Q3 2023 Delek US Holdings Inc Earnings Call

November 7, 2023

Speaker 1: Good day and welcome to the Dellick US Third Quarter Earnings Conference Call. All participants will be in lesson only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two.

Operator 2: Good day and welcome to the Delek US Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Rosy Zuklic, Vice President of Investor Relations. Please go ahead.

Operator: Good day and welcome to the Delek US Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Rosy Zuklic, Vice President of Investor Relations. Please go ahead.

Good day and welcome to the Delek U S third quarter earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

After today's presentation there'll be an opportunity to ask questions to ask a question.

Question You May Press Star then one on your Touchtone phone.

To withdraw your question. Please press Star then two.

Speaker 1: Please note this event is being recorded. I would now like to turn the conference over to Rosie Zuklik, Vice President of Investor Relations. Go ahead.

Please note. This event is being recorded I would now like to turn the conference over to Rosy quick Vice President of Investor Relations. Please go ahead.

Rosy Zuklic: Good morning and welcome to the Delek US Q3 Earnings Conference Call. Participants on today's call will include Avigal Soreq, President and CEO; Joseph Israel, EVP Operations; Reuven Spiegel, EVP and Chief Financial Officer; Mark Hobbs, EVP Corporate Development. Today's presentation material can be found on the investor relations section of the Delek US website. Slide two contains our safe harbor statement regarding forward-looking statements. We'll be making forward-looking statements during today's call. The statements involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included here, as well as in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks.

Speaker 2: Good morning and welcome to the Dellick US third quarter earnings conference call.

Good morning, and welcome to the Delek U S third quarter earnings Conference call.

Participants on today's call will include Abbott Golf tour, it President and CEO.

Joseph Israel, EVP operations, Reuven, Spiegel, EVP and Chief Financial Officer.

Mark Hoppe EVP corporate development today.

Speaker 2: Today's presentation material can be found on the Investor Relations section of the Delic US website.

Today's presentation material can be found on the Investor Relations section of the Delek U S website.

Slide two contains our safe harbor statement regarding forward looking statements.

We'll be making forward looking statements during todays call.

Speaker 2: The statements involve risks and uncertainties that may cause actual results to differ materially from today's comments.

These statements involve risks and uncertainties that may cause actual results to differ materially from today's comments.

Speaker 2: Factors that could cause actual results to differ are included here as well as in our FCC filings.

Factors that could cause actual results to differ are included here as well as in our SEC filings.

Speaker 2: The company assumes no obligation to update any forward-looking statement.

The company assumes no obligation to update any forward looking statements.

Speaker 3: I will now turn the call over to Avigal for opening remarks. Thank you, Rosie. Good morning, and thank you for joining us today. We delivered strong third quarter results. All segments performed well.

I will now turn the call over to avid golfer opening remarks. Thank you all.

Avigal Soreq: Thank you, Rosie. Good morning, and thank you for joining us today. We delivered strong Q3 results. All segments performed well. Our team remains focused and drove improvements across our businesses. I thank each member of our Delek team for their contribution. From a macro perspective, during the quarter, we saw a significant volatility in the markets. Gasoline crack weakened. Diesel crack remained strong, driven by inventory levels continuing at five-year lows. Given our higher distillate production relative to our peers, we are at a competitive advantage. The Refining segment ran well. We achieved a record total throughput during the quarter. Joseph will provide more details on our refinery operation in his remarks. In logistics, we are investing in continued growth of our business. We benefited from our favorable Permian location, which led to another record quarter.

Good morning, and thank you for joining US today, we delivered strong third quarter results all segments performed well.

Speaker 3: Our team remains focused and drove improvements across our business.

Our team remains focused and drove improvements across our businesses.

Speaker 3: I thank each member of our DELEC team for their contribution.

I, thank each member of our Delek team for their contribution.

Speaker 3: From a macro perspective, during the quarter we saw a significant volatility in the market.

From a macro perspective during the quarter, we saw a significant volatility in the markets.

Speaker 3: gasoline crack weakened. Diesel crack remains strong driven by inventory levels continued at 5-year lows.

Because the linker weekend.

Diesel.

Strong driven by inventory levels continued its five year lows.

Speaker 3: Giving our higher distillate production relative to our spills were at a competitive advantage.

Keeping our highest distillate production relative to oil spills, whereas the competitive advantage.

The refining segment ran well.

Speaker 3: we achieved a record total throughput during the quarter.

We achieved a record total throughput during the quarter.

Speaker 3: Joseph will provide more details on our refinery operations in his remark.

Joseph will provide more details on our refinery operation in his remarks.

Speaker 3: Illogistic, we are investing in continued growth of our peace.

In logistics, we are investing in continued growth of our business, we benefited from a favorable bellmon location, which led to another record quarter.

Speaker 3: We benefited from our favorable permanent location, which led to another record quarter.

Speaker 3: giving our strong portfolio performance, we are confident in decals ability to exceed $100 million in quarterly EBITDA run rate by the fourth quarter of this year.

Avigal Soreq: Given our strong portfolio performance, we are confident in DKL's ability to exceed $100 million in quarterly EBITDA run rate by Q4 of this year. Moving to slide 4. Reflecting on my first year as the CEO of Delek, we have much to be proud of. When I returned to Delek, I outlined my focus areas, safe and reliable operations, being shareholder-friendly and having strong balance sheet, unlocking the sum of the part value, and improving the efficiency of our cost structure. We are very focused on these objectives. Our dedication to see each one of them to completion has not wavered. We have made progress in all of them. On the operation side, we enhanced our team with experienced talent. Together, we streamlined the structure and process throughout our operation. This has led to a strong safety results.

Given our strong portfolio performance we are.

Im confident in <unk> ability to exceed.

$100 million in quarterly EBITDA run rate by the fourth quarter of this year.

Yeah.

Speaker 3: Moving to slide 4, reflecting on my first zero to zero of Delac. We have much to be proud of. When I return to Delac, I...

Moving to slide four reflecting on my first theater to see of Delek.

We have much to be filed.

When I returned to Delek I outlined my focus areas.

Safe and reliable operations.

Speaker 3: being sure they are friendly and having strong balance.

Being shareholder friendly and having a strong balance sheet.

Speaker 3: unlocking the sum of the power value and improving the efficiency of the out-go structure.

I'm looking to some of the value and improving the efficiency of political spectrum.

We are very focused on these objectives.

Speaker 3: Our dedication to see each one of them to completion has not wavled. We have made progress.

Our dedication to see each one of them to completion has not wavered.

We have made progress in all of them.

Speaker 3: On the operations side, we enhance our team with experienced talent.

On the operation side, we enhanced our team with experienced talent.

Speaker 3: together we streamlined the structure and process throughout our operation. This is led by the

Together, we streamlined the structure at both as well, though the operation.

This is led to a strong safety results.

Avigal Soreq: We achieve a total record throughput in our refining systems. Earlier in the year, we successfully completed the Tyler turnaround with zero recordables on time and on budget. Post-turnaround, the refinery is performing at higher yield and, most importantly, record capture rates. On financial and shareholder returns, over the past year, our logistics business achieved record EBITDA quarters. In Q3, retail achieved its highest EBITDA since COVID. We continue to be shareholder friendly. Through October, we repurchased $85 million of shares and, including the latest increase, raised the dividend five times in a row. We improved our financial position by using our strong cash flow to reduce our net debt by $476 million during the year. From a strategic point of view, our $100 million cost reduction efforts are well underway, and we are seeing early results.

Speaker 3: We achieve a total record to put in our refining system.

We achieved a total record throughput in our refining system.

Speaker 3: Earlier in the year, we successfully completed the Tyler Turni out with zero recordables on time and on budget.

Yes, Indeed, we successfully completed the Tyler there now with zero recordable on time and on budget.

Speaker 3: Both turn around, the refinery is performing a higher yield and most importantly, record capture rigs.

Both down around the refinery is performing at higher yield and most importantly record capture right.

On financial and shareholder return.

Speaker 3: Over the past year, our logistics business achieved record EBITDA quarter.

Over the past year, our logistics business achieved record EBITDA quarter.

Speaker 3: and Q3 Retail Achieve it's highest EBITDA since COVID.

In Q3 retail achieved its highest EBITDA since COVID-19.

Speaker 3: We continue to be a shareholder friendly. To October , we repurchase $85 million of shares.

We continue to be a shareholder friendly to October we repurchased $85 million of ship.

Speaker 3: and including the latest increase raised the dividend five times in a row.

And including the latest increased the dividend five times you know.

Speaker 3: We improved our financial position by using our strong cash flow to reduce our net debt by $476 million during the day.

We improved our financial position by using our strong cash flow to reduce our net debt by $476 million Dooley.

Doing deep.

