
	Three Months Ended March 31, 2020
	Refining		Logistics		Retail		Corporate, Other and Eliminations		Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	1,569.3	$	56.8	$	178.6	$	16.5	$	1,821.2
Inter-segment fees and revenues	158.6		106.6		0		(265.2)		—
Operating costs and expenses:
Cost of materials and other	1,906.6		101.3		144.1		(241.4)		1,910.6
Operating expenses (excluding depreciation and amortization presented below)	111.7		14.8		22.2		5.8		154.5
Segment contribution margin	$	(290.4)	$	47.3	$	12.3	$	(13.1)	(243.9)
Depreciation and amortization	$	37.2	$	6.3	$	2.9	$	6.2	52.6
General and administrative expenses									65.7
Other operating income, net									(0.7)
Operating loss									$	(361.5)
Capital spending (excluding business combinations)	$	168.1	$	3.0	$	6.2	$	12.9	$	190.2


12 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three Months Ended March 31, 2020
(In millions) Refining Logistics Retail Corporate,
Other and Eliminations Consolidated
Net revenues (excluding inter-segment fees and revenues) $ 1,569.3
$ 56.8
$ 178.6
$ 16.5
$ 1,821.2
Inter-segment fees and revenues 158.6
106.6
—
(265.2 ) —
Operating costs and expenses:
Cost of materials and other 1,906.6
101.3
144.1
(241.4 ) 1,910.6
Operating expenses (excluding depreciation and amortization presented below) 111.7
14.8
22.2
5.8
154.5
Segment contribution margin $ (290.4 ) $ 47.3
$ 12.3
$ (13.1 ) (243.9 )
Depreciation and amortization $ 37.2
$ 6.3
$ 2.9
$ 6.2
52.6
General and administrative expenses 65.7
Other operating income, net (0.7 )
Operating loss

$ (361.5 )
Capital spending (excluding business combinations) $ 168.1
$ 3.0
$ 6.2
$ 12.9
$ 190.2

Three Months Ended March 31, 2019

Refining ⁽¹⁾
Logistics Retail
Corporate,
Other and Eliminations ⁽¹⁾
Consolidated
Net revenues (excluding inter-segment fees and revenues) $ 1,907.4
$ 89.6
$ 197.2
$ 5.7
$ 2,199.9
Inter-segment fees and revenues
184.6
62.9
—
(247.5 ) —
Operating costs and expenses:
Cost of materials and other 1,669.1
96.3
163.4
(229.4 ) 1,699.4
Operating expenses (excluding depreciation and amortization presented below) 121.0
16.1
23.6
6.0
166.7
Segment contribution margin $ 301.9
$ 40.1
$ 10.2
$ (18.4 ) 333.8
Depreciation and amortization $ 31.1
$ 6.5
$ 4.3
$ 4.9
46.8
General and administrative expenses 62.2
Other operating expense, net 2.4
Operating income $ 222.4
Capital spending (excluding business combinations) $ 81.7
$ 0.9
$ 5.1
$ 40.7
$ 128.4


⁽¹⁾	The refining segment results of operations for the three months ended March 31, 2019, includes hedging gains, a component of cost of materials and other, of $7.6 million which was previously included and reported in corporate, other and eliminations.

Other Segment Information

Total assets by segment were as follows as of March 31, ~~2020:~~2021:

Refining Logistics Retail Corporate,
Other and Eliminations Consolidated
Total assets $ 5,949.5
$ 946.3
$ 312.1
$ (1,114.5 ) $ 6,093.4
Less:
Inter-segment notes receivable (1,584.3 ) —
—
1,584.3
—
Inter-segment right of use lease assets (418.1 ) —
—
418.1
—
Total assets, excluding inter-segment notes receivable and right of use assets $ 3,947.1
$ 946.3
$ 312.1
$ 887.9
$ 6,093.4


	Refining		Logistics		Retail		Corporate, Other and Eliminations		Consolidated
Total assets	$	6,527.9	$	948.9	$	255.3	$	(988.1)	$	6,744.0
Less:
Inter-segment notes receivable	(1,372.8)		0		0		1,372.8		—
Inter-segment right of use lease assets	(346.4)		0		0		346.4		—
Total assets, excluding inter-segment notes receivable and right of use assets	$	4,808.7	$	948.9	$	255.3	$	731.1	$	6,744.0



~~13 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Property, plant and equipment and accumulated depreciation as of March 31, ~~2020~~2021 and depreciation expense by reporting segment for the three months ended March 31, ~~2020~~2021 are as follows (in millions):


	Refining		Logistics		Retail		Corporate, Other and Eliminations		Consolidated
Property, plant and equipment	$	2,619.3	$	699.6	$	165.8	$	96.0	$	3,580.7
Less: Accumulated depreciation	(856.9)		(237.5)		(51.8)		(66.7)		(1,212.9)
Property, plant and equipment, net	$	1,762.4	$	462.1	$	114.0	$	29.3	$	2,367.8

Depreciation expense for the three months ended March 31, 2021	$	50.4	$	10.7	$	3.0	$	2.5	$	66.6

Refining Logistics Retail Corporate,
Other and Eliminations Consolidated
Property, plant and equipment $ 2,601.8
$ 665.7
$ 162.7
$ 109.6
$ 3,539.8
Less: Accumulated depreciation (684.3 ) (186.2 ) (39.4 ) (65.5 ) (975.4 )
Property, plant and equipment, net $ 1,917.5
$ 479.5
$ 123.3
$ 44.1
$ 2,564.4
Depreciation expense for the three months ended March 31, 2020 $ 35.6
$ 6.3
$ 2.7
$ 6.2
$ 50.8

In accordance with ~~Accounting Standards Codification ("ASC")~~ASC 360, Property, Plant and Equipment ("ASC 360"), Delek evaluates the realizability of property, plant and equipment as events occur that might indicate potential impairment. There were no indicators of impairment related to our property, plant and equipment as of March 31, ~~2020~~2021 (see Note 1 for further discussion on the impact of COVID-19 ~~Pandemic and OPEC Production Disputes)~~Pandemic).

Note 3 - Earnings (Loss) Per Share

Basic earnings per share (or "EPS") is computed by dividing net income (loss) by the weighted average common shares outstanding. Diluted earnings per share is computed by dividing net income (loss), as adjusted for changes to income that would result from the assumed settlement of the dilutive equity instruments included in diluted weighted average common shares outstanding, by the diluted weighted average common shares outstanding. For all periods presented, we have outstanding various equity-based compensation awards that are considered in our diluted EPS calculation (when to do so would be dilutive), and is inclusive of awards disclosed in Note 15 to these condensed consolidated financial statements. For those instruments that are indexed to our common stock, they are generally dilutive when the market price of the underlying indexed share of common stock is in excess of the exercise price.


13 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the computation of basic and diluted earnings per share.

Three Months Ended
March 31,
2020 2019
Numerator:
Numerator for EPS
Net (loss) income $ (307.0 ) $ 154.4
Less: Income attributed to non-controlling interest 7.4
5.1
Numerator for basic and diluted EPS - attributable to Delek $ (314.4 ) $ 149.3
Denominator:
Weighted average common shares outstanding (denominator for basic EPS) 73,437,730
77,793,278
Dilutive effect of stock-based awards —
653,412
Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS) 73,437,730
78,446,690
EPS:
Basic (loss) income per share $ (4.28 ) $ 1.92
Diluted (loss) income per share $ (4.28 ) $ 1.90
The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be antidilutive:
Antidilutive stock-based compensation (because average share price is less than exercise price) 3,684,935
2,173,510
Antidilutive due to loss 433,488
—
Total antidilutive stock-based compensation 4,118,423
2,173,510


	Three Months Ended
	March 31,
		2021		2020
Numerator:
Numerator for EPS
Net loss		$	(91.3)	$	(307.0)
Less: Income attributed to non-controlling interest		7.3		7.4
Numerator for basic and diluted EPS attributable to Delek		$	(98.6)	$	(314.4)








Denominator:
Weighted average common shares outstanding (denominator for basic EPS)		73,803,772		73,437,730


Dilutive effect of stock-based awards		0		0
Weighted average common shares outstanding, assuming dilution (denominator for diluted EPS)		73,803,772		73,437,730

EPS:



Basic loss per share		$	(1.34)	$	(4.28)



Diluted loss per share		$	(1.34)	$	(4.28)

The following equity instruments were excluded from the diluted weighted average common shares outstanding because their effect would be antidilutive:
Antidilutive stock-based compensation (because average share price is less than exercise price)		634,006		3,684,935
Antidilutive due to loss		2,733,056		433,488
Total antidilutive stock-based compensation		3,367,062		4,118,423



~~14 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Note 4 - Delek Logistics

Delek Logistics is a publicly traded limited partnership that was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are integral to Delek’s refining and marketing operations. As of March 31, ~~2020,~~2021, we owned ~~a 69.1% limited partner~~an 80.0% interest in Delek Logistics, consisting of ~~20,745,868~~34,745,868 common limited partner units and ~~a 94.6% interest in Delek Logistics GP, LLC, which owns~~ the ~~entire 2.0%~~non-economic general partner ~~interest, consisting of 600,523 general partner units, in Delek Logistics and all of the incentive distribution rights.~~

interest. The limited partner interests in Delek Logistics not owned by us are reflected in net income attributable to non-controlling interest in the accompanying condensed consolidated statements of income and in non-controlling interest in subsidiaries in the accompanying condensed consolidated balance sheets.

On August 13, 2020, Delek Logistics completed a transaction to eliminate the incentive distribution rights ("IDRs") held by Delek Logistics GP, LLC, the general partner, and convert the economic general partner interest into a non-economic general partner interest in exchange for total consideration consisting of $45.0 million cash and 14.0 million newly issued common limited partner units. Contemporaneously, we repurchased the 5.2% ownership interest in the general partner from affiliates, who are also members of the general partner's management and board of directors, for $23.1 million, increasing our ownership interest in the general partner to 100.0%.

As a result of these transactions, the non-controlling interest in our consolidated balance sheets decreased by $50.8 million, with a $37.2 million increase to additional paid-in capital which is net of $11.5 million related to deferred income taxes and $2.1 million of transaction costs, none of which was recognized during the first quarter of 2020.

In August 2020, Delek Logistics filed a shelf registration statement, which subsequently became effective, with the SEC for the proposed re-sale or other disposition from time to time by Delek of up to 14.0 million common limited partner units representing our limited partner interests in Delek Logistics. No units were sold as of March 31, 2021.

We have agreements with Delek Logistics that, among other things, establish fees for certain administrative and operational services provided by us and our subsidiaries to Delek Logistics, provide certain indemnification obligations and establish terms for fee-based commercial logistics and marketing services provided by Delek Logistics and its subsidiaries to us. The revenues and expenses associated with these agreements are eliminated in consolidation.


14 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Delek Logistics is a ~~variable interest entity,~~VIE, as defined under GAAP, and is consolidated into our condensed consolidated financial statements, representing our logistics segment. The assets of Delek Logistics can only be used to settle its own obligations and its creditors have no recourse to our assets. Exclusive of intercompany balances and the marketing agreement intangible asset between Delek Logistics and Delek which are eliminated in consolidation, the Delek Logistics condensed consolidated balance sheets as presented below are included in the condensed consolidated balance sheets of Delek (unaudited, in millions).

March 31,
2020 December 31,
2019

ASSETS
Cash and cash equivalents $ 4.2
$ 5.5
Accounts receivable 12.4
13.2
Inventory 5.1
12.6
Other current assets 0.9
2.3
Property, plant and equipment, net 479.5
295.0
Equity method investments 255.7
247.0
Operating lease right-of-use assets 3.5
3.7
Goodwill 12.2
12.2
Intangible assets, net 166.5
146.6
Other non-current assets 6.2
6.3
Total assets $ 946.2
$ 744.4
LIABILITIES AND DEFICIT
Accounts payable $ 4.4
$ 12.5
Accounts payable to related parties 2.1
8.9
Current portion of operating lease liabilities 1.5
1.4
Accrued expenses and other current liabilities 14.6
12.2
Long-term debt 940.0
833.1
Asset retirement obligations 5.7
5.6
Deferred tax liabilities 1.0
0.2
Operating lease liabilities, net of current portion 2.0
2.3
Other non-current liabilities 19.3
19.3
Deficit (44.4 ) (151.1 )
Total liabilities and deficit $ 946.2
$ 744.4


	March 31, 2021		December 31, 2020

ASSETS
Cash and cash equivalents	$	13.4	$	4.2
Accounts receivable	12.3		15.7
Accounts receivable from related parties	0		5.9
Inventory	1.9		3.1
Other current assets	0.5		0.4
Property, plant and equipment, net	462.1		464.8
Equity method investments	251.4		253.7
Operating lease right-of-use assets	24.8		24.2
Goodwill	12.2		12.2
Intangible assets, net	158.8		160.1
Other non-current assets	11.5		12.1
Total assets	$	948.9	$	956.4
LIABILITIES AND DEFICIT
Accounts payable	$	4.2	$	6.7
Accounts payable to related parties	4.5		0

Current portion of operating lease liabilities	8.4		8.7
Accrued expenses and other current liabilities	15.7		12.9
Long-term debt	983.4		992.3
Asset retirement obligations	6.1		6.0
Deferred tax liabilities	0.7		0.6
Operating lease liabilities, net of current portion	16.3		15.4
Other non-current liabilities	21.0		22.1
Deficit	(111.4)		(108.3)
Total liabilities and deficit	$	948.9	$	956.4

Effective May 1, 2020, Delek through its wholly owned subsidiaries Lion Oil Company, LLC (“Lion Oil”) and Delek Refining, Ltd. (“Delek Refining”) contributed certain leased and owned tractors and trailers and related assets used in the provision of trucking and transportation services for crude oil, petroleum and certain other products throughout Arkansas, Oklahoma and Texas to Delek Trucking, LLC (“Delek Trucking”), a direct wholly owned subsidiary of Lion Oil. Following this contribution, Lion Oil sold all of the issued and outstanding membership interests in Delek Trucking (the “Trucking Acquisition”) to DKL Transportation, LLC (“DKL Transportation”), a wholly owned subsidiary of Delek Logistics. Promptly following the consummation of the Trucking Acquisition, Delek Trucking merged with and into DKL Transportation, with DKL Transportation continuing as the surviving entity. Total consideration for the Trucking Acquisition was approximately $48.0 million in cash, subject to certain post-closing adjustments, financed primarily with borrowings on the Delek Logistics Credit Facility (as defined in Note 8). In connection with the Trucking Acquisition, Delek Refining, Lion Oil and DKL Transportation entered into a Transportation Services Agreement pursuant to which DKL Transportation will gather, coordinate the pickup of, transport and deliver petroleum products for Delek Refining and Lion Oil, as well as provide ancillary services as requested. Prior periods have not been recast in our Note 2 - Segment Data, as these assets did not constitute a business in accordance with ASU 2017-01, Clarifying the Definition of a Business ("ASU 2017-01"), and the transaction was accounted for as an acquisition of assets between entities under common control.

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek, which included the execution of related commercial agreements. In connection with the closing of the transaction, Delek, Delek Logistics and various of their respective subsidiaries entered into a Throughput and Deficiency Agreement (the “T&D Agreement”). Under the T&D Agreement, Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing a limited partner interest in Delek Logistics. The cash component of this dropdown was financed with borrowings on the ~~DKL~~Delek Logistics Credit Facility (as defined in Note 8). ~~Prior periods have not been recast in our~~



15 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prior periods have not been recast in our Segment Data Note 2, as these assets did not constitute a business in accordance with ASU 2017-01 ~~Clarifying the Definition of a Business~~, and the transaction was accounted for as an acquisition of assets between entities under common control.

Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from an investor pursuant to a Common Unit Purchase Agreement between Delek Marketing & Supply, LLC and such investor. The purchase price of the units amounted to approximately $5.0 million. As a result of the transaction, our ownership in Delek Logistics' outstanding common limited partner units increased to 64.5% from 62.6%. Our ownership in Delek Logistics' common limited partner units was further increased to 70.5% as a result of the issuance of 5.0 million common units in connection with the Big Spring Gathering Assets Acquisition described above.

Note 5 - Equity Method Investments

Wink to Webster Pipeline

On July 30, 2019, we, through our wholly-owned direct subsidiary Delek US Energy, ~~Inc. ("Delek Energy" or "Delek Member"),~~ entered into a limited liability company agreement (the “LLCA”) and related agreements with multiple joint venture members of Wink to Webster Pipeline LLC (“WWP”). Pursuant to the LLCA, Delek Energy acquired a 15% ownership interest in ~~WWP.~~WWP ("WWP Joint Venture"). WWP intends to construct and operate a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area. Pursuant to the LLCA, Delek Energy will be required to contribute its percentage interest of the applicable construction costs (including certain costs previously incurred by WWP) and, at the date we acquired our ownership interest, it iswas anticipated that Delek Energy’s capital contributions ~~will~~would total approximately $340 million to $380 million over the course of construction (expected to be two to three years). Construction of the crude oil pipeline system remains ongoing, where the main segment of the pipeline system connecting the Permian Basin to Houston, Texas was completed and began transporting crude oil in October 2020, and where other construction continues to progress. During the three months ended March 31, 2020, we made capital contributions totaling $18.9 million. Additionally, during the three months ended March 31, 2021, we made additional capital contributions totaling $0.1 million based on capital calls received.

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC ~~("HoldCo")~~ Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV"). The WWP Project Financing JV was created for the specific purpose of obtaining financing ~~through its wholly-owned subsidiary, W2W Finance LLC,~~ to fund ~~the majority of~~ our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt. In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15% ownership interests to the WWP Project Financing JV as collateral for and in service of the related project financing. Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed under the project financing debt. The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV.

The Company evaluated Delek ~~Member's~~Energy's investment in ~~HoldCo~~W2W Holdings LLC ("HoldCo") and determined that HoldCo is a ~~variable interest entity.~~VIE. The Company determined it is not the primary beneficiary since it does not have the power to direct activities that most significantly impact HoldCo. The Company does not hold a controlling financial interest in HoldCo because no single party has the power to direct the activities that most significantly impact HoldCo’s economic performance since power to make the decisions about the significant activities is shared equally with MPLX and all significant decisions require unanimous consent of the ~~Board~~board of ~~Directors.~~directors of HoldCo. The Company accounts for its investment in HoldCo using the equity method of accounting due to its significant influence with its 50% membership interest.

The Company's maximum exposure to any losses incurred by HoldCo is limited to its investment. As of March 31, ~~2020,~~2021, except for the guarantee of member obligations under the W2W Holdings LLC Agreement, the Company does not have other existing guarantees with or to HoldCo, or any third-party work contracted with it.

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, Delek's investment balance in WWP Project Financing Joint Venture totaled ~~$73.9~~$66.4 million and ~~$125.3~~$66.6 million, ~~respectively. We~~respectively, and is included as part of total assets in corporate, other and eliminations in our segment disclosure. During the three months ended March 31, 2020, we received distributions of $69.3 million from WWP Project Financing Joint Venture to return excess contributions made. In addition, we recognized ~~$1.1 million~~a loss on the investment totaling $0.3 million and $1.1 million for the three months ended March 31, ~~2020. This investment is accounted for using the equity method~~2021 and ~~is included as part of total assets in corporate, other and eliminations in our segment disclosure.~~2020, respectively.

~~Red River Pipeline Company LLC ("Red River")~~Delek Logistics Investments

In May 2019, Delek Logistics, through its wholly owned indirect subsidiary DKL Pipeline, LLC (“DKL Pipeline”), entered into a Contribution and Subscription Agreement (the “Contribution Agreement”) with Plains Pipeline, L.P. (“Plains”) and Red River Pipeline Company LLC (“Red River”). Pursuant to the Contribution Agreement, DKL Pipeline contributed $124.7 million, substantially all of which was financed under the Delek Logistics Credit Facility (as defined in Note 8), to Red River in exchange for a 33% membership interest in Red River and DKL Pipeline’s admission as a member of Red River (the "Red River Pipeline Joint Venture"). Red River owns a 16-inch crude oil pipeline running from Cushing, Oklahoma to Longview, ~~Texas, with an~~Texas. In August 2020, Red River completed a planned expansion project ~~planned~~ to increase the pipeline capacity which ~~is expected to be completed during the first half of~~commenced operations on October 1, 2020. Delek Logistics contributed an additional $3.5 million related to such


16 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

expansion project in May ~~2019.~~2019 and during 2020 made additional capital contributions of $12.2 million based on capital calls received. During the three months ended March 31, 2021, we made additional capital contributions totaling $1.4 million based on capital calls received. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, Delek's investment balance in Red River totaled ~~$140.9~~$140.1 million and ~~$131.0~~$141.8 million, ~~respectively, and we~~respectively. We recognized income on the investment totaling $2.7 million and $1.8 million for the three months ended March 31, ~~2020.~~2021 and 2020, respectively. This investment is accounted for using the equity method and is included as part of total assets in our logistics segment.

~~Other Investments~~



~~16 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

In addition to Red River, Delek Logistics has 2 joint ventures that own and operate logistics assets, and which serve third parties and subsidiaries of Delek. We own a 50% membership interest in the entity formed with an affiliate of Plains All American Pipeline, L.P. to operate one of these pipeline systems (the "Caddo Pipeline") and a 33% membership interest in Andeavor Logistics Rio Pipeline LLC which operates the other pipeline system (the "Rio Pipeline"). As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, Delek Logistics' investment balances in these joint ventures totaled ~~$114.9~~$111.8 million and ~~$116.0~~$111.9 million, respectively, and were accounted for using the equity method. We recognized income on these investments totaling $1.8 million and $3.8 million for the three months ended March 31, 2021 and 2020, respectively.

Other Investments

We have a 50% interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas. As of March 31, 2021 and December 31, 2020, Delek's investment balance in this joint venture was $38.2 million and $39.3 million, respectively. We recognized income on this investment totaling $0.9 million and $0.4 million for the three months ended March 31, 2021 and 2020, respectively. This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Delek Renewables, LLC, a wholly-owned subsidiary of Delek, has a joint venture that owns, operates and maintains a terminal consisting of an ethanol unit train facility with an ethanol tank in North Little Rock, Arkansas. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, Delek Renewables, LLC's investment balance in this joint venture was ~~$4.5~~$4.2 million and ~~$4.3~~$4.0 million, respectively, and was accounted for using the equity method. We recognized income on this investment totaling $0.2 million for both the three months ended March 31, 2021 and 2020. The investment in this joint venture is reflected in the refining segment.

We have a 50% interest in a joint venture that owns an asphalt terminal located in Brownwood, Texas. As of March 31, 2020 and December 31, 2019, Delek's investment balance in this joint venture was $31.1 million and $30.7 million, respectively. This investment is accounted for using the equity method and is included as part of total assets in corporate, other and eliminations in our segment disclosure.

Note 6 - Inventory

Crude oil, work in process, refined products, blendstocks and asphalt inventory for all of our operations, excluding the Tyler refinery and merchandise inventory in our retail segment, are stated at the lower of cost determined using ~~the first-in, first-out (“FIFO”)~~FIFO basis or net realizable value. Cost of all inventory at the Tyler refinery is determined using the ~~last-in, first-out ("LIFO")~~LIFO inventory valuation method and inventory is stated at the lower of cost or market. Retail merchandise inventory consists of cigarettes, beer, convenience merchandise and food service merchandise and is stated at estimated cost as determined by the retail inventory method.

Carrying value of inventories consisted of the following (in millions):

March 31,
2020 December 31,
2019
Refinery raw materials and supplies $ 179.6
$ 400.4
Refinery work in process 58.7
109.1
Refinery finished goods 202.5
397.5
Retail fuel 4.7
7.3
Retail merchandise 22.5
19.8
Logistics refined products 5.1
12.6
Total inventories $ 473.1
$ 946.7


	March 31, 2021		December 31, 2020
Refinery raw materials and supplies	$	528.0	$	270.7
Refinery work in process	109.4		92.1
Refinery finished goods	363.1		327.1
Retail fuel	6.7		6.2
Retail merchandise	25.5		28.5
Logistics refined products	1.9		3.1
Total inventories	$	1,034.6	$	727.7

At March 31, ~~2020,~~2021, we recorded a pre-tax inventory valuation reserve of ~~$282.5~~$10.7 million, ~~$149.6~~$8.9 million of which related to LIFO inventory, due to a market price decline below our cost of certain inventory products. At December 31, ~~2019,~~2020, we recorded a pre-tax inventory valuation reserve of ~~$1.7~~$31.1 million, ~~$1.2~~$30.3 million of which related to LIFO inventory, which reversed in the first quarter of ~~2020~~2021 due to the sale of inventory quantities that gave rise to the December 31, ~~2019~~2020 reserve. We recognized a net reduction (increase) ~~reduction~~ in cost of materials and other in the accompanying condensed consolidated statements of income related to the change in pre-tax inventory valuation of ~~$(280.8)~~$20.4 million and ~~$52.1~~$(280.8) million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.


17 \|

Note 7 - Crude Oil Supply and Inventory Purchase Agreement

Delek has Supply and Offtake Agreements with J. Aron & Company ("J. Aron") in connection with its El Dorado, Big Spring and Krotz Springs refineries (collectively, the "Supply and Offtake Agreements"). Pursuant to the Supply and Offtake Agreements, (i) J. Aron agrees to sell to us, and we agree to buy from J. Aron, at market prices, crude oil for processing at these refineries and (ii) we agree to sell, and J. Aron agrees to buy, at market prices, certain refined products produced at these refineries. The Supply and Offtake Agreements also provide for the lease to J. Aron of crude oil and refined product storage facilities, and the identification of prospective purchasers of refined products on J. Aron’s behalf. At the inception of the Supply and Offtake Agreements, we transferred title to a certain number of barrels of crude and other inventories to J. Aron (the "Step-In"), and the Supply and Offtake Agreements require the repurchase of remaining inventory (including certain "Baseline Volumes") at the termination of those Agreements (the "Step-Out"). The Supply and Offtake Agreements are accounted for as inventory financing arrangements under the fair value election provided by ASC 815 Derivatives and Hedging ("ASC 815") and ASC 825, Financial Instruments ("ASC 825").



~~17 \|~~

Barrels subject to the Supply and Offtake Agreements are as follows:


(in millions)	El Dorado	Big Spring	Krotz Springs
Baseline Volumes pursuant to the respective Supply and Offtake Agreements	2.0	0.8	1.3
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2021 (1)	3.4	1.3	1.4
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2020 (1)	4.0	1.3	1.2

(in millions) El Dorado Big Spring Krotz Springs
Baseline Volumes pursuant to the respective Supply and Offtake Agreements 2.0
0.8
1.3
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of March 31, 2020 ⁽¹⁾
3.5
1.8
1.5
Barrels of inventory consigned under the respective Supply and Offtake Agreements as of December 31, 2019 ⁽¹⁾
3.5
2.0
1.7
(1) Includes Baseline Volumes plus/minus over/short quantities.


⁽¹⁾			~~Includes Baseline Volumes plus/minus over/short quantities.~~

The Supply and Offtake Agreements have certain termination provisions, which may include requirements to negotiate with third parties for the assignment to us of certain contracts, commitments and arrangements, including procurement contracts, commitments for the sale of product, and pipeline, terminalling, storage and shipping arrangements.

The Supply and Offtake Agreements were amended in December 2018 for Big Spring and in January 2019 for El Dorado and Krotz Springs so that the Baseline Step-Out Liabilities, as defined below, were based upon a fixed price. As a result, we recorded gains on the change in fair value resulting from the modification in cost of materials and other in the periods in which the amendments occurred, including a gain of $7.6 million which was recognized in the first quarter of 2019. As a result of these amendments, the changes in fair value of the Baseline Step-Out Liabilities were recorded in interest expense.

In January 2020, we amended ~~and restated~~ our three Supply and Offtake Agreements so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") ~~would be~~was based on market-indexed prices subject to commodity price risk. As a result of the amendment, such Baseline Step-Out Liabilities ~~will continue~~continued to be recorded at fair value under the fair value election provided by ASC 815 and ASC 825, where the fair value ~~will~~ now ~~reflect~~reflected changes in commodity price risk rather than interest rate risk with ~~such~~subsequent changes in fair value being recorded in cost of materials and other. We recognized a loss in the first quarter of 2020 of $1.5 million on the change in fair value resulting from the modification.

The Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months. Monthly activity resulting in over and short volumes continue to be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our consolidated balance sheet.

~~Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates:~~

(in millions) El Dorado Big Spring Krotz Springs Total
Balances as of March 31, 2020:
Baseline Step-Out Liability $ 78.7
$ 41.7
$ 59.1
$ 179.5
Revolving over/short product financing liability 58.9
30.3
8.7
97.9
Total Obligations Under Supply and Offtake Agreements 137.6
72.0
67.8
277.4
Less: Current portion 58.9
30.3
8.7
97.9
Obligations Under Supply and Offtake Agreements - Noncurrent portion $ 78.7
$ 41.7
$ 59.1
$ 179.5
Other current payable (receivable) for monthly activity true-up $ 11.4
$ 10.7
$ (18.2 ) $ 3.9

(in millions) El Dorado Big Spring Krotz Springs Total
Balances as of December 31, 2019:
Baseline Step-Out Liability $ 125.5
$ 57.2
$ 87.6
$ 270.3
Revolving over/short product financing liability 93.0
73.5
40.5
207.0
Total Obligations Under Supply and Offtake Agreements 218.5
130.7
128.1
477.3
Less: Current portion 218.5
73.5
40.5
332.5
Obligations Under Supply and Offtake Agreements - Noncurrent portion $ —
$ 57.2
$ 87.6
$ 144.8
Other current receivable for monthly activity true-up $ (16.4 ) $ (3.1 ) $ (3.5 ) $ (23.0 )



~~18 \|~~

The El Dorado Supply and Offtake Agreement has a maturity date of April 30, 2020. The Big Spring and Krotz Springs Supply and Offtake Agreements expire in May 2021, except that J. Aron or Delek may elect to terminate in May 2020 on prior notice, as defined in those Agreements. The Big Spring and Krotz Springs Supply and Offtake Agreements were amended in November 2019 to require such notice prior to February 2020, and again in January, February and March 2020 to ultimately require such notice in April 2020. Subsequent to March 31, 2020, inIn April 2020, we amended and restated our three Supply and Offtake Agreements to renew and extend the terms to December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, ~~2025.~~2025 by giving at least 6 months prior notice to the current maturity date. As part of this amendment, there were changes to the underlying market index, annual fee, ~~and~~ the crude purchase ~~fee.~~fee, crude roll fees and timing of cash settlements related to periodic price adjustments (the "Periodic Price Adjustments"). The Baseline Step-Out Liabilities continue to be recorded at fair value under the fair value election included under ASC 815 and ASC 825. The Baseline Step-Out Liabilities have a floating component whose fair value reflects changes to commodity price risk with changes in fair value recorded in cost of materials and other and a fixed component whose fair value reflects changes to interest rate risk with changes in fair value recorded in interest expense. There was no amendment date change in fair value resulting from the modification. The Baseline Step-Out Liabilities are reflected as non-current liabilities on our consolidated balance sheet to the extent that they are not contractually due within twelve months.

