Delek US Holdings, Inc. 10-K

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. 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 Delaware Gathering Acquisition, the H2O Midstream Acquisition and the Gravity Acquisition, including any statements regarding the expected benefits, synergies, growth opportunities, impact on liquidity and prospects, and other financial and operating benefits thereof, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the outbreak of a pandemic and its impact on oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning possible future results of operations, business and growth strategies, including as the same may be impacted by 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, 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. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to: • volatility in our refining margins or fuel gross profit as a result of changes in the prices of crude oil, other feedstocks and refined petroleum products; • reliability of our operating assets; • actions of our competitors and customers; • 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 sale of our Retail Stores, the Gravity Acquisition, 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; • the impact on commercial activity and other economic effects of any widespread public health crisis, including uncertainty regarding the timing, pace and extent of economic recovery following any such crisis; • general economic and business conditions affecting the southern, southwestern and western U.S., particularly levels of spending related to travel and tourism; • volatility under our derivative instruments; • deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties); • unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement safety initiative and periodic turnaround projects; • risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals; • operating hazards, natural disasters, weather related disruptions, casualty losses and other matters beyond our control; • increases in our debt levels or costs; • possibility of accelerated repayment on a portion of our Inventory Intermediation Agreement obligation if the purchase price adjustment feature triggers a change on the re-pricing dates; • changes in our ability to continue to access the credit markets; • compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements; • changes in our ability to pay dividends; • 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; • increases in costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements; • societal, legislative and regulatory measures to address climate change and GHG; • our ability to execute our sustainability improvement plans, including GHG reduction targets; • acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities; • impacts of global conflicts such as the war between Israel and Hamas and the Russia-Ukraine War; • future decisions by OPEC regarding production and pricing and disputes between OPEC+ members regarding the same; • disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers; • changes in the cost or availability of transportation for feedstocks and refined products; and • other factors discussed under Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and in our other filings with the SEC. In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our 55 | Management's Discussion and Analysis historical performance to anticipate future results or period trends. We can give no assurances that any of the events anticipated by any forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise. 56 | Management's Discussion and Analysis Executive Summary: Management's View of Our Business and Strategic Overview Management's View of Our Business We are an integrated downstream energy business focused on petroleum refining and the transportation, storage and wholesale distribution of crude oil, intermediate and refined products as well as wastewater processing and disposal. Business and Economic Environment Overview Our focus on safe and reliable operations is a pillar which underlines all of our business activities. 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 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 was an important step in our value creation journey and strengthened our balance sheet. Our logistics segment (or "Logistics") successfully closed the H2O Midstream Acquisition which expands our gathering footprint in the Midland sub-basin of the Permian, and extended our product offering of wastewater processing and disposal. In addition, in January 2025, the Logistics segment successfully closed the Gravity Acquisition which includes integrated full-cycle water systems in the Permian Basin, in addition to produced water gathering, and transportation assets in the Bakken, and along with the H2O Midstream Acquisition, provide a strong opportunity for integrated crude and water services to Delek Logistics customers. These acquisitions represent another significant step in Delek Logistics' commitment of being a full suite crude, gas and water midstream services provider in the Permian Basin in addition to diversifying our logistics customer base to include more third-party customers. We expect that these acquisitions 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. During 2024, the Refining segment navigated a complex landscape characterized by strong U.S. utilization, volatile crude oil prices, resilient demand and fluctuating inventories. We had a safe and reliable 2024 from an operational perspective; however, the current refining margin environment is challenging as crack spreads narrowed in 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 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, 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 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. Our focus on reduction of GHG is a key objective as we strive to be a leader in the transition to a carbon neutral future. Gulf coast industries should be well positioned for growth, particularly if global trade becomes tied to environmental attributes. Following the enactment of the Inflation Reduction Act ("IRA"), Delek is investing in carbon capture technology. We were selected by the Department of Energy's ("DOE") Office of Clean Energy Demonstrations to negotiate a cost-sharing agreement in support of a carbon capture pilot project at the Big Spring, Texas refinery. The DOE Carbon Capture Large-Scale Pilot Project program provides 70% cost-share for up to $95 million of federal funding to support project development. The project will deploy carbon capture technology at the Big Spring refinery's Fluid Catalytic Cracking unit, while maintaining existing production capabilities and turnaround schedule. Expectations for the project are to capture 145,000 metric tons of carbon dioxide per year, as well as reduce health-harming pollutants, such as sulfur oxide and particulate matter. Carbon dioxide is expected to be transported by existing pipelines for permanent storage or utilization. Delek prioritizes stewardship of the environment, and we focus on how to positively impact our shareholders, employees, customers, and the communities where we operate. We want to reward our shareholders with a disciplined and balanced capital allocation framework. As we strengthen our relative financial position, we believe a balanced approach between shareholder returns and balance sheet improvement is appropriate. In 2024, we returned $105.7 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 2024, we took steps to refinance the 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 57 | Management's Discussion and Analysis us to further execute on our "sum of the parts" plan by facilitating Delek Logistics' acquisition of H2O Midstream and Gravity, dropdown 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. We believe each of these steps is consistent with our focus on strategic initiatives which includes unlocking the "sum of the parts". See further discussion in the "Strategic Objectives" section below. See further discussion on macroeconomic factors and market trends, including the impact on 2024, in the ‘Market Trends’ section below. Other 2024 Developments 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. The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.2 million and were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility (as defined in Note 11 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). 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. The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $165.6 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 11 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). Delek Logistics Debt Agreements On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029 (the “Delek Logistics 2029 Notes”), at par. Net proceeds were used to redeem the Delek Logistics 2025 Notes including accrued interest, pay off the Delek Logistics Term Loan Facility (as defined in Note 11 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) including accrued interest and to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility. On March 29, 2024, Delek Logistics entered into a fourth amendment to the Delek Logistics Revolving Facility which among other things increased the U.S. Revolving Credit Commitments (as defined in the Delek Logistics Credit Facility) by an amount equal to $100.0 million resulting in aggregate lender commitments under the Delek Logistics Revolving Credit Facility in an amount of $1,150.0 million. On April 17, 2024, Delek Logistics sold $200 million in aggregate principal amount of additional 8.625% senior notes due 2029 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 and helped create the foundation for a "sum of the parts" initiative. Renewables 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. Those alternatives could include restarting if market conditions improve, marketing for sale or permanently closing any of the facilities. Our decision to idle these facilities was driven by the decline in the overall biodiesel market and aligns with our continued operational and cost optimization efforts. 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 year ended December 31, 2024. Property Settlement On June 27, 2024, we settled a dispute that was in litigation related to a property that we historically operated as an asphalt and marine fuel terminal both as an owner and, subsequently, as a lessee under an in-substance lease agreement (the “License Agreement”). The settlement included the purchase of the property for $10.0 million and $42.0 million for settlement of the litigation for a total of $52.0 million. The total settlement was comprised of $24.0 million of cash paid at closing and a promissory note for $28.0 million to be paid in three equal installments of $9.3 million on each of April 1, 2025, April 1, 2026 and April 1, 2027, plus accrued interest. As a result of the termination of the License Agreement, we are no longer obligated to remove equipment from the property for certain development activities and as a result we reversed the $17.9 million asset retirement obligation since we intend to operate the property as an asphalt and marine fuel terminal. Additionally, as a result of the settlement, we reduced the non-contingent guarantee and environmental liability 58 | Management's Discussion and Analysis 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 consolidated statements of income. Refer to Note 14 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. Delek Logistics Gas Plant Expansion 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 and aims to meet the rising demand for natural gas in the region. Total estimated cost is between $160.0 and $165.0 million with an anticipated start-up in the first half 2025. This expansion project will also increase Delek Logistics' third party revenue. Expected annual earnings before interest, taxes, depreciation and amortization ("EBITDA") is estimated to be approximately $40.0 million attributable to Delek Logistics. Additionally, in December 2024, Delek Logistics announced the development of permitted acid gas injection ("AGI") capabilities at the new plant with an anticipated start-up in the first half 2025. The sour natural gas treating and acid gas injection capability is enabled by Delek Logistics' two existing AGI well permits and amine unit currently under construction. Retail Divestiture On September 30, 2024, Delek US sold 100% of the equity interests in four of Delek US' wholly-owned subsidiaries that owned and operated 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. 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 5 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. Acquisition of H2O Midstream On September 11, 2024, Delek Logistics acquired 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC from H2O Midstream Holdings, LLC (the “Seller”) related to the Seller’s water disposal and recycling operations in the Midland Basin in Texas for total consideration of $229.7 million (the "H2O Transaction"). The purchase price is comprised of approximately $159.7 million in cash and $70.0 million of preferred equity. Refer to Note 3 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 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. 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. Delek Logistics Commercial Agreements On August 5, 2024, we amended and extended expired, or soon to be expired, commercial agreements with subsidiaries of Delek Logistics under which the Delek Logistics subsidiaries provide various services, including crude oil gathering and crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to us. These agreements have an initial term of five to seven years, with the ability to extend for an additional five years at our option. In addition, we also entered into an assignment agreement with a subsidiary of Delek Logistics to assign the Big Spring Refinery Marketing Agreement to Delek Holdings. As a result of these agreements, we transferred 2,500,000 of our Delek Logistics common units to Delek Logistics to be retired. 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 transaction, for four years following closing. 