Speaker 3: From a strategic point of view, our $100 million cost reduction effort are well underway and we are seeing early results.

On a strategic point of view.

$100 million cost reduction efforts are well underway and we are seeing early results.

Avigal Soreq: On unlocking value from sum of the parts, we have a clear strategy, and we are well on our way to meet our objectives. As you can see, we have been consistent. This resulted in tangible progress. Importantly, the achievements I just outlined position us well for the mid-cycle market environment, both from an operations and financial standpoint. In closing, we are pleased with our strong quarter. We will continue to drive further improvements and unlock value from our business. Now, I would like to turn the call over to Joseph Israel, who will provide additional detail on our operations.

Speaker 3: On unlocking value from south of the path, we have a clear strategy and we are well on our way to meet our objectives. As you can see, we have been consistent.

When I'm looking value from some of the pulp we have a clear strategy and we are well on our way to meet all objectives.

As you can see we have been consistent.

This resulted in tangible book.

Speaker 3: importantly the achievements I just outlined position as well for the mid-cycle market environment both from an operation and financial standpoint

Importantly, the achievements I, just outlined position us well for the mid cycle market environment.

Both from an operation and financial standpoint.

Speaker 3: In closing, we are pleased with our strong quarter.

In closing we are pleased with our strong culture.

Speaker 3: We will continue to drive further improvements and unlock value from our business. Now, I would like to turn the call over to Joseph. We will provide additional detail on our operation.

We will continue to drive further improvements and unlock value from our business now I would like to turn the call over to Joseph will provide additional detail on our operation.

Joseph Israel: Thank you, Avigal Soreq. Moving to slide five. In Q3, our team processed a record high 306,000 barrels per day of total throughput. The focus on people, process, and equipment helps us to build a solid organization to support safe and reliable operations. In Q3, the combination of favorable market conditions and strong operations performance led to $286 million of adjusted EBITDA contribution by the Refining segment. In Tyler, total throughput in Q3 was approximately 76,000 barrels per day. Production margin in the quarter was $23.66 per barrel, reflecting improved reliability, yield recovery, and a strong capture rate of 73%.

Thank you Rafi go.

Speaker 4: Moving to flight 5, in the third quarter, our team process that could hide $306,000 per day of total throughput.

Moving to slide five in the third quarter Oh team process.

306000 barrels per day of total throughput.

Speaker 4: The focus on people, process and equipment helps us to build a solid organization to support safe and reliable operations.

The focus on people processes and equipment helps us to build a Sony the organization to support safe and reliable operations.

Speaker 4: In the third quarter, the combination of favorable market conditions and strong operations performance led to a $286 million of adjusted EBDA contribution by the refining segment.

In the third quarter, the combination of favorable market conditions and strong operations performance.

Led to $286 million of.

Adjusted EBITDA contribution by the refining segment.

Speaker 4: Entiler total throughput in the third quarter was approximately 76,000 barrels per day. Production margin in the quarter was $23.66 per barrel, reflecting improved reliability, yield recovery and a strong capture rate of 73%.

And Tyler total throughput in the third quarter was approximately 76000 barrels per day.

Production margin in the quarter was $23.

66 cents per barrel.

Reflecting improved reliability, you'll do recovery and a strong capture rate of 73%.

Speaker 4: Operating expenses were $4.74 per barrel, including elevated utility cost at approximately 50 cents per barrel, due to high demand for electricity in the state of Texas late in the summer.

Joseph Israel: Operating expenses were $4.74 per barrel, including elevated utility costs at approximately $0.50 per barrel due to high demand for electricity in the state of Texas late in the summer. In Q4, the estimated total throughput in Tyler is in the 73,000 to 76,000 barrels per day range. In El Dorado, total throughput in Q4 was approximately 84,000 barrels per day. Our production margin was $12.57 per barrel. Operating expenses were $4.36 per barrel. Estimated throughput for Q4 is in the 81,000 to 84,000 barrels per day range. In Big Spring, total throughput for Q4 was approximately 65,000 barrels per day, driven by maintenance work, but still well within our guidance range.

Operating expenses were $4.74 per barrel, including elevated utility cost at approximately 50 cents per barrel.

Due to high demand for electricity in the state of Texas.

In the summer.

Speaker 4: In the fourth quarter, the estimated total throughput in Kylo is in the 73 to 76,000 barrels today range.

In the fourth quarter.

Estimated total throughput to Cardinal isn't.

Is in the 73 to 76000 barrels per day range.

Speaker 4: In El Dorado, built on throughput in the corner with approximately 84,000 barrels per day.

In El Dorado total throughput in the quarter with approximately 84000 barrels per day.

Speaker 4: Our production margin was $12.57 per barrel.

Oh production molecule.

Twins dwindles in 57 cents per barrel.

Speaker 4: Operating expenses were full no loads and 36 cents per barrel estimated through

Operating expenses were 36 cents per barrel.

Estimated throughput for the quarter.

Speaker 4: So the fourth quarter is in the 81 to 84,000 barrels per day range.

For the fourth quarter is indeed, 81 to 84000 barrels per day range.

Speaker 4: In Big Spring, Tuttle Thruppwood for the Quarter was approximately 65,000 pounds per day. Driven by maintenance work.

In Big Spring total throughput for the quarter was approximately 65000 barrels per day.

Driven by maintenance work.

Speaker 4: but still well within our guidance range.

But still well within our guidance range.

Speaker 4: Our production margin was $15.92 per barrel, including an estimated unfavorable $3.50 per barrel impact from the maintenance activities.

Joseph Israel: Our production margin was $15.92 per barrel, including an estimated unfavorable $3.50 per barrel impact from the maintenance activities. Operating expenses in Big Spring Refinery were $8.37 per barrel, including approximately $0.80 per barrel of the unplanned activities, and an additional $0.70 per barrel related to the elevated utility cost. In October, we completed a planned outage to replace reformer catalyst in a couple of reactors. As a result, the estimated Q4 throughput in Big Spring Refinery is in the 61,000 to 64,000 barrels per day range. We are very excited with our progress in Big Spring Refinery. We have the right leadership team in place, and we are pushing operational excellence to the next level. In Q3, we already improved throughput capture and OpEx compared with Q2.

Our production margin was $15 92 per barrel <unk>.

Clothing, and estimated on favorable $3.50 per barrel impact from the maintenance activities.

Speaker 4: Operating expenses in Big Spring were $1.37 per barrel, including approximately 80 cents per barrel of the unplanned activities and an additional 70 cents per barrel related to the elevated utility cost.

Operating expenses in Big Spring, where it belongs and 37 cents per barrel, including approximately 80 cents per barrel of the unplanned activities and then additional 70 cents per barrel related to the elevated utility costs.

Speaker 4: In October , we completed a planned outage to replace the reform on the capitalist in a couple of reacts.

In October we completed a planned outage to replace reformer catalyst and a couple of weeks dose.

Speaker 4: As a result, the estimated full score till throughput in Big Spring is in the 61-64,000 barrels close to the range.

As a result, the estimated fourth quarter throughput can be spring is indeed, 61 to 64000 barrels per day range.

Speaker 4: We are very excited with our Porglas and Big Spring Refinery. We have the right leadership.

We are very excited with.

With our progress in Big Spring refinery.

We have the right leadership team in place.

Speaker 4: and we are pushing operational excellence to the next level. In the third quarter, we already improved throughput, capture, and optics compared with the second quarter. And going forward, we are planning for the following improvements at the controllable level.

And we are pushing operational excellence to the next level.

In the third quarter, we already improved throughput capture in opex compared to the second quarter and going forward. We are planning for the following improvements at the controllable labor.

Joseph Israel: Going forward, we are planning for the following improvements at the controllable level. Throughput up approximately 5,000 barrels per day from our year-to-date 66,500 barrels per day performance level. Capture up 15% to 20% from our year-to-date 52.6% level. We are expecting to realize 65% of the improvement in 2024, and the remaining 35% in 2025. In Krotz Springs, total throughput was approximately 81,000 barrels per day. Our production margin was $12.45 per barrel, and operating expenses were $5 per barrel. Planned throughput in Q4 is in the 77,000 to 81,000 barrels per day range. In Q3, wholesale and asphalt marketing added about $35 million to the Refining segment earnings, compared with $80 million in Q2.

Speaker 4: Through put up approximately 5000 barrels per day from our U to date 66 and a half thousand per day performance load.

Throughput up approximately 5000 barrels per day from our U today, 66, and a half thousand barrels per day performance lately.

Speaker 4: Capture up 15 to 20% from our YouTube date 52.6% level.

Capture up 15% to 20% from all of you to date 52, 6% level.

Speaker 4: We are expecting to realize 65% of the improvement in 2024 and the remaining 35% in 2025.

