Dive Brief:
- Delek US Holdings saw its retail earnings before interest, taxes, depreciation and amortization (EBITDA) increase 20% year-over-year in the second quarter, to $15 million, according to the company’s second quarter earnings report. On a sequential basis, retail EBITDA increased 134% between this year’s Q1 and Q2.
- While its logistics and retail business posted strong results, earnings for Delek’s refining business decreased by more than half in Q2, contributing to a net loss of $8.3 million.
- In the earnings call, President and CEO Avigal Soreq once again told shareholders Delek is exploring M&A opportunities around its retail and logistics assets, which he first teased in March.
Dive Insight:
When Delek’s retail segment fell earlier this year, the company blamed lower average margins that were offset by increased inside store sales. This quarter, Delek has credited higher fuel volume and better average fuel margins and inside store sales for the major boost in EBITDA.
Delek’s merchandise sales also hit $84.3 million during this past quarter.
“Retail improved versus last quarter as crude prices fell, improving pricing at the retail level,” Rosy Zuklic, vice president of investor relations for Delek, said during the company’s earnings call Monday. “In addition, volumes were higher, consistent with the season.”
When Delek first teased that potential M&A activity was on the horizon, Soreq said everything was on the table, although Delek wouldn’t pursue a move that would risk the company’s total cash flow.
Soreq kept that same sentiment on Monday’s earnings call when an attendee from financial services company TD Cowen requested an update regarding the strategic reorganization Delek has been hinting at over the past few months.
“We have the right incentives in place to make everyone want it,” Soreq said. “We have the right plan in place to make it work… it’s a big decision.”
Brentwood, Tennessee-based Delek operates nearly 250 convenience stores in West Texas and New Mexico.