59 | Management's Discussion and Analysis Other 2025 Developments Acquisition of Gravity On December 11, 2024, Delek Logistics entered into an agreement to acquire 100% of the limited liability company interests in Gravity Water Intermediate Holdings LLC ("Gravity") from Gravity Water Holdings LLC (the "Gravity Purchase Agreement") related to water disposal and recycling operations in the Permian Basin and the Bakken (the “Gravity Acquisition”) for total consideration of $301.2 million, subject to customary adjustments for net working capital. The purchase price was comprised of $209.3 million in cash and 2,175,209 of Delek Logistics’ common units. Upon execution of the Gravity Purchase Agreement, we made a cash deposit of $22.8 million, recorded in other current assets on the consolidated balance sheets, which was credited to the sale upon closing. The Gravity Acquisition closed on January 2, 2025. Inventory Intermediation Agreement Amendment On February 21, 2025, DK Trading & Supply, LLC ("DKTS") amended the Inventory Intermediation Agreement to among other things, (i) extend the term of the Inventory Intermediation Agreement from January 31, 2026 to January 31, 2027 and (ii) include a mechanism for DKTS to nominate each month whether to include volumes related to the Krotz Springs refinery for funding under the Inventory Intermediation Agreement. Information About Our Segments Prior to July 2024, we aggregated our operating segments into three reportable segments: refining, logistics, and retail. However, in July 2024, we entered into the Retail Purchase Agreement with FEMSA. 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 owned and operated 249 retail fuel and convenience stores. On September 30, 2024, the Retail Transaction closed. As a result of the Retail Purchase Agreement, 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. 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. The change represents reporting the operating results of our 50% interest in a joint venture that owns asphalt terminals located in the southwestern region of the U.S. within the refining segment. Prior to this change, these operating results were reported as part of corporate, other and eliminations. While this reporting change did not change our consolidated results, segment data for previous years has been restated and is consistent with the current year presentation. Refining Overview The refining segment 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 bpd as of December 31, 2024. A high-level summary of the refinery activities is presented below: Tyler, Texas refinery El Dorado, Arkansas refinery Big Spring, Texas refinery Krotz Springs, Louisiana refinery Total Nameplate Capacity (bpd) 75,000 80,000 73,000 74,000 Primary Products Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate Relevant Crack Spread Benchmark Gulf Coast 5-3-2 Gulf Coast 5-3-2 (1) Gulf Coast 3-2-1 (2) Gulf Coast 2-1-1 (3) Marketing and Distribution The refining segment's petroleum-based products are marketed primarily in the south central and southwestern regions of the United States, and the refining segment also ships and sells gasoline into wholesale markets in the southern and eastern United States. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis. (1) While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the U.S. Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark. (2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the WTI Cushing/ WTS price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions. (3) The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products. Our refining segment also owns three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi. During the second quarter of 2024, we made the decision to idle the biodiesel facilities, while exploring viable and sustainable alternatives. See Note 20 of the consolidated financial statements included in Item 8. Financial 60 | Management's Discussion and Analysis Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 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. Logistics Overview Our logistics segment gathers, transports and stores crude oil and natural gas; markets, distributes, transports and stores refined products; and disposes and recycles water in select regions of the southeastern United States, West Texas and New Mexico for our refining segment and third parties. It is comprised of the consolidated balance sheet and results of operations of Delek Logistics (NYSE: DKL), where we owned a 66.3% interest at December 31, 2024. Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. 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. The logistics segment has an aggregate of approximately 11.2 million barrels of active shell capacity. It also owns and operates nine light product terminals and markets light products using third-party terminals. Logistics has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations. The logistics segment owns or leases approximately 161 tractors and 306 trailers used to haul primarily crude oil and other products for related and third parties. Corporate and Other Overview Our corporate activities, results of certain immaterial operating segments, and intercompany eliminations are reported in 'corporate, other and eliminations' in our segment disclosures. Additionally, our corporate activities include certain of our commodity and other hedging activities. 61 | Management's Discussion and Analysis Strategic Objectives It is vitally important that our strategic objectives, especially in view of the evolutionary direction of our macroeconomic and geopolitical environment, involves a process of continuous evaluation of our business model in terms of cost structure, as well as long-term economic and operational sustainability. More consolidation in our industry is expected from increased cost pressures due in part to the regulatory environment continuing to move towards reducing carbon emissions and transitioning to renewable energy in the long-term. However, we believe we are uniquely positioned as a leader in operating and excelling in niche markets and could continue capitalizing on our niche position by being the supplier of choice in our markets. Key Objectives Certain fundamental principles are foundational to our long-term strategy and direct us as we develop our strategic objectives. With that in mind, we have identified the following overarching key objectives: I. Operational Excellence II. Financial Strength and Flexibility III. Strategic Initiatives Operational Excellence We are committed to operational excellence which includes maintaining safe, reliable, and environmentally responsible operations. It also encompasses the dedication and drive for constant improvement across our operations in reliability, safety, and efficiency. Delek prioritizes stewardship of the environment, and we focus on how to positively impact our shareholders, employees, customers, and the communities where we operate. We believe that focusing on people, processes and equipment will lead to improved utilization and yields and ultimately better employee retention and lower costs, which translates to improved returns for our shareholders. For 2025, we are focused on the following: • Prioritize safety and environmental compliance by the continued implementation of foundational best practices to increase operations ability to provide safe, compliant, and reliable operations. • Focus on operational excellence by building out our operations centric area business teams, as well as other key competency training. • Identify and execute on low-capital organic growth projects that improve yield and increase utilization. • Continue our progression of digital system implementations that will do the following: ◦ improve our ability to understand all aspects of our business as well as our ability to make real-time and forward-looking operational decisions; and ◦ automate processes and shift operational roles to higher value-added activities. Financial Strength and Flexibility In our industry, as with many volatile businesses, it is very important to make capital investments with accretive returns and maintain a strong balance sheet. We want to reward our shareholders and investors with a disciplined and balanced capital allocation framework, which we believe will strengthen shareholder value by, among other things, a stable dividend complemented by opportunistic share repurchases. We are also committed to lowering costs and improving the efficiency of our cost structure in all aspects of our business. For 2025, we are focused on the following: • Reward our shareholders and investors with a disciplined and balanced capital allocation framework, including opportunities to strengthen our balance sheet by reducing debt or opportunistically repurchasing shares with excess cash. • Build on the “zero-based budget” cost saving plan completed in 2024, with a comprehensive margin enhancement plan included within the EOP. The EOP initiatives are focused on improving our financial health and ability to generate free cash flow. The EOP includes leaner costs including lower general and administrative expenses, lower operating expenses specifically at our refineries and lowering interest expense. The EOP also includes margin initiatives including accretive, minimal capital projects in our Refining segment and commercial improvements through market optionality, improved Delek Logistics and product slate optimization. Strategic Initiatives For 2025, we will continue to focus on furthering our sum of the parts efforts focusing on the following: • Execute on our strategic initiatives, which may include opportunities to monetize our investment in Delek Logistics. The goal being, to help unlock value embedded in the Delek valuation, along with deconsolidating Delek Logistics by bringing DK's ownership below 50%. • Identify and evaluate investment opportunities that fit our sustainability view and integrate into our current asset footprint, including strategic investments or joint ventures in renewables or carbon capture and incubator investments in new technologies. 62 | Management's Discussion and Analysis 2024 Strategic Developments The following table highlights our 2024 Strategic Developments: 2024 Key Initiatives 2024 Strategic Developments Operational Excellence Financial Strength & Flexibility Strategic Initiatives Investing in Energy Transition: We were selected by the DOE Office of Clean Energy Demonstrations to negotiate a cost-sharing agreement in support of a carbon capture pilot project at the Big Spring refinery. The DOE Carbon Capture Large-Scale Pilot Project program provides 70% cost-share for up to $95 million of federal funding to support project development. ü Extending Long Term Debt Maturities: On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029, at par. Net proceeds were used to redeem the Delek Logistics 2025 Notes including accrued interest, pay off the Delek Logistics Term Loan Facility including accrued interest and to repay a portion of the outstanding 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% and on August 16, 2024 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. The net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility. ü Strengthening the Balance Sheet: On March 12, 2024, Delek Logistics completed a public offering of its common units in which it sold 3,584,416 common units (including an overallotment option of 467,532 common units) to the underwriters of the offering at a price to the public of $38.50 per unit. The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $132.2 million and were used to repay a portion of outstanding 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. The proceeds received from this offering (net of underwriting discounts, commissions and expenses) were $165.6 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. ü Executing Safe and Reliable Operations: Our focus on safe and reliable operations allowed us to achieve record throughput for the second quarter of 2024 as reliability continues to increase. ü Enhancing Environmental Standards with Capital Expenditures: We successfully completed a benzene stripper project at the Big Spring Refinery, which supports achievement of our Clean Air Act Consent Decree requirements related to benzene in wastewater. ü Expanding Delek Logistics' Natural Gas Processing: 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 and aims to meet the rising demand for natural gas in the region. Total estimated cost is between $160.0 and $165.0 million with an anticipated start-up of early 2025. This expansion project will also increase Delek Logistics' third party revenue. Additionally, in December 2024, Delek Logistics announced the development of permitted AGI capabilities at the new plant with an anticipated start-up in the first half 2025. ü ü Monetizing Our Retail Operations: On September 30, 2024, Delek US sold 100% of the equity interests in four of Delek US' wholly-owned subsidiaries that owned and operated 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. ü ü Executing Strategic Midstream Acquisition: On September 11, 2024, Delek Logistics acquired H2O Midstream related to water disposal and recycling operations, in the Midland Basin in Texas for total consideration of $229.7 million. The purchase price was comprised of approximately $159.7 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. ü ü Maximizing Shareholder Value: 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 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. ü 63 | Management's Discussion and Analysis Significant Known Uncertainties Impacting Delek Aside from the market trends and the uncertainties inherent to those market drivers many of which are referenced in the 'Executive Summary' above and which are discussed at length in the 'Market Trends' section below, we have also identified certain uncertainties that we believe to be sufficiently significant to our financial results in the near term as to warrant additional discussion. We have included supplemental discussion of those uncertainties, and our efforts for mitigating them, below. However, note that this discussion is to bring additional attention to areas that have been of particular interest to management but should not be considered comprehensive of all known trends and uncertainties which may be relevant. Instead, in the context of all known trends or uncertainties that have had, or that are