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DKDK

Delek (DK) Q4 FY25 earnings call: guidance and Q&A

Earnings call· Dec 2025 (Q4 FY25)· Energy· Feb 27, 2026

Source: earnings call transcript

Executive summary

Delek Q4 FY25 — EOP Target Raised to $200M, Strong Shareholder Returns, and DKL Separation Progress

Delek US delivered a strong Q4 FY25, driven by the success of its Enterprise Optimization Plan, which saw its annual run rate target raised to at least $200 million. The company also made significant progress on its DKL economic separation strategy and monetized a substantial portion of its recent SREs, improving free cash flow and reducing interest expense. Management remains committed to disciplined capital allocation and shareholder returns, while navigating ongoing SRE policy uncertainties.

Highlights

5

  • Adjusted EPS (excluding SREs) of $0.44 in Q4 FY25.

  • Adjusted EBITDA (excluding SREs) of approximately $226 million in Q4 FY25.

  • Enterprise Optimization Plan (EOP) target raised to at least $200 million on an annual run rate basis, up from $100 million.

  • Monetized approximately $360 million of 2023 and 2024 RINs, reducing annual interest expense by at least $40 million.

  • Returned $20 million through share repurchases and $15 million in dividends during Q4 FY25.

Concerns

2

  • Refining segment adjusted EBITDA declined by $91 million QoQ due to seasonality.

  • Uncertainty regarding the monetization path for 2019-2022 SREs, currently deemed 'invalid RINs' or 'zombie RINs'.

Guidance & targets

CategoryTargetConfidence
DKL Adjusted EBITDA
$520 million to $560 million
high materiality
High
DKL Third-Party EBITDA Percentage
exceed 80%
medium materiality
High
Enterprise Optimization Plan (EOP) Cash Flow Improvement
at least $200 million
high materiality
High
IIA Annual Interest Expense Reduction
at least $40 million
medium materiality
High
Q1 2026 Throughput
70,000 to 74,000 barrels per day
medium materiality
High
Q1 2026 Throughput
66,000 to 71,000 barrels per day
medium materiality
High
Q1 2026 Throughput
22,000 to 28,000 barrels per day
medium materiality
High
Q1 2026 Throughput
82,000 to 86,000 barrels per day
medium materiality
High
Q1 2026 Implied System Throughput
240,000 to 259,000 barrels per day
high materiality
High
Q1 2026 Operating Expenses
$210 million and $220 million
medium materiality
High
Q1 2026 G&A
$47 million and $52 million
low materiality
High
Q1 2026 D&A
$100 million and $110 million
low materiality
High
Q1 2026 Net Interest Expense
$75 million and $85 million
low materiality
High
2025 RVO Obligation
$468.4 million
high materiality
High
Remaining 2023/2024 RINs Monetization
most likely in the first quarter
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Refining
Adjusted EBITDA declined by $91 million quarter-over-quarter, largely due to seasonality.
——-$91 million—
Supply and Marketing
Contributed approximately $23 million in adjusted EBITDA, with wholesale marketing being the primary driver and asphalt showing a loss. EOP progress is very visible in this segment.
Wholesale marketing contribution: $35 millionAsphalt contribution: -$4.2 million
———approximately $23 million
Logistics (DKL)
Delivered a strong quarter with approximately $142 million in adjusted EBITDA.
———approximately $142 million

DK operating KPIs by quarter

DK operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Dec 2025 Q4 FY25 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.

Deals & partnerships

DKL (Delek Logistics) Internal asset transfers and restructuring to further economic separation and optimize asset placement. approximately $85 million

Transactions aimed at furthering the economic separation of Delek US and Delek Logistics, ensuring assets are under the appropriate corporate structure. The second part of the deal is scheduled to close in October 2027, phased to balance cash flows between the two entities.

Risks & headwinds

Uncertainty regarding monetization of 2019-2022 SREs Ongoing

Currently 'invalid RINs' or 'zombie RINs' for which full value has not yet been realized.

Mitigation:Management believes SREs are critical for energy policy and expects full value to be realized as relief and eligibility come together.

