Retail Purchase Agreement, we met the requirements of Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements - Discontinued Operations and ASC 360, Property, Plant and Equipment, to report the results of the Retail Stores as discontinued operations and to classify the Retail Stores as a group of discontinued operations assets.

During the second quarter 2024, 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.

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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.

During the second quarter of 2024, we experienced narrowing crack spreads.

The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, and the WTI Midland to Cushing differential narrowed favorably during the quarter.

The differentials remained relatively consistent with 2023.

Along with lower crack spreads driven by higher inventories, the industry experienced lower natural gas costs and lower RINs costs, which counterbalanced lower crack spreads.

Though refining margins softened, demand for refined products continues to be robust driven by the continued constrained supply in the markets we serve.

We achieved record throughput in the second quarter 2024, driven by increased reliability and we will continue to identify opportunities for operational efficiency improvements.

Our logistics segment (or "Logistics") continued to 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.

The retail segment experienced decreased sales due to the remodeling of stores which limited some store availability during quarter.

We expect to begin seeing benefits from successful re-branding and remodeling in future periods.

During the third quarter of 2024, we made steady progress on our "sum of the parts" efforts.

We completed the sale of our Retail Stores during the third quarter 2024 for proceeds of $390.2 million and also entered into a 10 year fuel supply agreement whereby Delek will sell to FEMSA certain motor fuel products for use at the Retail Stores.

The completion of the Retail Transaction is an important step in our value creation journey.

Our logistics segment (or "Logistics") successfully closed H2O Midstream acquisition that expands our gathering footprint in the Midland sub-basin of the Permian, and extended our product offering of wastewater processing and disposal.

This acquisition diversifies our logistics customer base to include more third-party customers.

While the impact on the third quarter is not significant (as a result of the acquisition closing in September 2024), we expect that the acquisition itself will be immediately accretive, delivering incremental contribution margin and cash flows.

We also completed strategic transactions with Delek Logistics including the dropdown of W2W Holdings LLC ("HoldCo") which includes our 15.6% indirect interest in the Wink to Webster Pipeline LLC joint venture as well as amended and extended certain commercial agreements.

These transactions are expected to make both Delek and Delek Logistics stronger companies.

We had another safe and reliable quarter from an operational perspective;

however, the current refining margin environment is challenging as crack spreads narrowed and followed atypical seasonal patterns during the third quarter of 2024.

The domestic West Texas Intermediate ("WTI") differentials compared to Brent continued to be favorable, and the WTI Midland to Cushing differential narrowed favorably during the quarter and compared to the third quarter of 2023.

Though refining margins softened, demand for refined products continues to be strong.

Logistics continued to contribute strong results driven by increased volumes from the Delaware Basin and rate increases.

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

We will continue to execute on our priorities of running safe and reliable operations, and making further progress on our "sum of the parts" efforts, and delivering shareholder value while maintaining our financial strength and flexibility.

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

During 2024, we have implemented additional cost reduction measures across the organization, including reducing contract services and reducing or eliminating non-critical travel.

We completed our zero based budget action plans and announced a new enterprise optimization plan ("EOP") which includes initiatives that are focused on improving our financial health and ability to generate cash flows.

The EOP includes leaner costs including lower general and administrative expenses, lower operating expenses specifically at the Big Spring Refinery and Krotz Springs Refinery and lowering interest expense.

The EOP also includes stronger margins including accretive minimal capital projects in our Refining segment and commercial improvements including market optionality, improved product slate and optimization.

By executing on our initiatives to optimize our cost structure, we are positioning the Company in the event of lower crack spreads and volatility in the commodity markets.

Management's Discussion and Analysis

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.

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

In 2024 to date, we have returned $31.7 million of capital to shareholders through dividends.

In 2024 to date, we have returned $68.1 million of capital to shareholders through dividends and share buybacks.

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 first half of 2024, we took steps to refinance the Delek Logistics Partners, LP ("Delek Logistics") long term debt, ending with a more attractive maturity profile.

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

These steps allowed us to further execute on our "sum of the parts" plan by facilitating Delek Logistics' planned acquisition of H2O Midstream, purchase of the Wink to Webster Pipeline joint venture and planned expansion of its natural gas processing plant.

These Delek Logistics transactions will enhance Delek Logistics position as a full service (crude, natural gas and water) provider in the most prolific areas of

Management's Discussion and Analysis

the Permian basin while increasing third party revenue.

In 2024, we took steps to refinance the Delek Logistics Partners, LP ("Delek Logistics") long term debt, ending with a more attractive maturity profile.

Delek Logistics also completed two public equity offerings of its common units in March and October 2024.

These steps allowed us to further execute on our "sum of the parts" plan by facilitating Delek Logistics' acquisition of H2O Midstream, purchase of the Wink to Webster Pipeline joint venture and planned expansion of its natural gas processing plant.

These Delek Logistics transactions will enhance Delek Logistics position as a full service (crude, natural gas and water) provider in the most prolific areas of the Permian basin while increasing third party revenue.

In addition, the Retail Transaction will allow us to strengthen our balance sheet.

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Other 2024 Developments

Delek Logistics Equity Offering

Delek Logistics Equity Offerings

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.

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

On October 10, 2024, Delek Logistics completed a public offering of its common units in which it sold 3,846,153 common units (including an overallotment option of 576,922 common units) to the underwriters of the offering at a price to the public of $39.00 per unit.

The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $165.3 million and were used to redeem Delek Logistics’ preferred units outstanding and repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility (as defined in Note 10 of the condensed consolidated financial statements in Item 1.

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

Delek Logistics Debt Agreements

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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%.

Management's Discussion and Analysis

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 101.25% and on August 16, 2024, Delek Logistics sold $200.0 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 103.25% (collectively, the "Additional 2029 Notes").

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.

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

During the second quarter of 2024, we made the decision to idle the Crossett, Arkansas, Cleburne, Texas and New Albany, Mississippi biodiesel facilities, while exploring viable and sustainable alternatives.

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As a result, we conducted an evaluation of impairment and based on our review we recorded a $22.1 million impairment which included property, plant and equipment and right of use assets.

In addition, $0.4 million of severance and benefit expenses were recognized in the three and six months ended June 30, 2024.

In addition, $0.4 million of severance and benefit expenses were recognized in the nine months ended months ended September 30, 2024.

No severance and benefit expenses were recognized in the three months ended September 30, 2024.

Property Settlement

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Additionally, as a result of the settlement, we reduced the non-contingent guarantee and environmental liability to $1.0 million since our risk of a contingent guarantee was eliminated and determined it appropriate to retain an accrual based on what we can reasonably estimate as the cost of the initial steps once operations cease or a cleanup is ordered.

Total net gain from the property settlement was $53.4 million and is recorded in other operating income, net in the condensed consolidated statements of income.

Total net gain from the property settlement was $53.4 million and is recorded in other operating expense (income), net in the condensed consolidated statements of income.

Refer to Note 13 of the condensed consolidated financial statements in Item 1.

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Delek Logistics Gas Plant Expansion

In Q2 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin.

In second quarter of 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin.

The plant is expected to have a capacity of approximately 110 MMcf/d (as defined below) and aims to meet the rising demand for natural gas in the region.

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Expected annual EBITDA is estimated to be approximately $40.0 million.

Management's Discussion and Analysis

Planned Sale of Retail

On July 31, 2024, a wholly owned subsidiary of Delek, entered into a definitive equity purchase agreement (the "Retail Purchase Agreement") with a subsidiary of Fomento Económico Mexicano, S.A.B.

Under the terms of the Retail Purchase Agreement, Delek agreed to sell, and FEMSA has agreed to purchase, 100% of the equity interests in four of Delek’s wholly-owned subsidiaries that own and operate 249 retail fuel and convenience stores (the "Retail Stores") under the Delek US Retail brand for a cash consideration of $350.0 million plus the purchase of inventory and other customary adjustments under the Retail Purchase Agreement for indebtedness (the “Retail Transaction”).

The closing of the Retail Transaction is currently anticipated to occur by the end of 2024, subject to certain customary closing conditions, including, among other things, the receipt of required governmental and other third party approvals (or the termination or expiration of applicable waiting periods).

The Retail Transaction includes a long-term agreement whereby Delek will sell to FEMSA certain motor fuel products for use at the Retail Stores.

