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Delek US Holdings posts adjusted net income of $89M, misses estimates

Delek US Holdings Inc. reported on Aug. 7 second-quarter adjusted net income of $89.0 million, or $1.03 per diluted share, missing the S&P Global Market Intelligence consensus normalized estimate of $1.10 per share.

During the year-ago quarter, the refiner reported an adjusted net loss of $25.0 million, or 40 cents per basic share.

In its second-quarter adjusted results, Delek did not include $60.3 million in non-cash items, comprised of a $38.5 million after-tax reduction related to an inventory timing effect between the price of Permian Basin crude oil when it was purchased and when it was sold and realized as finished product sales in the gross margin, and a $21.8 million after-tax reduction related to a mark-to-market biofuel blending credit inventory position.

On a GAAP basis, Delek reported second-quarter net income of $79.1 million, or 89 cents per diluted share, versus a year-ago net loss of $37.9 million, or 61 cents per basic share.

The company saw improved results across business segments. Refining segment contribution margin climbed from $16.9 million to $177.0 million on wider Midland crude oil discounts to Brent crude and improved crack spreads.

Logistics segment contribution margin climbed from $31.7 million to $45.4 million partially due to the drop down of the Big Spring refinery logistics assets to Delek Logistics Partners LP that was completed on March 1.

The retail segment posted contribution margin of $18.6 million. Through its July 1, 2017, acquisition of Alon USA Inc., Delek acquired approximately 300 convenience store locations in west Texas and New Mexico.

Through the deal, Delek also acquired refining assets in Louisiana, California and Texas. The company said it had captured $131.0 million in annualized synergies since the deal closed, and raised its annualized synergy guidance for 2018 from between $115.0 million and $130.0 million to between $130.0 million and $140.0 million.