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Delek US (DK) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 5, 2026

Source: earnings call transcript

Executive summary

Delek US Q2 FY26 — Strong Execution and Free Cash Flow Growth

Delek US Holdings demonstrated strong operational execution in Q2 FY26, successfully navigating volatile markets and advancing its Enterprise Optimization Plan. The company continues to focus on increasing free cash flow, reducing costs, and maintaining a disciplined capital allocation strategy, including shareholder returns, while progressing towards the deconsolidation of its midstream business. Management expressed confidence in its mid-cycle free cash flow profile and the ongoing benefits from its EOP initiatives.

Highlights

5

  • Enterprise Optimization Plan (EOP) contributed approximately $60 million to P&L in Q2 FY26.

  • Logistics segment posted its best quarterly results in history, delivering approximately $144 million in adjusted EBITDA.

  • Refining system operated well with no planned turnarounds for the rest of the year, enhancing market capture.

  • Successfully navigated volatility in crude and product markets, demonstrating enhanced execution capabilities.

  • Paid $16 million in dividend and executed $20 million in share buybacks during the quarter.

Concerns

2

  • Elevated RVO costs and the absence of Small Refinery Exemptions (SREs) created a significant burden on small refineries.

  • Experienced a $138 million net outflow from changes in working capital during the quarter.

Guidance & targets

CategoryTargetConfidence
DKL Adjusted EBITDA
$520 million to $560 million
high materiality
High
System Throughput
296,000 to 316,000 barrels per day
high materiality
High
Tyler Throughput
72,000 to 77,000 barrels per day
medium materiality
High
El Dorado Throughput
78,000 to 83,000 barrels per day
medium materiality
High
Big Spring Throughput
68,000 to 73,000 barrels per day
medium materiality
High
Krotz Springs Throughput
78,000 to 83,000 barrels per day
medium materiality
High
Operating Expenses
$220 million and $230 million
medium materiality
High
G&A Expenses
$50 million and $55 million
medium materiality
High
D&A Expenses
$110 million and $120 million
medium materiality
High
Net Interest Expense
$75 million and $85 million
medium materiality
High
DK Stand-alone Net Interest Expense
$28 million and $33 million
medium materiality
High
DKL Net Interest Expense
$47 million and $52 million
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Logistics
Posted its best quarterly results in history, driven by momentum across crude, gas, and water offerings in the Permian Basin.
Adjusted EBITDA: $144 million
————

DK operating KPIs by quarter

DK operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25This call Jun 2026 Q2 FY26Change vs prior quarter
Capital expenditures DKL
$31M On Slide 21, we outline our fourth quarter capital spending with $82 million invested at Delek stand-alone and $31 million at DKL, largely for growth projects. Source: earnings call transcript
$61M This includes second quarter capital purchases of $61 million at Delek Logistics, primarily for growth projects and $55 million of purchases in refining, along with a quarter-over-quarter reduction of capital accruals, primarily related to the payments on the final expenditures of the Big Spring turnaround, which we completed safely, on schedule and on budget. Source: earnings call transcript
+96.8%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Capital programs

Big Spring Turnaround completed

Benefit:Improved reliability, higher crude slate flexibility, improved product yields, higher octane and blending capabilities

The Big Spring turnaround was completed safely, on schedule, and on budget, leading to improved operational metrics.

Risks & headwinds

Elevated RVO costs and absence of SREs 2025 and beyond

Significant burden on small refineries

Mitigation:Proactive strategy to manage RFS obligations; expecting EPA relief due to 'disproportionate economic harm'.

Volatility in crude and product markets Ongoing, expected to last a few quarters

Caused by events in the Middle East and East Europe, leading to steep liquidation, swing in crude differentials, and shortage of transportation fuels.

Mitigation:Mitigating risk and capturing opportunities through operational flexibility, high distillate yield, and access to crude.