Retail Divestiture

On September 30, 2024, Delek US closed the previously announced transaction to sell 100% of the equity interests in four of Delek US' wholly-owned subsidiaries that own and operate 249 retail fuel and convenience stores (the "Retail Stores") under the Delek US Retail brand to a subsidiary of FEMSA.

Net cash proceeds before taxes related to this transaction were approximately $390.2 million.

As a result, we met the requirements of ASC 205-20 and ASC 360 to report the results of the Retail Stores as discontinued operations and to classify the Retail Stores as a group of discontinued operations assets.

The operating results for the Retail Stores, in all periods presented, have been reclassified to discontinued operations.

Refer to Note 4 of the condensed consolidated financial statements in Item 1.

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

Planned Acquisition of H2O Midstream

On August 2, 2024, Delek Logistics entered into a Purchase and Sale Agreement with H2O Midstream Holdings, LLC (the “Seller”) to purchase 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “Purchased Interests” or "H2O Midstream"), related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas (the “H2O Purchase Agreement”) for total consideration of $230.0 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness (the "H2O Transaction").

Acquisition of H2O Midstream

On September 11, 2024, Delek Logistics completed the previously announced acquisition of 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the “Purchased Interests” or "H2O Midstream") from H2O Midstream Holdings, LLC (the “Seller”) related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas (the “H2O Purchase Agreement”) for total consideration of $229.5 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness (the "H2O Transaction").

The purchase price is comprised of approximately $159.5 million in cash and $70.0 million of preferred equity.

Delek Logistics paid a deposit under the H2O Purchase Agreement of $23.0 million.

The closing of the H2O Transaction is currently anticipated to occur by the end of 2024.

Refer to Note 2 of the condensed consolidated financial statements in Item 1.

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

Management's Discussion and Analysis

Wink to Webster Pipeline

On August 1, 2024, we purchased an additional 0.6% indirect investment in Wink to Webster Pipeline LLC for $18.6 million, bringing our total indirect ownership in the pipeline joint venture to 15.6%.

On August 5, 2024, we contributed all of our 50% investment in W2W Holdings LLC ("HoldCo") which includes our 15.6% indirect interest in the Wink to Webster Pipeline LLC joint venture and related joint venture indebtedness, to a subsidiary of Delek Logistics.

On August 5, 2024, we contributed all of our 50% investment in HoldCo which includes our 15.6% indirect interest in the Wink to Webster Pipeline LLC joint venture and related joint venture indebtedness, to a subsidiary of Delek Logistics.

Total consideration was comprised of $83.9 million in cash, forgiveness of a $60.0 million payable to Delek Logistics and 2,300,000 of Delek Logistics common units.

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We also entered into an amended and restated Omnibus Agreement with Delek Logistics that provides us an option to purchase certain critical assets from Delek Logistics at market value during the period beginning upon any change in control, sale of substantially all assets, or other deconsolidation transaction involving Delek Logistics and extending (i) in the case of a deconsolidation involving a third party, for six months following closing, and (ii) for any other deconsolidation, for four years following closing.

Management's Discussion and Analysis

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 June 30, 2024.

The refining segment has a combined nameplate capacity of 302,000 barrels per day ("bpd") as of September 30, 2024.

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

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In addition, the refining segment includes our wholesale crude operations and our 50% interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S.

Management's Discussion and Analysis

Logistics Overview

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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 72.6% interest at June 30, 2024.

DKL), where we owned a 70.4% interest at September 30, 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.

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 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.

In addition, this segment also includes water disposal and recycling operations, located in the Delaware Basin of New Mexico and the Midland Basin of Texas.

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.

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The logistics segment owns or leases approximately 199 tractors and 353 trailers used to haul primarily crude oil and other products for related and third parties.

Retail Overview

Our retail segment (or "Retail") at June 30, 2024 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 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

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• 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.

Management's Discussion and Analysis

Strategic Initiatives

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For 2024, we are focused on the following:

Management's Discussion and Analysis

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

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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, at 101.25%.

On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 101.25% and on August 16, 2024, the Co-issuers sold $200.0 million in aggregate principal amount of additional 8.625% senior notes due 2029 at 103.25%.

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.

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The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.2 million and were used to repay borrowings under the Delek Logistics Revolving Facility.

On October 10, 2024, Delek Logistics completed a public offering of its common units in which it sold 4,423,075 common units (including an overallotment option of 576,922 common units) to the underwriters of the offering at a price to the public of $39.00 per unit.

Executing Safe and Reliable Operations:

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Expanding Delek Logistics' Natural Gas Processing:

In Q2 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin.

In the second quarter of 2024, Delek Logistics made the final investment decision to build a new natural gas processing plant adjacent to its plant in the Permian Basin.

The plant is expected to have a capacity of approximately 110 MMcf/d (as defined below) and aims to meet the rising demand for natural gas in the region.

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Monetizing Our Retail Operations:

On July 31, 2024, we entered into the Retail Purchase Agreement with FEMSA to sell 249 retail fuel and convenience stores that we own and operate under the DK brand for a cash consideration of $350.0 million plus the purchase of inventory and other customary adjustments under the Retail Purchase Agreement for indebtedness.

The Retail Stores are located in Texas, New Mexico, and Arkansas.

The Retail Transaction includes a long-term agreement whereby Delek will sell to FEMSA certain motor fuel products for use at the Retail Stores.

The closing of the Retail Transaction is currently anticipated to occur by the end of 2024, subject to certain customary closing conditions.

On September 30, 2024, Delek US closed the previously announced transaction to sell 100% of the equity interests in four of Delek US' wholly-owned subsidiaries that own and operate 249 retail fuel and convenience stores under the Delek US Retail brand to a subsidiary of FEMSA.

Net cash proceeds before taxes related to this transaction were approximately $390.2 million.

Executing Strategic Midstream Acquisition:

On August 2, 2024, Delek Logistics entered into the H2O Purchase Agreement related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas for total consideration of $230.0 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness.

On September 11, 2024, Delek Logistics completed the previously announced acquisition of 100% of the limited liability company interests in H2O Midstream from H2O Midstream Holdings, LLC related to the Seller’s water disposal and recycling operations, in the Midland Basin in Texas for total consideration of $229.5 million, subject to customary adjustments under the H2O Purchase Agreement for net working capital and indebtedness.

The purchase price is comprised of approximately $159.5 million in cash and $70.0 million of preferred equity.

This transaction will enhance Delek Logistics' position as a full service (crude, natural gas and water) provider in the most prolific areas of the Permian basin.

The closing of the H2O Transaction is currently anticipated to occur by the end of 2024.

Maximizing Shareholder Value:

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

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.

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 business with an eye towards the One Delek vision.

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.

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

We expect refining capacity to shut down, lower refined products inventory and crude oil demand to continue to rise.

These factors will help absorb the recent additions in global supply and balance the market over the next 6 to 12 months.

However, escalating conflicts in the Middle East could potentially result in supply disruptions or further volatility in crude oil prices.

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

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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 2023 and for the two quarterly periods in 2024.

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 three quarterly periods in 2024.

Crude Pricing Differentials

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Management's Discussion and Analysis

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 2023 and for the two quarterly periods in 2024.

Refined Product Prices

We are impacted by refined product prices in two ways:

(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 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.

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

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

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

Management's Discussion and Analysis

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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 2023 and for the two quarterly periods in 2024.

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 three quarterly periods 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 2023 and for the two quarterly periods in 2024.

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

Management's Discussion and Analysis

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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") beginning with the first quarter of 2023 through the second quarter of 2024.