We are expecting to realize 65% of the improvement in 2024, and the remaining 35% in 2025.

Okay.

Speaker 4: In Crout Springs, total throughput was approximately 81,000 barrels per day. Our production margin was $12.45 per barrel, and operating expenses were $5 per barrel.

The Krotz Springs.

Total throughput was approximately 81000 barrels per day.

Our production margin was 12 45 cents per barrel and operating expenses were $5 per barrel.

Speaker 4: Plant throughput in the fourth quarter is in the 77,000 to 81,000 barrels per day range.

Planned throughput in the fourth quarter is in the 77 to 81000 barrels per day range.

Speaker 4: In the third quarter, wholesale and asphalt marketing added about $35 million.

In the third quarter.

Wholesale and asphalt marketing added about $35 million.

The refining segment earnings.

Speaker 4: compared with $80 million in the second.

Compared with $80 million in the second quarter.

Speaker 4: These results are outside of our reported margins at each of the refineries and their associated capture rates.

Joseph Israel: These results are outside of our reported margins at each of the refineries and their associated capture rates. Wholesale marketing contributed about $20 million, down from approximately $60 million in Q2. Asphalt marketing contributed approximately $15 million, compared with about $20 million in Q2. The contribution of both businesses was impacted by rising oil price, but more importantly, allowed us to pool inventory even with record high throughput for our refining system. The resilient demand in our niche markets and the access to rack blending are the significant strengths of our integrated downstream business model. With regards to Q4, our refining system plant throughput is in the 292,000 to 305,000 barrels per day range. We are well positioned to capture strong distillate margin environment with our 42% distillate yield capability.

This will result.

Side of our reported margins.

Each of the refineries.

And their associated the capture rates.

Speaker 4: Also, marketing contributed about 20 million dollars down from approximately 60 million dollars in the second quarter. An assault marketing contributed approximately 15 million dollars compared with about 20 million dollars in the second quarter.

Wholesale marketing contributed about $22 million down from approximately $60 million in the second quarter and asphalt marketing contributed approximately $15 million.

Compared with about $20 million in the second quarter.

Speaker 4: The contribution of both businesses was impacted by rising oil price, but more importantly, allowed us to pull inventory even with record high throughput for our refining system.

The contribution of both businesses was impacted by rising oil price, but more importantly.

Loudest pooled inventory, even with record high throughput.

Well, how about refining system.

The resilient demand you know are in niche markets.

Speaker 4: And the access to rack blending are a significant strength of our integrated downstream business model.

And the axis to recommending a significant strength of our integrated downstream business models.

Okay.

Speaker 4: With regards to the fourth quarter, our refining system plant throughput is in the 292 to 305,000 barrels per day range.

With regards to the fourth quarter, our refining system planned throughput is in the 292 to 305000 barrels per day range.

Speaker 4: We are well positioned to capture strong distillate margin environment with our 42% distillate yield capability.

We are well positioned to capture strong distillate margin environment with our 42% distillate yield capability.

Joseph Israel: As a reminder, no major turnaround is planned until Q4 2024 in Krotz Springs. In DKL, the team delivered another record quarter under operational excellence focus and growth. I will now turn the call over to Rosy for the financial variance.

Speaker 4: As a reminder, no major turnaround is planned until the fourth quarter of 2024 in Cross Springs.

Reminder, no major turnaround as planned until the fourth quarter of 2024 and Krotz Springs.

Speaker 4: In BKL, the team delivered another record quarter under operational excellence, focus, and growth.

And again.

The team delivered another record quarter under operational excellence focus and growth.

Speaker 4: I will now turn the call over to Rosie for the financial variance.

Now turning the corner to Rosie for the financial variance.

Rosy Zuklic: Thanks, Joseph. Starting on slide 6. For Q3 2023, Delek US had a net income of $129 million or $1.97 per share. Adjusted net income was $132 million or $2.02 per share, and adjusted EBITDA was $345 million. Cash flow from operations was $433 million. On slide 7, we provide a waterfall of our adjusted EBITDA by segment from Q2 to Q3 2023. The increase was primarily from improved results in Refining, driven by higher throughput and cracks in the third quarter. Logistics had a record quarter of nearly $97 million, and Retail had another strong quarter with EBITDA of $16 million. Corporate segment costs increased compared with last quarter, largely due to bonus accruals.

Thanks, Jeff starting on slide six.

Speaker 2: For the third quarter of 2023, Delic U.S. had a net income of $129 million, or $1.97 per share. Adjusted net income was $132 million, or $2.02 per share, and adjusted EBITDA was $345 million.

For the third quarter of 2023, Delek U S had a net income of $129 million or $1 97 per share adjusted net income was $132 million or $2 <unk> per share and adjusted EBITDA was $345 million.

Speaker 2: Cash flow from operations was $433 million.

Cash flow from operations was $433 million.

Speaker 2: On slide 7, we provide a waterfall of our adjusted Ipidabi segment from the second quarter to the third quarter of 2023.

On slide seven we provide a waterfall of our adjusted EBITDA by segment for the second quarter to third quarter of 2023.

Speaker 2: The increase was primarily from improved results in refining, driven by higher throughput and cracks in the third quarter.

The increase was primarily from improved results in refi driven by higher throughput in cracks in the third quarter.

Speaker 2: Logistics had a record quarter at nearly $97 million, and retail had another strong quarter with EBITDA of $16 million.

Logistics had a record quarter at nearly $97 million.

Retail had another strong quarter with EBITDA of $16 million.

Speaker 2: Corporate segment costs increased compared with last quarter, largely due to bonus accruals. Moving to slide eight.

Corporate segment costs increased compared with last quarter, largely due to bonus accruals.

Rosy Zuklic: Moving to slide 8 to discuss cash flow. We built $80 million in cash during the quarter, ending Q3 with a balance of $902 million. The $433 million in cash flow from operations reflects the strong performance of the quarter. Included in this amount is $177 million in favorable working capital. This was largely from improved inventory management. Investing activities of $59 million is mainly for capital expenditures. Financing activities of $294 million primarily reflects pay-down of debt and return to shareholders. This includes $176 million of debt repayment, $25 million in buybacks, $15 million in dividends, and $10 million in distribution payments. On slide 9, we show capital expenditures. Year-to-date total company, we have spent $302 million.

Moving to slide eight to discuss cash flow.

Speaker 2: We built $80 million in cash during the quarter, ending the third quarter with a balance of $902 million.

We built $80 million in cash during the quarter ending the third quarter with a balance of $902 million.

Speaker 2: The $433 million in cash flow from operations reflects the strong performance of the quarter. Included in this amount is $177 million in favorable working capital. This was largely from improved inventory management.

The $433 million in cash flow from operations reflects the strong performance of the quarter.

Included in this amount is $177 million in favorable working capital. This was largely from improved inventory management.

Speaker 2: Investing activities of $59 million is mainly for capital expenditure.

Investing activities of $59 million is mainly for capital expenditures.

Speaker 2: Financing activities of $294 million primarily reflects paydown of debt and return to shareholding.

Financing activities of $294 million, primarily reflects pay down of debt and returned to shareholders.

Speaker 2: This includes $176 million of debt repayment, $25 million in buybacks, $15 million in dividends, and $10 million in distribution payments.

This includes the $176 million of debt repayment $25 million in buybacks $15 million in dividends and $10 million in the ship in distribution payments.

On slide nine we show capital expenditure.

Speaker 2: Here to date, total company, we have spent $302 million.

Year to date total company, we have spent $302 million.

Speaker 2: We estimate the full year cat-backs to be in the range of $380 to $390 million before any reimbursement.

Rosy Zuklic: We estimate the full year CapEx to be in the range of $300 to 390 million before any reimbursements. We expect to receive approximately $20 million of insurance proceeds, growth CapEx partially funded by producers, as well as other reimbursements. Including this, net capital expenditures for the year is in the range of $360 to 370 million. Net debt is broken out between Delek and Delek Logistics on slide ten. During the quarter, we built $80 million of cash and paid down $176 million of debt, ending the quarter with a net cash position. Slide eleven covers outlook items for Q4 2023.

We estimate the full year capex to be in the range of $380 million to $390 million before any reimbursement.

Speaker 2: We expect to receive approximately $20 million of insurance proceeds, growth capex partially funded by producers, as well as other reimbursements.

We expect to receive approximately $20 million of.

Of insurance proceeds.

Growth Capex, partially funded by producers as well as other reimbursements.

Speaker 2: Including this, net capital expenditures for the year is in the range of $360 to $370 million.

Including this net capital expenditures for the year is in the range of $360 million to $378 million.

Speaker 2: Net debt is broken out between Delic and Delic logistics on slide 10.

Net debt is broken out between Delek and Delek logistics on slide 10.

