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Delek (DK) Q4 Earnings Miss on Logistics and Retail Softness
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Delek US Holdings, Inc. (DK - Free Report) witnessed a comprehensive earnings miss in the fourth quarter of 2019. The company posted adjusted net loss per share of 11 cents. However, the Zacks Consensus Estimate was of an income of a cent. Moreover, the same fell from the year-ago income of $2.03 per share. Notably, weak contribution from the retail and logistics segments hampered its results.
The company’s quarterly revenues of $2,284 million compared unfavorably with the year-ago sales of $2,474 million. However, the top line surpassed the Zacks Consensus Estimate of $2,255 million owing to solid revenues from the refining segment. Precisely, revenues from the refining segment came in at $2,162 million, beating the Zacks Consensus Estimate of $1,877 million.
Segmental Performance
Refining: Margin at this segment was $161.5 million, down 31.4% from $235.3 million in the year-ago quarter. Results were negatively impacted by lower crude differential environment and reduced sales volumes.
Logistics: This unit represents the company’s 63% 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 $42.5 million, down 5.5% from $45 million in the year-ago period due to spill related expenses worth $7.1 million, partially offset by strong operations in the Paline Pipeline and SALA gathering system.
Retail: Margin for the unit, formed following the acquisition of Alon USA Energy in 2017, declined 7.6% to $12.1 million from the year-earlier quarter, thanks to lower merchandise and fuel gallons sales. Delek’s merchandise sales of $72.9 million with average margin of 30.6% compared unfavorably with sales of $81 million with average margin of 30.2% in the prior year. Its retail fuel gallons sale totaled $51.5 million with average margin of 29 cents per gallon compared unfavorably with $53.3 million sale with average margin of 30 cents in fourth-quarter 2018.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Total expenses incurred in the quarter declined 2.43% from the prior-year period to $2,235.5 million.
In the reported quarter, Delek spent $103.3 million on capital programs (70.5% on the Refining segment). As of Dec 31, 2019, the company had cash and cash equivalents of $955.3 million and long-term debt of $2,030.7 million with a debt-to-capitalization ratio of 52.52%.
Delek bought back shares worth $30.3million in the fourth quarter.
The company declared a quarterly dividend of 31 cents per share, marking a 3.3% sequential hike. The dividend will be payable Mar 24 to its shareholders of record as of Mar 10.
Guidance
Crude throughput for the first quarter of 2020 is expected between 245,000 and 255,000 barrels per day.
Delek anticipates its full-year capital expenditure to be $325 million, indicating a 24% drop from the prior-year reported figure.
Delek projects its 2022 EBITDA for the Big Spring Gathering System to improve $5 million and is expected in the $45-$55 million band.
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Delek (DK) Q4 Earnings Miss on Logistics and Retail Softness
Delek US Holdings, Inc. (DK - Free Report) witnessed a comprehensive earnings miss in the fourth quarter of 2019. The company posted adjusted net loss per share of 11 cents. However, the Zacks Consensus Estimate was of an income of a cent. Moreover, the same fell from the year-ago income of $2.03 per share. Notably, weak contribution from the retail and logistics segments hampered its results.
The company’s quarterly revenues of $2,284 million compared unfavorably with the year-ago sales of $2,474 million. However, the top line surpassed the Zacks Consensus Estimate of $2,255 million owing to solid revenues from the refining segment. Precisely, revenues from the refining segment came in at $2,162 million, beating the Zacks Consensus Estimate of $1,877 million.
Segmental Performance
Refining: Margin at this segment was $161.5 million, down 31.4% from $235.3 million in the year-ago quarter. Results were negatively impacted by lower crude differential environment and reduced sales volumes.
Logistics: This unit represents the company’s 63% 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 $42.5 million, down 5.5% from $45 million in the year-ago period due to spill related expenses worth $7.1 million, partially offset by strong operations in the Paline Pipeline and SALA gathering system.
Retail: Margin for the unit, formed following the acquisition of Alon USA Energy in 2017, declined 7.6% to $12.1 million from the year-earlier quarter, thanks to lower merchandise and fuel gallons sales. Delek’s merchandise sales of $72.9 million with average margin of 30.6% compared unfavorably with sales of $81 million with average margin of 30.2% in the prior year. Its retail fuel gallons sale totaled $51.5 million with average margin of 29 cents per gallon compared unfavorably with $53.3 million sale with average margin of 30 cents in fourth-quarter 2018.
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 expenses incurred in the quarter declined 2.43% from the prior-year period to $2,235.5 million.
In the reported quarter, Delek spent $103.3 million on capital programs (70.5% on the Refining segment). As of Dec 31, 2019, the company had cash and cash equivalents of $955.3 million and long-term debt of $2,030.7 million with a debt-to-capitalization ratio of 52.52%.
Delek bought back shares worth $30.3million in the fourth quarter.
The company declared a quarterly dividend of 31 cents per share, marking a 3.3% sequential hike. The dividend will be payable Mar 24 to its shareholders of record as of Mar 10.
Guidance
Crude throughput for the first quarter of 2020 is expected between 245,000 and 255,000 barrels per day.
Delek anticipates its full-year capital expenditure to be $325 million, indicating a 24% drop from the prior-year reported figure.
Delek projects its 2022 EBITDA for the Big Spring Gathering System to improve $5 million and is expected in the $45-$55 million band.
Zacks Rank & Key Picks
Delek has a Zacks Rank #5 (Strong Sell).
Some better-ranked players in the energy space are Contango Oil & Gas Company and Earthstone Energy, Inc. , each carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>