Non-GAAP Measures

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

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

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

2024 2023 2024 2023

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Logistics segment EBITDA 68.6 96.5 268.9 278.8

Retail segment EBITDA 12.4 15.0 18.9 21.4

Corporate, Other and Eliminations EBITDA (88.9) (74.8) (163.3) (198.4)

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Depreciation and amortization (98.1) (87.7) (278.2) (255.2)

Income from discontinued operations, net of tax 67.3 10.5 78.2 23.9

Net (loss) income attributable to Delek $ (76.8) $ 128.7 $ (146.6) $ 184.7

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Refining Segment

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

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

2024 2023 2024 2023

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Summary Statement of Operations Data (1)

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

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

Net revenues $ 3,042.4 $ 4,628.8 $ 9,478.5 $ 12,525.1

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Total cost of sales 3,062.6 4,350.8 9,387.0 11,931.5

Insurance proceeds — — — —

Operating expenses related to retail and wholesale business (excluding depreciation and amortization presented below) 26.3 31.1 52.1 58.1

Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 3.7 (3.7) 5.7 3.9

General and administrative expenses 70.4 67.7 191.6 208.0

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Asset impairment 9.2 — 31.3 —

Other operating income, net (79.9) (6.1) (81.5) (16.9)

Other operating expense (income), net 12.8 (2.1) (67.6) (19.0)

Total operating costs and expenses 3,164.3 4,416.7 9,566.6 12,136.5

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Income from equity method investments (25.1) (27.0) (77.4) (67.1)

Other expense (income), net — 0.5 (0.7) (6.6)

Other (income) expense, net (0.5) 2.0 (1.1) (4.6)

Total non-operating expenses, net 53.2 57.4 165.6 167.4

(Loss) income before income tax (benefit) expense (33.8) (5.3) (66.2) 82.7

(Loss) income from continuing operations before income tax (benefit) expense (175.1) 154.7 (253.7) 221.2

Income tax (benefit) expense (40.3) 29.1 (56.7) 38.3

(Loss) income from continuing operations, net of tax (134.8) 125.6 (197.0) 182.9

Discontinued operations:

Income from discontinued operations, including gain on sale of discontinued operations 95.4 12.9 107.8 29.1

Income tax expense 28.1 2.4 29.6 5.2

Income from discontinued operations, net of tax 67.3 10.5 78.2 23.9

Net (loss) income (67.5) 136.1 (118.8) 206.8

Net income attributed to non-controlling interests 11.1 6.8 18.5 14.7

Net income attributable to:

Non-controlling interests 9.3 7.4 27.8 22.1

Net (loss) income attributable to Delek $ (76.8) $ 128.7 $ (146.6) $ 184.7

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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.

We report operating results in three reportable segments:

We report operating results in two reportable segments:

Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation.

Management measures the operating performance of each of its reportable segments based on the segment EBITDA.

Management's Discussion and Analysis

Results of Operations

Consolidated Results of Operations — Comparison of the Three and Six Months Ended June 30, 2024 versus the Three and Six Months Ended June 30, 2023.

Consolidated Results of Operations — Comparison of the Three and Nine Months Ended September 30, 2024 versus the Three and Nine Months Ended September 30, 2023.

Net (Loss) Income

Consolidated net loss for the second quarter of 2024 was $26.1 million compared to net loss of $1.5 million for the second quarter of 2023.

Consolidated net loss attributable to Delek for the second quarter of June 30, 2024 was $37.2 million, or $(0.58) per basic share, compared to a net loss of $8.3 million, or $(0.13) per basic share, for the second quarter 2023.

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

Management's Discussion and Analysis

Consolidated net loss for the six months ended June 30, 2024 was $51.3 million compared to a net income of $70.7 million for the six months ended June 30, 2023.

Consolidated net loss attributable to Delek for the six months ended June 30, 2024 was $69.8 million, or $(1.09) per basic share, compared to income of $56.0 million, or $0.84 per basic share, for the six months ended June 30, 2023.

Consolidated net loss for the third quarter of 2024 was $67.5 million compared to net income of $136.1 million for the third quarter of 2023.

Consolidated net loss attributable to Delek for the third quarter of September 30, 2024 was $76.8 million, or $(1.20) per basic share, compared to a net income of $128.7 million, or $1.98 per basic share, for the third quarter 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.

In the second quarter of 2024 and 2023, we generated net revenues of $3,421.7 million and $4,195.6 million, respectively, a decrease of $773.9 million, or 18.4%.

Consolidated net loss for the nine months ended September 30, 2024 was $118.8 million compared to a net income of $206.8 million for the nine months ended September 30, 2023.

Consolidated net loss attributable to Delek for the nine months ended September 30, 2024 was $146.6 million, or $(2.29) per basic share, compared to income of $184.7 million, or $2.80 per basic share, for the nine months ended September 30, 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.

In the third quarter of 2024 and 2023, we generated net revenues of $3,042.4 million and $4,628.8 million, respectively, a decrease of $1,586.4 million, or 34.3%.

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 1.7% and decreases in wholesale activity, partially offset by increased sales volume and increases in the average price of U.S.

Gulf Coast ULSD of 2.5% and HSD of 30.3%;

• in our logistics segment, increases in our West Texas marketing operations and an increase in terminalling and marketing fees due to rate increases as well as higher volumes;

• in our retail segment, a decrease in total fuel sales primarily attributable to a 2.9% decrease in average price charged per gallon sold and a decrease in merchandise sales primarily driven by the same-store sales decrease of 5.2%.

We generated net revenues of $6,649.3 million and $8,119.9 million during the six months ended June 30, 2024 and 2023, respectively, a decrease of $1,470.6 million, or 18.1%.

Gulf Coast gasoline of 18.2% and ULSD of 24.6% and decreases in wholesale activity, decreased sales volume (including purchased products), partially offset by increases in the average price of U.S.

Gulf Coast HSD of 2.0%;

• in our logistics segment, decreases in our West Texas marketing operations and decreases due to recording certain throughput and storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

We generated net revenues of $9,478.5 million and $12,525.1 million during the nine months ended September 30, 2024 and 2023, respectively, a decrease of $3,046.6 million, or 24.3%.

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 4.6% and ULSD of 3.4% and decreases in wholesale activity, partially offset by increased sales volume and an increase in the average price of U.S.

Gulf Coast gasoline of 9.4% and ULSD of 11.3% and decreases in wholesale activity, partially offset by increased sales volume (including purchased products) and an increase in the average price of U.S.

Gulf Coast HSD of 9.4%;

• in our logistics segment, increases in our West Texas marketing operations and an increase in terminalling and marketing fees due to rate increases as well as higher volumes;

• in our retail segment, a decrease in total fuel sales primarily attributable to a $0.13 decrease in average price charged per gallon sold and a decrease in merchandise sales primarily driven by the same-store sales decrease of 4.7%.

Total Operating Costs and Expenses

Cost of Materials and Other

Cost of materials and other was $3,099.4 million for the second quarter of 2024 compared to $3,766.6 million for the second quarter of 2023, a decrease of $667.2 million, or 17.7%.

Cost of materials and other was $2,788.7 million for the third quarter of 2024 compared to $4,049.4 million for the third quarter of 2023, a decrease of $1,260.7 million, or 31.1%.

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

• decreased wholesale activity and decreased RINs pricing, partially offset by increases in cost of crude oil feedstocks at the refineries, including a 9.9% increase in the average cost of WTI Cushing crude oil and a 9.9% increase in the average cost of WTI Midland crude oil and an increase in sales volume;

• increase in logistics costs due to increased costs of materials and other in our West Texas marketing operations primarily driven by increases in the volumes of gasoline and diesel sold, partially offset by decreases in the average cost per gallon;

• a decrease in retail cost of materials and other due to 2.1% decrease in average cost per gallon sold applied to lower fuel sales volumes.

Cost of materials and other was $5,896.7 million for the six months ended June 30, 2024, compared to $7,206.2 million for six months ended June 30, 2023, a decrease of $1,309.5 million, or 18.2%.

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

• decreased wholesale activity and decreased RINs pricing, partially offset by an increase in the cost of crude oil feedstocks at the refineries, including a 5.6% increase in the average cost of WTI Cushing crude oil and a 5.5% increase in the average cost of WTI Midland crude oil and an increase in sales volume;

• increase in logistics costs due to increased costs of materials and other in our West Texas marketing operations primarily driven by increases in the average volumes of gasoline and diesel sold, partially offset by decreased costs per gallon;

• a decrease in retail cost of materials and other due to 4.3% decrease in average cost per gallon sold applied to lower fuel sales volumes.

• decreases in cost of crude oil feedstocks at the refineries, including an 8.8% decrease in the average cost of WTI Cushing crude oil and a 9.4% decrease in the average cost of WTI Midland crude oil, decreased wholesale activity decreased RINs pricing, decreased sales volume (including purchased products), and a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting;

• decrease in logistics costs due to decreased costs of materials and other in our West Texas marketing operations primarily driven by decreases in the volumes of gasoline and diesel sold and decreases in the average cost per gallon.