Speaker 2: During the quarter, we built $80 million of cash and paid down $176 million of debt, ending the quarter with a net cash position.

During the quarter, we built $80 million of cash and paid down $176 million of debt ending the quarter with a net cash position.

Speaker 2: side 11 covers outlook items for the fourth quarter of 2023.

Slide 11 covers outlook items for the fourth quarter of 2023.

Rosy Zuklic: In addition to the throughput guidance Joseph provided, we expect operating expenses to be between $210 and $220 million, G&A to be between $65 and $70 million, D&A to be between $90 and $95 million, and net interest expense to be between $80 and $85 million. We will now open the line for questions.

Speaker 2: In addition to the throughput guidance Joseph provided, we expect operating expenses to be between $210 and $220 million.

In addition to the throughput guidance Josef provided.

We expect operating expenses to be between 200 and Penn in $220 million.

Speaker 2: DNA to be between $65 and $70 million, DNA to be between $90 and $95 million, and Net Interest Expense to be between $80 and $85 million. We will now open...

G&A to be between 65, and $70 million DNA to be between 90, and $95 million and net interest expense to be between 80 and $85 million.

We will now open the line for questions.

Okay.

Speaker 1: Thank you. We will now begin the question and answer session. To ask a question you may press star then one on your touchstone phone. If you are using your speaker phone, please pick up your handset before pressing the keys.

Operator 2: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Manav Gupta with UBS. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Manav Gupta with UBS. Please go ahead.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker 1: To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble a roster.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Yeah.

Speaker 1: Our first question comes from Minna Agapta with UBS. Please go ahead.

Our first question comes from.

Manav Gupta with UBS. Please go ahead.

Speaker 5: Hey guys, first of all congrats, big improvement from both Tyler and Old Raido. So, help us understand what were the factors helping you out over there. And then as it relates to big springs, was it just a turnaround and we shouldn't be worried that when you actually start running hard and fork you some of the issues you saw would be behind you, so if you could talk about those things.

Manav Gupta: Hey, guys. First of all, congrats. Big improvement from both Tyler and El Dorado. Help us understand what were the factors helping you out over there. As it relates to Big Spring, was it just a turnaround and we shouldn't be worried that when you actually start running hard in Q4, some of the issues you saw would be behind you. If you could talk about those things.

Oh, Hey, guys first of all congrats big improvement from both Tyler and.

So help us understand what were the factors, helping you out over there and then as it relates to Big Springs was adjusted turnaround and we shouldn't be worried that when you actually start running harden.

<unk> some of the issues you saw would be behind us if you could talk about those things.

Speaker 3: Amen, now it's Avigal. Thank you for the question. And yes, you're right. We see big improvements, both places, and that we can address for a few areas on Tyler. It's a lot of work that being done over the turnaround. We see the foot of it, both on the product mix.

Avigal Soreq: Hey, Manav, it's Avigal. Thank you for the question. Yes, you're right. We see a big improvement both places, and that we can address for few areas. On Tyler, it's a lot of work that's being done over the turnaround. We see the fruit of it, both on the product mix and the yield. Obviously, we are very fortunate with the Tyler market over there. We see the city growing and our ability to deploy product is just great. So that's a very solid market. In El Dorado, we, to be honest, El Dorado is a great asset, with capabilities, a hydrogen plant reformer and other great assets that we are just starting to tap into what we can make out of it, and we are very optimistic about it as well.

Hey, My notes regardless, thank you for the question and yes, you're right there, we see a big improvement both places.

And that we can address for fewer yards on Tyler its a a lot of work that's being done over the downtown we see the fruits of it.

On the product mix in the year.

Speaker 3: Obviously we are very fortunate with the Tyler market over there. You see the city growing and our ability to deploy product is

Obviously, we are very fortunate with the dial of the market over there you see the city growing and our ability to deploy product is.

Speaker 3: We just wait, so that's a very serious market. In El Dorado, we, to be honest, El Dorado is a great asset with capabilities.

Just great. So that's a very solid market in El Dorado.

To be honest is the other is a great asset.

<unk> capabilities.

Speaker 3: a hydrogen player and reformer and other great assets that we are just starting to tap into what we can make out of it and we are very optimistic about it as well. I think that Joseph touched a little bit on Big Spring in his prepared remark but I would allow Joseph to finish the arm.

Hydrogen planned reformer another great asset that we are just starting to tap into what we can make out of it and we are very optimistic about it as well I think that the Joseph touched a little bit on big spring in his prepared remarks, but there was.

Avigal Soreq: I think that Joseph touched a little bit on Big Spring in his prepared remark, but I will allow Joseph to finish the answer.

Allow joseph to finish the outcome.

Speaker 4: Yeah, thank you. We're very excited when I will be pulling this. So when you look at Tyler,

Joseph Israel: Yeah. Thank you. We are very excited with our progress. When you look at Tyler, our 45% distillate yield is a big plus, especially end of Q3 going to this quarter and for the future curve side. Obviously the lower LLS price and the better margin environment also supported our capture both in Tyler and El Dorado. With regards to Big Spring, we are very, very happy with the progress there. We have the right management team. We feel that things are under control as we implement best practice. We are very confident to share with you our plans in Big Spring, a rise increasing throughput and expecting a much higher capture rate. To answer your question, we are not worried about the turnaround being about two years from now.

Yeah. Thank you, we're very excited with our pool and so when you look at Tyler.

Speaker 4: Our 45% distillate yield is a big plus, especially end of the third quarter, going to this quarter and for the future curve side.

Our 45% distillate yield is a big plus personally.

The third quarter going to this quarter then.

Future curve.

Syed.

Speaker 4: Obviously in the lower, our V.O. price and the battery margin environment also supported our capture both in a Tyler and El Dorado. With regards to Big Spring, we all...

Obviously, the lower fuel price and margin.

Margin environment also supported our come true.

And Tyler and El Dorado.

With regards to big Spring Guido.

Speaker 4: very, very happy with the Pogos Nail. We have the right management team. We feel that things are under control as we implement the best practice.

Very very happy with the progress we have the right management team, we feel that things are under our control as we implement best practices and.

Speaker 4: We are very confident to share with you our plans in Big Spring.

We are very confident to share with you our plans in big spring.

Speaker 4: and increase throughput.

Right.

Creasing throughput and expecting.

Speaker 4: and expecting a much higher capture rate. And to answer your question, we are not worried about the turn around, being about two years from now. We feel a good about the mechanical integrity and our ability to operate it at a higher bar. So, excited.

Much higher capture rate and to answer your question, we are not worried about the tenant demand being about two years from now.

Joseph Israel: We feel good about the mechanical integrity and our ability to operate it at a higher bar. Excited.

We feel really good about the mechanical integrity and our ability to operate it.

Hi, Omar so excited.

Speaker 5: Perfect, my quick follow up here is as it relates to supply, marketing and other, which was formerly your trading and supply. A big swing quarter over quarter. I know behind the scenes, Rosie has been working very hard in trying to explain the street what are the matrix that, drive that performance. But if you could help us understand some of the, you know, reasons there was such a big swing in this segment quarter over quarter.

Manav Gupta: Perfect. My quick follow-up here is as it relates to supply, marketing, and other, which was formerly your trading and supply, a big swing quarter-over-quarter. I know behind the scenes, Rosie has been working very hard in trying to explain to the Street what the metrics that, you know, drive that performance. If you could help us understand some of the, you know, reasons there was such a big swing in this segment quarter-over-quarter.

But I'll take my quick follow up here is as it relates to supply and marketing and other which was formerly you're creating and supply.

A big swing quarter over quarter, I know behind the scenes roles. He has been working very hard in trying to explain to the street what are the metrics that drive that performance, but if you could help us understand some of the.

Reasons, there was such a big swing in this segment quarter over quarter, Yeah. Thanks, Manav and obviously in that the line that would be a bit more volatility than other lines and by Joseph in order to have a lot of passion around this by why don't you give the malware why they'll do okay. So we provided information about the asphalt.

Avigal Soreq: Yeah. Thanks, Manav. Obviously, in that line, there would be a bit more volatility than other lines. Joseph, I know that you have a lot of passion around this. Why don't you give a more wider view?

Speaker 4: Yeah, thanks, Manav. And obviously in that line there would be a bit more volatility than other lines. And by Joseph, I know that you have a lot of passion around it. My why don't you give a more wider view. Okay. So we provided information about the asphalt and wholesale marketing result.

Joseph Israel: Okay. We provided information about the asphalt and wholesale marketing results. Asphalt made $15 million and wholesale marketing made $20 million. Both are lower than previous quarter results.

In wholesale marketing results.

Speaker 4: Asphalt made $15 million in wholesale marketing made $20 million both of the lower than the ad's recommended and year of

Felt made $50 million in wholesale marketing made $20 million was both probably lower than previous quarter results due to oil price inquiries and you know the lagging pricing.