reasonably likely to have, a material favorable or unfavorable effect on financial results, they should be considered part of the larger discussion on market trends and uncertainties throughout our management's discussion and analysis. Regulatory Volatility In June 2022, the EPA finalized volumes for compliance years 2020, 2021 and 2022 under the RFS program (as defined in our accounting policies in Note 2 to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K), announced supplemental volume obligations for compliance years 2022 and 2023 and established new provisions of the RFS which addressed bio-intermediates. Additionally, the EPA denied the petitions for small refinery exemptions for prior period compliance years. In June 2023, the EPA released final volumes for compliance years 2023, 2024 and 2025. The cost of RINs continues to negatively impact our results of operations. Also of note, movements in crack spreads behave independently from movements in RFS regulatory requirements and RINs prices and thus can disproportionately impact small refiners. For example, in periods of low crack spreads and high RIN costs (which are a function of both regulatory volumetric requirements and market RINs prices), small refineries may experience negative operating results where other, larger refineries with better economies of scale and other competitive advantages may fare better. Even when increases in crack spreads coincide with the independent increases in RIN prices, small refiners may continue to see a larger burden of such costs on crack spread capture in earnings than many larger refineries experience. Uncertainty remains regarding the impact that proposed EPA rules, or future revisions to proposed rules, may have on RINs prices, which impact the determination of the fair value of our Net RINs Obligation, as well as the fair value of forward RIN commitment contracts. Additionally, while our current Net RINs Obligation reflects current RINs market prices as of December 31, 2024, the financial statement impact, including both the income statement and net cash impact of future changes to enacted Renewable Volume Obligation rates, is not determinable because of the complexity of the Net RINs Obligation and related transactions, where such financial statement impact is dependent upon the following: (1) the composition of the specific Net RINs Obligation (in terms of the vintages of RINs we currently own versus the waived RINs Obligation) and the related market prices at the date each volumetric requirement change is enacted; (2) the composition of our RINs forward commitment contracts that may be settled or positions closed as a result of any enacted change and the related gains or losses; (3) the settlement requirements of related RINs product financing arrangements; and (4) the quantity of and dates at which excess RINs can be sold and the sales price (see also Note 12, Note 13 and Note 19 as well as our related accounting policies related to RINs included in Note 2 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). Enacted regulatory changes could impact our financial results in ways that we cannot currently anticipate. Delek's Response to Significant Uncertainties Associated with Regulatory Volatility As discussed above, RFS activities and Renewable Volume Obligation requirements, and their impact on RIN prices, represent a significant risk which has, and could continue to, materially impact our financial results in ways that are currently uncertain. Our efforts to mitigate this risk include the following: • Actively monitoring EPA rule-making and RFS actions regarding volumetric requirements, remittance due dates, and deferral opportunities in order to make decisions about RINs inventory; • Proactively monitoring our Net RINs Obligation position (inclusive of our RINs inventory portfolio), by vintage and RIN category, in order to make decisions about the purchase and sale of RINs, based on both a current and forward basis, and considering the risk of floating versus fixed pricing; and • Incorporating into our strategic priorities activities designed to enhance incremental crack spread capture so that the impact of high RIN prices or RINs price volatility is diminished. While there continues to be risk around the fair value of the RINs Obligation that we incur and the RINs cost we recognize in our results of operations, we believe that our risk management activities around RINs are comprehensive. That said, because the RINs market is subject to factors outside of our control, there will continue to be risk that RINs cost could adversely affect our financial results. See additional discussion of the effect of RINs prices and volatility on our refining margins in the "Market Trends" section below. Climate Change Increasingly unstable environmental conditions and spontaneous extreme weather events are making it costlier and more difficult for oil and gas companies to operate in certain environments. Consequently, climate-change, and related current and proposed regulations, are directly and indirectly impacting industry bottom lines globally and in specific geographic areas where we operate. Current and proposed climate-change and environmental regulations, laws and government policies affect where and how companies invest, conduct their operations and formulate their products and, in some cases, limit their profits directly. There continues to be significant uncertainty around coming regulatory requirements, not just from an operational perspective, but also around what reporting requirements may be, as well as the associated cost. 64 | Management's Discussion and Analysis Delek's Response to Significant Uncertainties Associated with Climate Change We remain committed to complying with all regulations, laws and government policies designed to curb the growing climate-change crisis. In 2024, Delek updated its GHG reduction target to include application of a 2022 “baseline” year that is more reflective of the current operational boundaries and application of a 25% Scope 1 and 2 emission reduction target, measured on an intensity basis, by 2030. We plan to pursue the reductions via a combination of steps including, but not limited to: innovative technology investment, carbon capture, operational energy efficiencies, increased application of renewable power and refinery fuel gas optimization. We were selected by the DOE Office of Clean Energy Demonstrations to negotiate a cost-sharing agreement in support of a carbon capture pilot project at the Big Spring refinery. The DOE Carbon Capture Large-Scale Pilot Project program provides 70% cost-share for up to $95 million of federal funding to support project development. Market Trends Our results of operations are significantly affected by fluctuations in the prices of certain commodities, including, but not limited to, crude oil, gasoline, distillate fuel, biofuels, natural gas and electricity, among others. Historically, the impact of commodity price volatility on our refining margins (as defined in our "Non-GAAP Measures" in MD&A Item 7), specifically as it relates to the price of crude oil as compared to the price of refined products and timing differences in the movements of those prices (subject to our inventory costing methodology), as well as location differentials, may be favorable or unfavorable compared to peers. Additionally, our refining margin profitability is impacted by regulatory factors, including the cost of RINs. We have positioned the Company to continue to run safely, reliably and environmentally responsibly while leveraging our Delek Logistics business with an eye towards the One Delek vision. Many uncertainties remain in 2025 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 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. We expect crack spreads to be relatively consistent with 2024. However, U.S. policy changes and 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. Crude Prices WTI crude oil represents the largest component of our crude slate at all of our refineries, and can be sourced through our gathering channels or optimization efforts from Midland, Texas, Cushing, Oklahoma or other locations. We manage our supply chain risk to ensure that we have the barrels to meet our crude slate consumption plan for each month through gathering supply contracts and throughput agreements on various strategic pipelines, some of which include those where we hold equity method investments. We manage market price risk on crude oil through financial derivative hedges, in accordance with our risk management strategies. The chart below illustrates the average quarterly price of WTI Midland and WTI Cushing over the past three years. Crude Pricing Differentials 65 | Management's Discussion and Analysis Historically, domestic refiners have benefited from the discount for WTI Cushing compared to Brent, a global benchmark crude. This generally leads to higher margins in our refineries, as refined product prices are influenced by Brent crude prices and the majority of our crude supply is WTI-linked. Because of our positioning in the Permian basin, including our access to significant sources of WTI Midland crude through our gathering system, we are even further benefited by discounts for WTI Midland/WTI Cushing differentials. When these discounts shrink or become premiums, our reliance on WTI-linked crude pricing, and specifically WTI Midland crude, can negatively impact our refining margins. Conversely, as these price discounts widen, so does our competitive advantage, created specifically by our access to WTI Midland crude sourced through our gathering systems. The chart below illustrates the key differentials impacting our refining operations, including WTI Cushing to Brent, WTI Midland to WTI Cushing, and LLS to WTI Cushing over the past three years. 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. These prices largely depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Our refineries produce the following products: Tyler Refinery El Dorado Refinery Big Spring Refinery Krotz Springs Refinery Primary Products Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate 66 | Management's Discussion and Analysis The charts below illustrate the quarterly average prices of CBOB, HSD and ULSD over the past three years. Crack Spreads Crack spreads are used as benchmarks for predicting and evaluating a refinery's product margins by measuring the difference between the market price of feedstocks/crude oil and the resultant refined products. 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 over the past three years. 67 | Management's Discussion and Analysis RIN Volatility Environmental regulations and the political environment continue to affect our refining margins in the form of volatility in the price of RINs . We enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage our RINs Obligations. On a consolidated basis, we work to balance our RINs Obligation in order to minimize the effect of RINs prices on our results. While we obtain RINs in our refining and logistics segments through our ethanol blending, our refining segment still must purchase additional RINs to satisfy its obligations. Prior to the idling of the biodiesel facilities in 2024, we obtained RINs through biodiesel blending and generated RINs through biodiesel production. Additionally, our ability to obtain RINs through blending is limited by our refined product slate, blending capabilities and market constraints. The cost to purchase these additional RINs is a significant cash outflow for our business. Increases in the market prices of RINs generally adversely affect our results of operations through changes in fair value to our existing RINs Obligation, to the extent we do not have offsetting RINs inventory on hand or effective economic hedges through net forward purchase commitments. RINs prices are highly sensitive to regulatory and political influence and conditions, and therefore often do not correlate to movements in crude oil prices, refined product prices or crack spreads. 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 over the past three years. Energy Costs Energy costs are a significant element of our Refining EBITDA and can significantly impact our ability to capture crack spreads, with natural gas representing the largest component. Natural gas prices are driven by supply-side factors such as amount of natural gas production, level of natural gas in storage and import and export activity, while demand-side factors include variability of weather, economic growth and the availability and price of other fuels. Refiners and other large-volume fuel consumers may be more or less susceptible to volatility in natural gas prices depending on their consumption levels as well as their capabilities to switch to more economical sources of fuel/energy. Additionally, geographic location of facilities make consumers vulnerable to price differentials of natural gas available at different supply hubs. Within Delek’s geographic footprint, we source the majority of our natural gas from the Gulf Coast, and secondarily from the Permian, coinciding with the physical locations of our refineries. 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 charts below illustrate the quarterly average prices of Waha (Permian Basin) and Henry Hub (Gulf Coast) over the past three years. 68 | Management's Discussion and Analysis Non-GAAP Measures Our management uses certain non-Generally Accepted Accounting Principles (“non-GAAP”) operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include: • EBITDA - calculated as net income (loss) attributable to Delek adjusted to add back interest expense, income tax expense, depreciation and amortization; and • Refining margin - calculated as gross margin (which we define as sales minus cost of sales) adjusted for operating expenses and depreciation and amortization included in cost of sales. We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and they may obscure our underlying results and trends. Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures. 69 | Management's Discussion and Analysis Non-GAAP Reconciliations The following table provides a reconciliation of segment EBITDA to the most directly comparable U.S. GAAP measure, net (loss) income attributable to Delek: Reconciliation of segment EBITDA to net (loss) income attributable to Delek (in millions) Year Ended December 31, 2024 2023 2022 Refining segment EBITDA $ (158.0) $ 560.7 $ 736.6 Logistics segment EBITDA 342.7 363.0 304.8 Corporate, Other and Eliminations EBITDA (242.7) (276.5) (282.2) EBITDA attributable to Delek $ (58.0) $ 647.2 $ 759.2 Interest expense, net 313.0 318.0 195.8 Income tax (benefit) expense (107.9) (3.0) 56.4 Depreciation and amortization 374.5 339.5 275.0 Income from discontinued operations, net of tax (77.2) (27.1) (25.1) Net (loss) income attributable to Delek $ (560.4) $ 19.8 $ 257.1 The following table provides a reconciliation of refining margin to the most directly comparable U.S. GAAP measure, gross margin: Reconciliation of refining margin to gross margin (in millions) Refining Segment Year Ended December 31, 2024 2023 2022 Total revenues $ 11,783.0 $ 16,406.9 $ 19,763.0 Cost of sales 12,009.5 16,095.7 19,240.4 Gross margin $ (226.5) $ 311.2 522.6 Add back (items included in cost of sales): Operating expenses (excluding depreciation and amortization) 596.6 619.2 622.5 Depreciation and amortization 265.5 234.2 205.4 Refining margin $ 635.6 $ 1,164.6 $ 1,350.5 70 | Management's Discussion and Analysis Summary Financial and Other Information The following table provides summary financial data for Delek (in millions): Summary Statement of Operations Data (1) Year Ended December 31, 2024 2023 2022 Net revenues $ 11,852.2 $ 16,467.2 $ 19,801.0 Cost of sales: Cost of materials and other 10,781.8 14,825.3 18,071.4 Operating expenses (excluding depreciation and amortization presented below) 763.8 770.6 718.1 Depreciation and amortization 349.7 322.8 263.8 Total cost of sales 11,895.3 15,918.7 19,053.3 Insurance proceeds (20.6) (20.3) (31.2) Operating expenses related to wholesale business (excluding depreciation and amortization presented below) 3.4 4.4 8.6 General and administrative expenses 252.8 272.0 313.7 Depreciation and amortization 24.8 16.7 11.2 Asset impairment 243.5 37.9 — Other operating income, net (55.5) (6.9) (12.1) Total operating costs and expenses 12,343.7 16,222.5 19,343.5 Operating (loss) income (491.5) 244.7 457.5 Interest expense, net 313.0 318.0 195.8 Income from equity method investments (92.2) (86.2) (57.7) Other income, net (6.3) (3.7) (2.4) Total non-operating expenses, net 214.5 228.1 135.7 (Loss) income from continuing operations before income tax (benefit) expense (706.0) 16.6 321.8 Income tax (benefit) expense (107.9) (3.0) 56.4 (Loss) income from continuing operations, net of tax (598.1) 19.6 265.4 Discontinued operations: Income from discontinued operations, including gain on sale of discontinued operations 105.9 35.2 32.6 Income tax expense 28.7 8.1 7.5 Income from discontinued operations, net of tax 77.2 27.1 25.1 Net (loss) income (520.9) 46.7 290.5 Non-controlling interests 39.5 26.9 33.4 Net (loss) income attributable to Delek $ (560.4) $ 19.8 $ 257.1 (1) This information is presented at a summary level for your reference. See the Consolidated Statements of Income included in item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for more detail regarding our results of operations and net income per share. We report operating results in two reportable segments: • Refining • Logistics 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. 71 | Management's Discussion and Analysis Results of Operations Consolidated Results of Operations — Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023 and the Year Ended December 31, 2023 versus the Year Ended December 31, 2022 Net (Loss) Income 2024 vs. 2023 Consolidated net loss for the year ended December 31, 2024 was $520.9 million compared to a net income of $46.7 million for the year ended December 31, 2023. Consolidated net loss attributable to Delek for the year ended December 31, 2024 was $560.4 million, or $(8.77) per basic share, compared to income of $19.8 million, or $0.30 per basic share, for the year ended December 31, 2023. Explanations for significant drivers impacting net (loss) income as compared to the comparable period of the prior year are discussed in the sections below. 2023 vs. 2022 Consolidated net income for the year ended December 31, 2023 was $46.7 million compared to $290.5 million for the year ended December 31, 2022. Consolidated net income attributable to Delek for the year ended December 31, 2023 was $19.8 million, or $0.30 per basic share, compared to $257.1 million, or $3.63 per basic share, for the year ended December 31, 2022. Explanations for significant drivers impacting net income as compared to the comparable period of the prior year are discussed in the sections below. Net Revenues 2024 vs. 2023 We generated net revenues of $11,852.2 million and $16,467.2 million during the years ended December 31, 2024 and 2023, respectively, a decrease of $4,615.0 million, or 28.0%. 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 9.0% and ULSD of 13.2%, decreases in wholesale activity and decreased sales volumes (including purchased products), partially offset by an increase in the average price of U.S. Gulf Coast HSD of 7.0%; and • in our logistics segment, decreases in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations, partially offset by an increase in revenue associated with the H20 Midstream operations which was acquired in September 2024. 2023 vs. 2022 We generated net revenues of $16,467.2 million and $19,801.0 million during the years ended December 31, 2023 and 2022, respectively, a decrease of $3,333.8 million, or 16.8%. The decrease in net revenues was primarily due to the following: • in our refining segment, decreases in the average price of U.S. Gulf Coast gasoline of 15.5%, ULSD of 21.4%, and HSD of 36.2% and decreases in wholesale activity, partially offset by an increase in sales volume (including purchased product); and • in our logistics segment, increased volumes from the Midland Gathering operations and incremental revenues from the Delaware Gathering Acquisition, partially offset by decreases in the average volumes of diesel sold and in the average sales price per gallon of diesel and gasoline sold in our West Texas marketing operations. 72 | Management's Discussion and Analysis Total Operating Costs and Expenses Cost of Materials and Other 2024 vs. 2023 Cost of materials and other was $10,781.8 million for the year ended December 31, 2024, compared to $14,825.3 million for year ended December 31, 2023, a decrease of $4,043.5 million, or 27.3%. The net decrease in cost of materials and other primarily related to the following: • a decrease in the cost of crude oil feedstocks at the refineries, including a 2.3% decrease in the average cost of WTI Cushing crude oil and a 2.6% decrease in the average cost of WTI Midland crude oil, decreased wholesale activity and decreased sales volume (including purchased products); and • 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. 2023 vs. 2022 Cost of materials and other was $14,825.3 million for the year ended December 31, 2023, compared to $18,071.4 million for 2022, a decrease of $3,246.1 million, or 18.0%. The net decrease in cost of materials and other primarily related to the following: • a decrease in the cost of crude oil feedstocks at the refineries, including a 17.9% decrease in the average cost of WTI Cushing crude oil and a 17.8% decrease in the average cost of WTI Midland crude oil and decreased wholesale activity, and • decreases in the average cost per gallon of gasoline and diesel sold, partially offset by incremental cost of materials and other from the Delaware Gathering Acquisition in our logistics segment. Insurance Proceeds 2024 vs. 2023 Insurance proceeds were $20.6 million for the year ended December 31, 2024 compared to $20.3 million in 2023, an increase of $0.3 million, or 1.5%. The increase was primarily driven by the following: • for the year ended December 31, 2024, we recognized a gain of $20.6 million for insurance proceeds related to property damage from the 2021 El Dorado refinery fire, the 2021 freeze events and the 2022 Big Spring refinery fire, compared to $10.3 million of property damage insurance proceeds in the 2023 period related to the 2022 Big Spring refinery fire and the 2021 freeze events; and • for the year ended December 31, 2023, we recognized $10.0 million of business interruption claims related to the 2021 El Dorado refinery fire and the 2021 freeze events with no comparable claims for the year ended December 31, 2024. Refer to Note 14 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 2023 vs. 2022 Insurance proceeds were $20.3 million for the year ended December 31, 2023 compared to $31.2 million in 2022, a decrease of $10.9 million, or 34.9%. The decrease was primarily driven by the following: • for the year ended December 31, 2023, we recognized a gain of $10.3 million for insurance proceeds related to property damage from the 2022 Big Spring refinery fire and the 2021 freeze events, compared to $0.1 million of property damage insurance proceeds in the 2022 period related to the freeze events that occurred in 2021; and • for the year ended December 31, 2023, we recognized $10.0 million of business interruption claims related to the 2021 El Dorado refinery fire and the 2021 freeze events, compared to $31.1 million of business interruption claims in the 2022 period related to the 2021 El Dorado refinery fire and the 2021 freeze events. Refer to Note 14 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 73 | Management's Discussion and Analysis Operating Expenses 2024 vs. 2023 Operating expenses (included in both cost of sales and other operating expenses) were $767.2 million for the year ended December 31, 2024 compared to $775.0 million in year ended December 31, 2023, a decrease of $7.8 million, or 1.0%. The decrease in operating expenses was primarily driven by the following: • lower natural gas prices; • lower outside services; and • a decrease in insurance costs. These decreases were partially offset by the following: • an increase in employee costs. 2023 vs. 2022 Operating expenses (included in both cost of sales and other operating expenses) were $775.0 million for the year ended December 31, 2023 compared to $726.7 million in 2022, an increase of $48.3 million, or 6.6%. The increase in operating expenses was primarily driven by the following: • an increase in maintenance costs including costs related to our Safety Action Plan; • an additional $8.7 million expense for uncovered litigation, claims and assessments associated with the 2021 El Dorado refinery fire; and • an increase in employee costs. These increases were partially offset by the following: • lower natural gas prices. General and Administrative Expenses 2024 vs. 2023 General and administrative expenses were $252.8 million for the year ended December 31, 2024 compared to $272.0 million in year ended December 31, 2023, a decrease of $19.2 million, or 7.1%. The decrease was primarily driven by a decrease in employee costs including incentive compensation costs, partially offset by transaction costs associated with the H20 Midstream Acquisition and Gravity Acquisition, transaction costs associated with the amended and new agreements with Delek Logistics. 2023 vs. 2022 General and administrative expenses were $272.0 million for the year ended December 31, 2023 compared to $313.7 million in 2022, a decrease of $41.7 million, or 13.3%. The decrease was primarily driven by a decrease in employee costs including incentive compensation costs and no transaction costs related to the Delaware Gathering Acquisition in the 2023 period. Depreciation and Amortization 2024 vs. 2023 Depreciation and amortization (included in both cost of sales and other operating expenses) was $374.5 million for the year ended December 31, 2024 compared to $339.5 million in 2023, an increase of $35.0 million, or 10.3%. The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed and depreciation and amortization attributable to the H2O Midstream Acquisition. 2023 vs. 2022 Depreciation and amortization expenses were $339.5 million for the year ended December 31, 2023 compared to $275.0 million in 2022, an increase of $64.5 million, or 23.5%. The increase was a result of a general increase in our fixed asset base due to capital projects and turnarounds completed and depreciation and amortization attributable to the Delaware Gathering Acquisition. 74 | Management's Discussion and Analysis Asset Impairment 2024 vs. 2023 Asset impairment was $243.5 million for the year ended December 31, 2024 compared to $37.9 million for the year ended December 31, 2023. • For the year ended December 31, 2024, we recorded a $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, recorded a $9.2 million asset impairment for pipeline assets because utilization is no longer probable and recorded a $212.2 million goodwill impairment. The goodwill impairment is related to our Krotz Springs reporting unit driven by depressed crack spread pricing in the near term combined with an increased discount rate. • For the year ended December 31, 2023, we recorded a $14.8 million goodwill impairment and a $23.1 million of right-of-use asset impairment. The goodwill impairment is related to our Delaware Gathering reporting unit due to significant increases in interest rates and timing of system connections with our producer customers. The right-of-use asset impairment related to leased crude oil tanks in Canada that were not needed to support the future growth of our business. Refer to Note 17 and Note 20 to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 2023 vs. 2022 Asset impairment was $37.9 million for the year ended December 31, 2023. Asset impairment included $14.8 million of goodwill impairment and $23.1 million of right-of-use asset impairment. The goodwill impairment is related to our Delaware Gathering reporting unit due to significant increases in interest rates and timing of system connections with our producer customers. The right-of-use asset impairment related to leased crude oil tanks in Canada that were not needed to support the future growth of our business. There was no asset impairment in the year ended December 31, 2022. Refer to Note 17 and Note 20 to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. Other Operating Income, Net 2024 vs. 2023 Other operating income, net was $55.5 million and $6.9 million for the years ended December 31, 2024 and 2023, respectively, an increase of $48.6 million. The increase was primarily driven by the following: • for the year ended December 31, 2024, we recorded a net gain of $53.4 million related to a property settlement; • for the year ended December 31, 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 year ended December 31, 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; and • decreased hedge gains in 2024 compared to 2023 associated with our derivatives. Refer to Note 14 and Note 20 to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 2023 vs. 2022 Other operating income, net was $6.9 million and $12.1 million for the years ended December 31, 2023 and 2022, respectively, a decrease of $5.2 million, primarily due to decreased hedge gains in 2023 compared to 2022 associated with our derivatives. 