Management's Discussion and Analysis

Cost of materials and other was $8,547.1 million for the nine months ended September 30, 2024, compared to $11,111.2 million for nine months ended September 30, 2023, a decrease of $2,564.1 million, or 23.1%.

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

• decreased wholesale activity, decreased RINs pricing and decreased sales volume (including purchased products) and a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting;

• decrease in logistics costs due to decreased costs of materials and other in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by increases in the average volumes of gasoline and diesel sold.

Operating Expenses

Operating expenses (included in both cost of sales and other operating expenses) were $211.4 million for the second quarter of 2024 compared to $219.8 million for the second quarter of 2023, a decrease of $8.4 million, or 3.8%.

Operating expenses (included in both cost of sales and other operating expenses) were $185.1 million for the third quarter of 2024 compared to $214.0 million for the third quarter of 2023, a decrease of $28.9 million, or 13.5%.

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

• a decrease in employee costs.

These decreases were partially offset by the following:

• an increase in maintenance costs.

Operating expenses (included in both cost of sales and other operating expenses) were $451.0 million for the six months ended June 30, 2024 compared to $417.6 million in six months ended June 30, 2023, an increase of $33.4 million, or 8.0%.

• a decrease in natural gas costs;

• a decrease in outside services;

• a decrease in insurance costs.

Operating expenses (included in both cost of sales and other operating expenses) were $586.0 million for the nine months ended September 30, 2024 compared to $581.1 million in nine months ended September 30, 2023, an increase of $4.9 million, or 0.8%.

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

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• lower natural gas prices;

• a decrease in insurance costs.

General and Administrative Expenses

General and administrative expenses were $63.1 million for the second quarter of 2024 compared to $75.8 million for the second quarter of 2023, a decrease of $12.7 million, or 16.8%.

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

General and administrative expenses were $127.5 million for the six months ended June 30, 2024 compared to $147.3 million in six months ended June 30, 2023, a decrease of $19.8 million, or 13.4%.

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

General and administrative expenses were $70.4 million for the third quarter of 2024 compared to $67.7 million for the third quarter of 2023, an increase of $2.7 million, or 4.0%.

The increase was primarily driven by transaction costs associated with the H20 Transaction, transaction costs associated with the amended and new agreements with Delek Logistics and restructuring costs, partially offset by lower employee expenses incentive compensation costs.

General and administrative expenses were $191.6 million for the nine months ended September 30, 2024 compared to $208.0 million in nine months ended September 30, 2023, a decrease of $16.4 million, or 7.9%.

The decrease was primarily driven by a decrease in employee costs including incentive compensation costs, partially offset by transaction costs associated with the H20 Transaction, transaction costs associated with the amended and new agreements with Delek Logistics and restructuring costs.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $92.1 million for the second quarter of 2024 compared to $89.4 million for the second quarter of 2023, an increase of $2.7 million, or 3.0%.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $187.3 million and $172.8 million for the six months ended June 30, 2024 and 2023, respectively, an increase of $14.5 million, or 8.4%.

Depreciation and amortization (included in both cost of sales and other operating expenses) was $98.1 million for the third quarter of 2024 compared to $87.7 million for the third quarter of 2023, an increase of $10.4 million, or 11.9%.

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

Depreciation and amortization (included in both cost of sales and other operating expenses) was $278.2 million and $255.2 million for the nine months ended September 30, 2024 and 2023, respectively, an increase of $23.0 million, or 9.0%.

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

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Asset Impairment

Asset impairment was $22.1 million for the three months ended June 30, 2024.

We recorded $22.1 million asset impairment as a result of our second quarter 2024 decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives.

There was no asset impairment in the three months ended June 30, 2023.

Asset impairment was $22.1 million for the six months ended June 30, 2024.

We recorded $22.1 million asset impairment as a result of our second quarter 2024 decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives.

There was no asset impairment in the six months ended June 30, 2023.

Asset impairment was $9.2 million for the three months ended September 30, 2024.

We recorded $9.2 million asset impairment because it's no longer probable certain pipeline assets will be utilized.

There was no asset impairment in the three months ended September 30, 2023.

Asset impairment was $31.3 million for the nine months ended September 30, 2024.

We recorded $22.1 million asset impairment as a result of our second quarter 2024 decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives and recorded $9.2 million asset impairment because it's no longer probable certain pipeline assets will be utilized.

There was no asset impairment in the nine months ended September 30, 2023.

Refer to Note 17 condensed consolidated financial statements in Item 1.

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

Other Operating Income, Net

Other operating income, net increased by $73.8 million in the second quarter of 2024 to $79.9 million compared to $6.1 million in the second quarter of 2023.

The increase was primarily driven by the following:

• for the three months ended June 30, 2024, we recorded a net gain of $53.4 million in the 2024 period related to a property settlement;

• for the three months ended June 30, 2024, we recorded a gain of $25.1 million related to insurance proceeds and other third party recoveries related to the 2021 El Dorado refinery fire and the 2022 Big Spring refinery fire related to property damage and business interruption claims, compared to $4.7 million of business interruption and property damage insurance recoveries in the 2023 period related to the fire and freeze events that occurred in 2021;

• for the three months ended June 30, 2024, we recorded a gain of $8.3 million related to Delek Logistics' sale of storage tanks in Texas due an eminent domain settlement.

Refer to Note 11 of the condensed consolidated financial statements in Item 1.

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

Other operating income, net was $81.5 million and $16.9 million for the six months ended June 30, 2024 and 2023, respectively, an increase of $64.6 million.

Other Operating Expense (Income), Net

Other operating expense (income), net decreased by $14.9 million in the third quarter of 2024 to expense of $12.8 million compared to income of $2.1 million in the third quarter of 2023.

During the three months ended September 30, 2024, we made a strategic decision to abandon certain capital projects included in construction in progress that no longer fit our core objectives and as a result we recognized a loss of $14.1 million.

Other operating income, net was $67.6 million and $19.0 million for the nine months ended September 30, 2024 and 2023, respectively, an increase of $48.6 million.

The increase was primarily driven by the following:

• for the six months ended June 30, 2024, we recorded a net gain of $53.4 million in the 2024 period related to a property settlement;

• for the six months ended June 30, 2024, we recorded a gain of $28.7 million related to insurance proceeds and other third party recoveries related to the 2021 El Dorado refinery fire, the 2021 freeze events and the 2022 Big Spring refinery fire related to property damage and business interruption claims, compared to $9.8 million of business interruption and property damage insurance recoveries in the 2023 period related to the fire and freeze events that occurred in 2021;

• for the six months ended June 30, 2024, we recorded a gain of $8.3 million related to Delek Logistics' sale of storage tanks in Texas due to an eminent domain settlement;

• for the nine months ended September 30, 2024, we recorded a net gain of $53.4 million in the 2024 period related to a property settlement;

• for the nine months ended September 30, 2024, we recorded a gain of $30.1 million related to insurance proceeds and other third party recoveries related to the 2021 El Dorado refinery fire, the 2021 freeze events and the 2022 Big Spring refinery fire related to property damage and business interruption claims, compared to $13.3 million of business interruption and property damage insurance recoveries in the 2023 period related to the fire and freeze events that occurred in 2021 and 2022 Big Spring refinery fire;

• for the nine months ended September 30, 2024, we recorded a gain of $8.3 million related to Delek Logistics' sale of storage tanks in Texas due to an eminent domain settlement;

• for the nine months ended September 30, 2024, we made a strategic decision to abandon certain capital projects included in construction in progress that no longer fit our core objectives and as a result we recognized a loss of $14.1 million;

• decreased hedge gains in 2024 compared to 2023 associated with our derivatives.

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Interest Expense, Net

Interest expense, net decreased by $2.7 million, or (3.4)%, to $77.7 million in the second quarter of 2024 compared to $80.4 million in the second quarter of 2023, primarily driven by the following:

• a decrease in net average borrowings outstanding (including the obligations under the inventory intermediation agreements which have an associated interest charge) of approximately $326.0 million in the second quarter of 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the second quarter of 2023;

Interest expense, net decreased by $3.6 million, or 4.4%, to $78.8 million in the third quarter of 2024 compared to $82.4 million in the third quarter of 2023, primarily driven by the following:

• a decrease in net average borrowings outstanding (including the obligations under the inventory intermediation agreements which have an associated interest charge) of approximately $146.2 million in the third quarter of 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the third quarter of 2023.