Mark Hobbs: Due to oil price increase, and you know that lag in pricing, provide always a headwind for this type of businesses. The other component in supply and marketing results is the inventory management and the derivatives to really mitigate risk.

Joseph Israel: Due to oil price increase, and you know that lag in pricing, provide always a headwind for this type of businesses. The other component in supply and marketing results is the inventory management and the derivatives to really mitigate risk.

<unk> always.

Headwind.

For this type of businesses, but the other component in supply and marketing results is the inventory management and the derivative to really mitigate.

Speaker 4: is the inventory management and the derivative to really mitigate a risk.

The risk.

Okay.

Manav Gupta: Thanks, guys. Congrats on a good quarter, and good to see pay down of debt. Thank you.

Speaker 5: Thanks guys, congrats on a good quarter and good to see paydown of that. Thank you.

Thanks, guys congrats on a good quarter and good to see pay down of debt. Thank you.

Avigal Soreq: We appreciate it, Manav. Have a good day.

Appreciate it.

Speaker 1: Our next question comes from Neil Maddoe, who is Schoolman's axe, please go ahead.

Operator 2: Our next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Operator: Our next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Our next question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Neil Mehta: Yeah, thank you, and hope everybody's family is doing okay back home, Avigal in particular.

Speaker 6: Yeah, thank you and hope everybody's families doing okay back home. Other garlic, particularly. Thank you for the warm.

Yeah. Thank you and I hope everybody's family is doing.

Okay back home.

Avigal Soreq: Thank you for the call.

In particular, thank you for the world.

Neil Mehta: Um.

Avigal Soreq: Appreciate it. Thank you.

Thank you.

Neil Mehta: Awesome. Hey, so, again, a very good quarter there at Tyler. Would just love your perspective on the markets right now. We see this big dislocation in cracks between gasoline and distillate, and how does this play out as we move into 2024? How much of the weakness in gasoline is just seasonal as we're creating winter grade versus something more structural? And then do you see the distillate side of the equation normalizing given the weakness in gasoline through yield switch? Just talk us through the product markets and how they evolve as we set up into 2024.

Speaker 6: Hey, so again, a very good quarter there at Tyler. We just love your perspective on the markets right now. We see this big dislocation in cracks between gasoline and distillate. And how does this play out as we move into 2024?

Awesome, Hey, and so got again, a very good quarter there at Tyler.

Just love your perspective on the markets right now we see this big dislocation in and cracks between gasoline and distillate and how does this play out as we move into 2024, how much of the weakness in gasoline is just seasonal work, creating winter grade versus something more structural.

Speaker 6: How much of the weakness in gasoline is just seasonal? As we're creating winter grade versus something more structural. And then do you see the distillate side of the equation normalizing given the weakness in gasoline?

And then <unk>.

Do you see.

The distillate side of the equation normalizing given the weakness in gasoline through yield switch that just talk us through the product markets and how they evolved as we set up into 2020.

Speaker 6: through Yield Switch. So just talk us through the product markets and how they evolve as we set up it.

Speaker 3: I would love to do that. Obviously you will have DS, you can also use it there.

Avigal Soreq: Yeah, I mean, I would love to do that. Obviously, US, as you can all see, is in the five-year low in terms of inventories that determine the majority of the crack, that the way we see it on the distillate. Obviously, we don't really know what the winter in Europe gonna yield, but that's another upside, if it's gonna yield for a colder winter. On the gasoline side, obviously, we have seen, and we said that in the prepared remarks, we've seen a weakness. Some of that, as you mentioned, is seasonal and, some of that, I think most of it is seasonal. We believe that the demand for gasoline is solid. Our markets are pretty much resilient for demand.

Yeah, and I would love to do that obviously U S. D. As you can all see is in the five year low in terms of inventories that's determined the majority of the clock.

Speaker 3: five-year-low in terms of inventories that determine the majority of the crack.

Speaker 3: that the way we see it on this planet, obviously we don't really know what the winter in Europe going to yield, but that's another upside if it's going to yield for a colder winter. On the gasoline side, obviously we've seen and we said that in the propeller mark, we've seen a weakness. Some of that, as you mentioned, is seasonal and some of that, I think most of it is seasonal. We believe that the demand for gasoline is solid.

The the way we see it on the DS distillate, obviously, we don't really know what the winter in Europe going to yield, but that's another upside the if it's going to yield for a colder winter on the gasoline side, obviously, we have seen and we said it in the prepared remarks, we've seen a weakness some of that as you mentioned is the season and the.

Some of that.

Most of it is seasonal we believe that the demand for gasoline is solid.

Speaker 3: Our market is pretty much resilient for demand. You can see another testimony.

A little market are pretty much a resilience for their full demand you can see another testimony.

Avigal Soreq: You can see another testimony that we were able to deploy our to reduce inventory while other companies had a problem to deploy products. That's another testimony to our market resilience, and this is more micro than macro, but that's another something to note. The demand in the US, as we see it, is still very solid, and I think the market, they're gonna correct itself. I think that we see more supply going off the market, as I mentioned a few times, during COVID versus the change in demand. Overall, we think it's the right place to be.

Speaker 3: that we were able to reduce inventory.

We were able to deploy our aim to reduce inventory.

Speaker 3: while other companies had the problem to deploy products. So that's another testimony to our market resilience. And this is more micro than macro, but that's another something to note.

While the other company that had the problem to deploy products. So that's another testimony to our market resilience and this is more macro the macro but that's another one is something to note.

Speaker 3: The demand in the U.S., as we see it, is still very solid. And I think the market is going to correct itself. I think that we see more supply going off the market, as I mentioned a few times, during COVID versus the change in demand. So overall, we think it's the right place to be.

The demand in the U S. As we see it is it's still a very solid and they I think the market, they're going to collect itself I don't I think that we see more supply going off the market as I mentioned, a few times during COVID-19 versus the change in demand or do we think it's the right place.

To be.

Speaker 6: Thanks guys, the follow up is just on how we're thinking about unlocking some parts value. You Abigail has been a bunch of times talking about this as you stepped in, you know, how he transfers some of the value that fits that the DKL and accrued to the DK at the parent level. You know, what we talk about the different strategies that you're approaching this width and what ending are you in in terms of actually unlocking that value.

Neil Mehta: Thanks, guys. The follow-up is just on how we're thinking about unlocking some of the parent's value. Avigal spent a bunch of time talking about this as you stepped in. You know, how do you transfer some of the value that sits at DKL and accrue it to the DK at the parent level? You know, talk about the different strategies that you're approaching this with and what inning are you in in terms of actually unlocking that value?

Thanks, guys. The follow up it just got on a how how we're thinking about unlocking summer park's value. You you have to go spend a bunch of time talking about this that he stepped in you know how how do you transfer some of the the value that that that decal.

Accrued to the dk at the parent level.

Talk about the different strategies that you are approaching this with them.

And where what inning are you in in terms of actually unlocking that value.

Avigal Soreq: Yeah. Neil, you know that I said it many times, and that's our commitment. We're gonna make it happen. We're gonna make the right thing happen for both shareholders, and we didn't change our mind or went in another direction. That's gonna happen. I will start, and then I know Mark wants to have a lot of energy on that and wants to say a few words about that as well. Please remember that while we are still working on that very hard, we came up with a cost reduction, which is a great thing for mid-cycle if it presents itself. The safety and reliability initiative yields a higher throughput, and we obviously have an inventory reduction, Neil, in order to enhance the balance sheet.

Speaker 3: So Neil, you know that I said many times and that's my our commitment. We're going to make it happen. We're going to make it the right thing happen for both shareholders.

Yeah. So maybe you know you know that I said that many times and that's my our commitment that we're going to make it happen and we're going to make it the idea that I think had been for both shareholders.

Speaker 3: And we did a change our mind or went in a other direction that's going to happen. I will start and then I know Mark wants to have a lot of energy on that and wants to say a few words about that as well. But please remember that while we are still working on that very hard, we came up with a cost reduction, which is a great thing for me, to say, if it present itself, the safe and reliability initiative yields in a higher throughput.

And we did it change our mind or wins in.

Although direction that that's going to happen I will start and then I know Michael wants to have a lot of MLG on debt and wants to say a few words about this as well, but please remember that while we are still.

Walking on that very hard we came up with the cost reduction, which is a great thing for mid cycle. If it presents itself.

The safety and reliability initiatives yields and a higher throughput and we obviously have a inventory reduction needed in order to enhance the balance sheet and I'm very proud of him and his team being able to be at the net zero debt on the dk level.

Speaker 3: And we obviously have an even reduction in order to enhance the balance sheet. And I'm very proud of Ruben and his team being able to be at the net zero debt on the DK level.