Seasonality in refining segment Q4 FY25 (seasonal impact)

Adjusted EBITDA declined by $91 million QoQ in Q4 FY25.

Mitigation:EOP initiatives and market optimization in supply and marketing aim to reduce the impact of seasonality.

What to watch in Q1 FY26

Remaining 2023/2024 RINs monetization

Q1 2026
Current Approximately $360 million already monetized
Target Full monetization of remaining portion

Why it matters

Further enhances free cash flow and reduces debt.

yes, there's some more left beyond the monetization that we have done for 2023 and 2024 RINs, still left to be -- which we expect to be monetizing in the first half of 2026, most likely in the first quarter.

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

Q&A highlights

What is the cash inflow from recognized SREs, what remains, and what is the path for pre-2023 SREs? Also, why should the market risk the forward SRE value (2025-2028) given the guidance of refineries running under 75,000 bpd?

Delek monetized approximately $360 million of 2023/2024 RINs, using proceeds to pay down $380 million of IIA debt, saving $40 million annually in interest. Remaining 2023/2024 RINs are expected to be monetized in Q1 2026. For 2019-2022 'zombie RINs,' they believe full value will be realized as relief and eligibility come together. Management emphasized SREs are critical for energy policy and not a windfall. They provided the 2025 RVO obligation of $468.4 million but stated the percentage approved is up to the EPA. Mohit Bhardwaj also noted that a lot of value, at least $65 a share, is missing from the stock price, unrelated to SREs.

“raising approximately $360 million during the fourth quarter. And at the end of the quarter, near the very end, we used these proceeds and available cash to pay down approximately $380 million under the IIA and associated inventory financing, which was a large portion of what we actually had outstanding under the program. And these activities are going to reduce our annual interest expense associated with the IIA by at least $40 million.”

asked by Doug Leggate · answered by Mark Hobbs

2 min read 5 chapters

Detailed narrative

Enterprise Optimization Plan (EOP) Success

The EOP has been a significant driver of value, with its annual run rate target raised from an initial $100 million to at least $200 million. The plan has fostered a culture of continuous improvement across all business units, notably impacting the El Dorado refinery, supply and marketing results, and G&A expenses. Management emphasized that EOP is a 'lifestyle' and a 'cornerstone' of the company's culture, with further opportunities expected in gross margin, G&A, and supply and marketing.

DKL Economic Separation and Midstream Growth

Delek continued to advance its sum-of-the-parts strategy, aiming for increased economic separation between DK and DKL. DKL achieved a record $536 million in adjusted EBITDA in 2025 and provided 2026 EBITDA guidance of $520 million to $560 million. The company expects DKL's third-party EBITDA to exceed 80% on a pro forma basis in 2026, driven by its premier Permian Basin position and comprehensive sour gas solution. DK is exploring multiple avenues to realize DKL's intrinsic value, including asset sales, unit buybacks from DK, and M&A.

SRE Monetization and Future Outlook

Delek successfully monetized approximately $360 million of its 2023 and 2024 RINs much faster than anticipated, using the proceeds to reduce its inventory intermediation agreement (IIA) by $380 million. This move is expected to reduce annual interest expense by at least $40 million, further enhancing free cash flow. The company remains engaged in efforts to gain full value for the 2019-2022 RINs, which are currently considered 'invalid' or 'zombie RINs,' expressing confidence in their eventual recognition due to the SRE program's importance for small refineries and local communities.

Big Spring Turnaround and Operational Improvements

The Big Spring refinery is undergoing a planned turnaround in Q1 2026, which is progressing on schedule. This turnaround, the only one planned for the refining system in 2026, focuses on enhancing reliability, optimizing crude slate, and improving product slate. While no major capital projects or new technologies are being introduced, the improvements are expected to drive better cost structure and margin capture once the refinery returns to full operations.

Capital Allocation and Shareholder Returns

Delek reiterated its commitment to a disciplined and balanced capital allocation strategy. The company paid $15 million in dividends and executed $20 million in share repurchases during Q4 2025, demonstrating a countercyclical approach to buybacks in 2025. Management highlighted that total shareholder returns were 4% higher than refining peers, emphasizing a consistent philosophy of rewarding investors through the cycle.

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