The decrease was partially offset by the following:

• an increase in the average effective interest rate of 22 basis points in the third quarter of 2024 compared to the third quarter of 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• an increase in unrealized hedge losses associated with our interest rate swap.

Management's Discussion and Analysis

• an increase in the average effective interest rate of 92 basis points in the second quarter of 2024 compared to the second quarter of 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding).

Interest expense, net was $165.4 million in the six months ended June 30, 2024, compared to $156.9 million for six months ended June 30, 2023, an increase of $8.5 million, or 5.4% primarily due to the following:

• an increase in the average effective interest rate of 197 basis points during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• debt extinguishment costs of $3.6 million in the six months ended June 30, 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;

• a decrease in net average borrowings outstanding (including the obligations under the inventory intermediation agreements which have an associated interest charge) of approximately $459.2 million during the six months ended June 30, 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the six months ended June 30, 2023.

Interest expense, net was $244.1 million in the nine months ended September 30, 2024, compared to $239.1 million for nine months ended September 30, 2023, an increase of $5.0 million, or 2.1% primarily due to the following:

• an increase in the average effective interest rate of 110 basis points during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding);

• debt extinguishment costs of $3.6 million in the nine months ended September 30, 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;

• an increase in unrealized hedge losses associated with our interest rate swap.

The increase was partially offset by the following:

• a decrease in net average borrowings outstanding (including the obligations under the inventory intermediation agreements which have an associated interest charge) of approximately $275.0 million during the nine months ended September 30, 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the nine months ended September 30, 2023;

Results from Equity Method Investments

We recognized income of $30.4 million from equity method investments during the second quarter of 2024, compared to $25.5 million for the second quarter of 2023, an increase of $4.9 million.

This increase was primarily driven by the following:

• an increase in income from our investment in W2W Holdings LLC to income of $10.6 million in the second quarter of 2024 from income of $6.8 million in the second quarter of 2023.

We recognized income from equity method investments of $52.3 million for the six months ended June 30, 2024, compared to $40.1 million for the six months ended June 30, 2023, an increase of $12.2 million.

We recognized income of $25.1 million from equity method investments during the third quarter of 2024, compared to $27.0 million for the third quarter of 2023, a decrease of $1.9 million.

We recognized income from equity method investments of $77.4 million for the nine months ended September 30, 2024, compared to $67.1 million for the nine months ended September 30, 2023, an increase of $10.3 million.

This increase was primarily driven by the following:

• an increase in income from our investment in W2W Holdings LLC to $20.0 million during the six months ended June 30, 2024 from $11.3 million in the six months ended June 30, 2023.

For the second quarter of 2024, we recorded an income tax benefit of $7.7 million compared to $3.8 million for the second quarter of 2023, primarily driven by the following:

• an increase in income from our investment in W2W Holdings LLC to $26.0 million during the nine months ended September 30, 2024 from $18.2 million in the nine months ended September 30, 2023.

For the third quarter of 2024, we recorded an income tax benefit of $40.3 million compared to income tax expense of $29.1 million for the third quarter of 2023, primarily driven by the following:

• a decrease in pre-tax net income of $329.8 million;

• our effective tax rates were 22.8% and 71.7% for the three months ended June 30, 2024 and 2023, respectively, due to the impact of fixed dollar permanent differences on the tax rate and changes to valuation allowances on certain attributes.

For the six months ended June 30, 2024, we recorded an income tax benefit of $14.9 million compared to expense of $12.0 million for the six months ended June 30, 2023, primarily driven by the following:

• our effective tax rates were 23.0% and 18.8% for the three months ended September 30, 2024 and 2023, respectively, due to the impact of fixed dollar permanent differences on the tax rate and changes to valuation allowances on certain attributes.

For the nine months ended September 30, 2024, we recorded an income tax benefit of $56.7 million compared to income tax expense of $38.3 million for the nine months ended September 30, 2023, primarily driven by the following:

• a decrease in pre-tax net income of $474.9 million, and

• our effective tax rates were 22.5% and 14.5% for the six months ended June 30, 2024 and 2023, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate and changes in valuation allowance on certain attributes.

• our effective tax rates were 22.3% and 17.3% for the nine months ended September 30, 2024 and 2023, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate and changes in valuation allowance on certain attributes.

Management's Discussion and Analysis

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Selected Refining Financial Information

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

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

2024 2023 2024 2023

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Management's Discussion and Analysis

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.

The cost to acquire the refined fuel products we sell to our wholesale customers in our logistics 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

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Refinery Statistics (continued)

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

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

2024 2023 2024 2023

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East Texas crude oil 19.6 % 23.2 % 19.0 % 21.9 %

Other 1.2 % — % 0.4 % — %

El Dorado, AR Refinery

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Refinery Statistics (continued)

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

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

2024 2023 2024 2023

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Refinery Sales to Other Segments

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

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

(in barrels per day) 2024 2023 2024 2023

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Pricing Statistics (average for the period presented)

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

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

2024 2023 2024 2023

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Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three and Six Months Ended June 30, 2024 versus the Three and Six Months Ended June 30, 2023

Net revenues for the refining segment decreased by $745.3 million, or 18.4%, in the second quarter of 2024 compared to the second quarter of 2023.

Refining Segment Operational Comparison of the Three and Nine Months Ended September 30, 2024 versus the Three and Nine Months Ended September 30, 2023

Revenues for the refining segment decreased by $1,596.7 million, or 34.5%, in the third quarter of 2024 compared to the third quarter of 2023.

The decrease was primarily driven by the following:

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

Gulf Coast gasoline of 1.7%;

Gulf Coast gasoline of 18.2% and ULSD of 24.6%;

• a decrease in wholesale activity;

• a decrease in sales volumes (including purchased products).

These decreases were partially offset by the following:

• an increase in sales volumes;

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

Gulf Coast ULSD of 2.5% and HSD of 30.3%.

Net revenues included sales to our retail segment of $102.6 million and $111.5 million and sales to our logistics segment of $106.7 million and $92.0 million for the three months ended June 30, 2024 and June 30, 2023, respectively.

Gulf Coast HSD of 2.0%.

Net revenues included sales to our logistics segment of $84.6 million and $115.1 million for the three months ended September 30, 2024 and September 30, 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Revenues for the refining segment decreased $1,431.5 million, or 18.2%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Revenues for the refining segment decreased $3,028.2 million, or 24.3%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The decrease was primarily driven by the following:

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These decreases were partially offset by the following:

• an increase in sales volumes;

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

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

Gulf Coast HSD of 9.4%.

Revenues included sales to our retail segment of $196.4 million and $214.1 million and sales to our logistics segment of $199.6 million and $183.1 million for the six months ended June 30, 2024 and 2023, respectively.

Revenues included sales to our logistics segment of $284.2 million and $298.3 million for the nine months ended September 30, 2024 and 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other decreased by $632.9 million, or 16.7%, in the second quarter of 2024 compared to the second quarter of 2023.

Cost of materials and other decreased by $1,305.5 million, or 31.3%, in the third quarter of 2024 compared to the third quarter of 2023.

The decrease was primarily driven by the following:

• decreases in the cost of WTI Cushing crude oil, from an average of $82.51 per barrel to an average of $75.28, or 8.8%, and decreases in the cost of WTI Midland crude oil, from an average of $83.85 per barrel to an average of $75.96, or 9.4%;

• a decrease in wholesale activity;

• a decrease in RINs pricing;

These decreases were partially offset by the following:

• increases in the cost of WTI Cushing crude oil, from an average of $73.57 per barrel to an average of $80.83, or 9.9%, and increases in the cost of WTI Midland crude oil, from an average of $74.40 per barrel to an average of $81.73, or 9.9%;

• an increase in sales volume.

Cost of materials and other decreased $1,251.8 million, or 17.3%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

• a decrease in sales volume (including purchased products):

• a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

Cost of materials and other decreased $2,557.3 million, or 22.4%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

This decrease was primarily driven by the following:

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• a decrease in RINs pricing;

• a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

These decreases were partially offset by the following:

• increases in the cost of WTI Cushing crude oil, from an average of $74.78 per barrel to an average of $78.95, or 5.6%, and increases in the cost of WTI Midland crude oil, from an average of $75.98 per barrel to an average of $80.17, or 5.5%.