Working capital outflow Q2 FY26

$138 million net outflow

Mitigation:Not explicitly stated, but overall focus on free cash flow generation and capital discipline.

What to watch in Q3 FY26

Further EOP advancements

Near future
Current $220M annual run rate target, $60M Q2 contribution
Target Additional meaningful step change to free cash flow profile

Why it matters

EOP is a key driver for increasing free cash flow and improving the company's financial profile, directly impacting shareholder value.

We are currently working on further advancing EOP to create an additional meaningful step change to our free cash flow profile. We'll provide more details on this in the near future.

Find out whether DK delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the timing for 2025 SREs, how will they be monetized, and what are the implications of the Krotz Springs award for future SREs?

Management emphasized that SREs address 'disproportionate economic harm' to small refineries, supporting jobs and affordable fuels. They expressed confidence in their 2025 petitions, noting the Krotz Springs grant validates their position. Monetization will follow their capital allocation strategy, and SREs represent a return of previously invested cash (RINs).

“The issue of small refinery exemptions, and I want you to remember one line here is disproportionate economic harm. And the idea is to maintain high-paying jobs, local communities and affordable fuels.”

asked by Ayush Gupta · answered by Avigal Soreq

2 min read 6 chapters

Detailed narrative

Refining System Performance and Outlook

Delek's refining system demonstrated strong operational performance across all four refineries in Q2 FY26. Notably, the Big Spring refinery has shown improved reliability, greater crude slate flexibility, enhanced product yields, and better octane and blending capabilities following its recent turnaround. With no further planned turnarounds for the remainder of the year, the company's refining assets are well-positioned to capitalize on current market strength and capture favorable margins.

Enterprise Optimization Plan (EOP) Progress

The Enterprise Optimization Plan (EOP) continues to be a significant driver of value, contributing approximately $60 million to the P&L in Q2 FY26. The EOP targets an annual run rate cash flow increase of at least $220 million. Management views EOP as an ongoing 'lifestyle' rather than a project and is actively working on further advancements to create additional meaningful step changes in the company's free cash flow profile, with more details expected in the near future.

Sum of the Parts Strategy and DKL Growth

Delek is progressing its 'Sum of the Parts' initiative, with DKL reaffirming its 2026 EBITDA guidance of $520 million to $560 million. DKL is nearing completion of a comprehensive sour gas solution in the Delaware Basin, including gathering, treatment, processing, and acid gas injection. This infrastructure is expected to enable DKL to fully capitalize on growth opportunities in the region and maintain its strong EBITDA growth, with third-party EBITDA projected to exceed 80% on a pro forma basis in 2026.

Small Refinery Exemptions (SREs) Advocacy

The company is actively managing its obligations under the Renewable Fuel Standard (RFS) and advocating for Small Refinery Exemptions (SREs). Management expects the EPA to continue providing relief for 2025 and beyond, citing the importance of mitigating 'disproportionate economic harm' to small refineries, maintaining jobs, supporting local communities, and ensuring affordable fuels. The recent award of an SRE for Krotz Springs reinforces the company's confidence in its 2025 petitions.

Disciplined Capital Allocation

Delek maintains a disciplined and shareholder-friendly capital allocation strategy. In Q2 FY26, the company paid $16 million in dividends and executed $20 million in share buybacks. Since the beginning of 2025, Delek has repurchased approximately 10% of its shares. The strategy balances maintaining dividends through cycles, managing the balance sheet, and returning capital to shareholders, with a clear intent not to hold excess cash.

Refining Macro Environment and Strategic Positioning

The global refining market is characterized by approximately 5 million barrels of capacity being offline, leading to tight product markets, steep liquidation, and wide swings in crude differentials. Management anticipates these structural shortages to persist for several quarters. Delek is strategically positioned with good access to crude (Gulf Coast and Mid-Continent), high distillate and jet fuel yields, and Permian midstream exposure, allowing it to capture market strength effectively.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.