Delek US Holdings, Inc. Reports Fourth-Quarter Earnings.* Delek US Reports Record Earnings for 2006 * Sales Exceed $3.2 Billion for 2006 * 2006 Refinery Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Exceeds Industry Benchmark by 10% FRANKLIN, Tenn. -- Delek US Holdings, Inc. (NYSE NYSE See: New York Stock Exchange : DK) today reported record net income for the full year 2006, of $93.0 million, or $1.94 per diluted share, compared to $64.1 million, or $1.63 per diluted share for full year 2005. For the fourth quarter net income was $11.6 million, or $0.22 per diluted share, compared to $24.6 million, or $0.62 per diluted share, for the fourth quarter 2005. Uzi Yemin, President and Chief Executive Officer of Delek US, remarked, "We are very pleased and encouraged by the strong operating performance of all our businesses for the fourth quarter and full-year 2006. We expanded our businesses and achieved steady operating improvements during 2006 even while volatile energy prices impacted comparable-period results. "We achieved these results as we completed and integrated two major acquisitions during the year, established a new wholesale marketing business segment and completed two significant capital projects at our Tyler refinery. These accomplishments, along with our recently announced agreement to expand our base of retail fuel and convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. by more than 27%, position us for growth in 2007." Refining Segment: The refining segment contribution margin was $23.7 million for the fourth quarter of 2006 compared to $37.0 million for the fourth quarter of 2005. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter were $349.6 million compared to $342.2 million for the same period last year. The refinery operating gross margin excluding inter-company marketing fees of $0.66 per barrel was $8.73 per barrel sold. Delek exceeded the U.S. Gulf Coast crack spread Crack Spread The spread created when purchasing oil futures and offsetting the position by selling gasoline and heating oil futures. Notes: As the two futures contracts within the spread are relatively similar, risk is hedged against. of $6.76 by a record 29%. This compares to $12.39 per barrel, which was 113% of the U.S. Gulf Coast 5-3-2 crack spread, for the same quarter of 2005. The average gross margin was enhanced by the Company's first full quarter of Ultra Low Sulfur Diesel production. During the quarter, Delek produced nearly 19,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. of ULSD ULSD Ultra-Low Sulfur Diesel and sold approximately 1.7 million barrels. During the quarter, total production increased 11.3% to 56,300 barrels per day compared to 50,600 barrels a day for the same quarter last year, while total throughput increased 12.9% to more than 58,800 barrels per day compared to 52,100 barrels per day compared to the fourth quarter last year, which was impacted by a refinery turnaround. Direct operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter declined 16.1% to $3.43 per barrel sold. Yemin added, "We are proceeding with three significant capital projects focused on optimizing our crude slate and improving the efficiency of our refining operations. We currently estimate a capital outlay capital outlay See capital expenditure. of approximately $55 million, which is expected to generate a return on investment in excess of 50%. These projects are scheduled for completion in the second half of 2008 in conjunction with the completion of our gasoline hydrotreater unit." Retail Segment: The retail segment reported a contribution margin for the fourth quarter of 2006 of $9.0 million compared to $14.4 million for the same quarter last year. The contribution margin for the quarter was adversely impacted by the unusually low retail fuel margin for the quarter of $0.088 per gallon compared to $0.167 per gallon for the fourth quarter last year. Net sales for the quarter were $330.6 million, an increase of 9.5% compared to the fourth quarter last year. Merchandise sales for the quarter increased 16.7% to $84.6 million compared to $72.5 million for the fourth quarter of 2005. Same-store merchandise sales increased 1.1% for the quarter. The food and fountain service category same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. increased 7.7%. The merchandise margin was 30.8% for the fourth quarter of 2006, a 160 basis point increase from the same quarter last year. The retail segment's total fuel sales for the fourth quarter of 2006 increased 7.0% to $229.6 million from $214.5 million for the same quarter of 2005, primarily due to a 13.7% increase in gallons sold to over 104.4 million. The increase in gallons sold was driven by the increase in the number of stores in operation from 349 at the end of 2005 to 394 at the end of 2006. The Company expects the purchase of 107 Favorite Markets retail fuel and convenience stores from Calfee Company of Dalton, Inc. to close in the second quarter. These stores will solidify Delek's market presence in Chattanooga, TN and north Georgia North Georgia is the mountainous northern region of the U.S. state of Georgia. At the time of the arrival of settlers from Europe, it was inhabited largely by the Cherokee. The counties of North Georgia were often scenes of important events in the history of Georgia. , and will establish a new core market. Marketing Segment: The marketing segment reported a contribution margin for the fourth quarter of 2006 of $6.2 million including $3.4 million of inter-company marketing service fees from the refinery segment. The marketing segment contributed $127.2 million to net sales for the quarter on total sales volume of approximately 18,000 barrels per day. This is the first full quarter of operations for the marketing segment. This segment's contribution continues to grow as the business is assimilated. Conference Call: The Company will hold a conference call to discuss this release today at 10:30 a.m. eastern time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.delekus.com and clicking Investor Relations Investor relations The process by which the corporation communicates with its investors. , or by going to www.earnings.com, at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at (706) 645-9291, code 8428497, and the replay will also be available on Delek's website for 90 days. About the Company: Delek US Holdings, Inc. is a diversified energy business focused on petroleum refining, marketing and supply, and retail marketing. The refining segment operates a high conversion, independent refinery, with a design crude distillation distillation, process used to separate the substances composing a mixture. It involves a change of state, as of liquid to gas, and subsequent condensation. The process was probably first used in the production of intoxicating beverages. capacity of 60,000 barrels per day, in Tyler, Texas Tyler is the county seat of Smith County in East Texas, United States. The city is named for President John Tyler in recognition of his support for Texas's admission to the United States. . The marketing and supply segment markets refined products through its terminals in Abilene, Texas Abilene is a city in Taylor County, Texas, United States, in the central portion of the state. The population was 115,930 at the 2000 census. It is the principal city of the Abilene, Texas Metropolitan Statistical Area, which had a 2006 estimated population of 158,063. and San Angelo, Texas San Angelo is a city in and the county seat of Tom Green CountyGR6, Texas, United States. It is also the principal city of the "San Angelo, Texas Metropolitan Statistical Area" that includes all of Irion and Tom Green county. as well as other third party terminals. The retail segment markets gasoline, diesel and other refined petroleum products and convenience merchandise through a network of 394 company-operated retail fuel and convenience stores, operated under the MAPCO MAPCO Mid-America Pipeline Company Express[R], MAPCO Mart[TM], East Coast[R] and Discount Food Mart[TM] brand names. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Provisions Regarding Forward-Looking Statements: This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Statements concerning our current estimates, expectations and projections about our future results, performance, prospects and opportunities and other statements, concerns, or matters that are not historical facts are "forward-looking statements," as that term is defined under the federal securities laws. Investors are cautioned that the following important factors, among others, may affect these forward-looking statements. These factors include but are not limited to: our competitive position and the effects of competition; the projected growth of the industry in which we operate; changes in the scope, costs, and/or timing of capital projects; management's ability to execute its strategy of growth through acquisitions and transactional risks in acquisitions; general economic and business conditions, particularly levels of spending relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc travel and tourism or conditions affecting the southeastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ; risks and uncertainties with the respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals; potential conflicts of interest between our majority stockholder and other stockholders; and other risks contained in our filings with the Securities and Exchange Commission. Forward-looking statements should not be read as a guarantee of future performance or results and will not be accurate indications of the times at, or by which such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Delek US undertakes no obligation to update or revise any such forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (1)2005 comparative amounts reflect Refining operations from the date of acquisition, April 29, 2005, through the end of the three months or full year period. (2) Refining operating margin per barrel is calculated by dividing the margin between net sales and cost of crude oil, feedstocks and related transportation by the total barrels sold at our refinery. Industry-wide refining results are driven and measured by the margins between refined petroleum product prices and the prices for crude oil, which are referred to as crack spreads: the differential in price between a representative barrel of benchmark refined petroleum products, such as gasoline or heating oil, and a barrel of benchmark crude oil. The US Gulf Coast 5-3-2 crack spread represents the differential between Platt's quotations for 3/5 of a barrel of US Gulf Coast Pipeline 87 Octane oc·tane n. 1. Any of various isomeric paraffin hydrocarbons with the formula C8H18, found in petroleum and used as a fuel and solvent. 2. An octane number. Conventional Gasoline and 2/5 of a barrel of US Gulf Coast Pipeline No. 2 Heating Oil (high sulfur diesel) on the one hand, and the first month futures price Futures price The price at which parties to a futures contract agree to transact upon the settlement date. of 5/5 of a barrel of light sweet crude oil Sweet crude oil is a type of petroleum. Petroleum is considered "sweet" if it contains less than 0.5% sulfur[1], compared to a higher level of sulfur in sour crude oil. Sweet crude oil contains small amounts of hydrogen sulfide and carbon dioxide. on the New York Mercantile Exchange New York Mercantile Exchange (NYMEX) The world's largest physical commodity futures exchange. , on the other hand. We compare our refining operating margin to these crack spreads to assess our operating performance relative to other participants in our industry. (3) Excludes inter-company marketing services fees of $3.4 million for both the three months ended and year ended December 31, 2006, from Refining to Marketing segment. (4)The statistics and results of operations reflect Marketing's operations from the date of acquisition on August 1, 2006 through December 31, 2006. (5) Consists of third party credit, debit and fuel card processing fees as a percentage of gross margin. (6) Merchandise and cash over/short as a percentage of net sales is a measure of merchandise loss or theft, motor fuel theft and cash shortages as a percentage of net sales. (7) Operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. for our retail segment divided by merchandise sales plus total gallons sold is a ratio we use to measure store operating performance --especially operating expense control. Total gallons are used rather than net fuel sales to eliminate the volatility of fuel prices in the calculation and improve comparability. [TABLE OMITTED] [TABLE OMITTED] |
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