• 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 sales volumes (including purchased products) primarily associated with Tyler Refinery operations which were negatively impacted in prior year as a result of turnaround activities.

Management's Discussion and Analysis

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 $156.5 million and $132.6 million during the three months ended June 30, 2024 and 2023, respectively.

These costs and fees were $295.7 million and $257.2 million during the six months ended June 30, 2024 and 2023, respectively.

These costs and fees were $111.3 million and $156.0 million during the three months ended September 30, 2024 and 2023, respectively.

These costs and fees were $410.2 million and $413.2 million during the nine months ended September 30, 2024 and 2023, respectively.

We eliminate these intercompany fees in consolidation.

Refining Margin

Refining segment margin decreased by $112.4 million, or 41.8%, in the second quarter of 2024 compared to the second quarter of 2023, with a refining margin percentage of 4.7% as compared to 6.6% for the second quarter of 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 30.3% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery).

Refining segment margin decreased by $291.2 million, or 63.8%, in the third quarter of 2024 compared to the third quarter of 2023, with a refining margin percentage of 5.5% as compared to 9.9% for the third quarter of 2024 and 2023, respectively, primarily driven by the following:

• a 51.7% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 51.2% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and a 41.4% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• a decrease in sales volume (including purchased products).

These decreases were partially offset by the following:

• a 17.4% increase in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

• an increase in sales volume;

• lower RINs pricing;

Refining margin decreased by $179.7 million, or 29.7%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, with a refining margin percentage of 6.6% as compared to 7.7% for the six months ended June 30, 2024 and 2023, respectively, primarily driven by the following:

• a 29.2% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery) and a 30.1% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery).

• a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

Refining margin decreased by $470.9 million, or 44.4%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, with a refining margin percentage of 6.3% as compared to 8.5% for the nine months ended September 30, 2024 and 2023, respectively, primarily driven by the following:

• a 37.3% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 37.7% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and a 12.1% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery).

These decreases were partially offset by the following:

• a 7.0% 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 RINs pricing;

• a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

Operating Expenses

Operating expenses decreased by $5.2 million, or 3.4%, in the second quarter of 2024 compared to the second quarter of 2023.

Operating expenses decreased by $21.5 million, or 12.9%, in the third quarter of 2024 compared to the third quarter of 2023.

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

• decrease in outside services.

Operating expenses increased by $21.5 million, or 7.3%, in the six months ended June 30, 2024, compared to six months ended June 30, 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 $104.5 million, or 85.8%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by an increase in sales volume and insurance and third party proceeds related to the fires in 2021 and 2022.

• lower natural gas costs, outside services and insurance costs.

Operating expenses were flat in the nine months ended September 30, 2024, compared to nine months ended September 30, 2023.

EBITDA decreased by $282.9 million, or 95.7%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads and decreased sales volume (including purchased products), partially offset by a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

Management's Discussion and Analysis

EBITDA decreased by $194.9 million, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by an increase in sales volume and insurance and third party proceeds related to the fires in 2021 and 2022.

EBITDA decreased by $477.8 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads, partially offset by an increase in sales volume, an increase in insurance and third party proceeds related to the fires in 2021 and 2022 and a decrease in lease expense as a result of reclassification of certain fees with Delek Logistics from lease expense to interest expense under finance lease accounting.

Management's Discussion and Analysis

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Selected Logistics Financial and Operating Information

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

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

2024 2023 2024 2023

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Water disposal and recycling (average bpd) 123,856 99,158 120,360 104,920

Midland Water Gathering System:

Water disposal and recycling (average bpd) 100,335 — 100,335 —

Wholesale Marketing & Terminalling:

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

(2) 2024 volumes include volumes from September 11, 2024 through September 30, 2024.

(3) Excludes jet fuel and petroleum coke.

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Management's Discussion and Analysis

Logistics Segment Operational Comparison of the Three and Six Months Ended June 30, 2024 versus the Three and Six Months Ended June 30, 2023

Net revenues increased by $17.7 million, or 7.2%, in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by:

• increased revenue of $11.4 million in our West Texas marketing operations primarily driven by increases in volumes sold, partially offset by a decrease in average sales prices per gallon and decrease in RINs revenue:

◦ the volumes of gasoline and diesel sold increased by 3.6 million and 3.4 million gallons, respectively;

Logistics Segment Operational Comparison of the Three and Nine Months Ended September 30, 2024 versus the Three and Nine Months Ended September 30, 2023

Net revenues decreased by $61.8 million, or 22.4%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by:

• decreased revenue of $36.2 million in our West Texas marketing operations driven by decreases in volumes sold, a decrease in average sales prices per gallon and decrease in RINs revenue:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.42 and $0.71 per gallon, respectively;

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

Net revenues included sales to our refining segment of $156.5 million and $132.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively, and sales to our other segment of $0.4 million and $0.4 million for the three months June 30, 2024 and 2023, respectively.

◦ RINs revenue decreased from $3.5 million in the third quarter of 2023 to $1.3 million in the third quarter of 2024, due to decrease in RINs prices;

• decreased revenue of $13.3 million and $8.3 million in gathering and processing and storage and transportation operations, respectively, due to recording certain throughput and storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period.

Net revenues included sales to our refining segment of $111.3 million and $156.0 million for the three months ended September 30, 2024 and September 30, 2023, respectively, and sales to our other segment of $0.4 million and $0.4 million for the three months September 30, 2024 and 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Net revenues increased by $26.3 million, or 5.4%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily driven by the following:

• increased revenue of $10.8 million in our West Texas marketing operations primarily driven by increases in volumes sold, partially offset by a decrease in average sales prices per gallon and decrease in RINs revenue:

◦ the volumes of gasoline and diesel sold increased by 7.6 million and 3.9 million gallons, respectively;

Net revenues decreased by $35.5 million, or 4.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily driven by the following:

• decreased revenue of $28.7 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon and decrease in RINs revenue, partially offset by increases in volumes sold:

◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.33 and $0.36 per gallon, respectively;

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

Revenues included sales to our refining segment of $295.7 million and $257.2 million for the six months ended June 30, 2024 and 2023, respectively, and sales to our other segment of $0.8 million and $0.8 million for the six months ended June 30, 2024 and 2023, respectively.

◦ RINs revenue decreased from $9.1 million in the nine months ended September 30, 2023 to $3.7 million in the nine months ended September 30, 2024, due to decrease in RINs prices;

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively.

• decreased revenue of $10.4 million and $8.6 million in gathering and processing and storage and transportation operations, respectively, due to recording certain throughput and storage fees as interest income under sales-type lease accounting that were previously recorded as revenue in the prior year period;

• partially offset by increase in terminalling and marketing revenue primarily due to increased volumes and rate increases.

Revenues included sales to our refining segment of $410.2 million and $413.2 million for the nine months ended September 30, 2024 and 2023, respectively, and sales to our other segment of $1.2 million and $1.2 million for the nine months ended September 30, 2024 and 2023, respectively.

We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other for the logistics segment increased by $10.0 million, or 7.8%, in the second quarter of 2024 compared to the second quarter of 2023.

The increase was primarily driven by the following:

• increased costs of materials and other of $14.4 million in our West Texas marketing operations primarily driven by increases in the 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 3.6 million and 3.4 million gallons, respectively;

◦ the average cost per gallon of gasoline sold decreased by $0.14 per gallon, partially offset by an increase in average cost per gallon of diesel sold of $0.03 per gallon.

Our logistics segment purchased product from our refining segment of $106.7 million and $92.0 million for the three months ended June 30, 2024 and June 30, 2023, respectively.

Cost of materials and other for the logistics segment decreased by $33.1 million, or 22.0%, in the third quarter of 2024 compared to the third quarter of 2023.

The decrease was primarily driven by the following:

• decreased costs of materials and other of $29.4 million in our West Texas marketing operations primarily driven by decreases in the volumes and average cost per gallon of gasoline and diesel sold:

◦ the volumes of gasoline and diesel sold decreased by 4.7 million and 0.5 million gallons, respectively;

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.23 per gallon and $0.73 per gallon, respectively.

Our logistics segment purchased product from our refining segment of $84.6 million and $115.1 million for the three months ended September 30, 2024 and September 30, 2023, respectively.

We eliminate these intercompany costs in consolidation.