Pursuant to the Periodic Price Adjustments provision in the Supply and Offtake Agreements, the Company may be required to pay down all or a portion of the fixed component of the Baseline Step-Out Liabilities or may receive additional proceeds depending on the change in fair value of the inventory collateral subject to a threshold at certain specified periodic pricing dates (the "Periodic Pricing Dates"), which occur on October 1st and May 1st, annually, not to extend beyond expiration of the Supply and Offtake Agreements. Additionally, at the Periodic Pricing Dates, if a Periodic Price Adjustment is triggered, the prospective pricing underlying the fixed component of the Baseline Step-Out Liabilities will be adjusted to reflect either the pay-down or the incremental proceeds, accordingly. On October 1, 2020, the provision was triggered and a paydown amounting to $20.8 million was made to J. Aron on October 30, 2020. The prospective pricing underlying the fixed component of the Baseline Step-Out liabilities was adjusted accordingly to reflect this payment, resulting in a reduction to the fixed differential component of our long-term Supply and Offtake Obligation totaling $20.8 million and a prospective contractual reset of the fixed differentials subject to future Periodic Price Adjustments. Contemporaneous with the payment, J. Aron separately refunded to us the $10.0 million of deferred additional monthly fees. As of both March 31, 2021 and December 31, 2020, the fixed component of the Baseline Step-Out Liabilities subject to the Periodic Price Adjustments amounted to approximately $33.1 million. All or some portion of that amount may


18 \|

become due or payable in periods occurring within twelve months, if Periodic Price Adjustments are triggered on the Periodic Pricing Dates.

Monthly activity resulting in over and short volumes continue to be valued using market-indexed pricing, and are included in current liabilities (or receivables) on our condensed consolidated balance sheet. Net balances payable (receivable) under the Supply and Offtake Agreements were as follows as of the balance sheet dates:


(in millions)	El Dorado		Big Spring		Krotz Springs		Total
Balances as of March 31, 2021:
Baseline Step-Out Liability	$	136.8	$	60.1	$	90.2	$	287.1
Revolving over/short inventory financing liability	85.0		31.7		6.9		123.6
Total Obligations Under Supply and Offtake Agreements	221.8		91.8		97.1		410.7
Less: Current portion	85.0		31.7		6.9		123.6
Obligations Under Supply and Offtake Agreements - Noncurrent portion	$	136.8	$	60.1	$	90.2	$	287.1
Other current payable (receivable) for monthly activity true-up	$	1.4	$	4.7	$	(7.0)	$	(0.9)


(in millions)	El Dorado		Big Spring		Krotz Springs		Total
Balances as of December 31, 2020:
Baseline Step-Out Liability	$	106.3	$	47.9	$	70.7	$	224.9
Revolving over/short inventory financing liability (receivable)	102.0		25.3		(4.5)		122.8
Total Obligations Under Supply and Offtake Agreements	208.3		73.2		66.2		347.7
Less: Current portion (1)	102.0		25.3		(4.5)		122.8
Obligations Under Supply and Offtake Agreements - Noncurrent portion	$	106.3	$	47.9	$	70.7	$	224.9
Other current payable for monthly activity true-up	$	6.6	$	7.0	$	0	$	13.6

(1) Current portion for Krotz Springs includes $1.9 million of current portion of obligations under Supply and Offtake Agreements and $6.4 million of current assets presented in our condensed consolidated balance sheet.

The Supply and Offtake Agreements require payments of fixed annual fees which are factored into the interest rate yield under the fair value accounting model. Recurring cash fees paid during the periods presented were as follows:


(in millions)	El Dorado		Big Spring		Krotz Springs		Total


Recurring cash fees paid during the three months ended March 31, 2021	$	2.4	$	0.7	$	1.1	$	4.2
Recurring cash fees paid during the three months ended March 31, 2020	$	3.2	$	1.0	$	1.0	$	5.2

(in millions) El Dorado Big Spring Krotz Springs Total
Recurring cash fees paid during the three months ended March 31,2020 $ 3.2
$ 1.0
$ 1.0
$ 5.2
Recurring cash fees paid during the three months ended March 31, 2019 $ 2.4
$ 1.4
$ 2.3
$ 6.1

Interest expense recognized under the Supply and Offtake Agreements includes the yield attributable to recurring cash fees, one-time cash fees (e.g., in connection with amendments), as well as other changes in fair value, which may increase or decrease interest expense. Total interest expense incurred during the periods presented was as follows:

(in millions) El Dorado Big Spring Krotz Springs Total
Interest expense for the three months ended March 31, 2020 $ 3.6
$ 4.1
$ 1.4
$ 9.1
Interest expense for the three months ended March 31, 2019 $ 3.1
$ (0.1 ) $ 3.0
$ 6.0


(in millions)	El Dorado		Big Spring		Krotz Springs		Total


Interest expense for the three months ended March 31, 2021	$	2.4	$	0.7	$	1.1	$	4.2
Interest expense for the three months ended March 31, 2020	$	3.6	$	4.1	$	1.4	$	9.1

~~Reflected in interest expense are~~There were losses totaling $3.9 ~~million and gains totaling $5.1~~ million for the three months ended March 31, 2020, ~~and 2019, respectively,~~reflected in interest expense related to the changes in fair value in the Baseline Step-Out Liabilities component of Obligations Under Supply and Offtake Agreements. There were 0 such losses for the three months ended March 31, 2021.


19 \|

We maintained letters of credit under the Supply and Offtake Agreements as follows:

(in millions) El Dorado Big Spring and Krotz Springs
Letters of credit outstanding as of March 31, 2020 $ 150.0
$ 10.0
Letters of credit outstanding as of December 31. 2019 $ 180.0
$ 44.0

In connection with the Krotz Springs Supply and Offtake Agreement, prior to September 30, 2019, we granted a security interest to J. Aron in certain assets (including all of its accounts receivable and inventory) to secure our obligations to J. Aron. Pursuant to an amendment to the security agreement effective September 30, 2019, no cash, deposit accounts or accounts receivable constitute collateral.


(in millions)	El Dorado		Big Spring and Krotz Springs
Letters of credit outstanding as of March 31, 2021	$	145.0	$	10.0
Letters of credit outstanding as of December 31, 2020	$	195.0	$	10.0



~~19 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Note 8 - Long-Term Obligations and Notes Payable

Outstanding borrowings, net of unamortized debt discounts and certain deferred financing costs, under Delek’s existing debt instruments are as follows (in millions):


	March 31, 2021		December 31, 2020
Revolving Credit Facility	$	50.0	$	0
Term Loan Credit Facility (1)	1,245.2		1,246.8
Hapoalim Term Loan (2)	39.2		39.3
Delek Logistics Credit Facility	737.5		746.6
Delek Logistics Notes (3)	245.9		245.7
Reliant Bank Revolver	50.0		50.0
Promissory Notes	0		20.0
	2,367.8		2,348.4
Less: Current portion of long-term debt and notes payable	13.4		33.4
	$	2,354.4	$	2,315.0

March 31, 2020 December 31, 2019
Revolving Credit Facility $ 100.0
$ 30.0
Term LoanCredit Facility ⁽¹⁾
1,067.5
1,069.5
Delek Logistics Credit Facility 695.0
588.4
Hapoalim Term Loan ⁽²⁾
39.4
39.5
Delek Logistics Notes ⁽³⁾
245.0
244.7
Reliant Bank Revolver 50.0
50.0
Promissory Notes 20.0
45.0
2,216.9
2,067.1
Less: Current portion of long-term debt and notes payable 31.4
36.4
$ 2,185.5
$ 2,030.7

(1)Net of deferred financing costs of $2.7 million and $2.9 million and debt discount of $21.9 million and $23.3 million at March 31, 2021 and December 31, 2020, respectively.

(2)Net of deferred financing costs of $0.2 million and $0.2 million and debt discount of $0.1 million and $0.1 million at March 31, 2021 and December 31, 2020, respectively.

(3)Net of deferred financing costs of $3.1 million and $3.3 million and debt discount of $1.0 million and $1.0 million at March 31, 2021 and December 31, 2020, respectively.


⁽¹⁾			~~Net of deferred financing costs of $3.4 million and $3.5 million and debt discount of $11.9 million and $12.5 million at March 31, 2020 and December 31, 2019, respectively.~~


⁽²⁾	~~Net deferred financing costs of $0.3 million and $0.3 million and debt discount of $0.2 million and $0.2 million at March 31, 2020 and December 31, 2019, respectively.~~


⁽³⁾	~~Net of deferred financing costs of $3.8 million and $4.0 million and debt discount of $1.2 million and $1.3 million at March 31, 2020 and December 31, 2019, respectively.~~

Delek Revolver and Term Loan

On March 30, 2018 (the "Closing Date"), Delek entered into (i) a new term loan credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Term Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the lenders from time to time party thereto, providing for a senior secured term loan facility in an amount of $700.0 million (the "Term Loan Credit Facility") and (ii) a second amended and restated credit agreement with Wells Fargo Bank, National Association, as administrative agent (the "Revolver Administrative Agent"), Delek, as borrower, certain subsidiaries of Delek, as guarantors, and the other lenders party thereto, providing for a senior secured asset-based revolving credit facility with commitments of $1.0 billion (the "Revolving Credit Facility" and, together with the Term Loan Credit Facility, the "New Credit Facilities").

The Revolving Credit Facility permits borrowings in Canadian dollars of up to $50.0 million. The Revolving Credit Facility also permits the issuance of letters of credit of up to $400.0 million, including letters of credit denominated in Canadian dollars of up to $10.0 million. Delek may designate restricted subsidiaries as additional borrowers under the Revolving Credit Facility.

The Term Loan Credit Facility was drawn in full for $700.0 million on the Closing Date at an original issue discount of 0.50%. Proceeds under the Term Loan Credit Facility, as well as proceeds of approximately $300.0 million in borrowings under the Revolving Credit Facility on the Closing Date, were used to repay certain indebtedness of Delek and its subsidiaries (the “Refinancing”), as well as certain fees, costs and expenses in connection with the closing of the New Credit Facilities, with any remaining proceeds held in cash. Proceeds of future borrowings under the Revolving Credit Facility ~~will~~may be used for working capital and general corporate purposes of Delek and its subsidiaries.


20 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

On May 22, 2019 (the "First Incremental Effective Date"), we amended the Term Loan Credit Facility agreement pursuant to the terms of the First Incremental Amendment to Term Loan Credit Agreement (the "Incremental Amendment"). Pursuant to the Incremental Amendment, the Company borrowed $250.0 million in aggregate principal amount of incremental term loans (the “Incremental Term Loans”) at an original issue discount of 0.75%~~, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the First Incremental Effective Date to $943.0 million.~~. On November 12, 2019 (the "Second Incremental Effective Date"), we amended the Term Loan Credit facility agreement pursuant to the terms of the Second Incremental Amendment to the Term Loan Credit Agreement (the "Second Incremental Amendment") and borrowed $150.0 million in aggregate principal amount of incremental term loans (the "Incremental Loans") at an original issue discount of 1.21%~~, increasing the aggregate principal amount of loans outstanding under the Term Loan Credit Facility on the Second Incremental Effective Date to $1,088.3 million.The~~. The terms of the Incremental Term Loans and Incremental Loans are substantially identical to the terms applicable to the initial term loans under the Term Loan Credit Facility borrowed in March 2018. There are no restrictions on the Company's use of the proceeds of the Incremental Term Loans and Incremental ~~Term~~ Loans. The proceeds ~~for the Incremental Term Loans~~ may be used for (i) reducing utilizations under the Revolving Credit Facility, (ii) general corporate purposes and (iii) paying transaction fees and expenses associated with the incremental amendments.

On May 19, 2020, we amended the Term Loan Credit Facility agreement and borrowed $200.0 million in aggregate principal amount of incremental term loans (the “Third Incremental ~~Amendment.~~Term Loan”) at an original issue discount of 7.00%. The Third Incremental Term Loan constitutes a separate class of term loans (the "Class B Loans") under the Term Loan Credit Facility from those initially borrowed in March 2018 and the incremental term loans borrowed in May 2019 and November 2019 (collectively, the "Class A Loans"). Delek will be required to pay a make-whole prepayment fee if the Third Incremental Term Loan is prepaid pursuant to an optional prepayment, in connection with a non-permitted debt issuance or in connection with an acceleration within one year of the incurrence of the Third Incremental Term Loan. Delek may voluntarily prepay the outstanding Third Incremental Term Loan at any time subject to customary breakage costs with respect to LIBOR loans and subject to a prepayment premium of 1.00% in connection with certain customary repricing events that may occur during the period from the day after the first anniversary of the Third Incremental Term Loan through the second anniversary of the Third Incremental Term Loan. The other terms of the Third Incremental Term Loan are substantially identical to the terms applicable to the Class A Loans. The proceeds ~~for~~of the Third Incremental ~~Loans~~Term Loan may be used ~~for~~ (i) for general corporate purposes ~~(including growth capital expenditures)~~ and (ii) to pay transaction fees and expenses associated with the ~~Second~~Third Incremental ~~Amendment.~~Term Loan.

Interest and Unused Line Fees

The interest rates applicable to borrowings under the Term Loan Credit Facility and the Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at Delek’s option, (i) a base rate, plus an applicable margin, or (ii) a reserve-adjusted LIBOR,



~~20 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

plus an applicable margin (or, in the case of Revolving Credit Facility borrowings denominated in Canadian dollars, the Canadian dollar bankers' acceptances rate ("CDOR")). ~~The initial applicable margin for all Term Loan Credit Facility borrowings was 1.50% per annum with respect to base rate borrowings and 2.50% per annum with respect to LIBOR borrowings.~~

On October 26, 2018, Delek entered into an amendment to the Term Loan Credit Facility (the “First Amendment”) to reduce the margin on certain borrowings under the Term Loan Credit Facility and incorporate certain other changes. The First Amendment decreased the applicable margins for ~~borrowings~~Class A Loans under (i) Base Rate Loans ~~from 1.50%~~by 0.25% to 1.25% and (ii) LIBOR Rate Loans ~~from 2.50%~~by 0.25% to 2.25%, as such terms are defined in the Term Loan Credit Facility. Class B Loans incurred under the Third Incremental Term Loan bear interest at a rate that is determined, at the Company’s election, at LIBOR or at base rate, in each case, plus an applicable margin of 5.50% with respect to LIBOR borrowings and 4.50% with respect to base rate borrowings. Additionally, Class B loans that are LIBOR borrowings are subject to a minimum LIBOR rate floor of 1.00%.

The ~~initial~~ applicable margin for Revolving Credit Facility borrowings ~~was 0.25% per annum with respect to base rate borrowings and 1.25% per annum with respect to LIBOR and CDOR borrowings, and the applicable margin for such borrowings after September 30, 2018~~ is based on Delek’s excess availability as determined by reference to a borrowing base, ranging from 0.25% to 0.75% per annum with respect to base rate borrowings and from 1.25% to 1.75% per annum with respect to LIBOR and CDOR borrowings.

In addition, the Revolving Credit Facility requires Delek to pay an unused line fee on the average amount of unused commitments thereunder in each quarter, which the fee is at a rate of 0.25% or 0.375% per annum, depending on average commitment usage for such quarter. As of March 31, ~~2020,~~2021, the unused line fee was 0.375% per annum.

Maturity and Repayments

The Revolving Credit Facility will mature and the commitments thereunder will terminate on March 30, 2023. The Term Loan Credit Facility matures on March 30, 2025 and requires scheduled quarterly principal payments on the last business day of the applicable quarter. Pursuant to the ~~Incremental Amendment, quarterly payments increased from $1.75 million to $2.38 million. Pursuant to the~~ Second Incremental Amendment, the quarterly payments increased to $2.75 million commencing with December 31, ~~2019.~~2019 on the Class A Loans. Additionally, the Term Loan Credit Facility requires prepayments by Delek with the net cash proceeds from certain debt incurrences, asset dispositions and insurance or condemnation events with respect to Delek’s assets, subject to certain exceptions, thresholds and reinvestment rights. The Term Loan Credit Facility also requires annual prepayments with a variable percentage of Delek’s excess cash flow, ranging from 50.0% to 0% depending on Delek’s consolidated fiscal year end secured net leverage ratio. ~~Delek may also make voluntarily prepayments under the~~The Third Incremental Term Loan ~~Credit Facility at any time, subject~~requires quarterly payments on the Class B Loans of $0.5 million commencing June 30, 2020.


21 \|

Notes to a prepayment premium of 1.0% in connection with certain customary repricing events that may occur within six months after the Second Incremental Effective Date, with no such premium applied after six months.Condensed Consolidated Financial Statements (Unaudited)

Guarantee and Security

The obligations of the borrowers under the New Credit Facilities are guaranteed by Delek and each of its direct and indirect, existing and future, wholly-owned domestic subsidiaries, subject to customary exceptions and limitations, and excluding Delek Logistics Partners, LP, Delek Logistics GP, LLC, and each subsidiary of the foregoing (collectively, the "MLP Subsidiaries"). Borrowings under the New Credit Facilities are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of Delek.

The Revolving Credit Facility is secured by a first priority lien over substantially all of Delek’s and each guarantor's receivables, inventory, renewable identification numbers ("RINs"), instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the "Revolving Priority Collateral"), and a second priority lien over substantially all of Delek's and each guarantor's other assets, including all of the equity interests of any subsidiary held by Delek or any guarantor (other than equity interests in certain MLP Subsidiaries) subject to certain customary exceptions, but excluding real property (such real property and equity interests, the "Term Priority Collateral").

The Term Loan Credit Facility is secured by a first priority lien on the Term Priority Collateral and a second priority lien on the Revolving Priority Collateral, all in accordance with an intercreditor agreement between the Term Administrative Agent and the Revolver Administrative Agent and acknowledged by Delek and the subsidiary guarantors. Certain excluded assets are not included in the Term Priority Collateral and the Revolving Priority Collateral.

Additional Information

At March 31, ~~2020,~~2021, the weighted average borrowing rate under the Revolving Credit Facility was 3.50% and was comprised entirely of a base rate borrowing, and the principal amount outstanding thereunder was ~~$100.0~~$50.0 million. Additionally, there were letters of credit issued of approximately ~~$193.6~~$314.6 million as of March 31, ~~2020~~2021 under the Revolving Credit Facility. Unused credit commitments under the Revolving Credit Facility, as of March 31, ~~2020,~~2021, were approximately ~~$681.7~~$635.4 million.

At March 31, ~~2020,~~2021, the weighted average borrowing rate under the Term Loan Credit Facility was approximately ~~3.24%~~3.00% comprised entirely of a LIBOR ~~borrowing,~~borrowings, and the principal amount outstanding thereunder was ~~$1,082.8~~$1,269.8 million. As of March 31, ~~2020,~~2021, the effective interest rate related to the Term Loan Credit Facility was ~~3.55%~~3.61%.

Delek Hapoalim Term Loan

On December 31, 2019, Delek entered into a term loan credit and guaranty agreement (the "Agreement") with Bank Hapoalim B.M. ("BHI")



~~21 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

as the administrative agent. Pursuant to the Agreement, on December 31, 2019, Delek borrowed $40.0 million (the "BHI Term Loan"). The interest rate under the Agreement is equal to LIBOR plus a margin of 3.00%. The Agreement has a current maturity of December 31, 2022 and requires quarterly loan amortization payments of $0.1 million, commencing March 31, 2020. Proceeds may be used for general corporate purposes. The Agreement has an accordion feature that allows increasing the term loan to maximum size of $100.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent. Any such additional borrowings must be completed by December 31, 2021. On December 30, 2020, we amended the BHI Term Loan to modify one of the required quarterly financial covenant metrics; there were no other changes as a result of this amendment.

At March 31, ~~2020,~~2021, the weighted average borrowing rate under the term loan was approximately ~~3.99%~~3.11% comprised entirely of a LIBOR borrowing and the principal amount outstanding thereunder was ~~$39.9~~$39.5 million. As of March 31, ~~2020,~~2021, the effective interest rate related to the BHI Term Loan was ~~4.43%~~3.54%.

Delek Logistics Credit Facility

Prior to its amendment and restatement on September 28, 2018, Delek Logistics had a $700.0 million senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third"), as administrative agent, and a syndicate of lenders (the "2014 Facility") with a $100.0 million accordion feature, bearing interest at either a U.S. dollar prime rate, Canadian dollar prime rate, LIBOR, or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency. On September 28, 2018, Delek Logistics and all of its subsidiaries entered into a third amended and restated senior secured revolving credit agreement with Fifth Third Bank ("Fifth Third") as administrative agent and a syndicate of lenders (hereafter, the "Delek Logistics Credit Facility")~~. Under the terms of the Delek Logistics Credit Facility, among other things, the~~ with lender commitments ~~were increased from $700.0 million to $850.0~~of 850.0 million. The Delek Logistics Credit Facility also contains an accordion feature whereby Delek Logistics can increase the size of the credit facility to an aggregate of $1.0 billion, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent.

The obligations under the Delek Logistics Credit Facility remain secured by first priority liens on substantially all of Delek Logistics' tangible and intangible assets. Additionally, a subsidiary of Delek provided a limited guaranty of Delek Logistics' obligations under the Delek Logistics Credit Facility. The guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek in favor of the subsidiary guarantor (the "Holdings Note") and (ii) secured by the subsidiary guarantor's pledge of the Holdings Note to the Delek Logistics Credit Facility lenders. Effective March 30, 2020, the limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the Delek Logistics Credit Facility.

The Delek Logistics Credit Facility has a maturity date of September 28, 2023. Borrowings under the Delek Logistics Credit Facility bear interest at either a U.S. dollar prime rate, Canadian dollar prime rate, LIBOR, or a CDOR rate, in each case plus applicable margins, at the election of the borrowers and as a function of draw down currency. The applicable margin in each case and the fee payable for the unused revolving commitments vary based upon Delek Logistics' most recent total leverage ratio calculation delivered to the lenders, as called for and defined under the terms of the Delek Logistics Credit Facility. At March 31, ~~2020,~~2021, the weighted average borrowing rate was approximately ~~3.70%~~2.45%. Additionally, the Delek Logistics Credit Facility requires Delek Logistics to pay a leverage ratio dependent quarterly fee on the average unused revolving commitment. As of March 31, ~~2020,~~2021, this fee was ~~0.40% per year.~~0.35% on an annualized basis.


22 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

In connection with the elimination of IDRs in August 2020, Delek Logistics entered into a First Amendment to the Delek Logistics Credit Facility which, among other things, permitted the transfer of cash and equity consideration for the elimination of IDRs. It also modified the total leverage ratio and the senior leverage ratio (each as defined in the Delek Logistics Credit Facility) calculations to reduce the total funded debt (as defined in the Delek Logistics Credit Facility) component thereof by the total amount of unrestricted consolidated cash and cash equivalents on the balance sheet of the Delek Logistics and its subsidiaries up to $20.0 million.

As of March 31, ~~2020,~~2021, Delek Logistics had ~~$695.0~~$737.5 million of outstanding borrowings under the Delek Logistics Credit Facility, with no letters of credit in place. Unused credit commitments under the Delek Logistics Credit Facility, as of March 31, ~~2020,~~2021, were ~~$155.0~~$112.5 million.

Delek Logistics Notes

On May 23, 2017, Delek Logistics and Delek Logistics Finance Corp. (collectively, the “Issuers”) issued $250.0 million in aggregate principal amount of 6.75% senior notes due 2025 (the “Delek Logistics Notes”) at a discount. The Delek Logistics Notes are general unsecured senior obligations of the Issuers. The Delek Logistics Notes are unconditionally guaranteed jointly and severally on a senior unsecured basis by Delek Logistics' existing subsidiaries (other than Delek Logistics Finance Corp., the "Guarantors") and will be unconditionally guaranteed on the same basis by certain of Delek Logistics' future subsidiaries. The Delek Logistics Notes rank equal in right of payment with all existing and future senior indebtedness of the Issuers, and senior in right of payment to anyfuture subordinated indebtedness of the Issuers. Interest on theDelek Logistics ~~Delek Logistics~~ Notes is payable semi-annually in arrears on each May 15 and November 15, commencing November 15, 2017.

~~At any time prior to~~In May ~~15, 2020, the Issuers may redeem up to 35% of the aggregate principal amount of~~2018, the Delek Logistics Notes were exchanged for new notes with terms substantially identical in all material respects with the ~~net cash proceeds of one or more equity offerings by~~ Delek ~~Logistics at a redemption price of 106.750% of~~Logistic Notes except the ~~redeemed principal amount, plus accrued and unpaid interest, if any, subject~~new notes do not contain terms with respect to ~~certain conditions and limitations. Prior to May 15, 2020, the Issuers may redeem all~~transfer restrictions.

All or part of the Delek Logistics Notes are currently redeemable, subject to certain conditions and limitations, at a redemption price of 105.063% of the redeemed principal, ~~amount~~ plus accrued and unpaid interest, if ~~any, plus a "make whole" premium, subject to certain conditions and limitations. In addition, beginning~~any. Beginning on May 15, ~~2020,~~2021, the Issuers may, subject to certain conditions and limitations, redeem all or part of the Delek Logistics Notes, at a redemption price of ~~105.063%~~103.375% of the redeemed principal ~~for the twelve-month period beginning on May 15, 2020, 103.375%~~ for the twelve-month period beginning on May 15, 2021, 101.688% for the twelve-month period beginning on May 15, 2022, and 100.00% beginning on May 15, 2023 and thereafter, plus accrued and unpaid interest, if any.

In the event of a change of control, accompanied or followed by a ratings downgrade within a certain period of time, subject to certain conditions and limitations, the Issuers will be obligated to make an offer for the purchase of the Delek Logistics Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.



~~22 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

In May 2018, the Delek Logistics Notes were exchanged for new notes with terms substantially identical in all material respects with the 2025 Notes except the new notes do not contain terms with respect to transfer restrictions.

As of March 31, ~~2020,~~2021, we had $250.0 million in outstanding principal amount under the Delek Logistics ~~Notes. As of March 31, 2020,~~Notes, and the effective interest rate ~~related to the Delek Logistics Notes~~ was ~~7.23%~~7.25%.

Reliant Bank Revolver

Delek has an unsecured revolving credit agreement with Reliant Bank (the "Reliant Bank Revolver"). On December 16, 2019, we amended the Reliant Bank Revolver to extend the maturity date ~~from June 28, 2020~~ to June 30, 2022, reduce the fixed interest rate ~~from 4.75%~~ to 4.50% per annum and increase the revolver commitment amount ~~from $30.0 million~~ to $50.0 million. There were no other significant changes to the agreement in connection with this amendment. On December 9, 2020, we amended the Reliant Bank Revolver to modify one of the required quarterly financial covenant metrics; there were no other changes as a result of this amendment. The revolving credit agreement requires us to pay a quarterly fee of 0.50% ~~per year~~on an annualized basis on the average unused revolving commitment. As of March 31, ~~2020,~~2021, we had $50.0 million outstanding and had 0 unused credit commitments under the Reliant Bank Revolver.

Promissory Notes

Delek ~~has~~had 4 notes payable (the "Promissory Notes") with various assignees of Alon Israel Oil Company, Ltd., the holder of a predecessor consolidated promissory note, which ~~bear~~bore interest at a fixed rate of 5.50% per annum and which, collectively, ~~require~~required annual principal amortization payments of $25.0 million ~~through 2020 followed by~~to be made each January with a final ~~principal amortization~~ payment of $20.0 million which was paid at maturity on January 4, 2021. ~~As of March 31, 2020, a total principal amount of $20.0 million was outstanding under the Promissory Notes.~~

Restrictive Covenants

Under the terms of our Revolving Credit Facility, Term Loan Credit Facility, Delek Logistics Credit Facility, Delek Logistics Notes, Reliant Bank Revolver and BHI Agreement, we are required to comply with certain usual and customary financial and non-financial covenants. The terms and conditions of the Revolving Credit Facility include periodic compliance with a springing minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement. The Term Loan Credit Facility does not have any financial maintenance covenants. We believe we were in compliance with all covenant requirements under each of our credit facilities as of March 31, ~~2020.~~2021.

Certain of our debt facilities contain limitations on the incurrence of additional indebtedness, making of investments, creation of liens, dispositions and acquisitions of assets, and making of restricted payments and transactions with affiliates. ~~Specifically, these~~These covenants may also limit the payment, in the form of cash or other assets, of dividends or other distributions, or the repurchase of shares with respect to ~~the equity of~~ our ~~subsidiaries.~~ equity.


23 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Additionally, ~~certain~~some of our debt facilities limit our ability to make investments, including extensions of loans or advances to, or acquisitions of equity interests in, or guarantees of obligations of, ~~any~~certain other entities.

Note 9 - Derivative Instruments

We use the majority of our derivatives to reduce normal operating and market risks with the primary objective of reducing the impact of market price volatility on our results of operations. As such, our use of derivative contracts is aimed at:

•limiting ~~the~~our exposure to commodity price fluctuations ~~of commodity~~on inventory above or below target levels at(where appropriate) within each of our segments;

•managing our exposure to commodity price risk associated with the purchase or sale of crude oil, ~~feedstocks~~feedstocks/intermediates and finished grade fuel ~~products at~~within each of our segments;

•managing our exposure to market crack spread fluctuations;

•managing the cost of our credits ~~for commitments~~ required by the U.S. Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs Obligation") using future commitments to purchase or sell ~~renewable identification numbers ("RINs")~~RINs at fixed prices and quantities; and

•limiting the exposure to interest rate fluctuations on our floating rate borrowings.