Avigal Soreq: I'm very proud of Reuven and his team being able to be at the net zero debt on the DK level. Saying all of that, some of the part and allowing the value to be on the DK to be on the Delek side is gonna happen. Maybe, Mark, you wanna say a few words around that?

Saying all of that some of the buyout and the allowing the value to build the detail to be able to delek side is going to happen and maybe mark you want to say a few words about this yeah sure thing thanks, Avago and thanks, Neil for for the question as I've as I've mentioned on prior calls and discussions that we've had specifically.

Speaker 7: and allowing the value to be on the decals, to be on the delicate side is gonna happen. And maybe Mark, you wanna say a few words around this. Yeah, sure, thanks, Abigail, and thanks, Neil, for the question. As I've mentioned on prior calls and discussions that we've had specifically, we've evaluated a myriad of options and alternatives that are available to us. And we have strong conviction around the actions we need to take and what we would like to achieve through some of the parts. And as Abigail mentioned, as prepared remarks, we're working very hard.

Mark Hobbs: Yeah, sure. Thanks, Avigal, and thanks, Neil, for the question. As I've mentioned on prior calls and discussions that we've had specifically, you know, we've evaluated a myriad of options and alternatives that are available to us. We have strong conviction around the actions we need to take and what we would like to achieve through some of the parts. As Avigal mentioned in his prepared remarks, we're working very hard towards those objectives. You know, I don't want to say anything specific, and I would love to be more specific around timing.

You know we've evaluated a myriad of options and alternatives that are that are available to us.

And we have strong conviction around the actions we need to take in and what we would like to achieve through some of the parts and as <unk> mentioned in his prepared remarks, we're working very hard towards those objectives. You know I don't want to say anything specific and I would love to be more specific around around timing, but at this point in time, we don't have anything that we.

Speaker 7: working very hard towards those objectives. You know, I don't want...

Speaker 7: To say anything specific and I would love to be more specific around around timing, but at this point in time, we don't have anything that we feel that we can can tell you other than, you know, our focus is on, you know, preserving our ability to perform well through the cycle for all through all the steps that.

Mark Hobbs: At this point in time, we don't have anything that we feel that we can tell you other than, you know, our focus is on, you know, preserving our ability to perform well through the cycle for all through all the steps that Avigal and others on the call have mentioned. The other thing that we're really focused on is, in anything we do, preserving significant amount of liquidity across our business so that we can take advantage of accretive growth opportunities that we truly believe are in front of us going forward. Look, I would just finish with just saying, look, we are committed to extracting value, you know, across our businesses where we see opportunities to do so.

Phil that.

We can can tell you other than you know our focus is on preserving our ability to perform well.

Through the cycle for all through all the steps that the that Avago and others on the call I have mentioned and the other thing that we're really focused on is and anything we do preserving significant amount of liquidity across our business. So that we can take advantage of accretive growth opportunities that we do.

Speaker 7: that Abigail and others on the call have mentioned and the other thing that we're really focused on is in anything we do, preserving significant amount of liquidity across our business so that we can take advantage of accretive growth opportunities that we truly believe are in front of us going forward. But...

Truly believe are in front of us going forward, but look I would just finish with just saying that we are committed to extracting value across our businesses, where we see opportunities to do so.

Speaker 7: Look, I would just finish what you're saying. We are committed to extracting value across our businesses where we see opportunities to do so.

Neil Mehta: All right. Thanks, Mark.

Alright, Thanks Mark.

Yeah.

Yes.

Operator 2: Our next question comes from Ryan Todd with Piper Sandler. Please go ahead.

Operator: Our next question comes from Ryan Todd with Piper Sandler. Please go ahead.

Speaker 1: For next question comes from Ryan Todd with Piper Sandler. Please go ahead.

Our next question comes from Ryan Todd with Piper Sandler. Please go ahead.

Yeah.

Speaker 8: Thanks. Maybe a question on CAPEX for you is we're looking to 2024. I know that you had said that from a maintenance point of view, you don't have another major turnaround until Crotch in the fourth quarter of next year. Can you maybe talk about how you would think about some of the moving pieces on CAPEX? We're looking to 2024 and how we should think about a run rate there in the next year.

Ryan Todd: Great. Thanks. Maybe a question on CapEx for you as we look into 2024. I know that you had said that from a maintenance point of view, you don't have another major turnaround until Krotz in the Q4 of next year. Can you maybe talk about how you would think about some of the moving pieces on capital as we look into 2024 and how we should think about a run rate there in the next year?

Great. Thanks.

Maybe a question on Capex for you as you look into 'twenty 'twenty four I know that you had said.

But from a maintenance point of view you don't have another major turnaround until until crops in the fourth quarter of next year can you maybe talk about how you would think but some of the moving pieces on capital as we look into 2024 and how we should think about a run rate there in the next year.

Avigal Soreq: Yeah, Ryan, thanks for the question and, Ryan, we are very disciplined about capital deployment. We've demonstrated over and over, both on the shareholder and debt. That's the puzzle we are working on that every day, all day. Regarding 2024, specific to your, to your question, I don't want to be ahead of myself. We are still finalizing our plans for 2023 for 2024. Directionally, we are looking at on a lower number than 2023.

Speaker 3: The Iran, thankful to the question. And we are very disciplined about capital deployment. We've demonstrated all of that in over.

Yeah, Ryan Thanks for the question.

We're very disciplined about capital deployment, we've demonstrated all of and all of the both on the shareholder and that so that's the that's the puzzle we are working on that every day on day.

Speaker 3: both on the shareholder and debt. So that's the part that we are working on that every day all day. Regarding 2024, specific to your question, I don't want to be ahead of myself. We are still finalizing our plan for 2023 to 2024. But directionally, we are looking on a lower number than 2020.

Regarding 2020 full is specific to your question.

I don't want to be.

Ahead of myself, we are still finalizing our plan for 2023 for 2024.

But directionally, we are looking at them on a lower number than that 2023.

Speaker 8: Okay. Perfect. Thanks. And then maybe...

Ryan Todd: Okay. Perfect. Thanks. Maybe just a follow-up on your comments. Obviously, you know, you're at a zero net debt balance sheet position there at Delek on an unconsolidated basis. How should we think about your priorities here? You've been paying down debt, you've been buying back some shares. Is there further work on the balance sheet that you wanna do? Or should we expect, you know, a shift towards an increase in share of cash flow directed towards shareholder returns? Or maybe, you know, high level, how are you thinking about that as we think about the coming quarters?

Okay.

Perfect. Thanks, and then maybe just a follow up on your comments obviously, you're in are you in a zero net debt.

Speaker 8: Just a follow up on your comments, obviously you're in a zero net debt.

Speaker 8: balance sheet position there at Delic on an uncontrollable databases. How should we think about your priorities here? You've been paying down that, you've been buying back some shares. Is there further work on the balance sheet that you wanna do or should we expect a shift towards an increase in share of cash flow directed towards shareholder returns? Maybe, you know.

Balance sheet position there at Delek and then on consolidated basis.

How should we think about your your priorities here, you've been paying down debt you've been buying back some shares.

Is there further work on the balance sheet that you want to do or should we expect a shift towards an increase in share.

<unk> of cash flow directed towards shareholder return so maybe.

Speaker 8: I love how are you thinking about that as we think about becoming quarters.

High level, how are you thinking about that as we think about the coming quarters.

Avigal Soreq: Yeah, absolutely, Ryan. I will provide more kind of overview about the way we think about capital allocation. First of all, we increased dividend five times in a row, as you can see. Our intent is to be able to maintain dividend through the cycle. That's pretty clear. We said that many times. Regarding debt and the return to shareholder, we took a very balanced approach between the two. Obviously, when we have opportunity to give back to investor, we were not shy. We were aggressive with that, and that's gonna be the approach going forward. We have a balanced approach, and we're still gonna do that. Executing on some of the projects, it's top priority. We're gonna do that, and that's gonna play a big role in that equation as well.

Speaker 3: Yeah, absolutely. And I will provide more kind of overview about the way we think about capital allocation. So first of all, we increase dividend five times in a row, as you can see, and our intent.

Yeah, absolutely right and then I will provide more kind of overview about the way we think about capital allocation. So first of all we increased dividend five time in the whole as you can see in our outlook.

Our intent is to be able to maintain dividend towards cycle. So that's pretty clear we said it many times regarding that and the and the return to shareholder we took a very balanced approach between the two.

Speaker 3: be able to maintain dividend world cycle. So that's pretty clear. We said it many times. Regarding debt and the return to shareholder, we took a very balanced approach between the two. Obviously, when we have opportunity to give back to investor, we were not shy. We were aggressive with that. And that's going to be the approach going forward.