Cost of materials and other for the logistics segment increased by $7.6 million, or 3.0%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

This increase was primarily driven by the following:

• increased costs of materials and other of $16.2 million in our West Texas marketing operations primarily driven by increases in the average volumes of gasoline and diesel sold, partially offset by decreased costs per gallon:

◦ the volumes of gasoline and diesel sold increased by 7.6 million and 3.9 million gallons, respectively;

Management's Discussion and Analysis

Cost of materials and other for the logistics segment decreased by $25.5 million, or 6.3%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

This decrease was primarily driven by the following:

• decreased costs of materials and other of $13.2 million in our West Texas marketing operations primarily driven by decreased costs per gallon, partially offset by increases in the average volumes of gasoline and diesel sold:

◦ the average cost per gallon of gasoline and diesel sold decreased by $0.20 per gallon and $0.31 per gallon, respectively;

These increase was partially offset by the following:

◦ the volumes of gasoline and diesel sold increased by 2.9 million and 3.4 million gallons, respectively;

• decrease of $8.0 million in our gathering and processing segment driven primarily by lower natural gas costs.

Management's Discussion and Analysis

Our logistics segment purchased product from our refining segment of $199.6 million and $183.1 million for the six months ended June 30, 2024 and 2023, respectively.

Our logistics segment purchased product from our refining segment of $284.2 million and $298.3 million for the nine months ended September 30, 2024 and 2023, respectively.

We eliminate these intercompany costs in consolidation.

Operating Expenses

Operating expenses increased by $0.6 million, or 2.1%, in the second quarter of 2024 compared to the second quarter of 2023.

Operating expenses increased by $7.8 million, or 14.5%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by an increase in contract services.

EBITDA increased by $9.7 million, or 10.7%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily driven by higher contributions from the Delaware Gathering systems and terminalling and marketing rate increases.

EBITDA increased by $18.0 million, or 9.9%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by 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, partially offset by 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 ($ in millions):

Selected Retail Financial and Operating Information

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

2024 2023 2024 2023

Revenues $ 216.1 $ 232.7 $ 409.6 $ 437.7

Cost of materials and other $ 176.4 $ 188.5 $ 334.7 $ 358.5

Operating expenses (excluding depreciation and amortization) $ 25.4 $ 25.9 $ 50.5 $ 50.5

EBITDA $ 12.4 $ 15.0 $ 18.9 $ 21.4

Operating Information

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

2024 2023 2024 2023

Number of stores (end of period) 250 247 250 247

Average number of stores 250 247 250 247

Average number of fuel stores 245 242 245 242

Retail fuel sales $ 136.4 $ 148.4 $ 259.2 $ 279.5

Retail fuel sales (thousands of gallons) 43,126 45,687 82,809 85,651

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

176 189 339 354

Average retail sales price per gallon sold $ 3.16 $ 3.25 $ 3.13 $ 3.26

Retail fuel margin ($ per gallon) (1)

$ 0.312 $ 0.342 $ 0.302 $ 0.307

Merchandise sales (in millions) $ 79.6 $ 84.3 $ 150.4 $ 158.2

Merchandise sales per average number of stores (in millions) $ 0.3 $ 0.3 $ 0.6 $ 0.6

Merchandise margin % 32.9 % 33.9 % 33.2 % 33.5 %

Same-Store Comparison (2)

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

2024 2023 2024 2023

Change in same-store retail fuel gallons sold (4.0) % (1.5) % (1.8) % (1.6) %

Change in same-store merchandise sales (5.2) % 0.1 % (4.7) % 2.4 %

(1) Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales.

The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.

(2) Same-store comparisons include year-over-year changes in specified metrics for stores that were in service at both the beginning of the year and the end of the most recent year used in the comparison.

Our retail merchandise sales are driven by convenience, customer service, competitive pricing and branding.

Motor fuel margin is sales less the delivered cost of fuel and motor fuel taxes, measured on a cents per gallon basis.

Our motor fuel margins are impacted by local supply, demand, weather, competitor pricing and product brand.

Management's Discussion and Analysis

Retail Segment Operational Comparison of the Three and Six Months Ended June 30, 2024 versus the Three and Six Months Ended June 30, 2023

Net revenues for the retail segment decreased by $16.6 million, or 7.1%, in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by the following:

• a decrease in total fuel sales which were $136.4 million in the second quarter of 2024 compared to $148.4 million in the second quarter of 2023, primarily attributable to a decrease of $0.09 in average price charged per gallon sold and decreased volume;

• a decrease in merchandise sales to $79.6 million in the second quarter of 2024 compared to $84.3 million in the second quarter of 2023, primarily driven by the same-store sales decrease of 5.2% as a result of remodeling activities.

Revenues for the retail segment decreased by $28.1 million, or 6.4%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by the following:

• a decrease in total fuel sales which were $259.2 million for the six months ended June 30, 2024 compared to $279.5 million for the six months ended June 30, 2023, primarily attributable to a $0.13 decrease in average price charged per gallon sold and decreased volume;

• a decrease in merchandise sales to $150.4 million for the six months ended June 30, 2024 compared to $158.2 million for the six months ended June 30, 2023, primarily driven by the same-store sales decrease of 4.7% mostly attributable to tobacco sales.

Cost of Materials and Other

Cost of materials and other for the retail segment decreased by $12.1 million, or 6.4%, in the second quarter of 2024 compared to the second quarter of 2023, primarily driven by the following:

• a decrease in average cost per gallon of $0.06, or 2.1%, applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $102.6 million and $111.5 million for the three months ended June 30, 2024 and June 30, 2023, respectively, which is eliminated in consolidation.

Cost of materials and other for the retail segment decreased by $23.8 million, or 6.6%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by the following:

• a decrease in average cost per gallon of $0.13, or 4.3%, applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of $196.4 million and $214.1 million for the six months ended June 30, 2024 and 2023, respectively.

We eliminate this intercompany cost in consolidation.

Operating Expenses

Retail segment operating expenses decreased by $0.5 million, or 1.9%, in the second quarter of 2024 compared to the second quarter of 2023.

Operating expenses for the retail segment remained consistent at $50.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Operating expenses decreased by $5.0 million, or 15.2%, in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by a decrease in outside services.

Operating expenses increased by $2.8 million, or 3.2%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by an increase in contract services.

Management's Discussion and Analysis

EBITDA for the retail segment decreased by $2.6 million, or 17.3%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily driven by the following:

• a decrease in average fuel margin of $0.030 per gallon and a decrease in fuel sales volume;

• a decrease in merchandise margin percentage of 1.0%.

EBITDA for the retail segment decreased by $2.5 million, or 11.7%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by the following:

• a decrease in sales volume and a decrease in average fuel margin of $0.005;

• a 5.0% decrease in merchandise sales.

EBITDA decreased by $27.9 million, or 28.9%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by recording certain throughput and storage fees in interest income due to sales-type lease accounting that were previously recorded as revenue in prior year period.

EBITDA decreased by $9.9 million, or 3.6%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by recording certain throughput and storage fees in interest income due to sales-type lease accounting that were previously recorded as revenue in prior year period, partially offset by 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.

Management's Discussion and Analysis

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• potential issuances of additional equity and debt securities.

At June 30, 2024 our total liquidity amounted to $2,328.2 million comprised primarily of $1,670.3 million in unused credit commitments under our revolving credit facilities (as discussed in Note 8 of our condensed consolidated financial statements in Item 1.

At September 30, 2024 our total liquidity amounted to $2,582.2 million comprised primarily of $1,544.6 million in unused credit commitments under our revolving credit facilities (as discussed in Note 10 of our condensed consolidated financial statements in Item 1.

Financial Statements, of this Quarterly Report on Form 10-Q) and $1,037.6 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 July 31, 2024, our Board of Directors approved a quarterly cash dividend of $0.255 per share of our common stock.

On October 30, 2024, our Board of Directors approved a quarterly cash dividend of $0.255 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.

5 unchanged sentences

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 June 30, 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.

As of September 30, 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 10 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 covenants during the quarter ended June 30, 2024.

Additionally, we were in compliance with covenants during the quarter ended September 30, 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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Cash Position and Indebtedness

As of June 30, 2024, our total cash and cash equivalents were $657.9 million and we had total long-term indebtedness of approximately $2,461.7 million.