We primarily utilize commodity swaps, futures, forward contracts and options contracts, generally with maturity dates of three years or less, and from time to time interest rate ~~swap~~swaps or ~~cap agreements,~~caps to achieve these objectives. Futures contracts are standardized agreements, traded on a futures exchange, to buy or sell ~~the~~a commodity at a predetermined price and location at a specified future date. Options provide the right, but not the obligation to buy or sell the commodity at a specified price in the future. Commodity ~~swap~~swaps and futures contracts require cash settlement for the commodity based on the difference between a fixed or floating price and the market price on the settlement date, and options require ~~payment~~payment/receipt of an upfront premium. Because these derivatives are entered into to achieve objectives specifically related to our inventory and production risks, such gains and losses (to the extent not designated as accounting hedges and recognized on an unrealized basis in other comprehensive income) are recognized in cost of materials and other.

Forward contracts are agreements to buy or sell a commodity at a predetermined price at a specified future date, and for our transactions, generally require physical delivery. Forward contracts where the underlying commodity will be used or sold in the normal course of business qualify as normal purchases and normal sales pursuant to ASC ~~815~~815. If we elect the normal purchases and normal sales exception, such forward contracts are not accounted for as derivative ~~instruments. Rather, such forward contracts~~instruments but rather are accounted for under other applicable GAAP. ~~Forward~~Commodity forward contracts ~~entered into for trading purposes that do not meet the normal~~



~~23 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~purchases, normal sales exception are~~ accounted for as derivative instruments are recorded at fair value with changes in fair value recognized in earnings in the period of change. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, and for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019, all of~~2020, our commodity fixed-price forward contracts that were accounted for as derivative instruments primarily consisted of contracts related to our Canadian crude trading operations. Since Canadian crude trading activity is not related to managing supply or pricing risk of the actual inventory that will be used in production, such unrealized and realized gains and losses are recognized in other operating income, net rather than cost of materials and other on the accompanying condensed consolidated statements of income.

Futures, swaps or other commodity related derivative instruments that are utilized to specifically provide economic hedges on our Canadian forward contract or investment positions are recognized in other operating income, net because that is where the related underlying transactions are reflected.

From time to time, we also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs Obligation. These future ~~RIN~~RINs commitment contracts meet the definition of derivative instruments under ASC 815, and are recorded at estimated fair value in accordance with the provisions of ASC 815. Changes in the fair value of these future ~~RIN~~RINs commitment contracts are recorded in cost of materials and other on the condensed consolidated statements of income.

As of March 31, ~~2020,~~2021, we do not believe there is any material credit risk with respect to the counterparties to any of our derivative contracts.

In accordance with ASC 815, certain of our commodity swap contracts have been designated as cash flow hedges and the change in fair value between the execution date and the end of period has been recorded in other comprehensive income. The fair value of these contracts is recognized in income in the same financial statement line item as hedged transaction at the time the positions are closed and the hedged transactions are recognized in income.

The following table presents the fair value of our derivative instruments as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020. The fair value amounts below are presented on a gross basis and do not reflect the netting of asset and liability positions permitted under our master netting arrangements, including cash collateral on deposit with our counterparties. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements. As a result, the asset and liability amounts below differ from the amounts presented in our condensed consolidated balance sheets. See Note 10 for further information regarding the fair value of derivative instruments (in millions).

March 31, 2020 December 31, 2019
Derivative Type Balance Sheet Location Assets Liabilities Assets Liabilities
Derivatives not designated as hedging instruments:
Commodity derivatives⁽¹⁾
Other current assets $ 2,159.2
$ (2,087.9 ) $ 188.9
$ (202.1 )
Commodity derivatives⁽¹⁾
Other current liabilities 244.1
(275.7 ) 24.4
(34.0 )
Commodity derivatives⁽¹⁾
Other long-term assets 152.8
(149.6 ) —
—
Commodity derivatives⁽¹⁾
Other long-term liabilities 23.3
(24.4 ) 23.4
(24.8 )
RIN commitment contracts⁽²⁾
Other current assets 2.2
—
0.6
—
RIN commitment contracts⁽²⁾
Other current liabilities —
(1.7 ) —
(1.9 )

Derivatives designated as hedging instruments:
Commodity derivatives ⁽¹⁾
Other current assets 7.3
(5.2 ) 3.4
(2.0 )
Commodity derivatives⁽¹⁾
Other current liabilities 4.5
(3.2 ) —
—
Commodity derivatives⁽¹⁾
Other long-term assets —
—
0.2
(0.1 )
Total gross fair value of derivatives $ 2,593.4
$ (2,547.7 ) $ 240.9
$ (264.9 )
Less: Counterparty netting and cash collateral⁽³⁾
2,505.5
(2,512.5 ) 210.7
(249.5 )
Total net fair value of derivatives $ 87.9
$ (35.2 ) $ 30.2
$ (15.4 )


⁽¹⁾ 24 \|			As of March 31, 2020 and December 31, 2019, we had open derivative positions representing 185,713,596 and 86,484,065 barrels, respectively, of crude oil and refined petroleum products. Of these open positions, contracts representing 450,000 and 600,000 barrels were designated as cash flow hedging instruments as of March 31, 2020 and December 31, 2019, respectively. Additionally, as of March 31, 2020 and December 31, 2019, we had open derivative positions representing 91,502,500 and 40,050,000 One Million British Thermal Units, ("MMBTU") of natural gas products, respectively.


⁽²⁾	~~Consists primarily of pipeline throughput fees paid by the refining segment and asphalt purchases.~~



29 \|

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 14 - Other Current Assets and Liabilities

The detail of other current assets is as follows (in millions):

Other Current Assets March 31, 2020 December 31, 2019
Short-term derivative assets (see Note 9) $ 84.8
$ 30.2
Income and other tax receivables 74.1
61.9
RINs assets 38.9
14.5
Prepaid expenses 21.0
21.9
Biodiesel tax credit (see Note 2) 12.4
97.5
Environmental Credits Obligation surplus (see Note 10) 11.1
16.8
Note receivable - current portion, net of allowance of $3.1 million 8.7
6.2
Investment commodities 4.6
12.1
Other 6.5
7.6
Total $ 262.1
$ 268.7


Other Current Assets	March 31, 2021		December 31, 2020

Income and other tax receivables	$	158.7	$	142.0

Short-term derivative assets (see Note 9)	150.6		72.9
Prepaid expenses	29.4		21.8



Other	19.5		19.7
Total	$	358.2	$	256.4

~~The detail of other non-current assets is as follows (in millions):~~

Other Non-Current Assets March 31, 2020 December 31, 2019
Supply and Offtake receivable $ 32.7
$ 32.7
Other equity Investments 9.4
8.9
Deferred financing costs 8.1
8.5
Note receivable - non-current portion —
6.2
Long-term derivative assets (see Note 9) 3.2
0.1
Other 10.0
11.4
Total $ 63.4
$ 67.8

The detail of accrued expenses and other current liabilities is as follows (in millions):

Accrued Expenses and Other Current Liabilities March 31, 2020 December 31, 2019
Crude purchase liabilities $ 79.4
$ 72.1
Income and other taxes payable 75.4
119.6
Environmental Credits Obligation deficit (see Note 10) 50.2
18.5
Product financing agreements 42.0
21.1
Short-term derivative liabilities (see Note 9) 34.2
14.1
Employee costs 22.2
47.6
Interest payable 11.3
8.8
Environmental liabilities (see Note 11) 8.2
8.2
Tank inspection liabilities 5.2
5.6
Accrued utilities 2.3
4.4
Other 24.3
26.8
Total $ 354.7
$ 346.8


Accrued Expenses and Other Current Liabilities	March 31, 2021		December 31, 2020

Product financing agreements	$	277.8	$	198.0
Consolidated Net RINs Obligation deficit (see Note 10)	220.8		59.6
Crude purchase liabilities	205.6		62.1
Income and other taxes payable	101.7		109.5
Deferred revenue	48.1		16.5
Employee costs	34.6		30.2
Short-term derivative liabilities (see Note 9)	22.2		35.8




Other	51.0		34.7
Total	$	961.8	$	546.4



~~30 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

~~The detail of other non-current liabilities is as follows (in millions):~~

Other Non-Current Liabilities March 31, 2020 December 31, 2019
Liability for unrecognized tax benefits $ 12.5
$ 12.1
Tank inspection liabilities 9.9
9.9
Pension and other postemployment benefit liabilities, net 4.6
5.3
Long-term derivative liabilities (see Note 9) 1.1
1.4
Other 0.6
2.2
Total $ 28.7
$ 30.9

Note 15 - Equity-Based Compensation

Delek US Holdings, Inc. 2006 and 2016 and Alon USA Energy, Inc. 2005 Long-Term Incentive Plans (collectively, the "Incentive Plans")

On May 5, 2020, the Company's stockholders approved an amendment to the Delek US Holdings, Inc. 2016 Long-Term Incentive Plan that increased the number of shares of common stock available for issuance under this plan by 2,120,000 shares to 11,020,000 shares.

Compensation expense related to equity-based awards granted under the Incentive Plans amounted to ~~$5.8~~$4.5 million and ~~$4.8~~$5.8 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of income.

As of March 31, ~~2020,~~2021, there was ~~$47.8~~$37.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements, which is expected to be recognized over a weighted-average period of ~~2.1~~1.6 years.

We issued ~~102,895 and 244,566~~net shares of common stock of 93,856 and 102,895 as a result of exercised or vested equity-based awards during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. These amounts are net of ~~61,505~~58,851 and ~~169,991~~61,505 shares withheld to satisfy employee tax obligations related to the exercises and ~~vestings~~vesting during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Delek Logistics GP, LLC 2012 Long-Term Incentive Plan

The Delek Logistics GP, LLC 2012 Long-Term Incentive Plan (the "LTIP") was adopted by the Delek Logistics GP, LLC board of directors in connection with the completion of Delek Logistics' initial public offering in November 2012. The LTIP is administered by the Conflicts Committee of the board of directors of Delek Logistics' general partner.

Note 16 - Shareholders' Equity

Dividends Suspension

~~During~~We have elected to suspend dividends beginning in the ~~three months ended March 31,~~fourth quarter of 2020 ~~our Board of Directors declared the following dividends:~~in order to conserve capital.



~~Approval Date~~30 \|			~~Dividend Amount Per Share~~	~~Record Date~~	~~Payment Date~~
~~February 24, 2020~~	~~$0.31~~	~~March 10, 2020~~	~~March 24, 2020~~

Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Repurchase Program

On November 6, 2018, our Board of Directors authorized a share repurchase program for up to $500.0 million of Delek common stock. Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws. The timing, price and size of repurchases are made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of stock and does not expire. During the three months ended March 31, 2020, 58,713 shares of our common stock were repurchased for a total of $1.9 ~~million compared to~~million. No repurchases of ~~1,291,644 shares during~~our common stock were made in the three months ended March 31, ~~2019 for a total of $46.2 million.~~2021. As of March 31, ~~2020,~~2021, there was $229.7 million of authorization remaining under Delek's aggregate stock repurchase program. In the second quarter of 2020, we elected to suspend the share repurchase program.

Stockholder Rights Plan

On March 20, 2020, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Delek’s common stock and adopted a stockholder rights plan (the “Rights Agreement”). The dividend was distributed in a non-cash transaction on March 30, 2020 to the stockholders of record on that date. The Rights ~~initially trade~~traded with ~~and are inseparable from,~~ Delek’s common stock.



~~31 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

Once the Rights become exercisable, each Right will allow its holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share (a “Preferred Share”) for $92.24, subject to adjustment (the “Exercise Price”). This portion of a Preferred Share will give the stockholder approximately the same dividend, voting and liquidation rights as would one share of Delek’s common stock. Prior to exercise, the Right does not give its holder any dividend, voting or liquidation rights.

The Rights ~~will not be exercisable until 10 days after~~expired in accordance with the ~~public announcement that a person or group that has become an “Acquiring Person” (as defined in the Rights Agreement). The point at which these~~ terms ~~are met is otherwise referred to as the "Distribution Date." If a person or group becomes an Acquiring Person, all holders~~ of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the Company’s common stock with a market value of two times the Exercise Price, based on the market price of the common stock prior to such acquisition. In addition, subject to certain conditions set forth in the Rights Agreement the Board may extinguish the Rights. If the Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase shares of the acquiring corporation with a market value of two times the Exercise Price, based on the market price of the acquiring corporation’s stock prior to such merger.

In the event the Company receives a fully financed, all-cash tender offer satisfying the conditions set forth in the Rights Agreement (a “Qualifying Offer”), and certain other events occur, the Rights Agreement provides a mechanism for stockholders holding more than 20% of the shares of Delek common stock then outstanding (excluding shares beneficially owned by the person making the Qualifying Offer) to demand a special meeting of the stockholders of the Company to vote on a resolution exempting such Qualifying Offer from the provisions of the Rights Agreement.

~~The Rights will expire~~ on March 19, ~~2021, subject to a possible earlier expiration to the extent provided in the Rights Agreement.~~

~~Preferred Stock~~

~~On March 20, 2020, our Board of Directors authorized 1,000,000 shares of preferred stock with a par value of $0.01 per share as Series A Junior Participating Preferred Stock.~~

2021.

Note 17 - ~~Employees~~

~~Postretirement Benefits~~

The net periodic (benefit) cost for our postretirement benefit plans was not material for the three months ended March 31, 2020 or 2019. Additionally, our estimated contributions to our pension plans during 2020 have not changed significantly from amounts previously disclosed in the notes to the consolidated financial statements for the year ended December 31, 2019.

Leases

~~Note 18 - Leases~~

We lease certain retail stores, land, building and various equipment from others. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of existing lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Some of our lease agreements include a rate based on equipment usage and others include a rate with fixed increases or inflationary indices based increase. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease certain real estate and equipment to third parties. Our sublease portfolio consists primarily of operating leases within our retail stores and crude storage equipment.

As of March 31, ~~2020, $23.0~~2021, $26.0 million of our net property, plant, and equipment balance is subject to an operating lease. This agreement does not include options for the lessee to purchase our leasing equipment, nor does it include any material residual value guarantees or material restrictive covenants. The agreement includes a one ~~year~~-year renewal option and certain variable payment based on usage.



~~32 \|~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~

The following table presents additional information related to our operating leases in accordance ASC 842, Leases ("ASC 842"):


	Three Months Ended March 31,							Three Months Ended March 31,
(in millions)	2020			2019			(in millions)		2021			2020
Lease Cost							Lease Cost
Operating lease costs	$	15.7		$	13.5
Short-term lease costs ⁽¹⁾	7.6			3.6
Operating lease costs (1)							Operating lease costs (1)		$	17.7		$	15.7
Short-term lease costs (2)							Short-term lease costs (2)		9.5			7.6
Sublease income	(1.9		)	(1.7		)	Sublease income		(1.9)			(1.9)
Net lease costs	$	21.4		$	15.4		Net lease costs		$	25.3		$	21.4

Other Information							Other Information
Cash paid for amounts included in the measurement of lease liabilities:							Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(15.7	)	$	(13.5	)
Operating cash flows from operating leases (1)							Operating cash flows from operating leases (1)		$	(18.3)		$	(15.7)
Leased assets obtained in exchange for new operating lease liabilities	$	6.8		$	—		Leased assets obtained in exchange for new operating lease liabilities		$	7.4		$	6.8

Leased assets obtained in exchange for new financing lease liabilities							Leased assets obtained in exchange for new financing lease liabilities		$	12.2		$	—
	March 31, 2020								March 31, 2021
Weighted-average remaining lease term (years) operating leases	6.6						Weighted-average remaining lease term (years) operating leases		5.1
Weighted-average discount rate operating leases ⁽²⁾	6.0		%
Weighted-average remaining lease term (years) financing leases							Weighted-average remaining lease term (years) financing leases		7.7
Weighted-average discount rate operating leases (3)							Weighted-average discount rate operating leases (3)		6.4		%
Weighted-average discount rate financing leases (3)							Weighted-average discount rate financing leases (3)		3.3		%

⁽¹⁾Includes an immaterial amount of financing lease cost.

(2)Includes an immaterial amount of variable lease cost.

⁽²⁾(3) Our discount rate is primarily based on our incremental borrowing rate in accordance with ASC ~~842.~~842

~~Note 19 - Subsequent Events~~

~~Dividend Declaration~~

~~On May 4, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on June 3, 2020 to shareholders of record on May 20, 2020.~~

~~2020 Amendments to Supply and Offtake Agreements~~

In April 2020, we amended our three Supply and Offtake Agreements with J. Aron to extend the respective terms to December 30, 2022, with J. Aron having the sole discretion to further extend the agreements to May 30, 2025. As part of this amendment, there were changes to the underlying market index, annual fee and the crude purchase fee. See Note 7 for further discussion.

~~COVID-19 Pandemic and OPEC Production Disputes Subsequent Events~~

Subsequent to quarter end, steps taken to address the COVID-19 Pandemic and developments in the OPEC Production Disputes significantly impacted supply and demand in global oil and gas markets, causing oil prices to decline sharply, as well as other changes to the economic outlook in the near term. Such subsequent developments included but are not limited to government-imposed temporary business closures and voluntary shelter-at-home directives as well as developments in production discussions between global oil producers, and the effect thereof. Oil prices as well as demand are expected to continue to be volatile as a result of the near-term over-supply and the ongoing COVID-19 Pandemic as changes in oil inventories, industry demand and global and national economic performance are reported, and we cannot predict when prices and demand will improve and stabilize. We are currently unable to estimate the impact these events will have on our future financial position and results of operations. Accordingly, we can give no assurances that the events will not have a material adverse effect on our financial position or results of operations, and the information presented in this Quarterly Report on Form 10-Q should be considered in light of these events.

~~Sale of Bakersfield Non-Operating Refinery~~

On May 7, 2020, we sold our equity interests in Alon Bakersfield Property, Inc., an indirect wholly-owned subsidiary that owns our non-operating refinery located in Bakersfield, California, to a subsidiary of Global Clean Energy Holdings, Inc. (“GCE”), a southern California-based renewable energy company, for total cash consideration of $40 million. GCE intends to repurpose the refinery to produce renewable diesel and possibly renewable jet fuel. As part of the transaction, GCE granted a call option to Delek to acquire up to a 33 1/3% interest in the acquiring subsidiary, GCE Acquisitions, exercisable by Delek through the 90th day after GCE demonstrates commercial operations, as contractually defined.



33


31 \|

~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~



~~34 \|~~

Management's Discussion and Analysis

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is management’s analysis of our financial performance and of significant trends that may affect our future performance. The MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on ~~February 28, 2020~~March 1, 2021 (the "Annual Report on Form 10-K"). Those statements in the MD&A that are not historical in nature should be deemed forward-looking statements that are inherently uncertain.

Delek US Holdings, Inc. is a registrant pursuant to the Securities Act of 1933, as amended ("Securities Act") and is listed on the New York Stock Exchange ("NYSE") under the ticker symbol "DK". Unless otherwise noted or the context requires otherwise, the terms "we," "our," "us," "Delek" and the "Company" are used in this report to refer to Delek US Holdings, Inc. and its consolidated subsidiaries for all periods presented. You should read the following discussion of our financial condition and results of operations in conjunction with our historical condensed consolidated financial statements and notes thereto.

The Company announces material information to the public about the Company, its products and services and other matters through a variety of means, including filings with the SEC, press releases, public conference calls, the Company’s website (www.delekus.com), the investor relations section of its website (ir.delekus.com), the news section of its website (www.delekus.com/news), and/or social media, including its Twitter account (@DelekUSHoldings). The Company encourages investors and others to review the information it makes public in these locations, as such information could be deemed to be material information. Please note that this list may be updated from time to time.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange ~~Act.~~Act of 1934 ("Exchange Act"). These forward-looking statements reflect our current estimates, expectations and projections about our future results, performance, prospects and opportunities. Forward-looking statements include, among other things, statements regarding the effect, impact, potential duration or other implications of, or expectations expressed with respect to, the ~~recent~~ outbreak of COVID-19 and its development into a pandemic in March 2020 (the "COVID-19 Pandemic" or the "Pandemic") and the actions of members of the Organization of Petroleum Exporting Countries ~~(“OPEC”~~("OPEC") and ~~Russia~~other leading oil producing countries (together with OPEC, “OPEC+”), with respect to oil production and pricing, and statements regarding our efforts and plans in response to such events, the information concerning our planned capital expenditures by segment for 2021, possible future results of operations, business and growth strategies, financing plans, expectations that regulatory developments or other matters will or will not have a material adverse effect on our business or financial condition, our competitive position and the effects of competition, the projected growth of the industry in which we operate, and the benefits and synergies to be obtained from our completed and any future acquisitions, statements of management’s goals and objectives, and other similar expressions concerning matters that are not historical facts. Words such as "may," "will," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "appears," "projects" and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily 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. Important factors that, individually or in the aggregate, could cause such differences include, but are not limited to:

•volatility in our refining margins or fuel gross profit as a result of changes in the prices of crude oil, other feedstocks and refined petroleum products and the impact of the COVID-19 Pandemic on such demand;

•reliability of our operating assets;

•actions of our competitors and customers;

•changes in, or the failure to comply with, the extensive government regulations applicable to our industry ~~segments;~~segments, including current and future restrictions on commercial and economic activities in response to the COVID-19 Pandemic;

•our ability to execute our strategy of growth through acquisitions and capital projects and changes in the expected value of and benefits derived therefrom, including any ability to successfully integrate acquisitions, realize expected synergies or achieve operational efficiency and effectiveness;

•diminishment in value of long-lived assets may result in an impairment in the carrying value of the assets on our balance sheet and a resultant loss recognized in the statement of operations;

•the unprecedented market environment and economic effects of the COVID-19 Pandemic, including uncertainty


32 \|

Management's Discussion and Analysis

regarding the timing, pace and extent of economic recovery in the United States due to the COVID-19 Pandemic;

•general economic and business conditions affecting the southern, southwestern and western United States, particularly levels of spending related to travel and ~~tourism;~~tourism and the ongoing and future impacts of the COVID-19 Pandemic;

•volatility under our derivative instruments;

•deterioration of creditworthiness or overall financial condition of a material counterparty (or counterparties);

•unanticipated increases in cost or scope of, or significant delays in the completion of, our capital improvement and periodic turnaround projects;

•risks and uncertainties with respect to the quantities and costs of refined petroleum products supplied to our pipelines and/or held in our terminals;

•operating hazards, natural disasters, weather related disruptions, casualty losses and other matters beyond our control;

•increases in our debt levels or costs;

•possibility of accelerated repayment on a portion of the J. Aron supply and offtake liability if the purchase price adjustment feature triggers a change on the re-pricing dates;

•changes in our ability to continue to access the credit markets;

•compliance, or failure to comply, with restrictive and financial covenants in our various debt agreements;

•the ~~inability~~suspension of our ~~subsidiaries to freely make dividends, loans or other cash distributions to us;~~quarterly dividend;

•seasonality;

•acts of terrorism (including cyber-terrorism) aimed at either our facilities or other facilities that could impair our ability to produce or transport refined products or receive feedstocks;

•future decisions by ~~OPEC~~OPEC+ members ~~and Russia~~ regarding production and pricing and disputes between ~~OPEC~~OPEC+ members ~~and Russia~~ regarding such;



~~35 \|~~

~~Management's Discussion and Analysis~~

•disruption, failure, or cybersecurity breaches affecting or targeting our IT systems and controls, our infrastructure, or the infrastructure of our cloud-based IT service providers;

•changes in the cost or availability of transportation for feedstocks and refined products; and

•other factors discussed under the headings "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" and in our other filings with the SEC.

In light of these risks, uncertainties and assumptions, our actual results of operations and execution of our business strategy could differ materially from those expressed in, or implied by, the forward-looking statements, and you should not place undue reliance upon them. In addition, past financial and/or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate future results or period trends. We can give no assurances that any of the events anticipated by any forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Executive Summary



Business Overview

We are an integrated downstream energy business focused on petroleum refining, the transportation, storage and wholesale distribution of crude oil, intermediate and refined products and convenience store retailing. Our operating segments consist of refining, logistics, and retail, and are discussed in the sections that follow.

The ~~recent~~Impact of the COVID-19 Pandemic

The outbreak of COVID-19 ~~and its development into a pandemic in March 2020 (the "COVID-19 Pandemic")~~Pandemic has resulted in significant economic disruption globally, including in the ~~U.S.~~United States and specific geographic areas where we operate. Actions taken by various governmental authorities, individuals and companies around the world to prevent the spread of COVID-19 through both voluntary and mandated social distancing, curfews, shutdowns and expanded safety measures have restricted travel, many business operations, public gatherings and the overall level of individual movement and in-person interaction across the globe. This has in turn significantly reduced global economic activity which has had a significant impact on the nature and ~~resulted in airlines~~extent of travel. The COVID-19 Pandemic has had a devastating impact on the airline industry, dramatically ~~cutting back on~~reducing the number of domestic flights and, due to foreign travel bans and immigration restrictions abroad as well as traveler concerns over exposure, virtually eliminating international travel originating from the U.S. to many parts of the world. Additionally, the COVID-19 Pandemic has had a ~~decrease in~~significant negative impact on motor vehicle ~~use at a time when seasonal driving patterns typically result in an increase of consumer demand for gasoline.~~activity. As a result, ~~there has also been~~and certainly during 2020, we experienced a decline in the demand for, and thus also the market prices of, crude oil and certain of our products, particularly our refined petroleum products and most notably gasoline and jet fuel. ~~In addition, recent events concerning~~Uncertainty about the ~~dispute over production levels between Russia~~duration of the COVID-19 Pandemic has caused periodic storage constraints in the U.S.


33 \|

Management's Discussion and Analysis

resulting from over-supply of produced oil, while some of this oversupply was alleviated during and after Winter Storm Uri, which caused disruption in pipelines and other supply sources in PADD 3 during February and early March. While in the ~~members of OPEC, particularly Saudi Arabia, and~~last few months, we have seen successful domestic efforts to distribute the ~~subsequent actions taken by such countries~~vaccine across the U.S. which has led to some improved stability in the capital markets as ~~a result thereof, including Saudi Arabia discounting the price of its crude oil exports (the "OPEC Production Disputes"), have exacerbated the decline~~well as improved pricing in crude oil, refined products and related forward curves, there continues to be uncertainty, and demand for refined product, and likewise for our logistics assets, has not yet returned to normal levels. Based on these conditions and events, downward pressure on commodity prices, crack spreads and ~~have contributed to an increase in crude oil price volatility.~~demand remains a significant risk and could continue for the foreseeable future.

We have previously identified the following known uncertainties resulting from the COVID-19 ~~Pandemic~~Pandemic. And while the risk surrounding these uncertainties appears to be lessening, they still represent risks that could impact our operations, financial condition and ~~the OPEC Production Disputes:~~results of operations. They are as follows:

•Significant declines and/or volatility in prices of refined products we sell and the feedstocks we purchase as well as in crack spreads resulting from the COVID-19 Pandemic ~~and the OPEC Production Disputes~~ could have a significant impact on our revenues, cost of sales, operating income and liquidity, as well to the carrying value of orour long-lived or indefinite-lived assets;

•A decline in the market prices of refined products and feedstocks below the carrying value in our inventory may result in the adjustment of the value of our inventories to the lower market price and a corresponding loss on the value of our ~~inventories;~~inventories (see also Note 1 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of specific financial statement risks);

•The decline in demand for refined ~~product~~products could significantly impact the demand for throughput at our refineries, unfavorably impacting operating results at our refineries, and could impact the demand for storage, which could impact our logistics segment;

•The decline in demand and margins impacting current results and forecasts could result in impairments in certain of our long-lived or indefinite-lived assets, including goodwill, or have other financial statement impacts that cannot currently be anticipated (see also Note 1 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of specific financial statement risks);

•A significant reduction or suspension in U.S. crude oil production could adversely affect our suppliers and sources of crude oil;

•An outbreak in one of our refineries, exacerbated by a limited pool of qualified replacements as well as quarantine protocols, could cause significant disruption in our production or, worst case, temporary idling of the facility;

•The restrictions on travel and requirements for social distancing could significantly impact the traffic at our convenience stores, particularly the demand for fuel;

•Customers of the refining segment as well as third-party customers of the logistics segment may experience financial difficulties which could interrupt the volumes ordered by those customers and/or could impact the credit worthiness of such customers and the collectability of their outstanding receivables;

•The impact of COVID-19 or protocols implemented in response to COVID-19 by key or specialty suppliers may negatively affect our ability to obtain specialty equipment or services when needed;

•Equity method investees may be significantly impacted by the COVID-19 Pandemic ~~and/or the OPEC Production Disputes,~~ which may increase the risk of impairment of those investments;

~~While~~•Access to capital markets may be significantly impacted by the volatility and uncertainty in the oil and gas market specifically which could restrict our ability to raise funds; while our current liquidity needs are managed by existing facilities, sources of future liquidity needs may be impacted by the volatility in the debt market and the availability and pricing of such funds as a result of the COVID-19 ~~Pandemic~~Pandemic; and ~~the OPEC Production Disputes; and~~

•The U.S. Federal Government has enacted certain stimulus and relief measures ~~including~~and may consider additional relief legislation. Beyond the ~~Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") passed~~direct impact of existing legislation on ~~March 27, 2020, which, among its provisions, provides companies certain income and~~



~~36 \|~~

~~Management's Discussion and Analysis~~

~~payroll tax-related relief. To the extent that the provisions do not directly impact~~ Delek in the current ~~period~~ or ~~are intended~~prior periods (as applicable), the extent to which the provisions of the existing or any future legislation will achieve its intention to stimulate or provide relief to the greater U.S. economy and/or consumer, as well as the impact and success of such efforts, remains unknown.

Other uncertainties related to the impact of the COVID-19 Pandemic ~~and the OPEC Production Disputes~~as well as global geopolitical factors may exist that have not been identified or that are not specifically listed above, and could impact our future results of operations and financial position, the nature of which and the extent to which are currently unknown. ~~Additionally, subsequent to March 31, 2020, developments have occurred which~~The U.S. Federal Government's passage and/or enactment of additional stimulus and relief measures, as well as their future actions may impact the extent to which the risk underlying these uncertainties are realized, including the April 2020 oil supply talks between global oil producers including OPEC and Russia which resulted in preliminary agreement for management of crude oil supply in the hopes of contributing to market stabilization (the "Oil Supply Talks"), as well as the U.S. Federal Government's recent passage and/or enactment of additional stimulus and relief measures.realized. To the extent these uncertainties have been identified and are believed to have an impact on our current period results of operations or financial position based on the requirements for assessing such financial statement impact under U.S. ~~generally accepted accounting principles~~Generally Accepted Accounting Principles ("GAAP"), we have considered them in the preparation of our unaudited financial statements as of and for the three months ended March 31, ~~2020,~~2021, which are included in Item 1.1, of this Quarterly Report on Form 10-Q.