75 | Management's Discussion and Analysis Non-Operating Expenses, Net Interest Expense, Net 2024 vs. 2023 Interest expense, net was $313.0 million in the year ended December 31, 2024, compared to $318.0 million for year ended December 31, 2023, a decrease of $5.0 million, or 1.6% primarily due to 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 $210.8 million during the year ended December 31, 2024 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the year ended December 31, 2023; and • an increase in hedge gains associated with our interest rate swap. The decrease was partially offset by the following: • an increase in the average effective interest rate of 79 basis points during the year ended December 31, 2024 compared to the year ended December 31, 2023 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding); and • debt extinguishment costs of $3.6 million in the year ended December 31, 2024 related to the payoff of the Delek Logistics Term Loan Facility and Delek Logistics 2025 Notes with proceeds from the Delek Logistics 2029 Notes issued in March 2024. 2023 vs. 2022 Interest expense, net was $318.0 million for the year ended December 31, 2023 compared to $195.8 million in 2022, an increase of $122.2 million, or 62.4% primarily due to the following: • an increase in the average effective interest rate of 390 basis points during the year ended December 31, 2023 compared to the year ended December 31, 2022 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding); and • an increase in net average borrowings outstanding (including the obligations under the supply and offtake agreements which have an associated interest charge) of approximately $151.0 million during the year ended December 31, 2023 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the year ended December 31, 2022. Results from Equity Method Investments 2024 vs. 2023 We recognized income from equity method investments of $92.2 million for the year ended December 31, 2024, compared to $86.2 million for the year ended December 31, 2023, an increase of $6.0 million. This increase was primarily driven by the following: • an increase in income from our investment in W2W Holdings LLC to $28.9 million during the year ended December 31, 2024 from $22.9 million in the year ended December 31, 2023. 2023 vs. 2022 We recognized income from equity method investments of $86.2 million for the year ended December 31, 2023, compared to $57.7 million for the year ended December 31, 2022, an increase of $28.5 million. This increase was primarily driven by the following: • an increase in income from our asphalt terminal equity method investment due to higher volumes and resulting revenue increases; and • an increase in income from our investment in W2W Holdings LLC to $22.9 million during the year ended December 31, 2023 from $7.6 million in the year ended December 31, 2022. Income Taxes 2024 vs. 2023 For the year ended December 31, 2024, we recorded an income tax benefit of $107.9 million from continuing operations compared to an income tax benefit of $3.0 million from continuing operations for the year ended December 31, 2023, primarily driven by the following: • a decrease in pre-tax net income of $722.6 million, and • our effective tax rates were 15.3% and (18.1)% for the year ended December 31, 2024 and 2023, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate, exclusion of goodwill impairment expense from taxable income and changes in valuation allowance on certain state attributes. 76 | Management's Discussion and Analysis 2023 vs. 2022 For the year ended December 31, 2023, we recorded an income tax benefit of $3.0 million from continuing operations compared to income tax expense of $56.4 million from continuing operations for the year ended December 31, 2022, primarily driven by the following: • a decrease in pre-tax net income of $305.2 million, and • our effective tax rates were (18.1)% and 17.5% for the year ended December 31, 2023 and 2022, respectively, due to the impact of fixed dollar favorable permanent differences on the tax rate and changes in valuation allowance on certain attributes. Refer to Note 15 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. 77 | Management's Discussion and Analysis Refining Segment The tables and charts below set forth selected information concerning our refining segment operations ($ in millions, except per barrel amounts): Selected Refining Financial Information Year Ended December 31, 2024 2023 2022 Revenues $ 11,783.0 $ 16,406.9 $ 19,763.0 Cost of materials and other 11,147.4 15,242.3 18,412.8 Refining Margin $ 635.6 $ 1,164.6 $ 1,350.2 Operating expenses (excluding depreciation and amortization) $ 596.6 $ 619.2 $ 622.5 Refining segment EBITDA (1) $ (158.0) $ 560.7 $ 736.6 (1) Includes a $212.2 million goodwill impairment charge for the year ended December 31, 2024. Refer to Note 17 - Goodwill and Intangible Assets to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. Factors Impacting Refining Profitability Our profitability in the refining segment is substantially determined by the difference between the cost of the crude oil feedstocks we purchase and the price of the refined products we sell, referred to as the "crack spread", "refining margin" or "refined product margin". Refining margin is used as a metric to assess a refinery's product margins against market crack spread trends, where "crack spread" is a measure of the difference between market prices for crude oil and refined products and is a commonly used proxy within the industry to estimate or identify trends in refining margins. The cost to acquire feedstocks and the price of the refined petroleum products we ultimately sell from our refineries 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 such as hurricanes or tornadoes, local, domestic and foreign political affairs, global conflict, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Other significant factors that influence our results in the refining segment include operating costs (particularly the cost of natural gas used for fuel and the cost of electricity), seasonal factors, refinery utilization rates and planned or unplanned maintenance activities or turnarounds. Moreover, while the fluctuations in the cost of crude oil are typically reflected in the prices of light refined products, such as gasoline and diesel fuel, the price of other residual products, such as asphalt, coke, carbon black oil and LPG are less likely to move in parallel with crude cost. This could cause additional pressure on our realized margin during periods of rising or falling crude oil prices. Additionally, our margins are impacted by the pricing differentials of the various types and sources of crude oil we use at our refineries and their relation to product pricing. Our crude slate is predominantly comprised of WTI crude oil. Therefore, favorable differentials of WTI compared to other crude will favorably impact our operating results, and vice versa. Additionally, because of our gathering system presence in the Midland area and the significant source of crude specifically from that region into our network, a widening of the WTI Cushing less WTI Midland spread will favorably influence the operating margin for our refineries. Alternatively, a narrowing of this differential will have an adverse effect on our operating margins. Global product prices are influenced by the price of Brent which is a global benchmark crude. Global product prices influence product prices in the U.S. As a result, our refineries are influenced by the spread between Brent and WTI Midland. The Brent less WTI Midland spread represents the differential between the average per barrel price of Brent crude oil and the average per barrel price of WTI Midland crude oil. A widening of the spread between Brent and WTI Midland will favorably influence our refineries' operating margins. Also, the Krotz Springs refinery is influenced by the spread between Brent and LLS. The Brent less LLS spread represents the differential between the average per barrel price of Brent and the average per barrel price of LLS crude oil. A discount in LLS relative to Brent will favorably influence the Krotz Springs refinery operating margin. Finally, Refining EBITDA is impacted by regulatory costs associated with the cost of RINs as well as energy costs, including the cost of natural gas. In periods of unfavorable regulatory sentiment, RINs prices can increase at higher rates than crack spreads, or even when crack spreads are declining. This can be particularly impactful on smaller refineries, where the operating cost structure does not have as much scalability as larger refineries. Additionally, volatility in energy costs, which are captured in our operating expenses and impact our Refining EBITDA, can significantly impact our ability to capture crack spreads, with natural gas representing the most significant component. Within Delek’s geographic footprint, we source the majority of our natural gas from the Gulf Coast, and secondarily from the Permian, and we do not currently have the capability at our refineries to switch our energy consumption to utilize alternative sources of fuel. For this reason, unfavorable Gulf Coast (Henry Hub) differentials can impact our crack spread capture. 78 | Management's Discussion and Analysis 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. For that purpose, from a pricing perspective, we enter into commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future sales of refined products or to fix margins on future production. We also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage our RINs Obligation. Additionally, from a sourcing perspective, we often enter into purchase and sale contracts with vendors and customers or take physical or financial commodity positions for crude oil that may not be used immediately in production, but that may be used to manage the overall supply and availability of crude expected to ultimately be needed for production and/or to meet minimum requirements under strategic pipeline arrangements, and also to optimize and hedge availability risks associated with crude that we ultimately expect to use in production. Such transactions are inherently based on certain assumptions and judgments made about the current and possible future availability of crude. Therefore, when we take physical or financial positions for optimization purposes, our intent is generally to take offsetting positions in quantities and at prices that will advance these objectives while minimizing our positional and financial statement risk. However, because of the volatility of the market in terms of pricing and availability, it is possible that we may have material positions with timing differences or, more rarely, that we are unable to cover a position with an offsetting position as intended. Such differences could have a material impact on the classification of resulting gains/losses, assets or liabilities, and could also significantly impact Refining EBITDA. Refinery Statistics Year Ended December 31, 2024 2023 2022 Total Refining Segment Days in period 366 365 365 Total sales volume - refined product (average bpd) (1) 301,834 298,617 299,004 Total production (average bpd) 292,817 291,802 290,041 Crude oil 281,271 278,231 281,205 Other feedstocks 15,380 15,998 10,558 Total throughput (average bpd): 296,651 294,229 291,763 Crude Slate: (% based on amount received in period) WTI crude oil 69.9 % 73.0 % 68.2 % Gulf Coast Sweet Crude 7.3 % 4.3 % 7.8 % Local Arkansas crude oil 3.4 % 4.0 % 4.1 % Other 19.4 % 18.7 % 19.9 % Crude utilization (% based on nameplate capacity) 93.1 % 92.1 % 93.1 % 79 | Management's Discussion and Analysis Refinery Statistics (continued) Year Ended December 31, 2024 2023 2022 Tyler, TX Refinery Days in period 366 365 365 Products manufactured (average bpd): Gasoline 35,723 33,442 36,847 Diesel/Jet 31,755 28,670 31,419 Petrochemicals, LPG, NGLs 2,319 2,341 2,114 Other 849 1,691 1,825 Total production 70,646 66,144 72,205 Throughput (average bpd): Crude Oil 70,009 63,210 70,114 Other feedstocks 2,299 3,617 2,604 Total throughput 72,308 66,827 72,718 Per barrel of throughput: Operating expenses $ 5.04 $ 5.08 $ 5.24 Crude Slate: (% based on amount received in period) WTI crude oil 79.2 % 79.5 % 84.7 % East Texas crude oil 20.4 % 20.5 % 15.0 % Other 0.4 % — % 0.3 % El Dorado, AR Refinery Days in period 366 365 365 Products manufactured (average bpd): Gasoline 38,215 38,868 38,738 Diesel 29,843 30,061 30,334 Petrochemicals, LPG, NGLs 1,205 1,495 1,255 Asphalt 8,739 7,711 7,782 Other 1,237 877 1,200 Total production 79,239 79,012 79,309 Throughput (average bpd): Crude Oil 77,993 77,423 76,806 Other feedstocks 2,886 3,262 3,646 Total throughput 80,879 80,685 80,452 Per barrel of throughput: Operating expenses $ 4.65 $ 4.59 $ 4.61 Crude Slate: (% based on amount received in period) WTI crude oil 66.5 % 67.3 % 55.1 % Local Arkansas crude oil 12.2 % 14.0 % 15.3 % Other 21.3 % 18.7 % 29.6 % 80 | Management's Discussion and Analysis Refinery Statistics (continued) Year Ended December 31, 2024 2023 2022 Big Spring, TX Refinery Days in period 366 365 365 Products manufactured (average bpd): Gasoline 33,888 32,386 30,689 Diesel/Jet 25,157 22,390 22,125 Petrochemicals, LPG, NGLs 4,710 3,593 2,942 Asphalt 2,774 1,983 1,721 Other 3,883 3,129 1,481 Total production 70,412 63,481 58,958 Throughput (average bpd): Crude oil 66,123 60,236 59,476 Other feedstocks 4,975 4,223 191 Total throughput 71,098 64,459 59,667 Per barrel of refined throughput: Operating expenses $ 6.66 $ 7.92 $ 7.48 Crude Slate: (% based on amount received in period) WTI crude oil 70.4 % 68.5 % 70.1 % WTS crude oil 29.6 % 31.5 % 29.9 % Krotz Springs, LA Refinery Days in period 366 365 365 Products manufactured (average bpd): Gasoline 34,268 40,805 34,370 Diesel/Jet 28,125 31,589 31,576 Heavy Oils 3,641 3,785 2,418 Petrochemicals, LPG, NGLs 4,942 6,525 6,749 Other 1,544 460 4,458 Total production 72,520 83,164 79,571 Throughput (average bpd): Crude Oil 67,146 77,362 74,808 Other feedstocks 5,220 4,896 4,118 Total throughput 72,366 82,258 78,926 Per barrel of throughput: Operating expenses $ 5.23 $ 4.96 $ 5.25 Crude Slate: (% based on amount received in period) WTI Crude 63.7 % 77.4 % 63.4 % Gulf Coast Sweet Crude 29.7 % 15.1 % 29.8 % Other 6.6 % 7.5 % 6.8 % (1) Includes inter-refinery sales and sales to other segments which are eliminated in consolidation. See tables below. 