As of September 30, 2024, our total cash and cash equivalents were $1,037.6 million and we had total long-term indebtedness of approximately $2,789.4 million.

The total long-term indebtedness is net of deferred financing costs and debt discount of $53.9 million.

1 unchanged sentence

Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $1,544.6 million.

The decrease of $136.4 million in total long-term principle indebtedness as of June 30, 2024 compared to December 31, 2023 resulted primarily from a decrease in net borrowings under the Delek Logistics Revolving Facility, payment of the outstanding balance of the Delek Logistics Term Loan Facility, and extinguishment of the Delek Logistics 2028 Notes, partially offset by the issuance of the Delek Logistics 2029 Notes.

As of June 30, 2024, our total long-term indebtedness (as defined in Note 8 of the condensed consolidated financial statements in Item 1.

The increase of $186.0 million in total long-term principle indebtedness as of September 30, 2024 compared to December 31, 2023 resulted primarily from issuance of the Delek Logistics 2029 Notes, partially offset by a decrease in net borrowings under the Delek Logistics Revolving Facility, payment of the outstanding balance of the Delek Logistics Term Loan Facility, and extinguishment of the Delek Logistics 2028 Notes.

As of September 30, 2024, our total long-term indebtedness (as defined in Note 10 of the condensed consolidated financial statements in Item 1.

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

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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.

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

See Note 10 to our accompanying condensed consolidated financial statements in Item 1.

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Our inventory intermediation obligation with Citigroup Energy Inc.

("Citi") was $472.2 million at June 30, 2024.

("Citi") was $388.9 million at September 30, 2024.

See Note 9 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 June 30, 2024, and totaled $110.7 million, all of which is due in the next 12 months.

Our product financing liabilities consisted primarily of RIN financings as of September 30, 2024, and totaled $163.9 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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The following table sets forth a summary of our consolidated cash flows (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flow Data:

Operating activities $ 118.3 $ 490.2

Investing activities (104.1) (279.9)

Financing activities (178.5) (230.0)

Net decrease $ (164.3) $ (19.7)

Operating activities - continuing operations $ 78.9 $ 891.7

Operating activities - discontinued operations 17.8 31.1

Total Operating activities 96.7 922.8

Investing activities - continuing operations (387.4) (320.6)

Investing activities - discontinued operations 361.7 (18.0)

Total Investing activities (25.7) (338.6)

Financing activities - continuing operations 144.4 (523.8)

Financing activities - continuing operations — —

Total Financing activities 144.4 (523.8)

Net (decrease) increase $ 215.4 $ 60.4

Cash Flows from Operating Activities

Net cash provided by operating activities was $118.3 million for the six months ended June 30, 2024, compared to $490.2 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 $393.2 million decrease in cash provided by operating activities, partially offset by a decrease in cash paid for debt interest of $14.7 million.

Continuing Operations

Net cash provided by operating activities from continuing operations was $78.9 million for the nine months ended September 30, 2024, compared to $891.7 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 $824.5 million decrease in cash provided by operating activities, an increase in cash paid for debt interest of $1.2 million, partially offset by a decrease in cash paid for taxes of $4.8 million.

Management's Discussion and Analysis

Discontinued Operations

Net cash provided by operating activities from discontinued operations include the Retail Stores business income.

Cash Flows from Investing Activities

Net cash used in investing activities was $104.1 million for the six months ended June 30, 2024, compared to $279.9 million in the comparable period of 2023.

The decrease in cash flows used in investing activities was primarily due to a $144.3 million decrease in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround in 2023, $18.0 million of insurance proceeds in 2024 and decrease of $8.6 million for equity interests investments and other.

Continuing Operations

Net cash used in investing activities from continuing operations was $387.4 million for the nine months ended September 30, 2024, compared to $320.6 million in the comparable period of 2023.

The increase in cash flows used in investing activities was primarily due to $229.5 million acquisition of H2O Midstream of which $159.5 million was paid in cash, purchase of an additional 0.6% indirect investment in Wink to Webster Pipeline LLC for $18.6 million, partially offset by an $83.1 million decrease in purchases of property, plant and equipment, substantially driven by maintenance projects associated with the Tyler turnaround in 2023 and a $14.0 million increase in insurance proceeds in 2024.

Discontinued Operations

Net cash provided by investing activities from discontinued operations in 2024 primarily includes the $381.7 million net proceeds from the sale of the Retail Stores, partially offset by cash used for Retail Stores capital expenditures of $19.8 million.

Cash Flows from Financing Activities

Net cash used in financing activities was $178.5 million for the six months ended June 30, 2024, compared to $230.0 million in the comparable 2023 period.

The decrease in cash used was primarily due to the receipt of net proceeds of $132.2 million from the Delek Logistics' public offering of common units in the six months ended June 30, 2024, net proceeds from term debt of $316.4 million for the six months ended June 30, 2024 compared to net payments on term debt of $12.3 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 $40.4 million of share buybacks in 2023.

Management's Discussion and Analysis

These decreases in cash flows were partially offset by the net payments from product and other financing arrangements of $102.1 million for the six months ended June 30, 2024 compared to net proceeds of $52.8 million in the comparable 2023 period, an increase in net payments on long-term revolvers of $215.8 million, the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J.

Continuing Operations

Net cash provided by financing activities from continuing operations was $144.4 million for the nine months ended September 30, 2024, compared to cash used of $523.8 million in the comparable 2023 period.

The decrease in cash used was primarily due to the receipt of net proceeds of $132.2 million from the Delek Logistics' public offering of common units in the nine months ended September 30, 2024, net proceeds from term debt of $520.6 million for the nine months ended September 30, 2024 compared to net payments on term debt of $18.4 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, a decrease in net payments on long-term revolvers of $78.4 million and Delek Logistics 2025 Notes and a decrease of $45.4 million in share buybacks.

These decreases in cash flows were partially offset by an increase in net payments from product and other financing arrangements of $38.5 million, 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 (as defined in Note 2 to the audited consolidated financial statements included in Item.

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

The following table summarizes our actual capital expenditures for the six months ended June 30, 2024, by operating segment and major category (in millions):

The following table summarizes our actual capital expenditures for the nine months ended September 30, 2024, by operating segment and major category (in millions):

2024 Forecast (1)

Six Months Ended June 30, 2024 Actual (2)

Nine Months Ended September 30, 2024 Actual (1) (2)

Regulatory $ 42 $ 33.6

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Logistics segment total 70 37.2

Regulatory — —

Sustaining maintenance 5 3.2

Growth projects 10 7.4

Retail segment total 15 10.6

Corporate and Other

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Total capital spending $ 315 $ 181.2

(1) Excludes estimated 2024 costs of $90.0 million to $100.0 million related to the new Delek Logistics natural gas processing plant .

Management's Discussion and Analysis

(1) Excludes estimated 2024 costs of $90.0 million to $100.0 million and actual 2024 costs of $53.4 million related to the new Delek Logistics natural gas processing plant .

Refer to 'Other 2024 Developments' section of Item 2.

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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 June 30, 2024, 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 September 30, 2024, is set forth in the following table (in millions):

Payments Due by Period

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39.5 15.7 — — 55.2

Retail Stores obligations (7)

8.6 17.2 17.5 10.4 53.7

Total $ 1,135.7 $ 1,339.7 $ 2,066.1 $ 1,137.3 $ 5,678.8

(1) Expected interest payments on debt outstanding at June 30, 2024.

Floating interest rate debt is calculated using June 30, 2024 rates.

(1) Expected interest payments on debt outstanding at September 30, 2024.

Floating interest rate debt is calculated using September 30, 2024 rates.

For additional information, see Note 10 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 June 30, 2024.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of September 30, 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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Financial Statements, of this Quarterly Report on Form 10-Q.

(7) Amounts reflect a rebate arrangement included in the long-term agreement with FEMSA entered into in conjunction with the Retail Transaction as well as certain underground storage tank cleanup obligations.

For additional information, see Note 4 to the condensed consolidated financial statements in Item 1.

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

Other Cash Requirements

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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 six months ended June 30, 2024.

Management's Discussion and Analysis

Refer to the cash flow section for our operating activities spend during the nine months ended September 30, 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 the six months ended June 30, 2024 and our anticipated cash requirements for planned capital expenditures for the full year 2024.

Refer to the 'Capital Spending' section for our capital expenditures for the nine months ended September 30, 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