34 \|

Management's Discussion and Analysis

In addition,management has ~~and continues~~actively responded to ~~actively respond to~~ the continuing impact of the COVID-19 Pandemic ~~and the OPEC Production Disputes~~ on our business. Additionally, to the extent warranted, we continue to monitor the impact and implement measures to mitigate the risk. Such efforts include (but are not limited to) the following:

•Reviewing planned production throughputs at our refineries and planning for ~~the possibility~~optimization of ~~reductions;~~operations;

•Coordinating planned maintenance activities with possible downtime as a result of possible reductions in throughputs;

•Searching for additional storage capacity if needed to store potential builds in crude oil or refined product inventories;

•Finding additional suppliers for key or specialty items or securing inventory or priority status with existing vendors;

•Reducing ~~planned~~discretionary capital ~~expenditures for 2020;~~expenditures;

•Suspending the share repurchase program and dividend distributions until our internal parameters are met for resuming such ~~repurchases;~~activities;

•Taking advantage of the income and payroll tax relief afforded to us by the CARES ~~Act;~~Act or other Pandemic relief legislation;

~~Reviewing dividend strategy to align with market changes~~•Implementing regular site cleaning and ~~current economic conditions;~~disinfecting procedures;

•Adopting remote working where possible, and where on-site operations are required, taking appropriate safety precautions;

•Identifying alternative financing solutions as needed to enhance our access to sources of liquidity; and

•Enacting ~~other~~ cost reduction measures across the organization, including reducing contract services, reducing overtime and other employee related costs, and reducing or eliminating non-critical ~~travel~~travel.

The most significant of these efforts to date as well as specifically identified measures that are anticipated in the near term, in terms of realized or anticipated impact, include the following:

•For the year ended December 31, 2020 pursuant to the provisions of the CARES Act, we recognized $16.8 million of current federal income tax benefit attributable to anticipated tax refunds from net operating loss carryback to prior 35% tax rate years, and deferred $10.9 million of payroll tax payments which ~~serves~~will be payable in equal installments in December 2021 and December 2022. Additionally, we recorded an income tax receivable totaling $156.2 million as of December 31, 2020 related to the ~~dual purpose~~net operating loss carryback, which we expect to collect $135.6 million in 2021 and the remaining balance in 2022.

•We made significant efforts to reduce our capital spending, particularly on growth and non-critical sustaining maintenance projects. See the "Liquidity and Capital Resources" section of Item 2. MD&A further information.

•In light of the weak macro-economic environment, we elected to pull forward turnaround work into the fourth quarter of 2020 on certain units at our Krotz Springs refinery that was conducted on a straight-time basis. This allowed us to continue running the more profitable units of the refinery and should help improve economics toward a break-even level. We completed this turnaround work late in the first quarter 2021 and have begun moving back to full utilization at the facility.

•Additionally, we developed a cost savings plan for 2021 designed to continue to reduce operating expenses and general and administrative expenses. The majority of the expected operating expenses reduction is attributable to the temporary unit optimization at the Krotz Springs refinery, while other efforts such as targeted budgeting around outside contractor expenses and deferral of certain non-critical, non-capitalizable maintenance activities are also ~~complying with recommendations~~expected to have a favorable impact. Furthermore, both operating and general and administrative expenses will be favorably impacted by a cumulative reduction in workforce. Reductions in workforce are made possible in large part by significant efforts to improve process efficiency and leverage technology where cost-effective.

•Finally, we elected to suspend dividends beginning in the fourth quarter 2020 in order to conserve capital. We expect this will help us maintain our liquidity and manage our cost of capital impacted by the ~~state~~Pandemic, and ~~federal governments because~~we believe it will provide us with flexibility to pursue opportunities to provide value to investors with respect to our stock price, which we believe is undervalued.

The combination of these efforts are expected to continue to have a favorable impact on cash flows as well as our operations process effectiveness, which will improve our liquidity positioning and operational flexibility and response in anticipation of the continued economic impacts of the COVID-19 Pandemic. See the "Liquidity and Capital Resources" section of Item 2. MD&A for further information.

~~See~~The extent to which our future results are affected by the COVID-19 Pandemic will depend on various factors and consequences beyond our control, such as the duration and scope of the Pandemic; additional actions by businesses and governments in response to the Pandemic, the speed and effectiveness of responses to combat the virus and any new variants and the challenges with the vaccination rollout. The COVID-19 Pandemic, and the volatile regional and global economic conditions stemming from the Pandemic, could also ~~'Risk Factors'~~exacerbate the risk factors identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and in this Form 10-Q, as applicable. The COVID-19 Pandemic may also materially adversely affect our results in a manner that is either not currently known or that we do not currently consider to be a significant risk to our business.


35 \|

Management's Discussion and Analysis

Other Significant Events

During February 2021, the Company experienced a severe weather event ("Winter Storm Uri") which temporarily impacted operations at all of our refineries. Due to the extreme freezing conditions, we experienced reduced throughputs at our Tyler and Big Spring refineries as there was a disruption in the crude supply, as well as damages to various units at our refineries requiring additional operating and capital expenditures. As a result of this event and the related outages at our El Dorado refinery, we accelerated certain of our planned turnaround activities to coincide with repairs of any damaged units, therefore optimizing and limiting our downtime. As a result of the temporary unit optimization at our Krotz Springs refinery, there was limited disruption to its operations. Additionally, the severe weather conditions and the resultant industry downtime caused energy prices to rise in certain regions where we operate, which has resulted in additional operating expenses for the refineries impacted.

On February 27, 2021, our El Dorado refinery experienced a fire in its Penex unit, in which six Delek employees were injured. Our on-site emergency response team, with the assistance of the El Dorado Fire Department, extinguished the fire, and we immediately began to monitor the air quality within the refinery and the community. The incident is currently being investigated by the Occupational Safety and Health Administration. The facility was in the process of undergoing turnaround activity, so there were no operational disruptions as a result of the fire. (See Note 11 to our Condensed Consolidated Financial Statements included in Part ~~II,~~I, Item ~~1A.~~1 of this Quarterly Report on Form 10-Q for ~~further discussion of risks associated with the COVID-19 Pandemic~~more information about losses incurred and ~~the OPEC Production Disputes.~~

related insurance coverages).



Refining Overview

The refining segment (or "Refining") processes crude oil and other feedstocks for the manufacture of transportation motor fuels, including various grades of gasoline, diesel fuel and aviation fuel, asphalt and other petroleum-based products that are distributed through owned and third-party product terminals. The refining segment has a combined nameplate capacity of 302,000 barrels per day as of March 31, ~~2020.~~2021. A high-level summary of the refinery activities is presented below:

Tyler, Texas refinery (the "Tyler refinery")

El Dorado, Arkansas refinery (the "El Dorado refinery")

Big Spring, Texas refinery (the "Big Spring refinery")

Krotz Springs, Louisiana refinery (the "Krotz Springs refinery")

Total Nameplate Capacity (barrels per day ("bpd"))

75,000

80,000

73,000

74,000

Primary Products

Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur

Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur

Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur

Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate

Relevant Crack Spread Benchmark

Gulf Coast 5-3-2

Gulf Coast 5-3-2 (1)

Gulf Coast 3-2-1 (2)

Gulf Coast 2-1-1 (3)

Marketing and Distribution

The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States, and the refining segment also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis.

Tyler, Texas refinery (the "Tyler refinery") El Dorado, Arkansas refinery (the "El Dorado refinery") Big Spring,Texas refinery (the "Big Spring refinery") Krotz Springs, Louisiana refinery (the "Krotz Springs refinery")
Total Nameplate Capacity (barrels per day ("bpd")) 75,000
80,000
73,000
74,000
Primary Products Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate
Relevant Crack Spread Benchmark (1) Gulf Coast 5-3-2 Gulf Coast 5-3-2 (2) Gulf Coast 3-2-1 (3) Gulf Coast 2-1-1 (4)
Marketing and Distribution The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States, and the refining segment also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis.
(1) While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the U.S. Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.

(2) Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the West Texas Intermediate ("WTI") Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.

(3) The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products.



~~37 \|~~

~~Management's Discussion and Analysis~~


⁽¹⁾	~~The term "crack spread" is a measure of the difference between market prices for crude oil and refined products.~~


⁽²⁾	While there is variability in the crude slate and the product output at the El Dorado refinery, we compare our per barrel refined product margin to the U.S. Gulf Coast ("Gulf Coast") 5-3-2 crack spread because we believe it to be the most closely aligned benchmark.

⁽³⁾

Our Big Spring refinery is capable of processing substantial volumes of sour crude oil, which has historically cost less than intermediate, and/or substantial volumes of sweet crude oil, and therefore the West Texas Intermediate ("WTI") Cushing/ West Texas Sour ("WTS") price differential, taking into account differences in production yield, is an important measure for helping us make strategic, market-respondent production decisions.


⁽⁴⁾	~~The Krotz Springs refinery has the capability to process substantial volumes of light sweet crude oil to produce a high percentage of refined light products~~

Our refining segment also owns and operates three biodiesel facilities involved in the production of biodiesel fuels and related activities, located in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi.


36 \|

Management's Discussion and Analysis



Logistics Overview

Our logistics segment (or "Logistics") gathers, transports and stores crude oil and markets, distributes, transports and stores refined products in select regions of the southeastern United States and West Texas for our refining segment and third parties. It is comprised of the consolidated balance sheet and results of operations of Delek Logistics Partners, LP ("Delek Logistics", NYSE:DKL), where we owned ~~a 69.1% limited partner interest (at March 31, 2020) in Delek Logistics and a 94.6% interest in the entity that owns the entire 2.0% general partner~~an 80.0% interest in Delek Logistics ~~and all of the incentive distribution rights.~~at March 31, 2021. Delek Logistics was formed by Delek in 2012 to own, operate, acquire and construct crude oil and refined products logistics and marketing assets. A substantial majority of Delek Logistics' assets are currently integral to our refining and marketing operations. The logistics segment's pipelines and transportation business owns or leases capacity on approximately 400 miles of crude oil transportation pipelines, approximately 450 miles of refined product pipelines, and an approximately ~~700-mile~~900-mile crude oil gathering system and associated crude oil storage tanks with an aggregate of approximately 10.2 million barrels of active shell capacity. ~~Our logistics segment~~It also owns and operates nine light product terminals and markets light products using third-party terminals. ~~The logistics segment also~~Logistics has strategic investments in pipeline joint ventures that provide access to pipeline capacity as well as the potential for earnings from joint venture operations. ~~Additionally, on March 31, 2020, the~~The logistics segment ~~acquired from another of our segments~~owns or leases approximately ~~200 miles of gathering~~264 tractors and ~~ancillary assets located in Howard, Borden~~353 trailers used to haul primarily crude oil and ~~Martin Counties, Texas.~~

other products for related and third parties.



Retail Overview

Our retail segment (or "Retail") at March 31, ~~2020~~2021 includes the operations of 253 owned and leased convenience store sites located primarily in Central and West Texas and New Mexico. Our convenience stores typically offer various grades of gasoline and diesel under the DK or Alon brand name and food products, food service, tobacco products, non-alcoholic and alcoholic beverages, general merchandise as well as money orders to the public, primarily under the 7-Eleven and DK or Alon brand names pursuant to a license agreement with 7-Eleven, Inc. In November 2018, we terminated the license agreement with 7-Eleven, Inc. and the terms of such termination and subsequent amendment require the removal of all 7-Eleven branding on a store-by-store basis by December 31, ~~2021. As of March 31, 2020, we have removed the 7-Eleven brand name at 57 of our store locations.~~2023. Merchandise sales at our convenience store sites will continue to be sold under the 7-Eleven brand name until 7-Eleven branding is removed pursuant to the termination. As of March 31, 2021, we have removed the 7-Eleven brand name at 57 of our store locations. Substantially all of the motor fuel sold through our retail segment is supplied by our Big Spring refinery, which is transferred to the retail segment at prices substantially determined by reference to published commodity pricing information. In connection with our ~~retail~~Retail strategic initiatives, ~~as of March 31, 2020,~~ we ~~have~~ closed or sold 46 under-performing or non-strategic store locations since the fourth quarter of ~~which one was closed during the three months ended March 31, 2020.~~2018.

The cost to acquire the refined fuel products we sell to our wholesale customers in our logistics segment and at our convenience stores in our retail segment depends on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Our retail merchandise sales are driven by convenience, customer service, competitive pricing and branding. Motor fuel margin is sales less the delivered cost of fuel and motor fuel taxes, measured on a cents per gallon basis. Our motor fuel margins are impacted by local supply, demand, weather, competitor pricing and product brand.



Corporate and Other Overview

Our corporate activities, results of certain immaterial operating segments, ~~including~~ our asphalt terminal operations, our recently commenced wholesale crude operations, and intercompany eliminations are reported in corporate, other and eliminations in our segment disclosures. Additionally, our corporate activities include certain of our commodity and other hedging activities.



3837 \|

Management's Discussion and Analysis



Strategic Overview

The Company's overall strategy has been to take a disciplined approach that looks to balance returning cash to our shareholders and prudently investing in the business to support safe and reliable operations, while exploring opportunities for growth. Our goal has been to balance the different aspects of this program based on evaluations of each opportunity and how it matches our strategic goals for the ~~company,~~Company, while factoring in market conditions and expected cash ~~generation.~~flows.

InHaving taken into account the ~~face~~significance of the economic impact of the COVID-19 Pandemic and the OPEC Production Disputes in early 2020, our overall strategy remains unchanged and continues to be focused on the following objectives:

I. Safety and wellness.

II. Reliability and integrity.

III. Systems and processes.

IV. Risk-based decision making.

V. Positioning for growth.

In addition to the above, it continues to be a strategic and operational objective to manage price and supply risk related to crude oil that is used in refinery production, and to develop strategic sourcing relationships. For that purpose, from a pricing perspective, we enter into commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future sales of refined products or to fix margins on future production. We also enter into future commitments to purchase or sell ~~RINs~~renewable identification numbers ("RINs") at fixed prices and quantities, which are used to manage the costs ~~associated with~~of our credits for commitments required by the U.S. Environmental Protection Agency ("EPA") to blend biofuels into fuel products ("RINs ~~obligations.~~Obligation"). Additionally, from a sourcing perspective, we often enter into purchase and sale contracts with vendors and customers or take financial commodity positions for crude oil that may not be used immediately in production, but that may be used to manage the overall supply and availability of crude expected to ultimately be needed for production and/or to meet minimum requirements under strategic pipeline arrangements, and also to optimize and hedge availability risks associated with crude that we ultimately expect to use in production. Such transactions are inherently based on certain assumptions and judgments made about the current and possible future availability of crude. Therefore, when we take physical or financial positions for optimization purposes, our intent is generally to take offsetting positions in quantities and at prices that will advance these objectives while minimizing our positional and financial statement risk. However, because of the volatility of the market in terms of pricing and availability, it is possible that we may have material positions with timing differences or, more rarely, that we are unable to cover a position with an offsetting position as intended. Such differences could have a material impact on the classification of resulting gains/losses, assets or liabilities, and could also significantly impact net earnings.

With these objectives serving as our guiding principles, we are applying the short-term measures to mitigate the impact of the COVID-19 Pandemic and the OPEC Production Disputes described in the 'Business Overview' above. And with these objectives in mind, we have achieved the following successes to date in 2020:

~~2020~~2021 Developments

~~Transactions designed to maximize shareholder return~~

~~Dividend Declaration~~

~~On May 4, 2020, Delek's Board of Directors voted to declare a quarterly cash dividend of $0.31 per share, payable on June 3, 2020, to stockholders of record on May 20, 2020.~~ Our ~~previous quarterly cash dividend amounts ranged between $0.27 to $0.30 per share for dividends paid throughout 2019 and was $0.31 per share for the dividend paid~~principle focus during the first quarter of ~~2020.~~2021 was to execute on the following initiatives, consistent with those discussed above in the context of the COVID-19 Pandemic measures:

~~Share Repurchases~~•effectively implementing and executing on our operating cost savings initiatives;

~~During~~•continuing to be focused on controlling capital expenditures;

•focusing on operating efficiently, including the ~~three months ended March 31, 2020, Delek repurchased 58,713 shares~~Krotz Springs refinery optimization;

•continuing to position ourselves to manage our supply chain risk, our customer risk and our liquidity sources;

•continuing to maintain a strong retail business; and

•with our sights also set on recovery from the Pandemic and the future, continuing to explore and investigate growth opportunities for ~~an aggregate purchase price~~midstream or other lines of ~~$1.9 million under~~business.

While, as previously noted above, COVID-19 conditions seem to be improving, as is the ~~most recent share repurchase plan~~outlook, with the continued successful distribution of effective vaccines, we were faced with some unprecedented challenges which ~~provided for repurchases~~required our focus during the first quarter 2021. These included the effects of upWinter Storm Uri as well as the El Dorado fire (described above). We believe that managing the efforts listed above, plus managing through the disruption caused by these two unexpected events, were critical to ~~$500.0 million~~managing our results in this continued challenging environment. That said, and ~~was approved by~~related to the ~~board~~last bullet above, we did successfully execute on ~~November 6, 2018. As of March 31, 2020, there remained $229.7 million available for repurchases under the most recent repurchase plan.~~a strategic opportunity in our logistics segment, as described below.

~~Transactions designed to maximize return on assets~~

~~Investment in Midstream Ventures~~Exclusivity Supply Agreement

In ~~July 2019, we acquired~~May 2021, Delek Logistics executed a ~~15% ownership interest in Wink~~strategic exclusivity supply agreement with Baker Petrolite LLC (an affiliate of Baker Hughes Company) ("Baker"), for the supply of chemicals to ~~Webster Pipeline ("WWP"). WWP intends to construct~~meet IMO regulations through blending competencies utilizing proprietary intellectual property.The agreement has a 5-year initial term and ~~operate~~ a crude oil pipeline system from Wink, Texas to Webster, Texas along with certain pipelines from Webster, Texas to other destinations in the Gulf Coast area. It is expected to span approximately 650 miles at completion. Under the agreements governing the joint venture, we must contribute our percentage interest5-year extension option. Terms of the ~~applicable construction costs (including certain costs previously incurred by WWP), and it is anticipated that our capital contributions will total approximately $340 million~~agreement are intended to ~~$380 million over the course of construction (expected~~incentivize a cooperative arrangement relating to strategic blending activities to be ~~two to three years).~~

operated by Delek Logistics, and provides an exciting growth opportunity in our logistics segment.



3938 \|

Management's Discussion and Analysis

On February 21, 2020, we, through our wholly-owned direct subsidiary Delek Energy, entered into the W2W Holdings LLC ("HoldCo") Agreement with MPLX Operations LLC ("MPLX") (collectively, with its wholly-owned subsidiaries, the "WWP Project Financing Joint Venture" or the "WWP Project Financing JV"). The WWP Project Financing JV was created for the specific purpose of obtaining financing, through its wholly-owned subsidiary, W2W Finance LLC, to fund the majority of our combined capital calls resulting from and occurring during the construction period of the pipeline system under the WWP Joint Venture, and to service that debt. In connection with the arrangement, both Delek Energy and MPLX contributed their respective 15% ownership interests to the WWP Project Financing JV as collateral for and in service of the related project financing. Accordingly, distributions received from WWP through the WWP Project Financing JV will first be applied in service of the related project financing debt, with excess distributions being made to the members of the WWP Project Financing JV as provided for in the W2W Holdings LLC Agreement and as allowed under the project financing debt. The obligations of the members under the W2W Holdings LLC Agreement are guaranteed by the parents of the members of the WWP Project Financing JV (i.e., for Delek Energy, the guarantee is from Delek US Holdings, Inc.). Our investment is accounted for as an equity method investment.

~~See further discussion in Note 5 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.~~

~~Increased Investment in Delek Logistics~~

Effective March 31, 2020, Delek Logistics, through its wholly-owned subsidiary DKL Permian Gathering, LLC, acquired the Big Spring Gathering System, located in Howard, Borden and Martin Counties, Texas, from Delek. Delek Logistics will operate and maintain the Big Spring Gathering System connecting our interests in and to certain crude oil production with the Delek Logistics' Big Spring, Texas terminal and provide gathering, transportation and other related services. The total consideration was subject to certain post-closing adjustments and was comprised of $100.0 million in cash and 5.0 million common units representing limited partner interest in Delek Logistics. The cash component of this dropdown was financed with borrowings on the DKL Credit Facility. Additionally, in March 2020, we purchased 451,822 of Delek Logistics limited partner units from a public investor for approximately $5.0 million. As a result of these transaction, our ownership in Delek Logistics' common limited partner units was increased to 70.5%. These continued investments enhance our ability to maximize the value of our logistics assets.

~~See further discussion in Note 4 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.~~

~~Sale of Bakersfield Non-Operating Refinery~~

~~See Note 19 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.~~

~~Transactions designed to minimize the cost of capital/manage financial risk exposures~~

~~2020 Amendments to Supply and Offtake Agreements~~

In January 2020, we amended and restated our three Supply and Offtake Agreements with J. Aron which applies to the El Dorado refinery, the Big Spring refinery and the Krotz Springs refinery so that the repurchase of Baseline Volumes at the end of the Supply and Offtake Agreement term (representing the "Baseline Step-Out Liability" or, collectively, the "Baseline Step-Out Liabilities") will be based on market-indexed price subject to commodity price risk with corresponding changes to underlying market-based indices and certain differentials. The amendments resulted in Baseline Step-Out Liabilities for which the fair value is no longer subject to interest rate risk but is now subject to commodity price volatility.

Subsequent to March 31, 2020, in April 2020, we further amended and restated our three Supply and Offtake Agreements with J. Aron to extend the term of each to December 30, 2022, with J. Aron having the sole discretion to further extend to May 30, 2025. As part of these amendments, there were changes to the underlying market index, annual fee and the crude purchase fee. The changes are expected to result in a more favorable effective interest rate on the inventory financing arrangement compared to what they were previously.

~~See further discussion in Note 7 of our condensed consolidated financial statements included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.~~



~~40 \|~~

~~Management's Discussion and Analysis~~

Market Trends

~~Commodity Prices~~

Our results of operations are significantly affected by fluctuations in the prices of certain commodities, including, but not limited to, crude oil, gasoline, distillate fuel, biofuels, natural gas and electricity, among others. Historically, ~~our profitability has been affected by~~the impact of commodity price volatility on our refining margins (as defined in our 'Non-GAAP Measures' on page 45), specifically as it relates to the price of crude oil as compared to the price of refined products and ~~refined products. We have significant sources~~timing differences in the movements of those prices (subject to our inventory costing methodology), as well as location differentials, may be favorable or unfavorable compared to peers. Additionally, our refining margin profitability is impacted by regulatory factors, including the cost of RINs.


Crude Prices

WTI ~~Midland~~ crude ~~because~~oil represents the largest component of our crude slate at all of our refineries, and can be sourced through our gathering ~~system, and so accordingly favorable pricing of WTI~~channels or optimization efforts from Midland, ~~crude compared to other WTI crude can favorably impact our cost of materials and other and therefore our margins compared to other refiners.~~

Texas or Cushing, Oklahoma. The table below reflects the quarterly average prices of WTI Midland and WTI Cushing crude oil for each of the quarterly periods in ~~2019~~2020 and for the first quarterly period in ~~2020.~~2021. As shown in the historical graph, WTI Midland crude prices ~~have generally been~~can be favorable or unfavorable as compared to WTI ~~Cushing, though that trend has reversed slightly in the fourth quarter 2019.~~Cushing.



~~Crack Spreads~~

Crack spreads are used as benchmarks for predicting and evaluating a refinery's product margins by measuring the difference between the market price of feedstocks and crude oil and refined products. Generally, crack spreads represent the approximate refining margin resulting from processing one barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2, 3-2-1 and 2-1-1 crack spreads for each of the quarterly periods in 2019 and for the first quarterly period in 2020. As the chart illustrates, the 3-2-1 crack spread has consistently outperformed the 5-3-2 and the 2-1-1 crack spreads. In such conditions, things being equal (i.e., near-capacity throughputs and no significant outages), our Big Spring refinery, whose benchmark is the 3-2-1 crack spread, should outperform our other refineries in terms of refining margin.

~~41 |~~Crude Pricing Differentials

~~Management's Discussion and Analysis~~



~~Refined Product Prices~~

~~Our refineries produce the following products:~~

~~Tyler Refinery~~

~~El Dorado Refinery~~

~~Big Spring Refinery~~

~~Krotz Springs Refinery~~

~~Primary Products~~

~~Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur~~

~~Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur~~

~~Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur~~

~~Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate~~

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline, U.S. High Sulfur Diesel and U.S. Ultra Low Sulfur Diesel for each of the quarterly periods in 2019 and for the first quarterly period in 2020.

~~Crude Pricing Differentials~~

As U.S. crude oil production has increased weover recent years, domestic refiners have ~~seen~~benefited from the discount for WTI Cushing compared to Brent ("Brent"), a global benchmark ~~crude, widen.~~crude. This generally leads to higher margins in our refineries, as refined product prices are influenced by Brent crude prices and the majority of our crude supply is WTI-linked. AsBecause of our positioning in the Permian basin, including our access to significant sources of WTI Midland crude through our gathering system, we are even further benefited by discounts for WTI Midland/WTI Cushing differentials. When these discounts shrink or ~~as in the case of the WTI Midland/WTI Cushing differential,~~ become ~~a premium, without taking into account changes in inventory, as they did at the end of 2019,~~premiums, our reliance on WTI-linked crude pricing, and specifically WTI Midland crude, can negatively impact our ~~results.~~refining margins. Conversely, as these price discounts ~~increase,~~widen, so does our competitive advantage, created specifically by our access to ~~WTI-linked crude oil pricing, and specifically~~ WTI Midland crude ~~sources~~sourced through our gathering systems.

The chart below illustrates the differentials of both Brent crude oil and WTI Midland crude oil as compared to WTI Cushing crude oil as well as WTI Cushing as compared to Louisiana Light Sweet crude oil ("LLS") for each of the quarterly periods in ~~2019~~2020 and for the first quarterly period in ~~2020.~~2021.



42


39 \|

Management's Discussion and Analysis


Refined Product Prices

Our refineries produce the following products:

Tyler Refinery

El Dorado Refinery

Big Spring Refinery

Krotz Springs Refinery

Primary Products

Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur

Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur

Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur

Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate

The charts below illustrate the quarterly average prices of Gulf Coast Gasoline (CBOB), U.S. High Sulfur Diesel ("HSD") and U.S. ULSD for each of the quarterly periods in 2020 and for the first quarterly period in 2021.


Crack Spreads

Crack spreads are used as benchmarks for predicting and evaluating a refinery's product margins by measuring the difference between the market price of feedstocks/crude oil and the resultant refined products. Generally, a crack spread represents the approximate refining margin resulting from processing one barrel of crude oil into its outputs, generally gasoline and diesel fuel.

The table below reflects the quarterly average Gulf Coast 5-3-2 Ultra Low Sulfur Diesel ("ULSD"), 3-2-1 and 2-1-1 crack spreads for each of the quarterly periods in 2020 and for the first quarterly period in 2021. As the chart illustrates, the 3-2-1 crack spread has consistently outperformed the 5-3-2 and the 2-1-1 crack spreads. When market conditions consist of near-capacity throughputs and no significant outages, our Big Spring refinery, whose benchmark is the 3-2-1 crack spread, should outperform our other refineries in terms of refining margin, which are benchmarked against either the 5-3-2 or the 2-1-1 crack spreads.


40 \|

Management's Discussion and Analysis


RIN Volatility

Environmentalregulations continue to affect our margins in the form of volatility in the cost of r~~enewable identification numbers ("RINs").~~RINs. On a consolidated basis, we work to balance ~~the cost of~~ our ~~credits for commitments required by the EPA to blend biofuels into fuel products ("~~RINs ~~Obligation")~~Obligation in order to minimize the effect of RINs on our results. While we generate RINs in both our refining and logistics segments through our ethanol blending and biodiesel production and blending, our refining segment still needs to purchase additional RINs to satisfy its obligations. AsThe cost to purchase these additional RINs is a ~~result,~~significant cash outflow for our business. Additionally, increases in the ~~price~~market prices of RINs generally adversely affect our results of ~~operations.~~operations through changes in fair value to our existing RINs Obligation, to the extent we do not have offsetting RINs inventory on hand or effective economic hedges through net forward purchase commitments. The volatility of RINs prices is highly sensitive to regulatory and political influence and conditions, and therefore often does not correlate to movements in crude oil prices, refined product prices or crack spreads. Additionally, the pricing of RINs and the resulting impact on a refiner's margins is dependent on the type of refined product produced. Furthermore, RIN prices are impacted by market expectations regarding whether the EPA may grant certain small refinery exemptions. Therefore, the recent judicial rulings overturning certain small refinery exemptions, as well as the new presidential administration's vocal support for faster-moving clean energy initiatives, have caused significant recent increases in RINs prices to levels not seen in many years. It is not possible at this time to predict with certainty what future volumes or costs may be, but given the volatile price of RINs, the cost of purchasing sufficient RINs to satisfy our obligation could have an adverse impact on our results of operations if we are unable to recover those costs in the sale price of our refined products.

The chart below illustrates the volatility in RINs prices over several quarterly periods, beginning with the first quarter of ~~2019~~2020 through the first quarter of ~~2020.~~2021.



43


41 \|

Management's Discussion and Analysis

Contractual Obligations

~~There have been no material changes to~~Information regarding our known contractual obligations and commercial commitments ~~during~~of the ~~three months ended~~types described below as of March 31, ~~2020, from those disclosed~~2021, is set forth in the following table (in millions):


	Payments Due by Period
	<1 Year		1-3 Years		3-5 Years		>5 Years		Total
Long term debt and notes payable obligations	$	13.4	$	902.6	$	1,480.8	$	—	$	2,396.8
Interest(1)	78.9		140.2		62.7		—		281.8
Operating lease commitments(2)(7)	47.1		80.6		43.3		55.7		226.7
Purchase commitments(3)	219.0		(0.2)		—		—		218.8
Product financing commitments(4)	277.8		—		—		—		277.8
Transportation agreements(5)	135.7		236.9		190.7		96.3		659.6
J. Aron supply and offtake obligations (6)	15.5		298.8		—		—		314.3
Total	$	787.4	$	1,658.9	$	1,777.5	$	152.0	$	4,375.8

(1) Expected interest payments on debt outstanding at March 31, 2021. Floating interest rate debt is calculated using March 31, 2021 rates. For additional information, see Note 8 of our ~~Annual~~condensed consolidated financial statements included in Item 1. Financial Statements, of this Quarterly Report on Form ~~10-K.~~10-Q.

