Shares of Delek US Holdings, Inc.’s (DK Quick QuoteDK ) have dropped 12.2% since the company’s second-quarter 2021 earnings announcement on Aug 3.
This downward stock movement could possibly be triggered by a wider year-over-year loss reported for the second quarter, increase in operating expenses and a lack of contribution from the company’s refining segment.
Behind the Earnings Headlines
Delek’s second-quarter 2021 results recently reported an adjusted loss of 88 cents a share, narrower than the Zacks Consensus Estimate of a loss of $1.01, attributable to a strong contribution from its logistics segment. However, the loss was wider than the year-ago quarterly loss of 48 cents. This underperformance was due to weak contribution from the refining segment and an escalated operating expense.
Quarterly revenues of $2.19 billion compared favorably with the year-ago sales of $1.54 billion and also surpassed the Zacks Consensus Estimate of $1.96 billion.
Refining: The company reported a negative margin of $19.9 million for this segment against the positive $59.7 million in the year-ago quarter. However, adjusted margins of -$5 million narrowed from -$126.6 million in the year-ago period. Results improved from increased crack spreads as the rising frequency of vaccination and a worldwide economic recovery buoyed demand.
Logistics: This unit represents the company’s majority interest in Delek Logistics Partners, L.P. (DKL), a publicly-traded master limited partnership that owns, operates, develops and acquires pipelines and other midstream assets. Margin from the Logistics unit was $64.2 million, up 4.6% from $61.4 million in the year-ago period, led by higher refinery utilization as well as demand along with divesting Trucking Assets.
Retail: Margin for the unit, which was formed from the acquisition of Alon USA Energy in 2017, fell 9.9% to $21.9 million from the year-earlier quarter’s level of $24.3 million on lower Retail fuel margin. Delek’s merchandise sales of $84.5 million with a margin of 32.7%, on average, compared unfavorably with $89.4 million sales carrying a margin of 30.8%, on average, in the prior year.
Its retail fuel gallons sale totaled $43 million in the June quarter of 2021, the average margin being 39 cents per gallon. This compared favorably with $42.4 million sale, the average margin being 45 cents per gallon in second-quarter 2020.
Delek US Holdings, Inc. Price, Consensus and EPS Surprise
Delek US Holdings, Inc. price-consensus-eps-surprise-chart | Delek US Holdings, Inc. Quote
Total operating expenses incurred in the quarter increased 50.5% from the prior-year period to $2,276.9 million.
In the reported quarter, Delek spent $65.7 million on capital programs (92.4% on the Refining segment). As of Jun 30, 2021, the company had cash and cash equivalents worth $833 million and a long-term debt of $2,197.9 million with the total debt to total capital of 69.8%.
Delek projects third-quarter 2021 total operating expenses in the 145-$155 million band while total crude throughput is estimated in the 280,000-290,000 barrels per day range.
The company anticipates its 2021 capital expenses to be around $175-$185 million, comprising turnarounds.
Zacks Rank & Key Picks
Delek currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the energy space are Matador Resources Co. (MTDR Quick QuoteMTDR ) , Devon Energy Corp. (DVN Quick QuoteDVN ) and Continental Resources, Inc. (CLR Quick QuoteCLR ) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.