Delek US Holdings Management Discusses Q3 2010 Results – Earnings Call Transcript
Delek US Holdings, Inc. (
)
Q3 2010 Earnings Call
November 4, 2010, 12:00 am ET
Executives
Uzi Yemin – President & Chief Executive Officer
Mark Cox – Chief Financial Officer
Noel Ryan – Director of Investor Relations
Analysts
Jacques Rousseau – RBC
Ben Brownlow – Morgan Keegan
Blake Fernandez – Howard Weil
Jeff Dietert – Simmons
Presentation
Operator
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Delek US Holdings, Inc. Q2 2009 Earnings Call Transcript
Good afternoon. My name is my Kelly and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek US Holdings third quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operators Instructions)
I would now like to turn the conference over to Noel Ryan, Director of Investor Relations. Mr. Ryan, you may begin your conference.
Noel Ryan
Thank you, Kelly. Good morning and welcome to the Delek US Holdings conference call for the third quarter 2010. Our hosts for today’s call are Uzi Yemin, President and Chief Executive Officer and Mark Cox, Chief Financial Officer of Delek US. Other members of the management team will be available during the question-and-answer portion of the call.
As a reminder, this conference call may contain certain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements.
You are cautioned that these statements may be affected by important factors set forth in Delek’s filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
Today’s call is being recorded and will be available for replay beginning today and ending November 18, 2010 by dialing 800-642-1687 with the confirmation ID number 17638552. An online replay may also be accessed for the next 90 days at the company’s website at delekus.com.
During today’s call, I will begin with an overview of our financial performance in the third quarter 2010. Mark will follow with a review of our capital spending, liquidity and results from operations within each of the three business segments for the period ended September 30, 2010. Uzi will conclude with a high-level outlook as we transition to the fourth quarter and look ahead to 2011. At the conclusion of these prepared remarks, we’ll open the call for questions.
For the three months ended September 30, 2010, Delek US reported a net loss of $9.9 million or loss of $0.18 per basic share versus a net loss of $4.8 million or a loss of $0.09 per basic share in the third quarter 2009. The company reported no special items in the third quarter 2010. Although the company’s non-refining segments reported strong year-over-year increases across a number of performance metrics during the third quarter 2010, these gains were more than offset by losses due to unplanned maintenance related downtime at Tyler during July and August. As a result of the unplanned maintenance conducted during the third quarter, total throughput levels declined by 15% in the period which in turn also led to lower sales of refined products during the period when compared to the third quarter 2009.
Within the retail segment, year-over-year same-store sales of fuel gallons and merchandise both increased during the third quarter, while retail fuel margins remained strong in the period, increasing on both quarter-over-quarter and year-over-year basis.
Before I hand the call over to Mark, allow me to provide some color on our operating expenses and interest expense incurred during the third quarter 2010. Total operating expense increased $0.9 million to $58.2 million in the third quarter 2010 versus $57.3 million in the third quarter 2009. The increase was due primarily to higher expenses in the refining segment associated with the maintenance performed at the refinery in the third quarter of 2010, partially offset by decreases in insurance, salaries, utilities and maintenance expenses at the retail segment.
Interest expense increased $1.3 million to $8.1 million in the third quarter 2010 versus $6.8 million in the third quarter 2009. The increase was attributable to a number of factors including high interest rates under several of our credit facilities, which have been refinanced or amended during the last 18 months, partially offset by decrease in amortization of deferred financing charges during the third quarter 2010 when compared to the third quarter 2009.
With that brief overview, I’ll hand the call over to Mark.
Mark Cox
Thank you, Noel, and good morning, everyone, and I’d also like to thank you for taking the time to join us on our call today. As always, we appreciate you being here. I’d like to begin my portion of today’s call with a review of our liquidity position. As of September 30, 2010, Delek US had $17.5 million in cash and $274.2 million in debt, resulting in a net debt position of $256.7 million. As we said in recent quarters, we remain committed to reducing debt and increasing our financial flexibility. To that end, please note that we have recently renewed or extended maturities on more than $140 million in combined promissory notes, of which 100 million has been finalized since quarter end.
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