Delek US Aims for $130M–$170M EOP Cash Flow Boost Amid DKL Separation Progress

Strategic Progress and Operational Gains

During the second quarter of 2025, Delek US Holdings, Inc. (DK) continued its transformational journey by making significant progress on key strategic initiatives. The company increased its Enterprise Optimization Plan (EOP) guidance to a run rate of $130 million to $170 million, starting in the second half of 2025. CEO Avigal Soreq highlighted that the company had already achieved its prior target of $120 million of run rate EOP benefits one quarter ahead of schedule. This achievement underscores the company’s commitment to operational efficiency and cost management.

Soreq emphasized the progress made across the company’s operations, noting record throughput in the quarter. The Big Spring refinery performed exceptionally well, with strong overall throughput and operational performance. Additionally, the completion of key capital projects, including operational benefits at El Dorado and the successful commissioning of the DKL Libby 2 plant, further reinforced the company’s operational strength.

Liquidity improvements were also a focal point during the earnings call. Soreq noted that the company increased financial liquidity at DKL through a successful high-yield offering, resulting in over $1 billion in liquidity at DKL. This move positions the company for future growth and investment opportunities.

Financial Performance and Guidance

The CFO, Mark Hobbs, provided an overview of the company’s financial results for the second quarter of 2025. Delek reported a net loss of $106 million or negative $1.76 per share. Adjusted net loss was $33 million or negative $0.56 per share, while adjusted EBITDA reached $170.2 million. These figures reflect the challenges faced by the refining industry amid fluctuating market conditions.

Hobbs detailed the capital expenditures for the quarter, which totaled $164 million. Approximately $119 million of this spend was allocated to the Logistics segment, including $115 million in growth capital at DKL. Of this, $48 million was associated with completing the Libby 2 gas plant. These investments highlight the company’s focus on long-term growth and operational expansion.

Joseph Israel, Executive Vice President, added that the company set record throughput results at several facilities, including Big Spring, Krotz Springs, and the entire system. Realized refining margins increased by $0.96 per barrel compared to the second quarter of 2024, despite an $0.18 per barrel decline in the benchmark net margin. This demonstrates the company’s ability to adapt and optimize its operations in a challenging environment.

Outlook and Future Guidance

Delek raised its EOP improvement guidance to $130 million to $170 million on a run rate basis, beginning in the second half of 2025. Soreq reiterated the company’s commitment to capturing the advantage of its operational EOP and strategic progress during the remainder of the year and beyond.

Throughput guidance for Q3 2025 was also provided, with expectations for Tyler (73,000–77,000 barrels/day), El Dorado (79,000–83,000 barrels/day), Big Spring (69,000–72,000 barrels/day), Krotz Springs (81,000–85,000 barrels/day), and system-wide (302,000–317,000 barrels/day). These targets reflect the company’s confidence in maintaining strong operational performance.

Hobbs provided expense guidance for the third quarter of 2025, estimating operating expenses between $210 million and $225 million, G&A between $52 million and $57 million, D&A between $100 million and $110 million, and net interest expense between $85 million and $95 million. These figures indicate the company’s proactive approach to managing costs and optimizing resources.

Key Operational Metrics and Market Positioning

Delek reported cash flow provided by operations of $51 million, with investing activities totaling $163 million, including $115 million for growth projects at DKL. Financing activities amounted to $103 million, covering $13 million in share repurchases and $16 million in dividend payments. Delek Logistics delivered approximately $120 million in adjusted EBITDA, marking a $4 million increase over the previous record.

Analysts maintained a constructive but probing tone, focusing on the sustainability and upside of EOP, SRE outcomes, capital allocation, and operational efficiencies. Management’s tone was confident and optimistic, emphasizing structural improvements, operational achievements, and positive market positioning. Soreq and his team used phrases indicating high confidence, such as “we are extremely optimistic” and “we are very proud of the EOP focus and the momentum.”

Risks and Concerns

Despite the positive developments, Soreq emphasized the pending SRE petition, stating that the value of the pending petition exceeds the company’s current market cap. This issue remains a critical focus area for Delek. Management noted that while operational improvements are progressing, there is still more work ahead, highlighting ongoing EOP implementation as a key risk if momentum is not sustained.

Analyst questions reflected concerns about the pace and realization of EOP benefits, the outcome of SRE petitions, and the ability to sustain operational gains. However, management provided detailed, data-backed responses, reinforcing their confidence in the company’s strategic direction and execution.

Final Takeaway

Delek US Holdings’ management highlighted a significant upward revision to its EOP cash flow improvement target, driven by broad-based operational gains, cost discipline, and structural changes. The company reported record throughput, sequential EBITDA growth, and continued progress on the strategic separation of DKL. With confidence in achieving and expanding these targets, management pointed to strengthened liquidity, consistent capital returns, and an optimistic outlook for refining margins and market demand in the second half of 2025 and beyond.