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Delek's (DK) Q1 Loss Wider Than Expected, Sales Beat Mark

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Delek US Holdings, Inc.’s (DK - Free Report) stock has been stable since the company’s first-quarter 2021 earnings announcement on May 4. While this industry player disappointed on the bottom line front, it gave an impressive revenue performance.

Behind the Earnings Headlines

Delek’s first-quarter 2021 results recently reported an adjusted loss of $1.69 a share, wider than the Zacks Consensus Estimate of a loss of $1.38 as well as the year-ago quarterly loss of 30 cents. This underperformance was due to weak contribution from the refining segment.

However, quarterly revenues of $2.39 billion compared favorably with the year-ago sales of $1.82 billion and also surpassed the Zacks Consensus Estimate of $1.64 billion. This better-than-expected report was driven by a strong contribution from the logistics segment and a rigid operating expense management.

Segmental Performances

Refining: The company reported a negative margin of $21.2 million for this segment, narrower than the negative $290.4 million in the year-ago quarter. However, adjusted margins of -$56.8 million worsened from -$23.1 million in the year-ago period. Results were hurt by the Winter Storm Uri, which weakened throughput and flared up energy costs.

Logistics: This unit represents the company’s majority interest in Delek Logistics Partners, L.P. (DKL - Free Report) , a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. Margin from the Logistics unit was $57.7 million, up 22% from $47.3 million in the year-ago period, led by divesting the Big Spring Gathering business and Trucking Assets.

Retail: Margin for the unit, formed from the acquisition of Alon USA Energy in 2017, rose37.4% to $16.9 million from the year-earlier quarter’s level of $12.3 million on higher Retail fuel margin. Delek’s merchandise sales of $74.6 million with a margin of 32.7%, on average, compared favorably with $71.7 million sales carrying a margin of 31.6%, on average, in the prior year.

Its retail fuel gallons sale totaled $39.8 million in the March quarter of 2021, the average margin being 35 cents per gallon. This compared unfavorably with $48 million sale, the average margin being 31 cents per gallon in first-quarter 2020.

Delek US Holdings, Inc. Price, Consensus and EPS Surprise

Delek US Holdings, Inc. Price, Consensus and EPS Surprise

Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote

Financials

Total operating expenses incurred in the quarter decreased 13.3% from the prior-year period to $2,472.3 million.

In the reported quarter, Delek spent $67 million on capital programs (86.3% on the Refining segment). As of Mar 31, 2021, the company had cash and cash equivalents worth $793.5 million and a long-term debt of $2,354.4 million with the total debt to total capital of 69.6%.

Guidance

Delek projects its second-quarter 2021 total operating expenses in the 140-$150 million band while total crude throughput is estimated in the 270,000-280,000 barrels per day range.

The company anticipates its 2021 capital expenses to be around $175-$185 million, comprising turnarounds.

Zacks Rank & Key Picks

Delek currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Matador Resources Co. (MTDR - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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