81 | Management's Discussion and Analysis Included in the refinery statistics above are the following sales to other segments: Refinery Sales to Other Segments Year Ended December 31, (in barrels per day) 2024 2023 2022 Big Spring refined product sales to other Delek segments 18,053 21,165 19,828 Pricing Statistics (average for the period presented) Year Ended December 31, 2024 2023 2022 WTI — Cushing crude oil (per barrel) $ 75.88 $ 77.69 $ 94.62 WTI — Midland crude oil (per barrel) $ 76.85 $ 78.90 $ 95.93 WTS — Midland crude oil (per barrel) $ 75.95 $ 77.61 $ 94.29 LLS (per barrel) $ 78.30 $ 80.18 $ 96.85 Brent (per barrel) $ 79.84 $ 82.21 $ 99.06 U.S. Gulf Coast 5-3-2 crack spread (per barrel) (1) $ 17.58 $ 27.02 $ 33.36 U.S. Gulf Coast 3-2-1 crack spread (per barrel) (1) $ 16.94 $ 25.93 $ 31.41 U.S. Gulf Coast 2-1-1 crack spread (per barrel) (1) $ 13.40 $ 14.70 $ 25.73 U.S. Gulf Coast unleaded gasoline (per gallon) $ 2.13 $ 2.34 $ 2.77 Gulf Coast ultra-low sulfur diesel (per gallon) $ 2.36 $ 2.72 $ 3.46 U.S. Gulf Coast high sulfur diesel (per gallon) $ 1.98 $ 1.85 $ 2.90 Natural gas (per MMBTU) $ 2.42 $ 2.66 $ 6.54 (1) For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of (Argus pricing) WTI Cushing crude, U.S. Gulf Coast CBOB gasoline and Gulf Coast ultra-low sulfur diesel. For our Big Spring refinery, we compare our per barrel refining margin to the Gulf Coast 3-2-1 crack spread consisting of (Argus pricing) WTI Cushing crude, U.S. Gulf Coast CBOB gasoline and Gulf Coast ultra-low sulfur diesel. For 2023, for our Krotz Springs refinery, we compare our per barrel refining margin to the Gulf Coast 2-1-1 crack spread consisting of (Argus pricing) LLS crude oil, (Argus pricing) U.S. Gulf Coast CBOB gasoline and 50% of (Argus pricing) U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel) and 50% of (Platts pricing) U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). For 2024, for our Krotz Springs refinery, we compare our per barrel refining margin to the Gulf Coast 2-1-1 crack spread consisting of (Argus pricing) LLS crude oil, (Argus pricing) U.S. Gulf Coast CBOB gasoline and (Platts pricing) U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and East Texas, while the El Dorado refinery's crude input is primarily a combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland. 82 | Management's Discussion and Analysis Refining Segment Operational Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023 and the Year Ended December 31, 2023 versus the Year Ended December 31, 2022 Revenues 2024 vs. 2023 Revenues for the refining segment decreased $4,623.9 million, or 28.2%, in the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily driven by the following: • a decrease in the average price of U.S. Gulf Coast gasoline of 9.0% and ULSD of 13.2%; • a decrease in wholesale activity; and • a decrease in sales volumes (including purchased products). These decreases were partially offset by the following: • an increase in the average price of U.S. Gulf Coast HSD of 7.0%. Revenues included sales to our logistics segment of $353.5 million and $396.3 million for the year ended December 31, 2024 and 2023, respectively. We eliminate this intercompany revenue in consolidation. 2023 vs. 2022 Revenues for the refining segment decreased $3,356.1 million, or 17.0%, in the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily driven by the following: • a decrease in the average price of U.S. Gulf Coast gasoline of 15.5%, ULSD of 21.4%, and HSD of 36.2%; • a decrease in wholesale activity; and • a decrease in sales volumes (including purchased products). Revenues included sales to our logistics segment of $396.3 million and $496.6 million and sales to our other segment of $0.0 million and $23.8 million for the years ended December 31, 2023 and 2022, respectively. We eliminate this intercompany revenue in consolidation. Cost of Materials and Other 2024 vs. 2023 Cost of materials and other decreased $4,094.9 million, or 26.9%, in the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was primarily driven by the following: • decreases in the cost of WTI Cushing crude oil, from an average of $77.69 per barrel to an average of $75.88, or 2.3%; and decreases in the cost of WTI Midland crude oil, from an average of $78.90 per barrel to an average of $76.85, or 2.6%; • a decrease in wholesale activity; • a decrease in sales volumes (including purchased products) • a decrease in RINs pricing; 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. These finance leases have no impact to the Delek US consolidated results as these amounts eliminate in consolidation. 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 $516.3 million and $562.2 million during the years ended December 31, 2024 and 2023, respectively. We eliminate these intercompany fees in consolidation. 2023 vs. 2022 Cost of materials and other decreased $3,170.5 million, or 17.2%, in the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily driven by the following: • decreases in the cost of WTI Cushing crude oil, from an average of $94.62 per barrel to an average of $77.69, or 17.9%; and decreases in the cost of WTI Midland crude oil, from an average of $95.93 per barrel to an average of $78.90, or 17.8%; and • a decrease in wholesale activity. These decreases were partially offset by the following: 83 | Management's Discussion and Analysis • an increase in sales volumes (including purchased products). 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 MVCs. These costs and fees were $562.2 million and $477.1 million during the years ended December 31, 2023 and 2022, respectively. We eliminate these intercompany fees in consolidation. Operating Expenses 2024 vs. 2023 Operating expenses decreased $22.6 million, or 3.6%, in the year ended December 31, 2024, compared to year ended December 31, 2023. The decrease in operating expenses was primarily driven by the following: • lower outside services; and • lower natural gas costs. These decreases were partially offset by the following: • increased repairs and maintenance. 2023 vs. 2022 Operating expenses decreased $3.3 million, or 0.5%, in the year ended December 31, 2023, compared to year ended December 31, 2022. The decrease in operating expenses was primarily driven by the following: • lower natural gas in 2023. These decreases were partially offset by the following: • higher employee, outside service and maintenance costs including costs related to our Safety Action Plan. Refining Margin 2024 vs. 2023 Refining margin decreased by $529.0 million, or 45.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, with a refining margin percentage of 5.4% as compared to 7.1% for the years ended December 31, 2024 and 2023, respectively, primarily driven by the following: • a 34.9% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 34.7% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery) and an 8.8% decrease in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery); and • a decrease in sales volumes (including purchased products). These decreases were partially offset by the following: • lower RINs pricing; 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. These finance leases have no impact to the Delek US consolidated results as these amounts eliminate in consolidation. 2023 vs. 2022 Refining margin decreased by $185.6 million, or 13.7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022, with a refining margin percentage of 7.1% as compared to 6.8% for the years ended December 31, 2023 and 2022, respectively, primarily driven by the following: • a 19.0% decrease in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery), a 17.4% decrease in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery), and a 42.9% 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: • lower natural gas prices. 84 | Management's Discussion and Analysis EBITDA 2024 vs. 2023 EBITDA decreased by $718.7 million, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a decrease in refining margin driven by decreased crack spreads, a $212.2 million goodwill impairment and decreased sales volumes (including purchased products), partially offset by 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. These finance leases have no impact to the Delek US consolidated results as these amounts eliminate in consolidation. 2023 vs. 2022 EBITDA decreased by $175.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to a decrease in refining margin primarily driven by decreased crack spreads. 85 | Management's Discussion and Analysis Logistics Segment The table below sets forth certain information concerning our logistics segment operations ($ in millions, except per barrel amounts): Selected Logistics Financial and Operating Information Year Ended December 31, 2024 2023 2022 Revenues $ 940.6 $ 1,020.4 $ 1,036.4 Cost of materials and other $ 483.7 $ 532.6 $ 641.4 Operating expenses (excluding depreciation and amortization) $ 122.7 $ 118.1 $ 88.3 EBITDA (1) $ 342.7 $ 363.0 $ 304.8 Operating Information: Gathering & Processing: (average bpd) Lion Pipeline System: Crude pipelines (non-gathered) 69,903 67,003 78,519 Refined products pipelines 59,136 58,181 56,382 SALA Gathering System 11,568 13,782 15,391 East Texas Crude Logistics System 34,711 32,668 21,310 Midland Gathering Assets 217,847 230,471 128,725 Plains Connection System 333,405 250,140 183,827 Delaware Gathering Assets: (2) Natural gas gathering and processing (Mcfd) (3) 74,831 71,239 60,971 Crude oil gathering (average bpd) 123,978 111,335 87,519 Water disposal and recycling (average bpd) 128,539 108,907 72,056 Midland Water Gathering System: (3) Water disposal and recycling (average bpd) 280,955 — — Wholesale Marketing & Terminalling: East Texas - Tyler refinery sales volumes (average bpd) (4) 67,682 60,626 66,058 Big Spring wholesale marketing throughputs (average bpd) 44,999 77,897 71,580 West Texas wholesale marketing throughputs (average bpd) 5,828 10,032 10,206 West Texas wholesale marketing margin per barrel $ 3.18 $ 5.18 $ 4.45 Terminalling throughputs (average bpd) (5) 154,217 113,803 132,262 (1) Includes a $14.8 million goodwill impairment charge for the year ended December 31, 2023. Refer to Note 17 - Goodwill and Intangible Assets to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. (2) 2022 volumes include volumes from June 1, 2022 through December 31, 2022. (3) 2024 volumes include volumes from September 11, 2024 through December 31, 2024. (4) Excludes jet fuel and petroleum coke. (5) Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas terminals, El Dorado and North Little Rock, Arkansas terminals and Memphis and Nashville, Tennessee terminals. Logistics revenue is largely based on fixed-fee or tariff rates charged for throughput volumes running through our logistics network, where many of those volumes are contractually protected by minimum volume commitments MVCs. To the extent that our logistics volumes are not subject to MVCs, our Logistics revenue may be negatively impacted in periods where our customers are experiencing economic pressures or reductions in demand for their products. Additionally, certain of our throughput arrangements contain deficiency credit provisions that may require us to defer excess MVC fees collected over actual throughputs to apply toward MVC deficiencies in future periods. With respect to our equity method investments in pipeline joint ventures, our earnings from those investments (which is based on our pro rata ownership percentage of the joint venture's recognized net income or loss) are directly impacted by the operations of those joint ventures. Items impacting the joint venture net income (loss) may include (but are not limited to) the following: long-term throughput contractual arrangements and related MVCs and, in some cases, deficiency credit provisions; the demand for walk-up nominations; applicable rates or tariffs; long-lived asset or other impairments assessed at the joint venture level; and pipeline releases or other contingent liabilities. With respect to our West Texas marketing activities, our profitability is dependent upon the cost of landed product versus the rack price of refined product sold. Our logistics segment is generally protected from commodity price risk because inventory is purchased and then immediately sold at the rack. 86 | Management's Discussion and Analysis Logistics Segment Operational Comparison of the Year Ended December 31, 2024 versus the Year Ended December 31, 2023 and the Year Ended December 31, 2023 versus the Year Ended December 31, 2022 Revenues 2024 vs. 2023 Net revenues decreased by $79.8 million, or 7.8%, in the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily driven by the following: • decreased revenue of $47.3 million in our West Texas marketing operations primarily driven by a decrease in average sales prices per gallon: ◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.19 and $0.40 per gallon, respectively; and • decreased revenue 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. These sales-type leases have no impact to the Delek US consolidated results as these amounts eliminate in consolidation. These decreases were partially offset by the following: • an increase in revenue associated with the H20 Midstream operations of $19.5 million which was acquired in September 2024. Revenues included sales to our refining segment of $516.3 million and $562.2 million for the years ended December 31, 2024 and 2023, respectively, and sales to our other segment of $1.5 million and $1.6 million for the years ended December 31, 2024 and 2023, respectively. We eliminate this intercompany revenue in consolidation. 