When we have opportunity to give back to invest all we will not shy we were aggressive with that and that's going to be the approach going forward.

Speaker 3: But we have a balanced approach, and we're still going to do that. Executing on some of the parties, it's top priority. We're going to do that, and that's going to play a big role in that equation as well. So stay tuned.

We have a balanced approach and we still want to do that is.

Executing on and some of the parties, it's top priority, we're going to do that and that's going to play a big role in that equation Swift.

Avigal Soreq: Stay tuned.

Stay tuned.

Ryan Todd: Great. Thank you.

Alright, thank you.

Yeah.

Speaker 1: Our next question comes from Doug Lickade with Bank of America. Please go ahead.

Operator 2: Our next question comes from Doug Leggate with Bank of America. Please go ahead.

Operator: Our next question comes from Doug Leggate with Bank of America. Please go ahead.

Our next question comes from Doug Leggate with Bank of America. Please go ahead.

Doug Leggate: Hi guys. Thanks for having me on. May I also offer my thoughts for you guys, and like what Neil said earlier. I'd like to hit a housekeeping point first, if I may, which is, I think Rosy mentioned the working capital move in the quarter, and I think she said better inventory management or words to that effect. Will that reverse or are we now looking at a permanent downward reset in working capital?

Speaker 9: Oh hi guys, thanks for having me on there. I also offer my thoughts for you guys in in-live one news had earlier.

Oh, Hi, guys. Thanks for having me on they're all for also offer my thoughts for you guys and let what Neil said earlier.

Speaker 9: I would, I'd like to hit a housekeeping point first if I may, which is I think Rosie mentioned the working capital move in the quarter and I think she said better inventory management or worse of that effect. Is that, will that reverse or are we now looking at a permanent downward reset in working capital?

I would I'd like to hit a housekeeping 0.1st if I may which is something tools. He mentioned the working capital move in the quarter.

And I think she said better inventory management or worse about effect.

It's done well, let reverse or are we now looking at our Permian a permanent downward reset in AR and working capital.

Speaker 3: A dar good morning. I will let they open and talk about working capital, just a little bit.

Avigal Soreq: Hey, Doug. Good morning. I will let Reuven talk about working capital just a little bit.

Hey, Doug Good morning, let's say a woman.

Talking about working capital just a little bit.

Reuven Spiegel: Hi, Doug. The short answer is it will not revert itself. The longer answer that we have been working on a zero-based budget initiative that included a few components. One of them was the cost reduction initiative, and the other one was also changing our process about how we manage inventory. That process change was tested, and that's why we did not execute on it until this quarter. After it was tested, we executed on the new process this quarter, and that helped us to reduce inventory by roughly 2.5 million barrels. Now, there will be some fluctuations going forward, but we're not gonna revert back to the old levels of inventory.

Hi, Doug.

Speaker 10: So the short answer is it will not revert itself. The longer answer that we have been working on a zero-based budget initiative that included a few components. One of them was the cost reduction initiative and the other one was also changing our process about how we manage inventory. That process...

So the short answer is it will not revert itself.

The longer answer that we have been working on a zero based budget initiatives that included a few components. One of them was the cost reduction initiative and the other one was also changing a process about how we manage inventory that process.

Speaker 10: change was tested and that's why we did not execute it on it until this quarter, but after it was tested it would be executed on it on the new process this quarter and that helped us to reduce inventory by roughly 2.5 million barrels. Now there will be some fluctuations going forward but we're not going to revert back to the old levels of

Change was tested and that's why we did not execute.

On it until this quarter, but after it was tested easily execute on interest on the new forces this quarter and that helped us to reduce inventory by roughly $2 5 million barrels now there will be some fluctuations going forward, because we're not going to revert back to the old levels of inventory.

Yeah.

Speaker 9: So we can treat that additional cash flow then as permanent.

Doug Leggate: We can treat that additional cash flow then as permanent?

So we can we can treat that additional cash flow Dennis is permanent.

Doug Leggate: We can treat that additional cash flow then as permanent?

Reuven Spiegel: Most of it, yes.

Most most of it yes.

Doug Leggate: Okay, thank you. My follow-up is really on the reliability improvements. I'm wondering, I mean, obviously, one of the key things we think about is what the free cash flow capacity of the portfolio looks like at mid-cycle. A key input to that is obviously operating costs and capital, sustaining capital costs. I'm wondering if you can, you know, just give us some guideposts on both of those things to achieve the higher reliability. What does it mean for OpEx? What does it mean for sustaining capital?

Speaker 9: Okay, thank you. My follow-up is really on the reliability improvement. And I'm wondering, I mean, obviously, one of the key things we think about is what the free cash flow capacity of the portfolio looks like at mid-cycle. And a key input to that is obviously operating costs and capital-sustaining capital costs. So I'm wondering if you can, you know, just give us some guide posts on both of those things to achieve the higher reliability.

Okay. Thank you.

My follow up is really on the reliability improvements and I'm wondering I mean, obviously one of the key things. We think about is what the free cash flow capacity of the portfolio looks like mid cycle and a key input to that is obviously operating costs from topical sustaining capital costs. So I'm wondering if you can just give us some.

<unk> pulse on both of those things to achieve the highest reliability.

Speaker 9: What does it mean for all packs? What does it mean for sustaining cattle?

What does it mean for Opex, what does it mean for sustaining capital.

Speaker 3: So Doug, I will start and I will let Ruben or Joseph chime in.

Avigal Soreq: Doug, I will start, then I will let Reuven and/or Joseph chime in. On the OpEx side, you remember, Doug, when the margin were at all-time high, pretty much, we started the program that the cost reduction. In the beginning, no one really understood why we are doing what we are doing, but we wanted to have a long runway in order to do it right. We didn't want to rush into that. That's obviously gonna improve our cost base, both on the OpEx and the G&A on a relative basis versus what we start. Always gonna have a fluctuation in OpEx and G&A based upon APM performance and based upon electricity, power, and et cetera, like Joseph outlined.

So Doug I'll start and I'll, let the move in the end all Joseph timing.

Speaker 3: On the opic side, you remember that when the margin were at the all-time high pretty much we started the program, the cost reduction.

On an opex on the Opex side, you'll remember that when the margin were at all time high pretty much we started the program the cost reduction.

Speaker 3: In the beginning no one really understood why we are doing what we are doing But we wanted to have a long runway in order to do it right. We didn't want to wash into the

In the beginning and no one really understood. What we are why we're doing what we're doing but we wanted to be to have a long runway in order to do it right. We didn't want to rush into it and that's obviously going to grow and improve our cost base. Both on the opex on the G&A on a relative basis versus what we stopped.

Speaker 3: And that's obviously going to improve our cost base, both on the OPEX, on the GNA, on a relative basis versus what we start. Obviously, it's always going to have a fluctuation in OPEX and GAN, GAN based upon AAPN performance, and based upon electricity power, and et cetera, like Joseph outlined. But that, over time, make us, or making us, very much ready for the mid-cycle that might present itself.

Obviously going to always going to have a fluctuation in opex and Jan Jan based upon.

In performance and based upon electricity power and et cetera, like Joseph outline, but that's over time make us or making us very much ready for the mid cycle that might present itself.

Avigal Soreq: That, over time, make us or making us very much ready for the mid-cycle that might present itself. That's on the. Joseph, any you wanna add on that?

Speaker 4: That's on the Joseph any any want to add on that? I will only add by reminding everyone that

That's on the agenda of any any you want to add on that I will only by reminding everyone that.

Ryan Todd: I will only add by reminding everyone that in a previous earnings call, we discussed the $1 per barrel of additional OpEx in Big Spring just for H2 of this year. It will include the Q4 to really address-

Joseph Israel: I will only add by reminding everyone that in a previous earnings call, we discussed the $1 per barrel of additional OpEx in Big Spring just for H2 of this year. It will include the Q4 to really address-

Speaker 4: A previous earning call, we discussed the $1 per barrel of additional optics in big spring just for the second half of this year. So it will include the four Q to really address.

Previous earning call we discussed the $1 per barrel.

With the additional Opex in Big Spring just for the second half of this year. So it will include the for Q.

To really address.

Joseph Israel: Our integrity, reliability opportunities that are giving us those fruits. Not much more than that and really nothing on the CapEx side that we need to accomplish to get all the benefits that we discussed earlier.

Speaker 4: Integrity, reliability, opportunities that are giving us those...

Integrity reliability opportunities that are giving us those fruits, so not much more than that and really nothing on the capex side that we need to accomplish to get all the benefits that we discussed earlier.

Speaker 4: So not much more than that and really nothing on the CapExI that we need to Accomplish to get all the benefits that we discussed earlier

Avigal Soreq: Yeah. That give you the kind of a more overview, Doug, on the P&L initiative we started ahead of time. Obviously, the balance sheet, as Reuven said, is the working capital in some of the parts. For us, it's we were ahead of the game, preparing ourselves and not waited for the clock to turn.

