Delek US Holdings (DK) Misses Q2 EPS Views

Delek US Holdings (NYSE: DK) reported Q2 EPS of $0.79, $0.26 worse than the analyst estimate of $1.05. Revenue for the quarter came in at $1.69 billion versus the consensus estimate of $1.57 billion.

Second quarter 2015 results included a $15.3 million net hedging loss, of which $13.4 million was unrealized. There was approximately $22.8 million of costs that reduced performance in the period, which includes the unrealized hedging loss, expenses related to the Alon USA transaction, higher depreciation due to asset disposals and unanticipated pipeline related expenses.

The effect of the Alon USA transaction for the period from May 14, 2015 to June 30, 2015 is included in results for the second quarter 2015. Equity income related to the ownership in Alon USA was $9.2 million, which was reduced by $1.7 million of depreciation expense for a net pre-tax equity income of $7.5 million. As part of the financing of this transaction, interest expense increased by $6.2 million in the second quarter 2015, which included $3.9 million of one-time interest expense related to financing costs.

Results in the second quarter 2015 benefited from increased throughput at the Tyler, Texas refinery and a higher WTI Gulf Coast 5-3-2 crack spread on a year-over-year basis. In the first quarter 2015, as part of the inventory management strategy, crude oil and product inventory was built during a period of lower prices. In the second quarter 2015 there was a 1.2 million barrel inventory reduction that occurred, consisting primarily of crude oil, during a period of rising prices. This change in inventory during the second quarter 2015 was a portion of a $19.0 million net inventory benefit during the period. An offsetting factor was a narrower discount between Midland WTI and Cushing WTI on a year-over-year basis, which lowered the performance in the refining segment.

For earnings history and earnings-related data on Delek US Holdings (DK) click here.

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