(2) Amounts reflect future estimated lease payments under operating leases having remaining non-cancelable terms in excess of one year as of March 31, 2021.

(3) We have supply agreements to secure certain quantities of crude oil, finished product and other resources used in production at both fixed and market prices. We have estimated future payments under the market-based agreements using current market rates. Excludes purchase commitments in buy-sell transactions which have matching notional amounts with the same counterparty and are generally net settled.

(4) Balances consist of contractual obligations under RINs product financing arrangements.

(5) Balances consist of obligations under agreements with third parties (not including Delek Logistics) for the transportation of crude oil to our refineries.

(6) Balances consists of contractual obligations under the J. Aron Supply and Offtake Agreements, including annual fees and principal obligation for the Baseline Volume Step-Out Liability. For additional information, see Note 7 of our condensed consolidated financial statements included in Item 1. Financial Statements, of this Quarterly Report on Form 10-Q.

(7) Includes an immaterial amount of financing lease cost.

Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results of operations, and require our most difficult, subjective or complex judgments or estimates. Based on this definition and as further described in our ~~2019~~2020 Annual Report on Form 10-K, we believe our critical accounting policies include the following: (i) estimating our quarterly inventory adjustments using the last-in, first-out valuation method for the Tyler refinery, (ii) evaluating impairment for property, plant and equipment and definite life intangibles, (iii) evaluating potential impairment of goodwill, (iv) estimating environmental expenditures, and (v) estimating asset retirement obligations.

~~During~~ Additionally, we have identified the ~~three months ended March 31, 2020, we updated our critical accounting policies to include accounting policies that have become critical as a result of new transactions. Accordingly, we are adding a~~following critical accounting policy ~~related~~that impacts the first quarter of 2021:

Under ASC 740, Accounting for Income Taxes, we use an estimated annual effective tax rate ("AETR") to ~~evaluating variable interest entities to reflect~~record income taxes. The development of the estimated AETR involves significant judgment, ~~that is involved when determining whether an entity is a variable interest entity ("VIE")~~particularly early in the year and ~~evaluating whether we are~~in times of economic uncertainty. In the ~~primary beneficiary in connection with~~first quarter of 2021, our ~~new investment in W2W Holdings LLC. See Note 5~~estimates of the ~~condensed consolidated financial statements~~expected AETR reflected inputs which are subject to judgment including (but not necessarily limited to) the following:

•Forecasted pre-tax GAAP income or loss for the year

•Estimates of expected permanent differences in ~~Item 1, Financial Statements~~GAAP income or loss and taxable income or loss for ~~discussion of our investment in W2W Holdings LLC~~the year

•Forecasted capital expenditures for the year and future years (where such activities were significantly impacted by the ~~related accounting treatment.~~recent weather event and can likewise be impacted by unanticipated events)

~~Evaluation of Variable Interest Entities~~

•Expected applicable jurisdictional tax rates

Our consolidated financial statements include the financial statements of our subsidiaries and VIEs, of which we are the primary beneficiary. We evaluate all legal entities in which we hold an ownership or other pecuniary interest to determine if the entity is a VIE. Variable interests can be contractual, ownership or other pecuniary interests in an entity that change with changes in the fair value of the VIE’s assets. If we are not the primary beneficiary, the general partner or another limited partner may consolidate the VIE, and we record the investment as an equity method investment. Significant judgment is exercised in determining that a legal entity is a VIE and in evaluating whether we are the primary beneficiary in a VIE. Generally, the primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the right to receive benefits or obligation to absorb losses that could be potentially significant to the VIE. We evaluate the entity’s need for continuing financial support; the equity holder’s lack of a controlling financial interest; and/or if an equity holder’s voting interests are disproportionate to its obligation to absorb expected losses or receive residual returns. We evaluate our interests in a VIE to determine whether we are the primary beneficiary. We use a primarily qualitative analysis to determine if we are deemed to have a controlling financial interest in the VIE, either on a standalone basis or as part of a related party group. We continually monitor our interests in legal entities for changes in the design or activities of an entity and changes in our interests, including our status as the primary beneficiary to determine if the changes require us to revise our previous conclusions.

~~Additionally, due to the economic and industry~~•Estimated impact of ~~the COVID-19 Pandemic~~possible deduction and ~~the OPEC Production Disputes, we also modified the application~~tax credit limitations

•Estimates regarding net operating losses, carryback and carryforward provisions (and limitations) and valuation allowances

All of ~~certain of our critical accounting policies during~~these inputs are subject to significant judgment and ~~as of the three months ended March 31, 2020 as follows:~~

~~Goodwill and Potential Impairment~~

~~Our annual goodwill impairment analysis is performed during the fourth quarter of each year. Under ASC 350,~~ ~~Intangibles - Goodwill and Other~~, goodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We have identified two significant events that arose during the three months ended March 31, 2020 that adversely affected the global economy and the oil and gas industry. These two events are the COVID-19 Pandemic and the OPEC Production Disputes (previously defined), both of which had the secondary effect of impacting prices of crude oil and refined products as well as supply and demand for crude oil and refined products, and triggered several identified uncertainties, as discussed in the 'Business Overview' section of Management's Discussion and Analysis. Our assessment was performed based on the events that had occurred through March 31, 2020 and excluded developments that occurred in the subsequent period, including but not limited to government-imposed temporary business closures and voluntary shelter-at-home directives as well as developments in production discussions between global oil producers, and the effect thereof. In order to determine whether these events, including the developments around such events that had occurred through March 31, 2020 and our assumptions about future ~~periods~~events impacting 2021, some of which are based on ~~those events~~historical trends and results, operational plans, and projections regarding future pricing and profitability (where we utilize third party forward curves and pricing sources, where possible, but where expectations regarding capture rates and other factors involve judgment). We also note that, while economic conditions affecting our industry and industry outlooks related ~~developments, would more likely than not reduce the fair value~~to COVID-19 are stabilizing and improving, there remains a level of ~~a reporting unit below its carrying amount, we performed certain analyses on the most significant inputs in our valuation model~~uncertainty related to evaluate the impact of these events on the fair value of our reporting units. This included sensitivity analysis and stress testing on certain of our inputs to our valuation model, including the weighted-average cost of capital, the throughput volume,COVID-19 and the ~~crack spread, which is based on~~expectations for recovery that increases the ~~crude and refined product markets. Based on our analyses (which, as noted above, were based on the conditions and events that had occurred as~~level of ~~March 31, 2020), we determined that there is not an indicator that fair value is more likely than not to have declined below carrying value as of March 31, 2020.~~

judgment involved with



4442 \|

Management's Discussion and Analysis

~~Additionally, because conditions and events are rapidly changing,~~some of these assumptions, particularly during the first quarter of 2021. Accordingly, where appropriate, we ~~continue~~may consider the probability of certain components in determining what we believe to ~~monitor developments with these events and their impact~~be a reasonable estimate based on ~~our valuation. However, there is uncertainty in and around the impact of the COVID-19 Pandemic and the OPEC Production Disputes that have not yet occurred or for existing~~ conditions and events that were in existence as of our reporting date, which may ~~have future ramifications that cannot yet be anticipated. Continued~~also involve the use of significant management judgment. Furthermore, many of our assumptions are inter-relational, where changing one assumption can impact other assumptions (e.g., in terms of the applicability of or ~~sustained adverse change~~limitations under various tax code provisions).

The nature of the AETR estimation approach for recording income taxes requires continuous review and adjustment during the year based on actual results, and as better information regarding forecasted results and assumptions becomes available. Significant changes in any of these assumptions or in actual results compared to ~~these factors may~~our forecasts and assumptions could cause material changes in our AETR, which could result in ~~potential~~cumulative adjustments to reflect the new estimates in future ~~impairment of some or all~~periods.

We have developed and utilized methodologies and rationales for the development of our ~~goodwill balance.~~

~~Other than~~assumptions, subject to internal controls and sensitivity or probability assessments, as ~~described above,~~appropriate, and we believe our process provides a reasonable basis for ~~all financial statement periods presented, there have been no material modifications to~~our estimated AETR as well as the ~~application~~income taxes as of ~~these critical accounting policies or estimates since our most recently filed Annual Report on Form 10-K. See Note 1 of~~and for the ~~condensed consolidated financial statements in Item 1, Financial Statements for discussion of updates to our accounting policies.~~three months ended March 31, 2021.

Non-GAAP Measures

Our management uses certain “non-GAAP” operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:

•Refining margin - calculated as the difference between net refining revenues and total cost of materials and other;

•Refined product margin - calculated as the difference between net revenues attributable to refined products (produced and purchased) and related cost of materials and other (which is applicable to both the refining segment and the ~~west~~West Texas wholesale marketing activities within our logistics segment); and

•Refining margin per barrels sold - calculated as refining margin divided by our average refining sales in barrels per day (excluding purchased barrels) multiplied by 1,000 and multiplied by the number of days in the period.

We believe these non-GAAP operational and financial measures are useful to investors, lenders, ratings agencies and analysts to assess our ongoing performance because, when reconciled to their most comparable GAAP financial measure, they provide improved comparability between periods through the exclusion of certain items that we believe are not indicative of our core operating performance and ~~they~~that may obscure our underlying results and trends.

Non-GAAP measures have important limitations as analytical tools, because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable U.S. GAAP financial measures.

Non-GAAP Reconciliations

The following table provides a reconciliation of refining margin to the most directly comparable ~~U.S.GAAP~~U.S. GAAP measure, gross margin:

Reconciliation of refining margin to gross margin

Refining Segment
Three Months Ended March 31,
2020 2019
Net revenues $ 1,727.9
$ 2,092.0
Cost of sales 2,055.5
1,821.2
Gross margin (327.6 ) 270.8
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization) 111.7
121.0
Depreciation and amortization 37.2
31.1
Refining margin $ (178.7 ) $ 422.9


Refining Segment
	Three Months Ended March 31,
		2021		2020
Net revenues		$	1,740.1	$	1,727.9
Cost of sales		1,813.4		2,055.5
Gross margin		(73.3)		(327.6)
Add back (items included in cost of sales):
Operating expenses (excluding depreciation and amortization)		113.6		111.7
Depreciation and amortization		52.1		37.2
Refining margin		$	92.4	$	(178.7)



45


43 \|

Management's Discussion and Analysis

Summary Financial and Other Information

The following table provides summary financial data for Delek:

Summary Statement of Operations Data (in millions)(1)


Consolidated
	Three Months Ended
	March 31,
		2021		2020
Net revenues		$	2,392.2	$	1,821.2
Total operating costs and expenses		2,472.3		2,182.7
Operating loss		(80.1)		(361.5)
Total non-operating expense, net		23.6		28.6
Loss before income tax benefit		(103.7)		(390.1)
Income tax benefit		(12.4)		(83.1)


Net loss		(91.3)		(307.0)
Net income attributed to non-controlling interests		7.3		7.4
Net loss attributable to Delek		$	(98.6)	$	(314.4)

Consolidated
Three Months Ended March 31,
2020 2019
Net revenues $ 1,821.2
$ 2,199.9
Total operating costs and expenses 2,182.7
1,977.5
Operating income (361.5 ) 222.4
Total non-operating expenses, net 28.6
22.2
(Loss) income before income tax (benefit) expense (390.1 ) 200.2
Income tax (benefit) expense (83.1 ) 45.8
Net (loss) income (307.0 ) 154.4
Net income attributed to non-controlling interests 7.4
5.1
Net (loss) income attributable to Delek $ (314.4 ) $ 149.3
(1) This information is presented at a summary level for your reference. See the Consolidated Condensed Statements of Income included in Item 1. to this Quarterly Report on Form 10-Q for more detail regarding our results of operations and net loss per share.

We report operating results in three reportable segments:

•Refining

•Logistics

•Retail

Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each of its reportable segments based on the segment contribution margin which is defined as net revenues less costs of materials and other and operating expenses, excluding depreciation and amortization.



~~46 \|~~

~~Management's Discussion and Analysis~~

Results of Operations

Consolidated Results of Operations — Comparison of the Three Months Ended March 31, ~~2020~~2021 versus the Three Months Ended March 31, ~~2019~~2020

Net Loss

Consolidated net loss for the first quarter of ~~2020~~2021 was ~~$307.0~~$91.3 million compared to a net ~~income~~loss of ~~$154.4~~$307.0 million for the first quarter of ~~2019.~~2020. Consolidated net loss attributable to Delek for the first quarter of March 31, ~~2020~~2021 was $98.6 million, or $(1.34) per basic share, compared to net loss of $314.4 million, or $(4.28) per basic share, ~~compared to a net income of $149.3 million, or $1.92 per basic share,~~ for the first quarter ~~2019.~~2020. Explanations for significant drivers impacting net ~~loss~~income as compared to the comparable period of the prior year are discussed in the sections below.

Net Revenues

In the first quarters of ~~2020~~2021 and ~~2019,~~2020, we generated net revenues of $2,392.2 million and $1,821.2 million, ~~and $2,199.9 million,~~ respectively, ~~a decrease~~an increase of ~~$378.7~~$571.0 million, or ~~17.2%~~31.4%. The ~~decrease~~increase in net revenues was primarily driven by the following factors:

•in our refining segment, ~~decreased sales volumes partially due~~we achieved similar results in the current period as compared to prior year, despite challenges impacting our refineries, including the severe weather event in February 2021, the El Dorado fire and turnaround activities, and the temporary suspension of crude refining unit production at our ~~Big~~Krotz Spring ~~refinery and decreases~~refinery; such results were driven by increases in the average price of U.S. Gulf Coast gasoline of ~~17.8%~~36.9%, ~~ultra-low sulfur diesel~~ULSD of ~~21.8%~~16.0%, and ~~high-sulfur diesel~~HSD of ~~22.3%~~10.3%; and

•in our corporate and other segment, an increase in wholesale crude activity which began in the second quarter of 2020.


44 \|

Management's Discussion and Analysis

Such increases were partially offset by:

•in our retail segment, decreases in fuel sales volumes ~~and~~due to demand slowdown as a result of COVID-19 Pandemic, partially offset by an increase in merchandise sales ~~partially attributable to reduction in the average number of stores,~~ as well as a ~~$0.03 decrease~~12.9% increase in average price charged per ~~gallon quarter over quarter.~~gallon.

~~Such decreases were partially offset by:~~

~~in our logistics segment, increased volumes sold in West Texas marketing operations, increased rates~~Total Operating Costs and ~~change in fee structure for Paline pipeline, and increased throughputs at our SALA gathering system and Magnolia pipeline.~~

Expenses

Cost of Materials and Other

Cost of materials and other was $2,205.5 million for the first quarter of 2021 compared to $1,910.6 million for the first quarter of 2020, ~~compared to $1,699.4 million for the first quarter of 2019,~~ an increase of ~~$211.2~~$294.9 million, or ~~12.4%~~15.4%. The net increase in cost of materials and other was primarily driven by the following:

~~a narrowing~~•increases in cost of crude oil ~~differentials during~~feedstocks at the ~~first quarter where~~refineries, including a 27.3% increase in the ~~Midland~~average cost of WTI Cushing crude oil ~~differential to Brent crude oil was an average discount of $5.31 per barrel compared to $10.13 per barrel~~and a 29.4% increase in the ~~prior-year period, and the~~average cost of WTI Midland ~~to WTI Cushing discount averaged $0.06 per barrel~~crude oil;

•an increase in wholesale crude activity which began in the ~~first~~second quarter ~~2020 compared~~of 2020; and

• a decrease in hedging gains to a ~~discount~~loss of ~~$1.17 per barrel in the prior-year period;~~

~~the net reversal (expense) benefit of $(280.8) million related to inventory valuation reserves recognized during the first quarter of 2020 compared to $52.1~~$57.4 million recognized during the first quarter of ~~2019;~~


•	~~increases in ethanol RIN prices which averaged $0.47 per RIN in first quarter 2020 compared to $0.20 per RIN in the prior-year period; and~~

~~increases in~~2021 from a gain of $77.9 million recognized during the ~~volume~~first quarter of ~~refined products in the logistics segment~~2020;

These increases were partially offset by:

•the benefit (expense) of $20.4 million related to the change in pre-tax inventory valuation recognized during the first quarter of 2021 compared to $(280.8) million recognized during the first quarter of 2020;

•decreases in the average volumes of gasoline and diesel sold, partially offset by ~~decreases~~increases in the average cost per gallon of gasoline and diesel ~~purchased.~~sold in our West Texas marketing operations; and

~~Such increases were~~•a decrease in total retail fuel gallons sold due to demand slowdown as a result of the COVID-19 Pandemic, partially offset by ~~the following:~~

decreases in volume partially due to turnaround activities at Big Spring refinery and cost of crude oil feedstocks at the refineries, including a decrease in the cost of WTI Cushing crude oil from an average of $54.87 per barrel to an average of $45.57;

an increase in ~~hedging gains to $77.9~~average cost per gallon.

Operating Expenses

Operating expenses were $149.3 million ~~recognized during~~for the first quarter of ~~2020 from $19.8 million recognized during the first quarter of 2019; and~~

~~a decrease in retail fuel cost of materials and other attributable~~2021 compared to ~~a reduction in number of stores and a decrease in average cost per gallon of $0.14.~~

~~Operating Expenses~~

~~Operating expenses were~~ $154.5 million for the first quarter of 2020, ~~compared to $166.7 million for the first quarter of 2019,~~ a decrease of ~~$12.2~~$5.2 million, or ~~7.3%~~3.4%. The decrease in operating expenses was primarily driven by the following:

•a decrease in employee expenses partially due to staff reductions and suspension of matching contributions to our 401(k) match; and

•decreases in ~~the refining segment related to lower employee, utilities and maintenance costs;~~

~~decrease in outside service costs across all segments; and~~

~~decrease in retail operating expenses~~contract services partially due to cost reduction measures continuing in ~~number~~the first quarter of ~~stores.~~2021.

Such decrease was offset by the following:



~~47 \|~~

~~Management's Discussion~~•an increase in utilities costs primarily associated with higher natural gas costs during the February 2021 severe freezing conditions that affected most of the regions where we operate, partially offset by lower production at our El Dorado and ~~Analysis~~

Krotz Springs refineries.

General and Administrative Expenses

General and administrative expenses were $47.1 million for the first quarter of 2021 compared to $65.7 million for the first quarter of 2020, ~~compared to $62.2 million for the first quarter~~a decrease of ~~2019, an increase of $3.5~~$18.6 million, or ~~5.6%~~28.3%. The ~~increase~~decrease in general and administrative expense was primarily driven by the following:

~~an increase~~•a decrease in employee ~~insurance~~expenses partially due to staff reductions, suspension of matching contributions to our 401(k) plan, and ~~subscriptions costs driven by increased headcount in corporate and other.~~reduction of stock-based compensation;

~~Such increases were partially offset by~~ •a decrease in contract ~~services.~~services due to cost reduction measures; and

•a decrease in travel related expense due to travel restrictions in place as a result of the COVID-19 Pandemic.

Depreciation and Amortization

Depreciation and amortization (included in both cost of sales and other operating expenses) was $68.5 million for the first quarter of 2021 compared to $52.6 million for the first quarter of 2020, ~~compared~~an increase of $15.9 million, or 30.2%. This increase was primarily due to ~~$46.8 million for~~depreciation associated with assets added during the Big Spring refinery turnaround in the first quarter of ~~2019, an increase of $5.8 million, or 12.4%.~~2020, as well as other refining assets placed in service.

Other Operating ~~Income,~~Loss (Income), Net

Other operating ~~income,~~loss, net increased by ~~$3.1~~$2.6 million in the first quarter of ~~2020~~2021 to a loss of $1.9 million compared to income of $0.7 ~~million compared to expense of $2.4~~ million in the first quarter of ~~2019.~~2020.


45 \|

Management's Discussion and Analysis

Non-operating Expenses, Net

Interest Expense

Interest expense ~~increased~~decreased by ~~$7.6~~$6.7 million, or ~~26.5%~~18.5%, to $29.6 million in the first quarter of 2021 compared to $36.3 million in the first quarter of 2020, ~~compared to $28.7 million~~primarily driven by the following:

•a decrease in the average effective interest rate of 1.44% in the first quarter of ~~2019, primarily driven~~2021 compared to the first quarter of 2020 (where effective interest rate is calculated as interest expense divided by the ~~following:~~

net average borrowings/obligations outstanding), partially offset by an increase in net average borrowings outstanding (including the obligations under the Supply and Offtake Agreements which have an associated interest charge) of approximately ~~$373.7~~$221.9 million in the first quarter of ~~2020~~2021 (calculated as a simple average of beginning borrowings/obligations and ending borrowings/obligations for the period) compared to the first quarter of 2019, and an increase in the average effective interest rate of 0.41% in the first quarter of 2020 compared to the first quarter of 2019 (where effective interest rate is calculated as interest expense divided by the net average borrowings/obligations outstanding).2020.

Results from Equity Method Investments

We recognized income of ~~$5.1~~$4.8 million from equity method investments during the first quarter of ~~2020,~~2021, compared to ~~$2.6~~$5.1 million for the first quarter of ~~2019, an increase~~2020, a decrease of ~~$2.5~~$0.3 million. ~~This increase was primarily driven by the following:~~

~~the addition of the Red River Joint Venture in May 2019 which contributed income of $1.8 million in the first quarter of 2020; and~~

~~an increase in income from our other logistics joint ventures from $2.0 million in the first quarter of 2019 to $3.8 million in the first quarter of 2020.~~

~~Such increases were partially offset by losses attributable to our investment in WWP and the WWP Project Financing JV, which is still in the construction period.~~

~~Other~~

~~Other income decreased $0.5 million, to $0.9 million in first quarter of 2019 compared to $1.4 million in the first quarter of 2020.~~

Income Taxes

Income tax expense ~~decreased~~increased by ~~$128.9~~$70.7 million in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•a pre-tax loss of ~~$390.1~~$103.7 million in the first quarter of ~~2020,~~2021, as compared to ~~pre-tax income of $200.2~~$390.1 million for the first quarter of ~~2019;~~2020; and

•a decrease in our effective tax rate which was 12.0% for the first quarter of 2021, compared to 21.3% for the first quarter of 2020 ~~compared~~primarily due to ~~22.9%~~the following:

◦changes in valuation allowance for state attributes in the first quarter of ~~2019 primarily due~~2021 compared to the ~~following:~~first quarter of 2020;

◦the reversal of a valuation allowance for deferred tax assets in partnership investments in the first quarter of 2020; and

◦changes in the state income tax footprint for separate state jurisdictions.


◦			~~reversal of a valuation allowance attributable to book-tax basis differences in partnership investments reported as a discrete benefit for the quarter; and~~


◦			~~offsetting impact of tax expense for permanent differences due to application of the estimated annual tax rate to year-to-date loss for the quarter.~~



4846 \|

Management's Discussion and Analysis



Refining Segment

The tables and charts below set forth certain information concerning our refining segment operations ($ in millions, except per barrel amounts):


Refining Segment Margins
	Three Months Ended
	March 31,
		2021		2020
Net revenues		$	1,740.1	$	1,727.9
Cost of materials and other		1,647.7		1,906.6
Refining margin		92.4		(178.7)
Operating expenses (excluding depreciation and amortization)		113.6		111.7
Contribution margin		$	(21.2)	$	(290.4)

Refining Segment Margins
Three Months Ended March 31,
2020 2019
Net revenues $ 1,727.9
$ 2,092.0
Cost of materials and other 1,906.6
1,669.1
Refining margin (178.7 ) 422.9
Operating expenses (excluding depreciation and amortization) 111.7
121.0
Contribution margin $ (290.4 ) $ 301.9

Factors Impacting Refining Profitability

Our profitability in the refining segment is substantially determined by the difference between the cost of the crude oil feedstocks we purchase and the price of the refined products we sell, referred to as the "crack spread", "refining margin" or "refined product margin". Refining margin is used as a metric to assess a refinery's product margins against market crack spread trends, where "crack spread" is a measure of the difference between market prices for crude oil and refined products and is a commonly used proxy within the industry to estimate or identify trends in refining margins.

The cost to acquire feedstocks and the price of the refined petroleum products we ultimately sell from our refineries depend on numerous factors beyond our control, including the supply of, and demand for, crude oil, gasoline and other refined petroleum products which, in turn, depend on, among other factors, changes in domestic and foreign economies, weather conditions such as hurricanes or tornadoes, local, domestic and foreign political affairs, global conflict, production levels, the availability of imports, the marketing of competitive fuels and government regulation. Other significant factors that influence our results in the refining segment include operating costs (particularly the cost of natural gas used for fuel and the cost of electricity), seasonal factors, refinery utilization rates and planned or unplanned maintenance activities or turnarounds. Moreover, while the fluctuations in the cost of crude oil are typically reflected in the prices of light refined products, such as gasoline and diesel fuel, the price of other residual products, such as asphalt, coke, carbon black oil and liquefied petroleum gas ("LPG") are less likely to move in parallel with crude cost. This could cause additional pressure on our realized margin during periods of rising or falling crude oil prices.

Additionally, our margins are impacted by the pricing differentials of the various types and sources of crude oil we use at our refineries and their relation to product pricing. Our crude slate is predominantly comprised of WTI crude oil. Therefore, favorable differentials of WTI compared to other crude will favorably impact our operating results, and vice versa. Additionally, because of our gathering system presence in the Midland area and the significant source of crude specifically from that region into our network, a widening of the WTI Cushing less WTI Midland spread will favorably influence the operating margin for our refineries. Alternatively, a narrowing of this differential will have an adverse effect on our operating margins. Global product prices are influenced by the price of Brent crude which is a global benchmark crude. Global product prices influence product prices in the U.S. As a result, our refineries are influenced by the spread between Brent crude and WTI Midland. The Brent less WTI Midland spread represents the differential between the average per barrel price of Brent crude oil and the average per barrel price of WTI Midland crude oil. A widening of the spread between Brent and WTI Midland will favorably influence our refineries' operating margins. Also, the Krotz Springs refinery is influenced by the spread between Brent crude and LLS. The Brent less LLS spread represents the differential between the average per barrel price of Brent crude oil and the average per barrel price of LLS crude oil. A discount in LLS relative to Brent will favorably influence the Krotz Springs refinery operating margin.

AsIn addition to the above, it continues to be a strategic and operational objective to manage price and supply risk related to crude oil that is used in refinery production, and to develop strategic sourcing relationships. For that purpose, from a pricing perspective, we enter into commodity derivative contracts to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future


47 \|

Management's Discussion and Analysis

sales of refined products or to fix margins on future production. We also enter into future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage our RINs Obligation. Additionally, from a sourcing perspective, we often enter into purchase and sale contracts with vendors and customers or take physical or financial commodity positions for crude oil that may not be used immediately in production, but that may be used to manage the overall supply and availability of crude expected to ultimately be needed for production and/or to meet minimum requirements under strategic pipeline arrangements, and also to optimize and hedge availability risks associated with crude that we ultimately expect to use in production. Such transactions are inherently based on certain assumptions and judgments made about the current and possible future availability of crude. Therefore, when we take physical or financial positions for optimization purposes, our intent is generally to take offsetting positions in quantities and at prices that will advance these objectives while minimizing our positional and financial statement risk. However, because of the volatility of the market in terms of pricing and availability, it is possible that we may have material positions with timing differences or, more rarely, that we are unable to cover a position with an offsetting position as intended. Such differences could have a material impact on the classification of resulting gains/losses, assets or liabilities, and could also significantly impact refining contribution margin.

Finally, as part of our overall business strategy, we regularly evaluate opportunities to expand our portfolio of businesses and may at any time be discussing or negotiating a transaction that, if consummated, could have a material effect on our business, financial condition, liquidity or results of operations.


48 \|

Management's Discussion and Analysis


Refinery Statistics
	Three Months Ended
	March 31,
		2021			2020
	(Unaudited)
Tyler, TX Refinery
Days in period		90			91
Total sales volume - refined product (average barrels per day)(1)		73,224			74,981

Products manufactured (average barrels per day):
Gasoline		39,560			40,041
Diesel/Jet		27,741			27,403
Petrochemicals, LPG, natural gas liquids ("NGLs")		1,724			1,992
Other		1,471			1,242
Total production		70,496			70,678
Throughput (average barrels per day):
Crude Oil		64,753			65,966
Other feedstocks		5,978			5,741
Total throughput		70,731			71,707
Total refining revenue ($ in millions)		$	490.0		$	419.6
Cost of materials and other ($ in millions)		441.2			566.4
Total refining margin ($ in millions)		$	48.8		$	(146.8)
Per barrel of refined product sales:
Tyler refining margin		7.41			$	(21.51)
Direct operating expenses		3.57			$	3.73
Crude Slate: (% based on amount received in period)
WTI crude oil		92.6		%	92.6		%
East Texas crude oil		6.8		%	7.4		%
Other		0.6		%	—		%

El Dorado, AR Refinery
Days in period		90			91
Total sales volume - refined product (average barrels per day)(1)		49,711			77,551

Products manufactured (average barrels per day):
Gasoline		17,553			36,407
Diesel		13,973			27,637
Petrochemicals, LPG, NGLs		751			2,061
Asphalt		3,670			6,641
Other		438			972
Total production		36,385			73,718
Throughput (average barrels per day):
Crude Oil		34,766			71,621
Other feedstocks		1,666			2,643
Total throughput		36,432			74,264
Total refining revenue ($ in millions)		$	436.8		$	611.9
Cost of materials and other ($ in millions)		450.9			671.5
Total refining margin ($ in millions)		$	(14.1)		$	(59.6)
Per barrel of refined product sales:
El Dorado refining margin		$	(3.16)		$	(8.45)
Direct operating expenses		$	6.36		$	4.42
Crude Slate: (% based on amount received in period)
WTI crude oil		44.0		%	34.4		%
Local Arkansas crude oil		32.2		%	19.2		%
Other		23.8		%	46.4		%


49 \|

Management's Discussion and Analysis


Refinery Statistics (continued)
	Three Months Ended
	March 31,
		2021			2020
	(Unaudited)
Big Spring, TX Refinery
Days in period		90			91
Total sales volume - refined product (average barrels per day) (1)		68,699			38,086

Products manufactured (average barrels per day):
Gasoline		32,812			14,607
Diesel/Jet		20,935			9,796
Petrochemicals, LPG, NGLs		3,148			1,381
Asphalt		1,793			850
Other		1,404			480
Total production		60,092			27,114
Throughput (average barrels per day):
Crude oil		59,758			29,905
Other feedstocks		929			(1,327)
Total throughput		60,686			28,578
Total refining revenue ($ in millions)		$	502.0		$	409.8
Cost of materials and other ($ in millions)		461.2			453.5
Total refining margin ($ in millions)		$	40.8		$	(43.7)
Per barrel of refined product sales:
Big Spring refining margin		$	6.60		$	(12.60)
Direct operating expenses		$	6.43		$	7.37
Crude Slate: (% based on amount received in period)
WTI crude oil		62.8		%	56.3		%
WTS crude oil		37.2		%	43.7		%

Krotz Springs, LA Refinery
Days in period		90			91
Total sales volume - refined product (average barrels per day) (1)		24,964			81,016
Products manufactured (average barrels per day):
Gasoline		6,118			29,933
Diesel/Jet		4,003			30,932
Heavy Oils		182			731
Petrochemicals, LPG, NGLs		1,265			3,006
Other		11,216			—
Total production		22,784			64,602
Throughput (average barrels per day):
Crude Oil		13,554			72,481
Other feedstocks		11,381			(8,383)
Total throughput		24,935			64,098
Total refining revenue ($ in millions)		$	319.7		$	443.6
Cost of materials and other ($ in millions)		305.6			454.6
Total refining margin ($ in millions)		$	14.1		$	(11.0)
Per barrel of refined product sales:
Krotz Springs refining margin		$	6.25		$	(1.49)
Direct operating expenses		$	9.07		$	3.43
Crude Slate: (% based on amount received in period)
WTI Crude		81.2		%	66.1		%
Gulf Coast Sweet Crude		18.8		%	33.9		%
Other		—		%	—		%

(1) Includes inter-refinery sales and sales to other segments which are eliminated in consolidation. See tables below.