2023 vs. 2022 Net revenues decreased by $16.0 million, or 1.5%, in the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily driven by the following: • decreased revenue of $99.6 million in our West Texas marketing operations primarily driven by decreases in the average sales prices per gallon and the average volumes of diesel sold in our West Texas marketing operations: ◦ the average sales prices per gallon of gasoline and diesel sold decreased by $0.46 per gallon and $0.73 per gallon, respectively; and ◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 0.6 million increase in gallons of gasoline sold. These decreases were partially offset by the following: • increase in revenue as a result of our Delaware Gathering operations, which acquired in June 2022; and • increase in volumes associated with Midland Gathering operations primarily due to new connections finalized during 2022. Revenues included sales to our refining segment of $562.2 million and $477.1 million for the years ended December 31, 2023 and 2022, respectively, and sales to our other segment of $1.6 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively. We eliminate this intercompany revenue in consolidation. Cost of Materials and Other 2024 vs. 2023 Cost of materials and other for the logistics segment decreased by $48.9 million, or 9.2%, in the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was primarily driven by the following: • decreased costs of materials and other of $40.1 million in our West Texas marketing operations primarily driven by decreased costs per gallon: ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.20 per gallon and $0.36 per gallon, respectively. Our logistics segment purchased product from our refining segment of $353.5 million and $396.3 million for the years ended December 31, 2024 and 2023, respectively. We eliminate these intercompany costs in consolidation. 2023 vs. 2022 Cost of materials and other for the logistics segment decreased by $108.8 million, or 17.0%, in the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was primarily driven by the following: • decrease in costs of materials and other in our West Texas marketing operations primarily driven by decreases in the average cost per gallon and the average volumes of diesel sold in our West Texas marketing operations: 87 | Management's Discussion and Analysis ◦ the average cost per gallon of gasoline and diesel sold decreased by $0.49 per gallon and $0.74 per gallon, respectively; and ◦ the volumes of diesel sold decreased by 3.6 million gallons, partially offset by a 0.6 million increase in gallons of gasoline sold. These decreases were partially offset by the following: • increase in cost of materials and other as a result of our Delaware Gathering operations, which began in June 2022. Our logistics segment purchased product from our refining segment of $396.3 million and $496.6 million for the years ended December 31, 2023 and 2022, respectively. We eliminate these intercompany costs in consolidation. Operating Expenses 2024 vs. 2023 Operating expenses increased by $4.6 million, or 3.9%, in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily driven by incremental costs associated with H20 Midstream Acquisition, partially offset by a decrease in repairs and maintenance expenses. 2023 vs. 2022 Operating expenses increased by $29.8 million, or 33.7%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by incremental expenses associated with Delaware Gathering Acquisition. EBITDA 2024 vs. 2023 EBITDA decreased by $20.3 million, or 5.6%, in the year ended December 31, 2024 compared to the year ended December 31, 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. These sales-type leases have no impact to the Delek US consolidated results as these amounts eliminate in consolidation. 2023 vs. 2022 EBITDA increased by $58.2 million, or 19.1%, in the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily driven by higher throughput volumes and incremental EBITDA from the Delaware Gathering Acquisition, partially offset by a $14.8 million goodwill impairment related to our Delaware Gathering reporting unit due to significant increases in interest rates and timing of system connections with our producer customers. 88 | Management's Discussion and Analysis Liquidity and Capital Resources Sources of Capital Our primary sources of liquidity and capital resources are • cash generated from our operating activities; • borrowings under our debt facilities; and • potential issuances of additional equity and debt securities. At December 31, 2024 our total liquidity amounted to $2,244.7 million comprised primarily of $1,509.1 million in unused credit commitments under our revolving credit facilities (as discussed in Note 11 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) and $735.6 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 February 18, 2025, 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. In addition, we have historically been able to source funding at terms that reflect market conditions, our financial position and our credit ratings and expect future funding sources to be at terms that are sustainable and profitable for the Company. However, there can be no assurances regarding the availability of future debt or equity financings or whether such financings can be made available on terms that are acceptable to us; any execution of such financing activities will be dependent on the contemporaneous availability of functioning debt or equity markets. Additionally, new debt financing activities will be subject to the satisfaction of any debt incurrence limitation covenants in our existing financing agreements. Our debt limitation covenants in our existing financing documents are usual and customary for credit agreements of our type and reflective of market conditions at the time of their execution. 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 December 31, 2024, we believe we were in compliance with all of our debt maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Term Loan Credit Facility (see further discussion in Note 11 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K). Additionally, we were in compliance with covenants during the quarter ended December 31, 2024. Failure to meet the incurrence covenants could impose certain incremental restrictions on our ability to incur new debt and also may limit whether and the extent to which we may pay dividends, as well as impose additional restrictions on our ability to repurchase our stock, make new investments and incur new liens (among others). Such restrictions would generally remain in place until such quarter that we return to compliance under the applicable incurrence based covenants. In the event that we are subject to these incremental restrictions, we believe that we have sufficient current and alternative sources of liquidity, including (but not limited to): available borrowings under our existing Delek Revolving Credit Facility, and for Delek Logistics, under its Delek Logistics Revolving Facility; the allowance to incur an additional $400.0 million of secured debt under the Delek Term Loan Credit Facility (see further discussion of these facilities in Note 11 of our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K); as well as the possibility of obtaining other secured and unsecured debt, raising capital through equity issuance, or taking advantage of transactional financing opportunities such as sale-leasebacks or joint ventures, as otherwise contemplated and allowed under our incurrence covenants. Cash Flows The following table sets forth a summary of our consolidated cash flows (in millions): Consolidated Year Ended December 31, 2024 2023 Cash Flow Data: Operating activities - continuing operations $ (83.7) $ 979.0 Operating activities - discontinued operations 16.9 34.6 Total Operating activities (66.8) 1,013.6 Investing activities - continuing operations (603.2) (381.6) Investing activities - discontinued operations 361.7 (26.4) Total Investing activities (241.5) (408.0) Financing activities - continuing operations 221.7 (624.7) Financing activities - continuing operations — — Total Financing activities 221.7 (624.7) Net decrease $ (86.6) $ (19.1) 89 | Management's Discussion and Analysis Cash Flows from Operating Activities Continuing Operations Net cash used by operating activities from continuing operations was $83.7 million for the year ended December 31, 2024, compared to net cash provided by of $979.0 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 $1,106.2 million decrease in cash provided by operating activities, partially offset by a decrease in cash paid for debt interest of $23.4 million and a decrease in cash paid for taxes of $7.0 million. Discontinued Operations Net cash provided by operating activities from discontinued operations include the Retail Stores business income. Cash Flows from Investing Activities Continuing Operations Net cash used in investing activities from continuing operations was $603.2 million for the year ended December 31, 2024, compared to $381.6 million in the comparable period of 2023. The increase in cash flows used in investing activities was primarily due to $229.7 million acquisition of H2O Midstream of which $159.7 million was paid in cash, purchase of an additional 0.6% indirect investment in Wink to Webster Pipeline LLC for $18.6 million, a $35.2 million increase in purchases of property, plant and equipment, and a $22.8 million deposit paid for the Gravity Acquisition, partially offset by a $11.5 million decrease in purchases of equity securities. Discontinued Operations Net cash provided by investing activities from discontinued operations in 2024 primarily includes the $381.6 million net proceeds from the sale of the Retail Stores, partially offset by cash used for Retail Stores capital expenditures of $19.9 million. Net cash provided by investing activities from discontinued operations in 2023 primarily includes cash used for Retail Stores capital expenditures of $26.4 million. Cash Flows from Financing Activities Continuing Operations Net cash provided by financing activities from continuing operations was $221.7 million for the year ended December 31, 2024, compared to cash used of $624.7 million in the comparable 2023 period. The decrease in cash used was primarily due to the receipt of net proceeds of $297.9 million from the Delek Logistics' public offerings of common units in the year ended December 31, 2024, net proceeds from term debt of $518.2 million for the year ended December 31, 2024 compared to net payments on term debt of $28.2 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, a decrease in net payments from product and other financing arrangements of $39.4 million, a decrease in net payments on long-term revolvers of $84.9 million, a decrease of $43.9 million in share buybacks and a $18.2 million increase in distributions to non-controlling interests. These decreases in cash flows were partially offset by the $70.8 million redemption of the Delek Logistics preferred units, the receipt of settlement proceeds of $58.0 million during the first quarter of 2023 associated with the termination of the J. Aron Supply & Offtake Agreements and origination of the Citi Inventory Intermediation Agreement (as defined in Note 10 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) and an increase of $13.6 million related to the payment of deferred financing costs primarily related to the issuance of the Delek Logistics 2029 Notes. Cash Position and Indebtedness As of December 31, 2024, our total cash and cash equivalents were $735.6 million and we had total long-term indebtedness of approximately $2,765.2 million. The total long-term indebtedness is net of deferred financing costs and debt discount of $51.2 million. Additionally, we had letters of credit issued of approximately $330.5 million. Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately $1,509.1 million. The increase of $159.1 million in total long-term principal indebtedness as of December 31, 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 December 31, 2024, our total long-term indebtedness (as defined in Note 11 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K) consisted of the following: • the Delek Revolving Credit Facility with no outstanding borrowings (maturity of October 26, 2027); • aggregate principal of $931.0 million under the Delek Term Loan Credit Facility (maturity of November 19, 2029 and effective interest of 8.64%); • aggregate principal of $435.4 million under the Delek Logistics Revolving Facility (maturity of October 13, 2027 and average borrowing rate of 7.27%); • aggregate principal of $400.0 million under the Delek Logistics 2028 Notes (due in 2028, with effective interest rate of 7.38%); • aggregate principal of $1,050.0 million under the Delek Logistics 2029 Notes (due in 2029, with effective interest rate of 8.82%); and 90 | Management's Discussion and Analysis • the United Community Bank Revolver with no outstanding borrowings (maturity of June 30, 2026). On March 13, 2024, Delek Logistics sold $650.0 million in aggregate principal amount of 8.625% Senior Notes due 2029, at par. Net proceeds were used to redeem the Delek Logistics 2025 Notes including accrued interest, pay off the Delek Logistics Term Loan Facility including accrued interest and to repay a portion of the outstanding 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% 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 net proceeds were used to repay a portion of the outstanding borrowings under the Delek Logistics Revolving Facility. See Note 11 to our accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information about our separate debt and credit facilities. Additionally, we utilize other financing arrangements to finance operating assets and/or, from time to time, to monetize other assets that may not be needed in the near term, when internal cost of capital and other criteria are met. Such arrangements include our inventory intermediation arrangement, which finances a significant portion of our first-in, first-out inventory at the refineries and, from time to time, RINs or other non-inventory product financing liabilities and funded letters of credit. Our inventory intermediation obligation with Citigroup Energy Inc. ("Citi") was $408.7 million at December 31, 2024. See Note 10 of the accompanying consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for additional information about our inventory intermediation agreement. Our product financing liabilities consisted primarily of RIN financings as of December 31, 2024, and totaled $185.9 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. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. For both arrangements and the related commitments, see also our "Cash Requirements" section below. Debt Ratings We receive debt ratings from the major ratings agencies in the U.S. In determining our debt ratings, the agencies consider a number of qualitative and quantitative items including, but not limited to, commodity pricing levels, our liquidity, asset quality, reserve mix, debt levels and seniorities, cost structure, planned asset sales and production growth opportunities. There are no "rating triggers" in any of our contractual debt obligations that would accelerate scheduled maturities should our debt rating fall below a specified level. However, a downgrade could adversely impact our interest rate on new credit facility borrowings and the ability to economically access debt markets in the future. Additionally, any rating downgrades may increase the likelihood of us having to post additional letters of credit or cash collateral under certain contractual arrangements. Capital Spending A key component of our long-term strategy is our capital expenditure program. The following table summarizes our actual capital expenditures for the year ended December 31, 2024, by operating segment and major category (in millions): 2025 Forecast Year Ended December 31, 2024 Actual (1) (2) Refining Regulatory $ 28 $ 40.0 Sustaining maintenance, including turnaround activities 113 205.1 Growth projects — 21.0 Refining segment total 141 266.1 Logistics Regulatory 7 1.9 Sustaining maintenance 12 10.7 Growth projects 216 31.9 Logistics segment total 235 44.5 Corporate and Other Regulatory 2 0.1 Sustaining maintenance 14 24.1 Growth projects 13 2.4 Other total 29 26.6 Total capital spending $ 405 $ 337.2 (1) Excludes $95.5 million related to the new Delek Logistics natural gas processing plant. Refer to 'Other 2024 Developments' section of Item 7. Management's Discussion and Analysis of this Annual Report on Form 10-K for further information. 91 | Management's Discussion and Analysis (2) Excludes a $10.0 million land purchase in connection with a settlement that was in litigation related to a property that we historically operated as an asphalt and marine fuel terminal. Refer to Note 14 of the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information. The amount of our capital expenditure forecast is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects and subject to the changes and uncertainties discussed under the 'Forward-Looking Statements' section of Item 7. Management's Discussion and Analysis of this Annual Report on Form 10-K. For further information, please refer to our discussion in Item 1A. Risk Factors, of this Annual Report on Form 10-K. 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 December 31, 2024, is set forth in the following table (in millions): Payments Due by Period < 1 Year 1-3 Years 3-5 Years >5 Years Total Long-term debt and notes payable obligations $ 9.5 $ 454.4 $ 2,352.5 $ — $ 2,816.4 Interest (1) 221.1 432.1 351.2 — 1,004.4 Operating lease commitments (2) 47.7 48.7 7.0 7.6 111.0 Purchase commitments (3) 4,553.1 — — — 4,553.1 Product financing agreements (4) 185.9 — — — 185.9 Transportation agreements (5) 188.7 297.8 211.0 195.8 893.3 Inventory intermediation obligation (6) 35.1 411.7 — — 446.8 Retail Stores obligations (7) 10.5 17.2 17.5 8.5 53.7 Total $ 5,251.6 $ 1,661.9 $ 2,939.2 $ 211.9 $ 10,064.6 (1) Expected interest payments on debt outstanding at December 31, 2024. Floating interest rate debt is calculated using December 31, 2024 rates. For additional information, see Note 11 to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. (2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of December 31, 2024. (3) We have purchase commitments to secure certain quantities of crude oil, finished product and other resources used in production at both fixed and market prices. We have estimated future payments under the market-based agreements using current market rates. Excludes purchase commitments in buy-sell transactions which have matching notional amounts with the same counterparty and are generally net settled in exchanges. (4) Balances consist of obligations under RINs product financing arrangements, as described in Note 14 to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K and further discussed in the ''Environmental Credits and Related Regulatory Obligations" accounting policy included in Note 2 to our consolidated financial statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. (5) Balances consist of contractual obligations under agreements with third parties (not including Delek Logistics) for the transportation of crude oil to our refineries. (6) Balances consist of contractual obligations under the Citi Inventory Intermediation Agreement, including principal obligation for the Baseline Volume Step-Out Liability and other recurring fees. For additional information, see Note 10 to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. (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 5 to the consolidated financial statements included in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. Other Cash Requirements Our material short-term cash requirements under contractual obligations are presented above, and we expect to fund the majority of those requirements with cash flows from operations. Our other cash requirements consisted of operating activities and capital expenditures. Operating activities include cash outflows related to payments to suppliers for crude and other inventories (which are largely reflected in our contractual purchase commitments in the table above) and payments for salaries and other employee related costs. Cash outlays in 2025 are planned to include incentive compensation payments that were earned and accrued in 2024. 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 year ended December 31, 2024. While many of the expenses related to the operating activities are variable in nature, some of the expenditures can be somewhat fixed in the short-term due to forward planning on our level of activity. Refer to the 'Capital Spending' section for our capital expenditures for the year ended December 31, 2024 and our anticipated cash requirements for planned capital expenditures for the full year 2024. 92 | Management's Discussion and Analysis Critical Accounting Estimates The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities. We prepare our consolidated financial statements in conformity with GAAP, and in the process of applying these principles, we must make judgments, assumptions and estimates based on the best available information at the time. To aid a reader's understanding, management has identified our critical accounting policies. These policies are considered critical because they are both most important to the portrayal of our financial condition and results, and require our most difficult, subjective or complex judgments. Often, they require judgments and estimation about matters which are inherently uncertain and involve measuring at a specific point in time, events which are continuous in nature. Actual results may differ based on the accuracy of the information utilized and subsequent events, some over which we may have little or no control. Goodwill Goodwill in an acquisition represents the excess of the aggregate purchase price over the fair value of the identifiable net assets. Goodwill is reviewed at least annually for impairment, or more frequently if indicators of impairment exist, such as disruptions in our business, unexpected significant declines in operating results or a sustained market capitalization decline. Goodwill is evaluated for impairment by comparing the carrying amount of the reporting unit to its estimated fair value. In assessing the recoverability of goodwill, assumptions are made with respect to future business conditions and estimated expected future cash flows to determine the fair value of a reporting unit. We may consider inputs such as WACC, forecasted crack spreads, gross margin, capital expenditures, and long-term growth rate based on historical information and our best estimate of future forecasts, all of which are subject to significant judgment and estimates. We may also consider a market approach in determining or corroborating the fair values of the reporting units using a multiple of expected future cash flows, such as those used by third-party analysts. The market approach involves significant judgment, including selection of an appropriate peer group, selection of valuation multiples, and determination of the appropriate weighting in our valuation model. If these estimates and assumptions change in the future, due to factors such as a decline in general economic conditions, sustained decrease in the crack spreads, competitive pressures on sales and margins and other economic and industry factors beyond management's control, an impairment charge may be required. The most significant risks to our valuation and the potential future impairment of goodwill are the WACC and the volatility of the crack spread, which is based on the crude oil and the refined product markets. The crack spread is often unpredictable and may negatively impact our results of operations in ways that cannot be anticipated and that are beyond management's control. Additionally, rising interest rates (which often occur under inflationary conditions) may also adversely impact our WACC. A higher WACC, all other things being equal, will result in a lower valuation using a discounted cash flow model, which is an income approach. Therefore, rising interest rates can cause a reporting unit to become impaired when, in a lower interest rate environment, it may not be. We may also elect to perform a qualitative impairment assessment of goodwill balances. The qualitative assessment permits companies to assess whether it is more likely than not (i.e., a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount. If a company concludes that, based on the qualitative assessment, it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the company is required to perform the quantitative impairment test. Alternatively, if a company concludes based on the qualitative assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it has completed its goodwill impairment test and does not need to perform the quantitative impairment test. For the 2024 annual impairment assessment, we performed a qualitative assessment on the reporting units in our logistics segment, which did not result in an impairment charge nor did our analysis reflect any reporting units at risk. For the 2023 annual impairment assessment, we performed a qualitative assessment on the reporting units in our logistics segment except for the Delaware Gathering reporting unit, as we determined it was more likely than not that the fair value of the reporting unit exceeded the carrying value. Our annual impairment assessment was performed on a quantitative basis for our Delaware Gathering reporting unit during the fourth quarter of 2023. As part of our 2023 annual assessment, we recorded a $14.8 million impairment charge in the fourth quarter of 2023 related to our Delaware Gathering reporting unit within the logistics segment, which brought the amount of goodwill recorded within this reporting unit to zero. The impairment was primarily driven by the significant increases in interest rates and timing effect of system connections with our producer customers. For the 2024 annual impairment assessment, we performed a quantitative assessment of goodwill on the reporting units in our refining segment during the fourth quarter of 2024, which resulted in an impairment of $212.2 million during the year ended December 31, 2024 related to our Krotz Springs refinery reporting unit. The impairment was predominantly driven by depressed crack spread pricing in the near term combined with an increased discount rate. As part of our assessment, the aggregate fair value of all reporting units have been reconciled to our market capitalization for reasonableness. For the 2023 annual impairment assessment, we performed a qualitative assessment on the reporting units in our refining segment, as we determined it was more likely than not that the fair value of the reporting units exceeded the carrying value. The 2023 annual assessment for the refining segment did not result in an impairment charge nor did our analysis reflect any reporting units at risk. Details of remaining goodwill balances by segment are included in Note 17 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. 93 | Management's Discussion and Analysis Business Combinations We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date in accordance with the provisions of ASC 805, Business Combinations ("ASC 805"). Any excess or deficiency of the purchase consideration when compared to the fair value of the net tangible assets acquired, if any, is recorded as goodwill or gain from a bargain purchase. The fair value of assets and liabilities as of the acquisition date are often estimated using a combination of approaches, including the income approach, which requires us to project future cash flows and apply an appropriate discount rate; the cost approach, which requires estimates of replacement costs and depreciation and obsolescence estimates; and the market approach which uses market data and adjusts for entity-specific differences. We use all available information to make these fair value determinations and engage third-party consultants for valuation assistance. The estimates used in determining fair values are based on assumptions believed to be reasonable, but which are inherently uncertain. Accordingly, actual results may differ materially from the projected results used to determine fair value. New Accounting Pronouncements See Note 2 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for a discussion of new accounting pronouncements applicable to us.