Refinery Statistics
Three Months Ended March 31,
2020 2019
(Unaudited)
Tyler, TX Refinery
Days in period 91
90
Total sales volume - refined product (average barrels per day)⁽¹⁾
74,981
70,028
Products manufactured (average barrels per day):
Gasoline 40,041
39,341
Diesel/Jet 27,403
27,383
Petrochemicals, LPG, natural gas liquids ("NGLs") 1,992
2,056
Other 1,242
1,166
Total production 70,678
69,946
Throughput (average barrels per day):
Crude Oil 65,966
64,479
Other feedstocks 5,741
6,471
Total throughput 71,707
70,950
Per barrel of refined product sales:
Tyler refining margin (21.51 ) $ 22.26
Direct operating expenses 3.73
$ 4.70
Crude Slate: (% based on amount received in period)
WTI crude oil 92.6 % 89.6 %
East Texas crude oil 7.4 % 9.1 %
Other — % 1.3 %

El Dorado, AR Refinery
Days in period 91
90
Total sales volume - refined product (average barrels per day)⁽¹⁾
77,551
52,440
Products manufactured (average barrels per day):
Gasoline 36,407
20,490
Diesel 27,637
15,451
Petrochemicals, LPG, NGLs 2,061
806
Asphalt 6,641
4,825
Other 972
639
Total production 73,718
42,211
Throughput (average barrels per day):
Crude Oil 71,621
41,112
Other feedstocks 2,643
2,192
Total throughput 74,265
43,304
Per barrel of refined product sales:
El Dorado refining margin $ (8.45 ) $ 13.45
Direct operating expenses $ 4.42
$ 6.69
Crude Slate: (% based on amount received in period)
WTI crude oil 34.4 % 41.3 %
Local Arkansas crude oil 19.2 % 27.7 %
Other 46.4 % 31.0 %



50 \|

Management's Discussion and Analysis

Refinery Statistics (continued)
Three Months Ended March 31,
2020 2019
(Unaudited)
Big Spring, TX Refinery
Days in period 91
90
Total sales volume - refined product (average barrels per day)⁽¹⁾
38,086
81,849
Products manufactured (average barrels per day):
Gasoline 14,607
38,900
Diesel/Jet 9,796
28,359
Petrochemicals, LPG, NGLs 1,381
3,848
Asphalt 850
1,512
Other 480
1,237
Total production 27,114
73,856
Throughput (average barrels per day):
Crude oil 29,905
72,329
Other feedstocks (1,327 ) 1,890
Total throughput 28,579
74,219
Per barrel of refined product sales:
Big Spring refining margin $ (12.60 ) $ 18.16
Direct operating expenses $ 7.37
$ 3.81
Crude Slate: (% based on amount received in period)
WTI crude oil 56.3 % 79.5 %
WTS crude oil 43.7 % 20.5 %

Krotz Springs, LA Refinery
Days in period 91
90
Total sales volume - refined product (average barrels per day) ⁽¹⁾
81,016
78,231
Products manufactured (average barrels per day):
Gasoline 29,933
38,062
Diesel/Jet 30,932
30,391
Heavy Oils 731
1,090
Petrochemicals, LPG, NGLs 3,006
7,269
Other —
105
Total production 64,602 76,917
Throughput (average barrels per day):
Crude Oil 72,481
72,330
Other feedstocks (8,383 ) 3,166
Total throughput 64,098 75,496
Per barrel of refined product sales:
Krotz Springs refining margin $ (1.49 ) $ 11.95
Direct operating expenses $ 3.43
$ 3.89
Crude Slate: (% based on amount received in period)
WTI Crude 66.1 % 65.0 %
Gulf Coast Sweet Crude 33.9 % 35.0 %


⁽¹⁾	~~Includes inter-refinery sales and sales to other segments which are eliminated in consolidation. See tables below.~~



~~51 \|~~

~~Management's Discussion and Analysis~~

Included in the refinery statistics above are the following inter-refinery and sales to other segments:


Inter-refinery Sales
	Three Months Ended
	March 31,
(in barrels per day)		2021	2020
	(Unaudited)

Tyler refined product sales to other Delek refineries		2,095	763
El Dorado refined product sales to other Delek refineries		445	1,466
Big Spring refined product sales to other Delek refineries		728	1,025
Krotz Springs refined product sales to other Delek refineries		—	293

Inter-refinery Sales
Three Months Ended March 31,
(in barrels per day) 2020 2019
(Unaudited)

Tyler refined product sales to other Delek refineries 763 197
El Dorado refined product sales to other Delek refineries 1,466 847
Big Spring refined product sales to other Delek refineries 1,025 1,296
Krotz Springs refined product sales to other Delek refineries 293 797


Refinery Sales to Other Segments
	Three Months Ended
	March 31,
(in barrels per day)		2021	2020
	(Unaudited)

Tyler refined product sales to other Delek segments		922	3,207
El Dorado refined product sales to other Delek segments		7	328
Big Spring refined product sales to other Delek segments		22,110	25,112
Krotz Springs refined product sales to other Delek segments		2,007	—

Refinery Sales to Other Segments
Three Months Ended March 31,
(in barrels per day) 2020 2019
(Unaudited)

Tyler refined product sales to other Delek segments 3,207 540
El Dorado refined product sales to other Delek segments 328 253
Big Spring refined product sales to other Delek segments 25,112 26,862

Pricing Statistics (average for the period presented)
Three Months Ended March 31,
2020 2019
(Unaudited)

WTI — Cushing crude oil (per barrel) $ 45.57
$ 54.87
WTI — Midland crude oil (per barrel) $ 45.51
$ 53.70
WTS -- Midland crude oil (per barrel) ⁽¹⁾
$ 44.99
$ 53.93
LLS (per barrel) ⁽¹⁾
$ 47.63
$ 62.36
Brent crude oil (per barrel) $ 50.82
$ 63.83

U.S. Gulf Coast 5-3-2 crack spread (per barrel) ⁽¹⁾
$ 8.76
$ 13.02
U.S. Gulf Coast 3-2-1 crack spread (per barrel) ⁽¹⁾
$ 11.41
$ 15.18
U.S. Gulf Coast 2-1-1 crack spread (per barrel) ⁽¹⁾
$ 8.12
$ 7.33

U.S. Gulf Coast Unleaded Gasoline (per gallon) $ 1.25
$ 1.52
Gulf Coast Ultra low sulfur diesel (per gallon) $ 1.47
$ 1.88
U.S. Gulf Coast high sulfur diesel (per gallon) $ 1.36
$ 1.75
Natural gas (per MMBTU) ⁽²⁾
$ 1.87
$ 2.87


⁽¹⁾			For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). For our Big Spring refinery, we compare our per barrel refined product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur diesel, and for our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil, Gulf Coast 87 Conventional gasoline and U.S, Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and east Texas, while the El Dorado refinery's crude input is primarily a combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland.


Pricing Statistics (average for the period presented)
	Three Months Ended
	March 31,
		2021		2020
	(Unaudited)

WTI — Cushing crude oil (per barrel)		$	58.03	$	45.57
WTI — Midland crude oil (per barrel)		$	58.90	$	45.51
WTS -- Midland crude oil (per barrel) (1)		$	58.77	$	44.99
LLS (per barrel) (1)		$	60.18	$	47.63
Brent crude oil (per barrel)		$	61.17	$	50.82

U.S. Gulf Coast 5-3-2 crack spread (per barrel) - utilizing HSD		$	10.13	$	8.76
U.S. Gulf Coast 5-3-2 crack spread (per barrel) (1)		$	13.57	$	10.74
U.S. Gulf Coast 3-2-1 crack spread (per barrel) (1)		$	14.33	$	11.41
U.S. Gulf Coast 2-1-1 crack spread (per barrel) (1)		$	7.65	$	8.12

U.S. Gulf Coast Unleaded Gasoline (per gallon)		$	1.71	$	1.25
Gulf Coast Ultra low sulfur diesel (per gallon)		$	1.71	$	1.47
U.S. Gulf Coast high sulfur diesel (per gallon)		$	1.50	$	1.36
Natural gas (per MMBTU) (2)		$	2.72	$	1.87

(1) For our Tyler and El Dorado refineries, we compare our per barrel refining product margin to the Gulf Coast 5-3-2 crack spread consisting of WTI Cushing crude, U.S. Gulf Coast CBOB and U.S. Gulf Coast Pipeline No. 2 heating oil (ultra low sulfur diesel). For our Big Spring refinery, we compare our refined product margin to the Gulf Coast 3-2-1 crack spread consisting of WTI Cushing crude, Gulf Coast 87 Conventional gasoline and Gulf Coast ultra low sulfur diesel, and for our Krotz Springs refinery, we compare our per barrel refined product margin to the Gulf Coast 2-1-1 crack spread consisting of LLS crude oil, Gulf Coast 87 Conventional gasoline and U.S. Gulf Coast Pipeline No. 2 heating oil (high sulfur diesel). The Tyler refinery's crude oil input is primarily WTI Midland and East Texas, while the El Dorado refinery's crude input is primarily a combination of WTI Midland, local Arkansas and other domestic inland crude oil. The Big Spring refinery’s crude oil input is primarily comprised of WTS and WTI Midland. The Krotz Springs refinery’s crude oil input is primarily comprised of LLS and WTI Midland.

(2) One Million British Thermal Units ("MMBTU").


⁽²⁾			~~One Million British Thermal Units ("MMBTU").~~



5251 \|

Management's Discussion and Analysis

Refining Segment Operational Comparison of the Three Months Ended March 31, ~~2020~~2021 versus the Three Months Ended March 31, ~~2019~~2020

Net Revenues

Net revenues for the refining segment ~~decreased~~increased by ~~$364.1~~$12.2 million, or ~~17.4%~~0.7%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

~~decreases~~•increases in the average price of U.S. Gulf Coast gasoline of ~~17.8%~~36.9%, ULSD of ~~21.8%~~16.0%, and HSD of ~~22.3%; and~~10.3%.

~~decreases~~Such increase was partially offset by the following:

•a decrease in sales ~~volume~~volumes of refined product totaling ~~0.7~~5.2 million barrels, partially due to ~~scheduled~~the temporary suspension of crude refining unit production at our Krotz Springs refinery from November 2020 through February 2021 and related turnaround activities, severe weather impacting our refineries in February 2021, and turnaround at our El Dorado refinery, partially offset by a 1.2 million barrel increase in purchased product sales and increased sales volumes at our Big Spring refinery~~and~~ which was in a ~~0.8 million barrel decrease~~turnaround in ~~purchased product sales.~~the prior year period.

Net revenues included sales to our retail segment of ~~$68.6~~$69.7 million and ~~$90.2~~$68.6 million, ~~and~~ sales to our logistics segment of $65.8 million and $80.7 million, and ~~$79.5 million. Also included was a reduction in~~ sales to our other segment of ~~$9.3~~$20.1 million and ~~sales of $14.9~~$9.3 million for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively. We eliminate this intercompany revenue in consolidation.

Cost of Materials and Other

Cost of materials and other ~~increased~~decreased by ~~$237.5~~$258.9 million, or ~~14.2%~~13.6%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•a decrease in refined sales volumes at our Krotz Springs refinery and El Dorado refinery, partially offset by increased sales volumes at Big Spring refinery; and

•the ~~net reversal~~benefit (expense) ~~benefit~~ of ~~$(277.8)~~$20.6 million related to the change in pre-tax inventory valuation ~~reserves~~ recognized during the first quarter of ~~2020~~2021 compared to ~~$52.2~~$(271.6) million recognized during the first quarter of ~~2019; and~~

~~increases in RIN expense, where ethanol RIN prices from an average of $0.47 per RIN in first quarter 2020 compared to $0.20 per RIN in the prior year period.~~2020.

These ~~increases~~decreases were partially offset by the following:


•	~~an increase in hedging gains to $80.4 million recognized during the first quarter of 2020 from $18.6 million recognized during the first quarter of 2019;~~

~~decreases~~•increases in the cost of WTI Cushing crude oil, from an average of ~~$54.87~~$45.57 per barrel to an average of ~~$45.57,~~$58.03, or ~~16.95%~~27.3%; ~~and~~

~~decreases~~•increases in the cost of WTI Midland crude oil, from an average of ~~$53.70~~$45.51 per barrel to an average of ~~$45.51,~~$58.90, or ~~15.3%.~~29.4%; and

•a decrease in hedging gains to a loss $5.0 million recognized during the first quarter of 2021 from a gain of $80.4 million recognized during the first quarter of 2020.



5352 \|

Management's Discussion and Analysis

Our refining segment purchases finished product from our logistics segment and has multiple service agreements with our logistics segment which, among other things, require the refining segment to pay terminalling and storage fees based on the throughput volume of crude and finished product in the logistics segment pipelines and the volume of crude and finished product stored in the logistics segment storage tanks, subject to minimum volume commitments. These costs and fees were ~~$96.7~~$95.8 million and ~~$52.2~~$105.7 million during the first quarters of ~~2020~~2021 and ~~2019,~~2020, respectively. We eliminate these intercompany fees in consolidation.

Refining Margin

Refining margin ~~decreased~~increased by ~~$601.6~~$271.1 million, or ~~142.3%~~151.7%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•a 15.6% improvement in the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery);

•a 25.6% improvement in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery); and

•an increase attributable to the $20.6 million change in pre-tax inventory valuation benefit recognized during the first quarter of 2021 compared to an expense of $271.6 million recognized during the prior year period.

These increases were partially offset by the following:

•a higher percentage of purchased product with a decrease in overall sales volumes;

•a 5.8% decline in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery);

•a narrowing of the average WTI Cushing crude oil differential to WTS crude oil to ~~$0.58~~$(0.74) per barrel during the first quarter of ~~2020~~2021 compared to ~~$0.94~~$0.58 during the first quarter of ~~2019~~2020 and narrowing of the average WTI Midland crude oil differential to WTI Cushing crude oil to $(0.87) per barrel during the first quarter of 2021 compared to $0.06 per barrel during the first quarter of ~~2020 compared to $1.17 during the first quarter of 2019; and~~2020;

•a narrowing of the discount between WTI Midland crude oil and Brent crude oil where, during the first quarter of ~~2020,~~2021, the WTI Midland crude oil differential to Brent crude oil was an average discount of ~~$5.31~~$2.27 per barrel compared to ~~$10.13~~$5.31 per barrel during the first quarter of ~~2019;~~2020; and

•a ~~32.72% decline~~decrease in ~~the 5-3-2 crack spread (the primary measure for the Tyler refinery and El Dorado refinery);~~

hedging gains to a ~~24.84% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery); and~~

~~an increase in inventory valuation reserve~~loss of $5.0 million recognized during the first quarter of ~~2020 compared to prior year period.~~2021 from a gain of $80.4 million recognized during the first quarter of 2020.

~~These decreases were partially offset by the following:~~


•			~~an increase in hedging gains to $80.4 million recognized during the first quarter of 2020 from $18.6 million recognized during the first quarter of 2019; and~~

~~a 10.78% improvement in the average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery).~~



5453 \|

Management's Discussion and Analysis

Operating Expenses

Operating expenses ~~decreased~~increased by ~~$9.3~~$1.9 million, or ~~7.7%~~1.7%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•an increase in utilities costs primarily associated with higher natural gas costs during the February 2021 severe freezing conditions that affected most of the regions where we operate, partially offset by lower production at our Krotz Springs refinery.

Such increase was offset by the following:

•decreases in ~~employee related costs primarily related to decrease in incentive plan and workforce optimization to reduce overtime rates;~~

~~decreases in utilities and catalyst costs, primarily at our Big Spring refinery related to reduced throughput due to turnaround; and~~

~~decreases in contractor and materials costs~~contract services partially due to cost reduction measures ~~taken~~continuing in the first quarter of ~~2020.~~2021; and

•decreases in employee related costs partially due to staff reductions made in prior year and suspension of matching contributions to our 401(k) plan.

Contribution Margin

Contribution margin ~~decreased~~increased by ~~$592.3~~$269.2 million, or a ~~31.2% reduction~~15.6% improvement in contribution margin percentage, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•an overall increase in the average crack spreads; and

•an increase in reversal benefit related to inventory valuation reserve during the first quarter of 2021 compared to prior year period.

These increases were partially offset by the following:

•the decline of the Midland WTI crude oil differential to Brent crude oil compared to the prior-year period;

~~reduced performance at our Big Spring refinery due to turnaround;~~



~~55 \|~~

~~Management's Discussion and Analysis~~

a 32.72% decline in the 5-3-2 crack spread (the primary measure for the Tyler and El Dorado refineries) and a 24.84% decline in the average Gulf Coast 3-2-1 crack spread (the primary measure for the Big Spring refinery);

~~an increase in inventory valuation reserve of during the first quarter of 2020 compared to prior year period; and~~

•a narrowing of the discount between WTI Cushing and WTS crude oil compared to the first quarter of ~~2019.~~2020; and

~~These decreases were partially offset by the following:~~

•an increase in hedging ~~gains during the first quarter of 2020~~losses compared to ~~prior year period;~~

~~a 10.78% improvement in~~ the ~~average Gulf Coast 2-1-1 crack spread (the primary measure for the Krotz Springs refinery); and~~

~~decreases in operating expenses across all refineries.~~

prior-year period.



5654 \|

Management's Discussion and Analysis



Logistics Segment

The table below sets forth certain information concerning our logistics segment operations ($ in millions, except per barrel amounts):


Logistics Contribution Margin and Operating Information
	Three Months Ended
	March 31,
		2021		2020
Net revenues		$	152.9	$	163.4
Cost of materials and other		81.1		101.3
Operating expenses (excluding depreciation and amortization)		14.1		14.8
Contribution margin		$	57.7	$	47.3
Operating Information:
East Texas - Tyler Refinery sales volumes (average bpd) (1)		71,963		72,650
Big Spring wholesale marketing throughputs (average bpd)		72,927		66,386

West Texas wholesale marketing throughputs (average bpd)		10,138		16,081
West Texas wholesale marketing margin per barrel		$	3.42	$	2.70
Terminalling throughputs (average bpd) (2)		144,539		135,329
Throughputs (average bpd):
Lion Pipeline System:
Crude pipelines (non-gathered)		44,118		55,471
Refined products pipelines to Enterprise Systems		26,349		54,106
SALA Gathering System		11,880		34,906
East Texas Crude Logistics System		26,075		14,174
Big Spring Gathering Assets (3)		73,724		—
Plains Connection System		108,361		—

Logistics Contribution Margin and Operating Information
Three Months Ended March 31,
2020 2019
Net revenues $ 163.4
$ 152.5
Cost of materials and other 101.3
96.3
Operating expenses (excluding depreciation and amortization) 14.8
16.1
Contribution margin $ 47.3
$ 40.1
Operating Information:
East Texas - Tyler Refinery sales volumes (average bpd) ⁽¹⁾
72,650
68,577
Big Spring wholesale marketing throughputs (average bpd) 66,386
87,741
West Texas wholesale marketing throughputs (average bpd) 16,081
13,314
West Texas wholesale marketing margin per barrel $ 2.70
$ 3.56
Terminalling throughputs (average bpd) ⁽²⁾
135,329
152,469
Throughputs (average bpd):
Lion Pipeline System:
Crude pipelines (non-gathered) 55,471
28,683
Refined products pipelines to Enterprise Systems 54,106
23,092
SALA Gathering System 34,906
16,998
East Texas Crude Logistics System 14,174
18,113
(1)Excludes jet fuel and petroleum coke.

(2)Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas terminals, El Dorado and North Little Rock, Arkansas terminals and Memphis and Nashville, Tennessee terminals.

(3)The Big Spring Gathering Assets Acquisition was effective March 31, 2020; therefore, there is no comparable activity for first quarter 2020.


⁽¹⁾			^{Excludes jet fuel and petroleum coke.}


⁽²⁾	^{Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.}

Logistics Segment Operational Comparison of the Three Months Ended March 31, ~~2020~~2021 versus the Three Months Ended March 31, ~~2019~~2020

Net Revenues

Net revenues ~~increased~~decreased by ~~$10.9~~$10.5 million, or ~~7.1%~~6.4%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

~~increases~~•decreases in the average volumes of gasoline and diesel sold partially offset by ~~decreases~~increases in the average sales prices per gallon of gasoline and diesel sold in our West Texas marketing ~~operations.~~operations:


◦	~~the average volumes of gasoline sold increased 13.3 million gallons, partially offset by a 1.3 million decrease of diesel gallons sold.~~


◦	◦the average volumes of gasoline and diesel sold decreased by 13.9 million gallons and 9.2 million gallons, respectively. ◦the average sales prices ~~per gallon~~ of gasoline and diesel sold ~~decreased $0.12 per gallon and $0.37 per gallon, respectively.~~

increased ~~revenues associated with our Paline Pipeline as a result~~$0.24 per gallon and $0.12 per gallon, respectively.

•decreases in throughputs due to the impact of ~~increased rates and a change~~the severe freezing conditions that affected most of the regions where we operate resulting in ~~the fee structure from~~lower volumes outside of contractual minimum volume commitments during the three months ended March 31, ~~2019, during~~2021 when compared to the three months ended March 31, 2020.

•decreases in throughputs at the Paline pipeline due to scheduled pipeline maintenance.

Such decrease was partially offset by the following:

•increased revenues associated with agreements executed in connection with Big Spring Gathering System and Delek Trucking acquisitions, which ~~the capacity~~were effective March 31, 2020 and May 1, 2020, respectively. Refer to Note 4 of the ~~Paline~~condensed consolidated financial statements in Item 1. Financial Statements, for additional information.

•increased revenues at our Big Spring Refinery Crude Pipeline ~~was contracted to separate parties for a monthly fee,~~(the "BSR Crude Pipeline") during the three months ended March 31, 2021 when compared to the three months ended March 31, 2020 ~~during which the pipeline was subject to~~as a ~~FERC tariff; and~~

~~increased revenues at our SALA Gathering and Magnolia Pipeline as~~ result of ~~increased throughput during~~new contracts executed in the ~~three months ended March 31, 2020 when compared to the three months ended March 31, 2019.~~second quarter of 2020.


55 \|

Management's Discussion and Analysis

Net revenues included sales to our refining segment of ~~$105.7~~$95.8 million and ~~$61.1~~$105.7 million for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively, and sales to our other segment of ~~$0.9~~$0.4 million and ~~$1.8~~$0.9 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. We eliminate this intercompany revenue in consolidation.



~~57 \|~~

~~Management's Discussion and Analysis~~

Cost of Materials and Other

Cost of materials and other for the logistics segment ~~increased $5.0~~decreased $20.2 million, or ~~5.2%~~19.9%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019. This increase was~~2020 primarily driven by the following:

~~increases~~•decreases in the average volumes of gasoline and diesel sold, partially offset by ~~decreases~~increases in the average cost per gallon of gasoline and diesel sold in our West Texas marketing ~~operations.~~operations:


◦	~~the average volumes of gasoline and diesel sold increased 13.3 million gallons, partially offset by 1.3 million decrease of diesel gallons sold.~~


◦	~~the average cost per gallon of gasoline and diesel sold decreased $0.10 per gallon and $0.30 per gallon, respectively.~~

~~inventory net realizable value charge amounting to $2.9~~◦the average volumes of gasoline and diesel sold decreased by 13.9 million ~~due to $0.92~~gallons and 9.2 million gallons, respectively.

◦the average cost per ~~barrel markdown on inventory;~~gallon of gasoline and

~~an increase in hedging gains to $3.1 million recognized during the first quarter of 2020 from a loss of $1.0 million recognized during the first quarter of 2019.~~ diesel sold increased $0.27 per gallon and $0.10 per gallon, respectively.

Our logistics segment purchased product from our refining segment of ~~$80.7~~$65.8 million and ~~$79.5~~$80.7 million for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019,~~2020, respectively. We eliminate these intercompany costs in consolidation.


56 \|

Management's Discussion and Analysis

Operating Expenses

Operating expenses decreased by ~~$1.3~~$0.7 million, or ~~8.1%~~4.7%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, driven by the following:

•a decrease in employee and outside services costs due to measures implemented to respond to the COVID-19 Pandemic including delaying non-essential projects;

•lower operating costs associated with allocated contract services pertaining to certain of our assets;

•decreases in variable expenses such as maintenance and materials costs due to lower throughput; and



~~58 \|~~

~~Management's Discussion and Analysis~~

~~decrease in utilities expense.~~

~~These decreases were~~ •partially offset ~~by:~~

~~higher employee~~by the increase in utility costs ~~allocated to us~~ as a result of ~~an increase in allocated employee headcount in various operational groups as~~significantly higher energy costs during the ~~Partnership continues to experience growth.~~February 2021 severe freezing conditions that affected most of the regions where we operate.

Contribution Margin

Contribution margin increased by ~~$7.2~~$10.4 million, or ~~18.0%~~22.0%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•an increase in gross margin of $0.72 per barrel in our West Texas marketing operations; and

•increases in revenues associated with ~~Paline Pipeline, SALA~~agreements executed in connection with Big Spring Gathering ~~system~~System and ~~West Texas Marketing operations;~~

~~decreases in operating expenses; and~~

~~increase in hedging gains.~~Delek Trucking acquisitions.

Such increases were partially offset by the following:

~~decrease~~•decreases in ~~gross margin of $0.86 per barrel of our~~ gasoline and diesel volumes sold in our West Texas marketing operations.



59


57 \|

Management's Discussion and Analysis



Retail Segment

The table below sets forth certain information concerning our retail segment operations (gross sales $ in millions):


Retail Contribution Margins
	Three Months Ended
	March 31,
		2021			2020
Net revenues		$	174.8		$	178.6
Cost of materials and other		136.5			144.1
Operating expenses (excluding depreciation and amortization)		21.4			22.2
Contribution margin		$	16.9		$	12.3

Operating Information
		Three Months Ended
		March 31,
		2021			2020
Number of stores (end of period)		253			253
Average number of stores		253			253
Average number of fuel stores		248			248
Retail fuel sales		$	100.1		$	106.9
Retail fuel sales (thousands of gallons)		39,765			47,959
Average retail gallons sold per average number of fuel stores (in thousands)		161			194
Average retail sales price per gallon sold		$	2.52		$	2.23
Retail fuel margin ($ per gallon) (1)		$	0.350		$	0.307
Merchandise sales (in millions)		$	74.6		$	71.7
Merchandise sales per average number of stores (in millions)		$	0.3		$	0.3
Merchandise margin %		32.7		%	31.6		%

Retail Contribution Margins
Three Months Ended March 31,
2020 2019
Net revenues $ 178.6
$ 197.2
Cost of materials and other 144.1
163.4
Operating expenses (excluding depreciation and amortization) 22.2
23.6
Contribution margin $ 12.3
$ 10.2

Operating Information
Number of stores (end of period) 253
281
Average number of stores 253
281
Average number of fuel stores 248
271
Retail fuel sales $ 106.9
$ 121.9
Retail fuel sales (thousands of gallons) 47,959
53,890
Average retail gallons sold per average number of fuel stores (in thousands) 194
199
Average retail sales price per gallon sold $ 2.23
$ 2.26
Retail fuel margin ($ per gallon) ⁽¹⁾
$ 0.307
$ 0.194
Merchandise sales (in millions) $ 71.7
$ 75.3
Merchandise sales per average number of stores (in millions) $ 0.3
$ 0.3
Merchandise margin % 31.6 % 31.0 %


Same-Store Comparison (2)
	Three Months Ended
	March 31,
		2021		2020
Change in same-store fuel gallons sold		(17.0)	%	(8.2)	%

Change in same-store merchandise sales		4.2	%	1.7	%

(1)Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.

Same-Store Comparison (2)
Three Months Ended March 31,
2020 2019
Change in same-store fuel gallons sold
(8.2 )% 4.1 %
Change in same-store merchandise sales 1.7 % 0.8 %
(2)Same-store comparisons include period-over-period changes in specified metrics for stores that were in service at both the beginning of the earliest period and the end of the most recent period used in the comparison.


⁽¹⁾			Retail fuel margin represents gross margin on fuel sales in the retail segment, and is calculated as retail fuel sales revenue less retail fuel cost of sales. The retail fuel margin per gallon calculation is derived by dividing retail fuel margin by the total retail fuel gallons sold for the period.


⁽²⁾	Same-store comparisons include period-over-period increases or decreases in specified metrics for stores that were in service at both the beginning of the earliest period and the end of the most recent period used in the comparison.

Retail Segment Operational Comparison of the Three Months Ended March 31, ~~2020~~2021 versus the Three Months Ended March 31, ~~2019~~2020

Net Revenue

Net revenues for the retail segment decreased by ~~$18.6~~$3.8 million, or ~~9.4%~~2.1%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

•total fuel sales were $100.1 million in the first quarter of 2021 compared to $106.9 million in the first quarter of 2020, ~~compared~~attributable to ~~$121.9~~the following:

◦a decrease in total retail fuel gallons sold for the retail segment to 39.8 million gallons in the first quarter of ~~2019, attributable~~2021 compared to 48.0 million gallons in the ~~following:~~first quarter of 2020 associated with same-store decrease in fuel volumes of 17.0%, primarily due to demand slowdown as a result of the COVID-19 Pandemic; and


◦			~~$4.1 million decrease related to reduction in number of stores period over period;~~


◦	a decrease in total retail fuel gallons sold for the retail segment to 47,959 thousand gallons in the first quarter of 2020 compared to 53,890 thousand gallons in the first quarter of 2019 associated with the reduction in average number of stores period over period, and a same-store sales decrease in fuel volumes of 8.2%; and


◦	~~a $0.03 decrease in average price charged per gallon;~~



6058 \|

Management's Discussion and Analysis

◦an offsetting $0.29 increase in average price charged per gallon.

•merchandise sales were $74.6 million in the first quarter of 2021 compared to $71.7 million in the first quarter of 2020 ~~compared to $75.3 million in the first quarter of 2019~~ attributable to ~~the following:~~a same-store sales increase of 4.2%, primarily due to strong sales growth for key categories such as beer, packaged beverages and services.


◦			~~$5.8 million decrease related to reduction in number of stores; and~~


◦	~~partially offset by a same-store sales increase of 1.7%.~~

Cost of Materials and Other

Cost of materials and other for the retail segment decreased by ~~$19.3~~$7.6 million, or ~~11.8%~~5.3%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by the following:

~~$8.3 million~~•a decrease in total retail fuel gallons sold due to ~~reduction in number~~demand slowdown as a result of ~~stores period over period;~~the COVID-19 Pandemic; and

~~a decrease~~•an offsetting increase in average cost per gallon of ~~$0.14~~$0.25 or ~~6.7%~~12.9% applied to fuel sales volumes that decreased period over period.

Our retail segment purchased finished product from our refining segment of ~~$68.6~~$69.7 million and ~~$90.2~~$68.6 million for the three months ended March 31, ~~2020~~2021 and March 31, ~~2019.~~2020. We eliminate this intercompany cost in consolidation.



~~61 \|~~

~~Management's Discussion and Analysis~~

Operating Expenses

Operating expenses for the retail segment decreased by ~~$1.4~~$0.8 million, or ~~5.9%~~3.6% in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019. This decrease is primarily attributable to~~2020 as a ~~decrease in operating costs associated with~~result of the execution of various cost reduction ininitiatives throughout the ~~number of stores.~~business.

Contribution Margin

Contribution margin for the retail segment increased by ~~$2.1~~$4.6 million, or ~~20.6%~~37.4%, in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019,~~2020, primarily driven by a ~~$0.113 per gallon~~4.1% improvement in ~~the retail fuel~~merchandise sales, an improvement in merchandise margin percentage of 1.1%, and a ~~slight increase~~3.6% reduction in ~~merchandise margin.~~

operating expenses.



6259 \|

Management's Discussion and Analysis

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are

•cash generated from our operating activities;

•borrowings under our debt facilities; and

•potential issuances of additional equity and debt securities.

At March 31, 2021 our total liquidity amounted to $1.5 billion comprised of $635.4 million in unused credit commitments under the Delek Revolving Credit Facility (as defined in Note 8 of the condensed consolidated financial statements in Item 1. Financial Statements), $112.5 million in unused credit commitments under the Delek Logistics Credit Facility (as defined in Note 8 of the condensed consolidated financial statements in Item 1. Financial Statements) and $793.5 million in cash and cash equivalents. Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay quarterly cash dividends and operational capital ~~expenditures~~expenditures. In response to the COVID-19 Pandemic and ~~expect~~ the ~~same~~decline in ~~the foreseeable future.~~oil prices, on November 5, 2020, we announced that we have elected to suspend dividends in order to conserve capital. Other funding sources including borrowings under existing credit agreements and issuance of equity and debt securities have been utilized to meet our funding requirements and support our growth capital projects and acquisitions. In addition we have historically been able to source funding at terms that reflect market conditions, our financial position and our credit ratings. We continue to monitor market conditions, our financial position and our credit ratings and expect future funding sources to be at terms that are sustainable and profitable for the Company. However, there can be no assurances regarding the availability of any future debt or equity financings or whether such financings can be made available on terms that are acceptable to ~~us. Nevertheless,~~us; any execution of such financing activities will be dependent on the contemporaneous availability of functioning debt or equity markets. Additionally, new debt financing activities will be subject to the satisfaction of any debt incurrence limitation covenants in our existing financing agreements. Our debt limitation covenants in our existing financing documents are usual and customary for credit agreements of our type and reflective of market conditions at the time of their execution. Additionally, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including the current COVID-19 Pandemic and oil prices, some of which are beyond our control.

If market conditions were to change, for instance due to the significant decline in oil prices or uncertainty created by the COVID-19 Pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be ~~reduced.~~unfavorably impacted.

As of March 31, ~~2020,~~2021, we believe we were in compliance with all of our debt ~~covenants.~~maintenance covenants, where the most significant long-term obligation subject to such covenants was the Delek Logistics Credit Facility (see Note 8 of the condensed consolidated financial statements in Item 1. Financial Statements). After considering the current ~~and potential~~ effect of the ~~significant decline in oil prices and~~ uncertainty created by the COVID-19 Pandemic on our operations, we currently expect to remain in compliance with our existing debt maintenance covenants, though we can provide no assurances, particularly if conditions significantly worsen beyond our ability to predict. Additionally, we were in compliance with incurrence covenants during the quarter ended March 31, 2021 to the extent that any of our activities triggered these covenants. However, given the


60 \|

Management's Discussion and Analysis

uncertainty around economic conditions arising from the COVID-19 Pandemic, it is at least reasonably possible that conditions could change significantly, and that such changes could adversely impact our ability to meet some of these incurrence covenants. Failure to meet the incurrence covenants could impose certain incremental restrictions on our ability to incur new debt and also may limit whether and the extent to which we may resume paying dividends, as well as impose additional restrictions on our ability to repurchase our stock, make new investments and incur new liens (among others). Such restrictions would generally remain in place until such quarter that we return to compliance under the applicable incurrence based covenants. In the event that we are subject to these incremental restrictions, we believe that we have sufficient current and alternative sources of liquidity, including (but not limited to): available borrowings under our existing Wells Fargo Revolving Credit Facility, and for Delek Logistics, under its Delek Logistics Credit Facility (each as defined in Note 8 of the condensed consolidated financial statements in Item 1. Financial Statements); the allowance to incur an additional $200 million of secured debt under the Term Loan Credit Facility (as defined in Note 8 of the condensed consolidated financial statements in Item 1. Financial Statements); as well as the possibility of obtaining other secured and unsecured debt, raising capital through equity issuance, or taking advantage of transactional financing opportunities such as sale-leasebacks, as otherwise contemplated and allowed under our incurrence covenants.

Cash Flows

The following table sets forth a summary of our consolidated cash flows (in millions):


Consolidated
	Three Months Ended March 31,
	2021		2020
Cash Flow Data:
Operating activities	$	(34.3)	$	(154.1)
Investing activities	(46.1)		(146.6)
Financing activities	86.4		130.3
Net increase (decrease)	$	6.0	$	(170.4)

Consolidated
Three Months Ended March 31,
2020 2019
Cash Flow Data:
Operating activities $ (154.1 ) $ 133.4
Investing activities (146.6 ) (127.0 )
Financing activities 130.3
(96.0 )
Net decrease $ (170.4 ) $ (89.6 )

Cash Flows from Operating Activities

Net cash used in operating activities was ~~$154.1~~$34.3 million for the three months ended March 31, ~~2020,~~2021, compared to ~~cash provided by operating activities of $133.4~~$154.1 million for the comparable period of ~~2019.~~2020. Cash ~~receipts from customers and cash~~ payments to suppliers and for salaries decreased resulting in a ~~net $283.3~~$201.7 million decrease in cash ~~from~~used in operating ~~activities mainly due to a decline in the volume of refined product sold.~~activities. Additionally, cash paid for debt interest increased by ~~$7.1~~$109.9 million. ~~This decrease was partially offset by a $3.0 million increase in cash received for dividends.~~

Cash Flows from Investing Activities

Net cash used in investing activities was ~~$146.6~~$46.1 million for the first three months of ~~2020,~~2021, compared to ~~$127.0~~$146.6 million in the comparable period of ~~2019.~~2020. The ~~increase~~decrease in cash flows used in investing activities was primarily due to ~~an increase~~a decrease in cash purchases of property, plant and equipment which ~~increased~~decreased from ~~$124.0 million in 2019, to~~ $189.2 million in 2020, ~~predominantly~~to $48.3 million in 2021, partially attributable to ~~capital expenditures related to turnaround and other sustaining maintenance activities~~delaying non-essential projects in ~~our refining segment, partially offset by reduced discretionary spending in other segment.~~light of the COVID-19 Pandemic. Additionally, ~~contributing to the increase in cash used was a $22.3 million increase in~~ equity method investment contributions ~~in the current year, $8.2~~decreased $25.6 million ~~of which~~primarily due to contributions made related to our ~~interest in Red River~~ Red River Pipeline Joint Venture and ~~$18.9 million of which related to our interest in the WWP and~~ WWP Project Financing JV ~~both of which did not exist in~~for $8.2 million and $18.9 million, respectively, during the ~~comparable prior year period. Such increases~~three months ended March 31, 2020. During the three months ended March 31, 2021, we contributed $1.4 million related to our Red River Pipeline Joint Venture and $0.1 million related to our WWP Project Financing JV.

These decreases in cash used in investing activities were partially offset by distributions received in the prior year from our WWP Project Financing JV to return excess capital contributions made in the amount of $69.3 million for which there was no comparable activity in the ~~prior~~current year period.



~~63 \|~~

Cash Flows from Financing Activities

Net cash provided by financing activities was ~~$130.3~~$86.4 million for the three months ended March 31, ~~2020,~~2021, compared to ~~net cash used of $96.0~~$130.3 million in the comparable ~~2019~~2020 period. This ~~increase~~decrease in cash provided was predominantly due to net proceeds received from long-term revolvers of ~~$176.7~~$40.9 million during the three months ended March 31, ~~2020~~2021, compared to ~~$4.5~~$176.7 million in the comparable ~~2019~~2020 period. ~~Additionally contributing to this increase~~

Such decreases were a decrease in repurchases of common stock to $1.9 million for the three months ended March 31, 2020 compared to $46.2 million in the comparable 2019 period due to management suspending our share repurchase program, andpartially offset by an increase in net proceeds from inventory financing arrangements to ~~$21.0~~$77.9 million for the three months ended March 31, ~~2020~~2021 compared to ~~$6.6~~$21.0 million in the comparable ~~2019~~2020 period. Additionally, cash paid decreased $1.9 million and $23.1 million, respectively, due to suspension of our share repurchase program in the second quarter of 2020 and suspension of dividend payment in the fourth quarter of 2020. Also, there was a decrease in net payments under our term debt of $23.3 million during the three months ended March 31, 2021, compared to $27.9 million in the comparable 2020 period. During the three months ended March 31, 2020, we also repurchased 451,822 of Delek Logistics limited partner units from an investor for $5.0 million with no comparable activity in the current year period.


61 \|

Cash Position and Indebtedness

As of March 31, ~~2020,~~2021, our total cash and cash equivalents were ~~$784.9~~$793.5 million and we had total long-term indebtedness of approximately ~~$2,216.9~~$2,367.8 million. The total long-term indebtedness is net of deferred financing costs and debt discount of ~~$7.5~~$6.0 million and ~~$13.3~~$23.0 million, respectively. Additionally, we had letters of credit issued of approximately ~~$193.6~~$314.6 million. Total unused credit commitments or borrowing base availability, as applicable, under our revolving credit facilities was approximately ~~$836.7~~$747.9 million. ~~We believe we were in compliance with our covenants in all debt facilities as of March 31, 2020.~~ Our total long-term indebtedness consisted of the following:

•an aggregate principal amount of ~~$100.0~~$50.0 million under the Revolving Credit Facility, due on March 30, 2023, with average borrowing rate of 3.50%;

•an aggregate principal amount of ~~$1,082.8~~$1,269.8 million under the Term Loan Credit Facility, due on March 30, 2025, with effective interest rate of ~~3.55%~~3.61%;

•an aggregate principal amount of ~~$39.9~~$39.5 million in outstanding borrowings under the Delek Hapoalim Term Loan, due on December 31, 2022, with effective interest rate of ~~4.43%~~3.54%;

•an aggregate principal amount of ~~$695.0~~$737.5 million under the Delek Logistics Credit Facility, due on September 28, 2023, with average borrowing rate of ~~3.70%~~2.45%;

•an aggregate principal amount of $250.0 million under the Delek Logistics Notes, due in 2025, with effective interest rate of ~~7.23%~~7.25%; and

•an aggregate principal amount of $50.0 million under the Reliant Bank Revolver, due on June 30, 2022, with fixed interest rate of 4.50%~~; and~~

~~an aggregate principal amount of $20.0 million under the Promissory Notes, due on January 04, 2021, with fixed interest rate of 5.50%~~.

See Note 8 of the condensed consolidated financial statements in Item 1,1. Financial Statements, for additional information about our separate credit facilities.

Additionally, our obligation under the supply and offtake inventory financing agreements with J. Aron amounted to $410.7 million at March 31, 2021, $287.1 million of which is due on December 30, 2022, except that a portion (not to exceed $33.1 million) of this otherwise long-term component is subject to potential earlier payment under the Periodic Price Adjustment provision. See Note 7 of the condensed consolidated financial statements in Item 1. Financial Statements, for additional information about our supply and offtake facilities.



6462 \|

Management's Discussion and Analysis

Capital Spending

A key component of our long-term strategy is our capital expenditure program. Our capital expenditures for the three months ended March 31, ~~2020~~2021 were ~~$190.2~~$67.0 million, of which approximately ~~$168.1~~$57.8 million was spent in our refining segment, ~~$3.0~~$7.8 million in our logistics segment, ~~$6.2~~$0.8 million in our retail segment and ~~$12.9~~$0.6 million at the holding company level. The following table summarizes our actual capital expenditures for the three months ended March 31, ~~2020~~2021 and planned capital expenditures for the full year ~~2020~~2021 by operating segment and major category (in millions):


	Full Year 2021 Forecast		Three Months Ended March 31, 2021
Refining
Sustaining maintenance, including turnaround activities (1)	$	115.3	$	57.4
Regulatory	4.0		0.4
Discretionary projects	0.9		—
Refining segment total	120.2		57.8

Logistics
Regulatory	8.4		0.5
Sustaining maintenance	4.7		—
Discretionary projects	14.7		7.3
Logistics segment total	27.8		7.8

Retail
Regulatory	—		—
Sustaining maintenance	2.5		0.6
Discretionary projects	2.4		0.2
Retail segment total	4.9		0.8

Other
Regulatory	4.2		0.4
Sustaining maintenance	13.2		0.2
Discretionary projects	9.9		—
Other total	27.3		0.6
Total capital spending	$	180.2	$	67.0

Full Year
2020 Forecast Three Months Ended March 31, 2020
Refining
Sustaining maintenance, including turnaround activities $ 155.2
$ 129.5
Regulatory 49.0
38.4
Discretionary projects 1.5
0.2
Refining segment total 205.7
168.1

Logistics
Regulatory 2.2
0.9
Sustaining maintenance 3.7
0.7
Discretionary projects 11.7
1.4
Logistics segment total 17.6
3.0

Retail
Regulatory 0.1
0.1
Sustaining maintenance 2.5
0.7
Discretionary projects 6.0
5.4
Retail segment total 8.6
6.2

Other
Regulatory 0.4
—
Sustaining maintenance 0.8
—
Discretionary projects 16.9
12.9
Other total 18.1
12.9
Total capital spending $ 250.0
$ 190.2
(1) Excludes potential additional capital expenditures associated with the effects of Winter Storm Uri and/or the El Dorado fire that are not yet determinable and/or which we reasonably expect to be covered under our applicable insurance policies and likewise reimbursable by insurance recoveries.

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects or scheduled maintenance activities. Additionally, the scope and cost of employee or contractor labor expense related to installation of that equipment could exceed our projections. Our capital expenditure budget may also be revised as management continues to evaluate projects for reliability or profitability.

We have no material off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

These disclosures should be read in conjunction with the condensed consolidated financial statements, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other information presented herein, as well as in the "Quantitative and Qualitative Disclosures About Market Risk" section contained in our Annual Report on Form 10-K, as filed on ~~February 28, 2020.~~



~~65 \|~~

~~Management's Discussion and Analysis~~

March 1, 2021.

Price Risk Management Activities

At times, we enter into the following instruments/transactions in order to manage our market-indexed pricing risk: commodity derivative contracts which we use to manage our price exposure to our inventory positions, future purchases of crude oil and ethanol, future sales of refined products or to fix margins on future production; and future commitments to purchase or sell RINs at fixed prices and quantities, which are used to manage the costs associated with our RINs obligations and meet the definition of derivative instruments under ASC 815,


63 \|

Management's Discussion and Analysis

Derivatives and Hedging ("ASC 815"). In accordance with ASC 815, all of these commodity contracts and future purchase commitments are recorded at fair value, and any change in fair value between periods has historically been recorded in the profit and loss section of our condensed consolidated financial statements. Occasionally, at inception, the Company will elect to designate the commodity derivative contracts as cash flow hedges under ASC 815. Gains or losses on commodity derivative contracts accounted for as cash flow hedges are recognized in other comprehensive income on the condensed consolidated balance sheets and, ultimately, when the forecasted transactions are completed, in net revenues or cost of materials and other in the condensed consolidated statements of income.

The following table sets forth information relating to our open commodity derivative contracts as of March 31, ~~2020~~2021 ($ in millions):


	Total Outstanding				Notional Contract Volume by Year of Maturity				Total Outstanding			Notional Contract Volume by Year of Maturity
Contract Description	Fair Value			Notional Contract Volume	2020	2021	2022	Contract Description	Fair Value		Notional Contract Volume	2021	2022	2023
Contracts not designated as hedging instruments:								Contracts not designated as hedging instruments:
Crude oil price swaps - long⁽¹⁾	$	(266.0	)	66,463,000	56,071,000	9,584,000	308,000	Crude oil price swaps - long(1)	$	62.0	21,106,000	20,176,000	930,000	—
Crude oil price swaps - short⁽¹⁾	262.4			65,372,000	54,678,000	9,574,000	750,000	Crude oil price swaps - short(1)	(64.0)		16,784,000	16,784,000	—	—
Inventory, refined product and crack spread swaps - long⁽¹⁾	(192.7		)	26,799,000	26,534,000	265,000	—	Inventory, refined product and crack spread swaps - long(1)	13.5		59,209,000	29,609,000	22,200,000	7,400,000
Inventory, refined product and crack spread swaps - short⁽¹⁾	227.7			24,862,000	24,477,000	385,000	—	Inventory, refined product and crack spread swaps - short(1)	(9.3)		61,755,000	32,155,000	22,200,000	7,400,000
Natural gas swaps - long⁽²⁾	13.4			46,577,500	46,577,500	—	—	Natural gas swaps - long(2)	—		—	—	—	—
Natural gas swaps - short⁽²⁾	(25.0		)	44,925,000	44,925,000	—	—	Natural gas swaps - short(2)	—		—	—	—	—
RIN commitment contracts - long⁽³⁾	(0.5		)	38,800,000	38,800,000	—	—	RIN commitment contracts - long(3)	122.2		235,290,749	235,290,749	—	—
RIN commitment contracts - short⁽³⁾	1.0			47,500,000	47,500,000	—	—	RIN commitment contracts - short(3)	(11.3)		46,317,747	46,317,747	—	—
Total	$	20.3		361,298,500	339,562,500	19,808,000	1,058,000	Total	$	113.1	440,462,496	380,332,496	45,330,000	14,800,000
Contracts designated as cash flow hedging instruments:
Crude oil price swaps - long⁽¹⁾	$	—		—	—	—	—
Crude oil price swaps - short⁽¹⁾	—			—	—	—	—
Inventory, refined product and crack spread swaps - long⁽¹⁾	(8.5		)	225,000	225,000	—	—
Inventory, refined product and crack spread swaps - short⁽¹⁾	11.8			225,000	225,000	—	—
Total	$	3.3		450,000	450,000	—	—

(1)Volume in barrels

(2)Volume in MMBTU

(3)Volume in RINs

Interest Risk Management Activities

We have market exposure to changes in interest rates relating to our outstanding floating rate borrowings, which totaled approximately ~~$1,917.7~~$2,096.8 million as of March 31, ~~2020.~~2021. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt as of March 31, ~~2020~~2021 would be to change interest expense by approximately ~~$19.2~~$21.0 million.

Commodity Derivatives Trading Activities

~~In the first half of 2018, we began entering~~We enter into active trading positions in a variety of commodity derivatives, which include forward physical contracts, swap contracts, and futures contracts. These ~~contracts are classified as held for~~ trading ~~and are recognized at fair value with~~



~~66 \|~~

~~Management's Discussion and Analysis~~

~~changes in fair value recognized in the income statement. Trading~~ activities are undertaken by using a range of contract types in combination to create incremental gains by capitalizing on crude oil supply and pricing seasonality. These contracts all had remaining durations of less than one year as of March 31, ~~2020.~~2021, and are classified as held for trading and are recognized at fair value with changes in fair value recognized in the income statement.

The following table sets forth information relating to commodity derivative contracts held for trading purposes as of March 31, ~~2020:~~2021:

Contract Description Less than 1 year
Over the counter forward sales contracts
Notional contract volume ⁽¹⁾
930,422
Weighted-average market price (per barrel) $ 9.78
Contractual volume at fair value (in millions) $ 9.1
Over the counter forward purchase contracts
Notional contract volume ⁽¹⁾
837,174
Weighted-average market price (per barrel) $ 9.75
Contractual volume at fair value (in millions) $ 8.2


Contract Description		Less than 1 year
Over the counter forward sales contracts (crude)
^{Notional contract volume}(1)	~~Volume in barrels~~	774,849
Weighted-average market price (per barrel)		$	48.22
Contractual volume at fair value (in millions)		$	37.4
Over the counter forward purchase contracts (crude)
Notional contract volume (1)		736,678
Weighted-average market price (per barrel)		$	48.23
Contractual volume at fair value (in millions)		$	35.5

(1) Volume in barrels


64 \|

Management's Discussion and Analysis

ITEM 4. CONTROLS AND PROCEDURES

Our disclosure controls and procedures are designed to provide reasonable assurance that the information that we are required to disclose in reports we file under the ~~Securities~~ Exchange Act, ~~of 1934, as amended ("the Exchange Act"),~~ is accumulated and appropriately communicated to management. We carried out an evaluation required by Rule 13a-15(b) of the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the end of the reporting period. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the reporting period.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the first quarter of ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Although most of our corporate employees have shifted to a remote working environment due to the COVID-19 Pandemic, we have not experienced a material impact to our internal control over financial reporting. We are continually monitoring and assessing the COVID-19 Pandemic to minimize the impact on the design and operating effectiveness of our internal controls.



6765 \|

Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities and Other Information

Part II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including, environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations. See Note 11 to our accompanying condensed consolidated financial statements, which is incorporated by reference in this ~~Item1,~~Item 1, for additional information. Aside from the disclosure in Note 11, there have been no material developments to the proceedings previously reported in our Annual Report on Form 10-K ~~as amended and~~ filed on ~~February 28, 2020.~~March 1, 2021.

ITEM 1A. RISK FACTORS

There were no material changes during the ~~first quarter of 2020~~three months ended March 31, 2021 to the risk factors identified in the Company’s fiscal ~~2019~~2020 Annual Report on Form ~~10-K, except as noted below.~~

The current COVID-19 Pandemic and certain developments in the global oil markets have had, and may continue to have, an adverse impact on our business, our future results of operations and our overall financial performance.

The COVID-19 Pandemic could materially adversely affect our business and operations during 2020 and possibly beyond. In early 2020, global health care systems and economies began to experience strain from the spread of the COVID-19 coronavirus. As the virus spread, global economic activity began to slow and future economic activity was forecast to slow with a resulting forecast of a decline in oil and gas demand. The global pandemic has resulted in a dramatic reduction in airline flights and has reduced the number of cars on the road. In response to the decline in demand, OPEC participating countries have agreed to adjust downwards their overall production of crude oil through April 30, 2022, with the agreement to be reassessed in December 2021. These declines have been exacerbated by a production dispute between Russia and the members of OPEC, particularly Saudi Arabia, and the subsequent actions taken by such countries as a result thereof. A sustained reduction in crude oil production will potentially affect the global supply, prices of oil and refined products in our market. Additionally, a significant reduction or freeze in crude oil production in the United States will adversely affect our suppliers and source of crude oil.

Global economic growth drives demand for energy from all sources, including fossil fuels. Should the U.S. and global economies experience weakness, demand for energy may decline. Similarly, should growth in global energy production outstrip demand, excess supplies may arise. Declines in demand and excess supplies may result in accompanying declines in commodity prices and deterioration of our financial position along with our ability to operate profitably and our ability to obtain financing to support operations. With respect to our business, we have experienced periodic declines in demand thought to be associated with slowing economic growth in certain markets, including the effects of the COVID-19 Pandemic, coupled with new oil and gas supplies coming on line and other circumstances beyond our control that resulted in oil and gas supply exceeding global demand which, in turn, resulted in steep declines in prices of oil and natural gas. There can be no assurance as to how low the current price decline will persist or that a recurrence of price weakness will not arise in the future.

The ultimate extent of the impact of COVID-19 on our business, financial condition, results of operation and liquidity will depend largely on future developments, including the duration and spread of the virus outbreak, particularly within the geographic areas where we operate, and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time. The ultimate extent of the impact of the volatile conditions in the oil and gas industry on our business, financial condition, results of operation and liquidity will also depend largely on future developments, including the extent and duration of any price reductions, any additional decisions by OPEC and the lack of resolution of disputes between Russia and the members of OPEC.

To the extent COVID-19 and the developments in the global oil markets adversely affects our business, financial condition, results of operation and liquidity, they may also have the effect of heightening many of the other risks described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in this Quarterly Report on Form 10-Q, as those risk factors are amended or supplemented by subsequent Quarterly Reports on Form 10-Q and other reports and documents we file with the SEC after the date hereof.

~~We are particularly vulnerable to disruptions to our refining operations because our refining operations are concentrated in four facilities.~~

Because all of our refining operations are concentrated in the Tyler, El Dorado, Big Spring and Krotz Springs refineries, significant disruptions at one of these facilities could have a material adverse effect on our consolidated financial results. Refining segment contribution margin comprised approximately 79.4%, 84.2% and 88.3% of our consolidated contribution margin for the 2019, 2018 and 2017 fiscal years, respectively.

Our refineries consist of many processing units, a number of which have been in operation for many years. These processing units undergo periodic shutdowns, known as turnarounds, during which routine maintenance is performed to restore the operation of the equipment to a higher level of performance. Depending on which units are affected, all or a portion of a refinery's production may be halted or disrupted during a



~~68 \|~~

maintenance turnaround. We completed a maintenance turnaround at our El Dorado refinery in 2014 and a shortened turnaround that allowed work to be completed on the majority of the process units in March 2019. In addition, we completed a maintenance turnaround at our Tyler refinery in 2015 and plan for a maintenance turnaround for our Big Spring refinery beginning January of 2020. We are also subject to unscheduled down time for unanticipated maintenance or repairs.

Refinery operations may also be disrupted by external factors, such as a suspension of feedstock deliveries, cyber-attacks, a global pandemic such as the recent outbreak of the novel coronavirus, or an interruption of electricity, natural gas, water treatment or other utilities. Other potentially disruptive factors include natural disasters, severe weather conditions, workplace or environmental accidents, interruptions of supply, work stoppages, losses of permits or authorizations or acts of terrorism.

~~The stockholder rights plan adopted by our Board may impair an attempt to acquire control of Delek.~~

On March 20, 2020, our Board of Directors adopted a stockholder rights plan and declared a dividend of one preferred share purchase right for each outstanding share of our common stock to stockholders of record on March 30, 2020. In the event that a person or group acquires beneficial ownership of 15% or more of our then-outstanding common stock, subject to certain exceptions, each right would entitle its holder (other than such person or members of such group) to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock. In addition, at any time after a person or group acquires 15% or more of our common stock (unless such person or group acquires 50% or more), the Board may exchange one share of our common stock for each outstanding right (other than rights owned by such person or group, which would have become void). The stockholder rights plan could make it more difficult for a third party to acquire control of Delek or a large block of our common stock without the approval of our Board of Directors. Unless extended by the Board prior to expiration, the rights will expire on March 19, 2021.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~10-K.

On November 6, 2018, our Board of Directors authorized a share repurchase program for up to $500.0 million of Delek common stock. Any share repurchases under the repurchase program may be implemented through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws. The timing, price, and size of repurchases will be made at the discretion of management and will depend on prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate us to acquire any particular amount of stock and does not expire. The following table sets forth information with respect to the purchase of shares of our common stock made during the three months ended March 31, 2020 by or on behalf of us or any “affiliated purchaser,” as defined by Rule 10b-18 of the Exchange Act (inclusive of all purchases that have settled as of March 31, 2020):

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans
or Programs
January 1 - January 31, 2020 58,713
$ 33.40
58,713
$ 229,724,248
February 1 - February 29, 2020 —
—
—
229,724,248
March 1 - March 31, 2020 —
—
—
229,724,248
Total 58,713
$ 33.40
58,713
N/A

ITEM 5. OTHER INFORMATION

~~Dividend Declaration~~

~~On May 4, 2020, our Board of Directors voted to declare a quarterly cash dividend of $0.31 per share of our common stock, payable on June 3, 2020 to shareholders of record on June 3, 2020.~~

~~Submission of Matters to a Vote of Security Holders~~

On May 5, 2020, Delek held its 2020 Annual Meeting of Stockholders. A quorum was present at the meeting. The matters presented to stockholders for vote and the final voting results on such matters are set forth below:

Proposal 1: Election of the seven nominees named in the Proxy Statement as directors of Delek to serve until the 2021 Annual Meeting of Stockholders or until their respective successors are appointed, elected and qualified:

None.



6966 \|

Director Nominee For Withheld Broker Non-Votes
Ezra Uzi Yemin 52,286,428 8,197,684 4,135,688
William J. Finnerty 49,824,919 10,659,193 4,135,688
Richard J. Marcogliese 54,941,799 5,542,313 4,135,688
Gary M. Sullivan, Jr. 49,861,679 10,622,433 4,135,688
Vicky Sutil 51,176,959 9,307,153 4,135,688
David Wiessman 54,528,512 5,955,600 4,135,688
Shlomo Zohar 51,171,259 9,312,853 4,135,688

~~Proposal 2: Adoption of the advisory resolution approving Delek's executive compensation program for our named executive officers as described in the Proxy Statement:~~

For Against Abstain Broker Non-Votes
54,774,051 1,995,120 3,714,941 4,135,688

~~Proposal 3: Ratification of the appointment of Ernst & Young LLP as Delek’s independent registered public accounting firm for the 2020 fiscal year:~~

For Against Abstain Broker Non-Votes
59,444,645 1,160,865 4,014,290 —

~~Proposal 4: Approval of an amendment to our 2016 Long-Term Incentive Plan to increase the number of shares available for issuance thereunder:~~

For Against Abstain Broker Non-Votes
55,058,852 1,712,364 3,712,896 4,135,688

~~Amendment to 2016 Long-Term Incentive Plan~~

On May 5, 2020, upon approval by our stockholders, Delek amended its 2016 Long-Term Incentive Plan to increase the number of shares of Delek common stock reserved for issuance under the plan by 2,120,000 shares.

~~Amendments to Bylaws~~

~~On May 6, 2020, our Board of Directors amended and restated Delek’s bylaws (as so amended and restated, the “Bylaws”), effective immediately. The amendments to the Bylaws were as follows:~~

~~Update various aspects of the advance notice and stockholder meeting provisions;~~

Expand the information required in connection with a stockholder nomination of a person for election as a director or a matter of business to be considered at a meeting of stockholders, and to require that such information be updated as of the record date of the meeting and again prior to the meeting;

Require that proposed nominees for election as a director complete a written representation and agreement regarding undisclosed voting agreements and compensation arrangements of the proposed nominee, compliance with applicable regulations, corporate policies and fiduciary duties, and the provision of information to the Company, among other matters, in the form required by the Company;

~~Shorten the notice period for calling meetings of the Board of Directors;~~

~~Provide for the adoption of emergency bylaws, as permitted by Delaware law; and~~

~~Other clarifying and conforming amendments throughout the Bylaws.~~

~~The foregoing description is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is attached hereto as Exhibit 3.2 and is incorporated by reference herein.~~

~~Amended Employment Agreement~~

On May 6, 2020, the Board of Directors of the Company approved an amended and restated employment agreement between the Company and Ezra Uzi Yemin dated May 8, 2020 (the "Employment Agreement") which, among other things, provides for the following: an annual base salary of $1,075,000; an annual bonus opportunity with a target amount of 140% of base salary and a maximum payout opportunity of 200% of



~~70 \|~~

the target amount; and annual grants under the Company’s 2016 Long-Term Incentive Plan in a target amount of $6,300,000 per year split evenly between time-vesting restricted stock units (“RSUs”) and performance-based RSUs. The Employment Agreement has an initial term expiring May 8, 2023, and will automatically renew for one year terms unless terminated by prior written notice by either Mr. Yemin or the Company.

In the event Mr. Yemin is terminated without cause (as defined in the Employment Agreement), terminates his employment with good reason (as defined in the Employment Agreement), or in the event of a failure to renew (as defined in the Employment Agreement), Mr. Yemin would be entitled to (i) an amount equal to two times the sum of his then current base salary and target annual bonus as in effect immediately before any notice of termination, (ii) the costs of continuing family health insurance coverage for 18 months following termination of employment, (iii) any annual bonus Mr. Yemin would have otherwise been entitled to if his employment had continued through the end of the bonus year based upon the actual performance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company’s annual bonus programs, and (iv) the immediate vesting and settlement, if applicable, of all unvested equity awards as follows: (A) for unvested performance awards, on a prorated basis through the termination of employment based on actual results evaluated after the close of the applicable performance period and payable in a lump sum at the same time as performance awards are paid to executives of the Company generally and (B) for full value equity awards (e.g., restricted stock, restricted stock units and phantom units) and appreciation equity awards (e.g., non-qualified stock options and stock appreciation rights), only to the extent that such awards would have vested if Mr. Yemin’s employment had continued during a period equal to the lesser of six months following termination of employment or the balance of the term of the Employment Agreement. In addition, Mr. Yemin’s existing unvested equity options will vest upon a change in control regardless of whether his employment terminates.

If Mr. Yemin terminates his employment for any reason, other than with good reason or upon his death or disability, and provides at least six months’ advance written notice of termination, Mr. Yemin would be entitled to an amount equal to his annual base salary at the time notice is delivered, plus the costs of continuing family health insurance coverage for 18 months following the termination of his employment.

If, within the period beginning six months prior to and ending three years following a change in control of the Company (as defined in the Employment Agreement), Mr. Yemin’s employment is terminated by the Company without cause or he terminates his employment for good reason, Mr. Yemin would be entitled to receive (i) an amount equal to three times the sum of his then-current base salary and target annual bonus as in effect immediately before any notice of termination, (ii) the costs of continuing family health insurance coverage for 18 months following termination of employment, (iii) any annual bonus Mr. Yemin would have otherwise been entitled if his employment had continued through the end of the bonus year based upon the actual performance of the Company, prorated for the period of actual employment during the bonus year, and paid upon the payment of the annual bonuses to senior executives of the Company pursuant to the Company’s annual bonus programs, and (iv) the immediate vesting of all unvested equity awards.

All payments to be made by the Company upon termination as described above are subject to Mr. Yemin executing a release of claims in favor of the Company. Under the Employment Agreement, Mr. Yemin also leases his residence from the Company at fair market value and holds an option to purchase the resident at fair market value. In addition to benefits available to the Company’s senior executive officers generally, the Employment Agreement also provides reimbursement for the reasonable costs of professional preparation of his personal income tax returns, not to exceed $25,000 in any calendar year, and the personal use of a Company-owned automobile.

The Employment Agreement includes a noncompetition clause which provides that Mr. Yemin will not compete with the Company, directly or indirectly, in the territory (as defined in the Employment Agreement) during the term of the Employment Agreement and for one year thereafter. The Employment Agreement also includes non-solicitation provisions with respect to the customers and employees of the Company during the term of the Employment Agreement and for one year thereafter.

The above description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement itself, a copy of which is filed with this report as Exhibit 10.4 and is incorporated herein in its entirety by reference.

~~Separation Payment~~

On May 6, 2020, the Board of Directors of the Company approved a Separation Agreement between the Company and Assaf Ginzburg in connection with Mr. Ginzburg’s departure from the Company. Under the Separation Agreement, Mr. Ginzburg will receive a payment of $750,000 in exchange for Mr. Ginzburg’s general release of claims for the benefit of the Company and its affiliates.



~~71 \|~~

Exhibits

ITEM 6. EXHIBITS


Exhibit No.					Description


~~Exhibit No.~~			~~Description~~
~~2.1~~3.1	~#			Contribution, Conveyance and Assumption Agreement, dated as of March 31, 2020, by and among Delek Big Spring South Mainline, LLC, Delek Permian Gathering, LLC, Delek Big Spring North Gathering, LLC, Delek Big Spring Gathering, LLC, DKL Permian Gathering, LLC, Delek Logistics Partners, LP and Delek US Holdings, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on April 6, 2020).

~~3.1~~	#	Amended and Restated Certificate of Incorporation, as amended by that certain Certificate of Designations of Series A Junior Participating Preferred Stock of Delek US Holdings, Inc., dated March 23, 2020.

~~3.2~~	#	Third Amended and Restated Bylaws of Delek US Holdings, Inc.

~~4.1~~31.1		#			Rights Agreement, dated as of March 20, 2020, by and between Delek US Holdings, Inc. as the Company, and American Stock Transfer & Trust Company, LLC as Rights Agent, incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on March 24, 2020).

~~10.1~~	~	Throughput and Deficiency Agreement, dated and effective as of March 31, 2020, by and between Lion Oil Trading & Transportation, LLC and DKL Permian Gathering, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 6, 2020).

~~10.2~~		Second Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of March 31, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed on April 6, 2020).

~~10.3~~	#	~~Second Amendment to the Delek US Holdings, Inc. 2016 Long-Term Incentive Plan, effective as of May 5, 2020.~~

~~10.4~~	#	~~Amended and Restated Executive Employment Agreement, dated as of May 8, 2020, by and between Delek US Holdings, Inc. and Ezra Uzi Yemin.~~

~~10.5~~		Amended and Restated Executive Employment Agreement, dated April 6, 2020, between Delek US Holdings, Inc. and Avigal Soreq (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).

~~10.6~~		~~Offer Letter, dated April 6, 2020, between Delek US Holdings, Inc. and Reuven Spiegel (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on April 9, 2020).~~

~~31.1~~	#	Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		#			Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.

32.1		##			Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		##			Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101~~
101					The following materials from Delek US Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2020,~~2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (Unaudited), (ii) Condensed Consolidated Statements of Income for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), (v) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).
~~104~~
104					The cover page from Delek US Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, has been formatted in Inline XBRL.



#		Filed herewith
##		Furnished herewith
~	~~Certain information contained in these exhibits has been omitted because it is not material and would likely cause competitive harm to the Company if publicly disclosed.~~



7267 \|

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Delek US Holdings, Inc.

~~Delek US Holdings, Inc.~~
By:
~~By:~~	/s/ Ezra Uzi Yemin
		Ezra Uzi Yemin
		Director (Chairman), President and Chief Executive Officer (Principal Executive Officer)

By:		/s/ ~~Assaf Ginzburg~~Reuven Spiegel
		~~Assaf Ginzburg~~Reuven Spiegel
		Executive Vice President and Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)

Dated: May ~~8, 2020~~

6, 2021



7368 \|



Delaware			35-2581557
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

7102 Commerce Way	Brentwood	Tennessee	37027
(Address of principal executive offices)			(Zip Code)



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)		3
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Income		4
Condensed Consolidated Statements of Comprehensive Income		5
Condensed Consolidated Statement s of Changes in Stockholders' Equity		6
Condensed Consolidated Statements of Cash Flows		8
Notes to Condensed Consolidated Financial Statements		9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3532
Item 3. Quantitative and Qualitative Disclosures about Market Risk		6563
Item 4. Controls and Procedures		6764

PART II. OTHER INFORMATION
Item 1. Legal Proceedings		6866
Item 1A. Risk Factors		6866
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		69
Item 5. Other Information	6966
Item 6. Exhibits		7267
Signatures		7368


	March 31, 2020			December 31, 2019				March 31, 2021		December 31, 2020
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	784.9		$	955.3		Cash and cash equivalents	$	793.5	$	787.5
Accounts receivable, net	436.0			792.6			Accounts receivable, net	720.2		527.9

Inventories, net of inventory valuation reserves	473.1			946.7			Inventories, net of inventory valuation reserves	1,034.6		727.7

Other current assets	262.1			268.7			Other current assets	358.2		256.4
Total current assets	1,956.1			2,963.3			Total current assets	2,906.5		2,299.5
Property, plant and equipment:							Property, plant and equipment:
Property, plant and equipment	3,539.8			3,362.8			Property, plant and equipment	3,580.7		3,519.5
Less: accumulated depreciation	(975.4		)	(934.5		)	Less: accumulated depreciation	(1,212.9)		(1,152.3)
Property, plant and equipment, net	2,564.4			2,428.3			Property, plant and equipment, net	2,367.8		2,367.2
Operating lease right-of-use assets	177.1			183.6			Operating lease right-of-use assets	174.1		182.0
Goodwill	855.7			855.7			Goodwill	729.7		729.7
Other intangibles, net	111.5			110.3			Other intangibles, net	106.9		107.8
Equity method investments	365.2			407.3			Equity method investments	360.2		363.6
Other non-current assets	63.4			67.8			Other non-current assets	98.8		84.3
Total assets	$	6,093.4		$	7,016.3		Total assets	$	6,744.0	$	6,134.1
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	1,102.3		$	1,599.7		Accounts payable	$	1,353.6	$	1,144.0

Current portion of long-term debt	31.4			36.4			Current portion of long-term debt	13.4		33.4
Obligation under Supply and Offtake Agreements	97.9			332.5			Obligation under Supply and Offtake Agreements	125.0		129.2

Current portion of operating lease liabilities	40.6			40.5			Current portion of operating lease liabilities	47.5		50.2
Accrued expenses and other current liabilities	354.7			346.8			Accrued expenses and other current liabilities	961.8		546.4
Total current liabilities	1,626.9			2,355.9			Total current liabilities	2,501.3		1,903.2
Non-current liabilities:							Non-current liabilities:
Long-term debt, net of current portion	2,185.5			2,030.7			Long-term debt, net of current portion	2,354.4		2,315.0
Obligation under Supply and Offtake Agreements	179.5			144.8			Obligation under Supply and Offtake Agreements	287.1		224.9
Environmental liabilities, net of current portion	136.3			137.9			Environmental liabilities, net of current portion	107.0		107.4
Asset retirement obligations	67.1			68.6			Asset retirement obligations	37.8		37.5
Deferred tax liabilities	242.2			267.9			Deferred tax liabilities	258.5		255.5
Operating lease liabilities, net of current portion	137.3			144.3			Operating lease liabilities, net of current portion	125.9		131.8
Other non-current liabilities	28.7			30.9			Other non-current liabilities	43.1		33.7
Total non-current liabilities	2,976.6			2,825.1			Total non-current liabilities	3,213.8		3,105.8
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.01 par value, 11,000,000 shares and 10,000,000 shares authorized at March 31,2020 and December 31, 2019, respectively, no shares issued and outstanding	—			—
Common stock, $0.01 par value, 110,000,000 shares authorized, 91,089,920 shares and 90,987,025 shares issued at March 31, 2020 and December 31, 2019, respectively	0.9			0.9
Preferred stock, $0.01 par value, 10,000,000 shares authorized, 0 shares issued and outstanding							Preferred stock, $0.01 par value, 10,000,000 shares authorized, 0 shares issued and outstanding	0		0
Common stock, $0.01 par value, 110,000,000 shares authorized, 91,450,724 shares and 91,356,868 shares issued at March 31, 2021 and December 31, 2020, respectively							Common stock, $0.01 par value, 110,000,000 shares authorized, 91,450,724 shares and 91,356,868 shares issued at March 31, 2021 and December 31, 2020, respectively	0.9		0.9
Additional paid-in capital	1,157.4			1,151.9			Additional paid-in capital	1,188.6		1,185.1
Accumulated other comprehensive income	1.2			0.1
Treasury stock, 17,575,527 shares and 17,516,814 shares, at cost, as of March 31, 2020 and December 31, 2019, respectively	(694.1		)	(692.2		)
Accumulated other comprehensive loss							Accumulated other comprehensive loss	(7.4)		(7.2)
Treasury stock, 17,575,527 shares, at cost, as of March 31, 2021 and December 31, 2020, respectively							Treasury stock, 17,575,527 shares, at cost, as of March 31, 2021 and December 31, 2020, respectively	(694.1)		(694.1)
Retained earnings	861.6			1,205.6			Retained earnings	423.2		522.0
Non-controlling interests in subsidiaries	162.9			169.0			Non-controlling interests in subsidiaries	117.7		118.4
Total stockholders’ equity	1,489.9			1,835.3			Total stockholders’ equity	1,028.9		1,125.1
Total liabilities and stockholders’ equity	$	6,093.4		$	7,016.3		Total liabilities and stockholders’ equity	$	6,744.0	$	6,134.1


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net loss	$	(91.3)	$	(307.0)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	68.5		52.6
Other amortization/accretion	3.0		2.2
Non-cash lease expense	15.3		13.3
Deferred income taxes	5.1		(24.5)

Income from equity method investments	(4.8)		(5.1)
Dividends from equity method investments	5.7		4.9
Non-cash lower of cost or market/net realizable value adjustment	(20.4)		280.8







Equity-based compensation expense	4.6		6.3

Other	0.9		1.1
Changes in assets and liabilities:
Accounts receivable	(192.3)		351.6
Inventories and other current assets	(304.2)		250.9
Fair value of derivatives	(91.9)		(36.1)
Accounts payable and other current liabilities	524.5		(546.3)
Obligation under Supply and Offtake Agreements	51.6		(199.9)
Non-current assets and liabilities, net	(8.6)		1.1


Net cash used in operating activities	(34.3)		(154.1)
Cash flows from investing activities:

Equity method investment contributions	(1.5)		(27.1)
Distributions from equity method investments	4.0		69.4
Purchases of property, plant and equipment	(48.3)		(189.2)

Purchase of intangible assets	(0.5)		0
Proceeds from sale of property, plant and equipment	0.2		0.3






Net cash used in investing activities	(46.1)		(146.6)



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(307.0	)	$	154.4
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	52.6			46.8
Other amortization/accretion	2.2			2.6
Non-cash lease expense	13.3			9.3
Deferred income taxes	(24.5		)	10.9
Income from equity method investments	(5.1		)	(2.6		)
Dividends from equity method investments	4.9			1.9
Loss on disposal of assets	0.5			5.6
Equity-based compensation expense	6.3			5.0
Excess tax deficiency (benefit) of equity-based compensation	0.6			(1.4		)
Changes in assets and liabilities:
Accounts receivable	351.6			(265.8		)
Inventories and other current assets	531.7			(192.5		)
Fair value of derivatives	(36.1		)	43.5
Accounts payable and other current liabilities	(546.3		)	292.4
Obligation under Supply and Offtake Agreement	(199.9		)	22.6
Non-current assets and liabilities, net	1.1			0.7
Net cash (used in) provided by operating activities	(154.1		)	133.4
Cash flows from investing activities:
Equity method investment contributions	(27.1		)	(4.8		)
Distributions from equity method investments	69.4			0.8
Purchases of property, plant and equipment	(189.2		)	(124.0		)
Proceeds from sale of property, plant and equipment	0.3			1.0
Net cash used in investing activities	(146.6		)	(127.0		)



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the transition period from to



		Three Months Ended March 31, 2020
		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Treasury Stock					Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
		Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Retained Earnings			Shares		Amount			Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
Balance at	December 31, 2019	90,987,025	$	0.9	$	1,151.9		$	0.1		$	1,205.6		(17,516,814	)	$	(692.2	)	$	169.0		$	1,835.3
Cumulative effect of adopting accounting principle regarding measurement of credit losses on financial instruments, net		—	—		—			—			(6.5		)	—		—			—			(6.5		)
Net (loss) income		—	—		—			—			(314.4		)	—		—			7.4			(307.0		)
Other comprehensive income related to commodity contracts, net		—	—		—			1.4			—			—		—			—			1.4
Foreign currency translation loss, net		—	—		—			(0.3		)	—			—		—			—			(0.3		)
Common stock dividends ($0.31 per share)		—	—		—			—			(23.1		)	—		—			—			(23.1		)
Distributions to non-controlling interests		—	—		—			—			—			—		—			(8.6		)	(8.6		)
Equity-based compensation expense		—	—		6.2			—			—			—		—			0.1			6.3
Repurchase of common stock		—	—		—			—			—			(58,713	)	(1.9		)	—			(1.9		)
Repurchases of non-controlling interests		—	—		—			—			—			—		—			(5.0		)	(5.0		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(0.7		)	—			—			—		—			—			(0.7		)
Exercise of equity-based awards		102,895	—		—			—			—			—		—			—			—
Balance at	March 31, 2020	91,089,920	$	0.9	$	1,157.4		$	1.2		$	861.6		(17,575,527	)	$	(694.1	)	$	162.9		$	1,489.9



		Three Months Ended March 31, 2019
		Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings			Treasury Stock					Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
		Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Income		Retained Earnings			Shares		Amount			Non-Controlling Interest in Subsidiaries			Total Stockholders' Equity
Balance at	December 31, 2018	90,478,075	$	0.9	$	1,135.4		$	28.6	$	981.8		(12,477,780	)	$	(514.1	)	$	175.5		$	1,808.1
Net income		—	—		—			—		149.3			—		—			5.1			154.4
Other comprehensive income related to commodity contracts, net		—	—		—			10.3		—			—		—			—			10.3
Other comprehensive income related to postretirement benefit plans, net		—	—		—			0.2		—			—		—			—			0.2
Foreign currency translation gain, net		—	—		—			0.2		—			—		—			—			0.2
Common stock dividends ($0.27 per share)		—	—		—			—		(21.0		)	—		—			—			(21.0		)
Distribution to non-controlling interest		—	—		—			—		—			—		—			(7.7		)	(7.7		)
Equity-based compensation expense		—	—		4.9			—		—			—		—			0.1			5.0
Repurchase of common stock		—	—		—			—		—			(1,291,644	)	(46.2		)	—			(46.2		)
Taxes paid due to the net settlement of equity-based compensation		—	—		(4.5		)	—		—			—		—			—			(4.5		)
Exercise of equity-based awards		244,566	—		—			—		—			—		—			—			—
Other		—	—		(0.3		)	—		—			—		—			—			(0.3		)
Balance at	March 31, 2019	90,722,641	$	0.9	$	1,135.5		$	39.3	$	1,110.1		(13,769,424	)	$	(560.3	)	$	173.0		$	1,898.5


Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:					Cash paid during the period for:
Interest, net of capitalized interest of $0.2 million and $0.3 million in the 2020 and 2019 periods, respectively	$	32.2	$	25.1
Interest, net of capitalized interest of $0.4 million and $0.2 million in the 2021 and 2020 periods, respectively					Interest, net of capitalized interest of $0.4 million and $0.2 million in the 2021 and 2020 periods, respectively	$	142.1	$	32.2
Income taxes	$	0.2	$	0.1	Income taxes	$	0.1	$	0.2
Non-cash investing activities:					Non-cash investing activities:

Increase in accrued capital expenditures	$	1.1	$	4.4	Increase in accrued capital expenditures	$	18.8	$	1.1
Non-cash financing activities:					Non-cash financing activities:
Non-cash lease liability arising from recognition of right of use assets upon adoption of Accounting Standards Update ("ASU") 2016-02	$	—	$	211.0

Non-cash lease liability arising from obtaining right of use assets during the period	$	6.8	$	—	Non-cash lease liability arising from obtaining right of use assets during the period	$	19.6	$	6.8



	Three Months Ended March 31, 2019
	Refining ⁽¹⁾		Logistics		Retail		Corporate, Other and Eliminations ⁽¹⁾			Consolidated
Net revenues (excluding inter-segment fees and revenues)	$	1,907.4	$	89.6	$	197.2	$	5.7		$	2,199.9
Inter-segment fees and revenues	184.6		62.9		—		(247.5		)	—
Operating costs and expenses:
Cost of materials and other	1,669.1		96.3		163.4		(229.4		)	1,699.4
Operating expenses (excluding depreciation and amortization presented below)	121.0		16.1		23.6		6.0			166.7
Segment contribution margin	$	301.9	$	40.1	$	10.2	$	(18.4	)	333.8
Depreciation and amortization	$	31.1	$	6.5	$	4.3	$	4.9		46.8
General and administrative expenses										62.2
Other operating expense, net										2.4
Operating income										$	222.4
Capital spending (excluding business combinations)	$	81.7	$	0.9	$	5.1	$	40.7		$	128.4



	March 31, 2020			December 31, 2019
	March 31, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	4.2		$	5.5
Accounts receivable	12.4			13.2
Inventory	5.1			12.6
Other current assets	0.9			2.3
Property, plant and equipment, net	479.5			295.0
Equity method investments	255.7			247.0
Operating lease right-of-use assets	3.5			3.7
Goodwill	12.2			12.2
Intangible assets, net	166.5			146.6
Other non-current assets	6.2			6.3
Total assets	$	946.2		$	744.4
LIABILITIES AND DEFICIT
Accounts payable	$	4.4		$	12.5
Accounts payable to related parties	2.1			8.9
Current portion of operating lease liabilities	1.5			1.4
Accrued expenses and other current liabilities	14.6			12.2
Long-term debt	940.0			833.1
Asset retirement obligations	5.7			5.6
Deferred tax liabilities	1.0			0.2
Operating lease liabilities, net of current portion	2.0			2.3
Other non-current liabilities	19.3			19.3
Deficit	(44.4		)	(151.1		)
Total liabilities and deficit	$	946.2		$	744.4



		March 31, 2020					December 31, 2019
Derivative Type	Balance Sheet Location	Assets		Liabilities			Assets		Liabilities
Derivatives not designated as hedging instruments:
Commodity derivatives⁽¹⁾	Other current assets	$	2,159.2	$	(2,087.9	)	$	188.9	$	(202.1	)
Commodity derivatives⁽¹⁾	Other current liabilities	244.1		(275.7		)	24.4		(34.0		)
Commodity derivatives⁽¹⁾	Other long-term assets	152.8		(149.6		)	—		—
Commodity derivatives⁽¹⁾	Other long-term liabilities	23.3		(24.4		)	23.4		(24.8		)
RIN commitment contracts⁽²⁾	Other current assets	2.2		—			0.6		—
RIN commitment contracts⁽²⁾	Other current liabilities	—		(1.7		)	—		(1.9		)

Derivatives designated as hedging instruments:
Commodity derivatives ⁽¹⁾	Other current assets	7.3		(5.2		)	3.4		(2.0		)
Commodity derivatives⁽¹⁾	Other current liabilities	4.5		(3.2		)	—		—
Commodity derivatives⁽¹⁾	Other long-term assets	—		—			0.2		(0.1		)
Total gross fair value of derivatives		$	2,593.4	$	(2,547.7	)	$	240.9	$	(264.9	)
Less: Counterparty netting and cash collateral⁽³⁾		2,505.5		(2,512.5		)	210.7		(249.5		)
Total net fair value of derivatives		$	87.9	$	(35.2	)	$	30.2	$	(15.4	)


⁽²⁾			~~As of March 31, 2020 and December 31, 2019, we had open RIN commitment contracts representing 86,300,000 and 147,000,000 RINs, respectively.~~


⁽²⁾	~~See separate table below for disclosures about "trading derivatives."~~


	March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets
Commodity derivatives	$	0	$	2,125.8	$	0	$	2,125.8


RINs commitment contracts	0		122.5		0		122.5

Total assets	0		2,248.3		0		2,248.3
Liabilities
Commodity derivatives	0		(2,106.6)		0		(2,106.6)

RINs commitment contracts	0		(11.6)		0		(11.6)
Environmental credits obligation deficit	0		(220.8)		0		(220.8)
J. Aron supply and offtake obligations	0		(410.7)		0		(410.7)
Total liabilities	0		(2,749.7)		0		(2,749.7)
Net assets (liabilities)	$	0	$	(501.4)	$	0	$	(501.4)



~~9 \|~~



~~10 \|~~



~~11 \|~~


⁽¹⁾			~~Consists primarily of asphalt sales which are recorded in corporate, other and eliminations segment.~~



	Tyler, Texas refinery (the "Tyler refinery")	El Dorado, Arkansas refinery (the "El Dorado refinery")	Big Spring,Texas refinery (the "Big Spring refinery")	Krotz Springs, Louisiana refinery (the "Krotz Springs refinery")
Total Nameplate Capacity (barrels per day ("bpd"))	75,000	80,000	73,000	74,000
Primary Products	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, petroleum coke and sulfur	Gasoline, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, asphalt and sulfur	Gasoline, jet fuel, ultra-low-sulfur diesel, liquefied petroleum gases, propylene, aromatics and sulfur	Gasoline, jet fuel, high-sulfur diesel, light cycle oil, liquefied petroleum gases, propylene and ammonium thiosulfate
Relevant Crack Spread Benchmark (1)	Gulf Coast 5-3-2	Gulf Coast 5-3-2 (2)	Gulf Coast 3-2-1 (3)	Gulf Coast 2-1-1 (4)
Marketing and Distribution	The refining segment's petroleum-based products are marketed primarily in the south central, southwestern and western regions of the United States, and the refining segment also ships and sells gasoline into wholesale markets in the southern and eastern United States. Motor fuels are sold under the Alon or Delek brand through various terminals to supply Alon or Delek branded retail sites. In addition, we sell motor fuels through our wholesale distribution network on an unbranded basis.



	Full Year 2020 Forecast		Three Months Ended March 31, 2020
Refining
Sustaining maintenance, including turnaround activities	$	155.2	$	129.5
Regulatory	49.0		38.4
Discretionary projects	1.5		0.2
Refining segment total	205.7		168.1

Logistics
Regulatory	2.2		0.9
Sustaining maintenance	3.7		0.7
Discretionary projects	11.7		1.4
Logistics segment total	17.6		3.0

Retail
Regulatory	0.1		0.1
Sustaining maintenance	2.5		0.7
Discretionary projects	6.0		5.4
Retail segment total	8.6		6.2

Other
Regulatory	0.4		—
Sustaining maintenance	0.8		—
Discretionary projects	16.9		12.9
Other total	18.1		12.9
Total capital spending	$	250.0	$	190.2



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 - January 31, 2020	58,713	$	33.40	58,713	$	229,724,248
February 1 - February 29, 2020	—	—		—	229,724,248
March 1 - March 31, 2020	—	—		—	229,724,248
Total	58,713	$	33.40	58,713	N/A



Director Nominee	For	Withheld	Broker Non-Votes
Ezra Uzi Yemin	52,286,428	8,197,684	4,135,688
William J. Finnerty	49,824,919	10,659,193	4,135,688
Richard J. Marcogliese	54,941,799	5,542,313	4,135,688
Gary M. Sullivan, Jr.	49,861,679	10,622,433	4,135,688
Vicky Sutil	51,176,959	9,307,153	4,135,688
David Wiessman	54,528,512	5,955,600	4,135,688
Shlomo Zohar	51,171,259	9,312,853	4,135,688



For	Against	Abstain	Broker Non-Votes
54,774,051	1,995,120	3,714,941	4,135,688