Speaker 9: So that gives you a kind of a more overview of the DAG on the P&L initiative we started ahead of time. Obviously the balance sheet that Sylvan said is the working capital in some of the parts. So for us, we were ahead of the game preparing ourselves and not waited for the clock to turn. Great, so thanks so much. And don't forget.

So, let's give you the kind of more of the view.

Doug on the P&L initiative. We started ahead of time, obviously the balance sheet has often said is the working capital and some of the bulk so for US. We were ahead of ahead of the game preparing ourselves and not waited for the for the clock to them.

Doug Leggate: Great stuff. Thanks so much. Joseph, look forward to seeing you next week.

Great stuff. Thanks, so much and also look forward to seeing you next week.

Joseph Israel: Great. Good to see you.

Great that's good too.

Speaker 1: Our next question comes from Matthew Blair with Tudor Pickard & Holt. Please go ahead.

Operator 2: Our next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead.

Operator: Our next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead.

Our next question comes from Matthew Blair with Tudor Pickering Holt. Please go ahead.

Matthew Blair: Hey, good morning. Joseph, you outlined some big expected improvements in Big Spring refining margin capture. Could you talk a little bit about what's driving that? Does that involve any sort of commercial efforts to perhaps increase your exposure to asphalt? Or is this more on the refining side in terms of reliability and yield improvement?

Speaker 11: Hey, good morning. Joseph, you outlined some big expected improvements in big spring refining margin capture. Could you talk a little bit about what's driving that? Does that involve any sort of commercial efforts to perhaps increase your exposure to Arizona, or is this more on the refining side in terms of reliability and yield improvement?

Hey, Good morning, Joseph you outlined two big expected improvements in.

Big Spring, our refining margin capture could you talk a little bit about about what's driving that does that involve any sort of commercial efforts to perhaps increase your exposure to Arizona or is this more on the refining side in terms of reliability and yield improvement.

Speaker 4: But this point is really fundamental. And this is uh...

Joseph Israel: Matt, at this point, it's really fundamentals, and this is the low-hanging fruits, no rocket science there, and this is the beauty of it. By putting the right leadership team out there and really implementing the best practice and the fundamentals on the process side, on the refining side, will improve reliability. As you know, with better reliability comes the capture and the OpEx side. What you're talking about is really my phase two and three. When it goes to commercial, crude selection, logistics, and other opportunities, it will really start to get fun.

But at this point, it's really the fundamentals and this is.

Speaker 4: The low hanging fruits, no rocket science near them, this is the beauty of it.

The low hanging fruits no rocket science, there and this isn't the beauty of it.

Speaker 4: by putting the right leadership team out there and really implementing the best practice and the fundamentals.

By putting the right leadership team out there and really implementing the best practice in the fundamentals.

Speaker 4: On the process side, on the refining side, we'll improve reliability.

The process side on the refining side will improve reliability and as you know it better reliability comes in.

Speaker 4: And as you know, with better reliability comes the capture and the optic side. And what you're talking about is really my phase two and three.

Capture and the Opex side as.

What you're only talking about is really my phase two and three when it goes to commercial and crude selection.

Speaker 4: When it goes to commercial and court selection, and logistics and other opportunities, it will really start with fun.

And ideally we'll pull communities.

It will really start to get the phone.

Matthew Blair: Looking forward to it. The wholesale and asphalt contribution, I believe it was $35 million in Q3 versus $80 million in Q2. What is, like, a normalized either quarter or year for this business?

Speaker 11: looking forward to it. And then the wholesale and asphalt contribution, I believe it was 35 million in the third quarter versus 80 in the second quarter. What is like a normalized either quarter or year for this business?

Looking forward to it and then on the wholesale and asphalt contribution I believe it was $35 million in the third quarter versus 80 in the second quarter, what is it like a normalized either quarter or year for this business.

Speaker 4: Yeah, we provided the guidance, I think, in the previous quarter when we opened up that supply and marketing line for you guys to model. So, as you know, first and fourth quarter is about five million dollar contribution in average, not including oil price changes.

Joseph Israel: Yeah. We provided the guidance, I think, in the previous quarter when we opened up that supply and marketing line for you guys to model. Asphalt is seasonal, as you know. Q1 and Q4 is about $5 million contribution on average, not including oil price changes. Then in the Q2 and Q3 during the season, it's gonna be more like $20 million per quarter. Wholesale is more stable. It's gonna be between $20 to $40 million a quarter.

Yes, we provided the guidance I think in the previous quarter. When we opened up not to supply in the marketing line for you guys to model. So occupancy season as you know first and fourth quarter is about $5 million contribution in average not including.

Oil price changes and then in the second and third quarter during the season.

Speaker 4: And then in the second and third quarter, during the season, it's gonna feel more like a 20 million per quarter. All cell is a is most stable. It's gonna be between 20 to 40 million dollar a quarter.

To be more like a $20 million per quarter.

Fillings.

It's more stable.

Between $20 million to $40 million or another quarter.

Yes.

Okay.

Matthew Blair: Sounds good. Thank you.

Sounds good thank you.

Joseph Israel: Thank you, Matt.

Avigal Soreq: Thank you.

Thank you. Thank you.

Okay.

Speaker 1: Our next question comes from Paul Chang with Scotiabank. Please go ahead.

Operator 2: Our next question comes from Paul Cheng with Scotiabank. Please go ahead.

Operator: Our next question comes from Paul Cheng with Scotiabank. Please go ahead.

Our next question comes from Paul Cheng with Scotiabank. Please go ahead.

Paul Cheng: Hey, guys. Good morning.

Speaker 12: Hey guys. Good morning. First, I just want to end my best wishes for everyone, their family in New Square. And I hope everyone is good.

Hey, guys good morning.

Joseph Israel: Morning, Paul.

Avigal Soreq: Morning, Paul.

Paul Cheng: May I first just want to add my best wishes for everyone that their family in Israel, and hope everyone is good and okay.

First I just wanted to earn money.

Best wishes for.

Everyone's that their family in Israel.

And hope everyone in your script and okay.

Joseph Israel: Thank you. Thank you, Paul. I appreciate the

Avigal Soreq: Thank you. Thank you, Paul. I appreciate the

Thank you Paul I appreciate the stuff.

Paul Cheng: Several quick questions, Reuven, in the Q3, is there any meaningful impact from the benefit of mark-to-market on the RVO due to the much lower RIN prices?

A quick question.

Speaker 12: that we've been in the third quarter. You see any meaning?

That's a weapon in the third quarter, you see any meaningful impact from that.

Speaker 12: from the benefit of a market on the RBO due to the much lower wind prices? No.

The benefit of a mark to market on the LBO due to the much lower grain prices.

Avigal Soreq: Nope.

No.

Paul Cheng: That maybe this is for Joseph. In Q4, we have in the gasoline market from a margin standpoint some opposing forces. The butane blending and the light naphtha blending economics are extremely good. On the other hand, the gasoline crack is still poor. So when we combine that, how our gasoline yield in Q4 versus Q3 is going to look like. Historically, I think the industry probably see a couple% increase sequentially, but given the dynamics we see, what is your operating plan currently suggesting?

Okay.

And that maybe this is for Joseph.

Speaker 12: In the fourth quarter, we have in the gasoline market, we have from a margin standpoint, have some opposing forces.

In the fourth quarter, we have in the gasoline market we have.

Jen stamp on that.

Oh opposing forces.

Speaker 12: the built-in branding and the line-in-lapfer branding, you can normally like extremely good.

The butane branding and.

Renting economically extremely good on the other hand that the gasoline crack is the earliest pool.

Speaker 12: on the other hand that the gasoline crack is poor, so when we combine that, how your gasoline yield in the fourth quarter versus the third quarter is going to look like. Historically, I think the...

So when we combine that gas.

In the fourth quarter versus the third quarter, it's going to look like historic Tony I think the industry puppies see couple of percent increase sequentially.

Speaker 12: sequentially but that given the dynamic we see that what is your operating plan currently

Sequentially, but that given the dynamic we see it that once your operating plan carbon needs, suggesting.

Avigal Soreq: You're absolutely right. The butane is going our favor, but the crack is going the other way. Also, the RVO is a tailwind other than headwinds for us. Big picture, gasoline crack spread still low versus what we've seen last year, but it's not off the charts, on a 5-3-2 basis Gulf Coast versus historical at Q4. We remain very optimistic about the future. I don't know, Joseph, if you have anything to add to that.

Speaker 3: So you absolutely right, so the butan is going out further but the car is going that way. Also the RVO is a tailwind other than headwinds for us.

So youre absolutely right. So the butane is going out of favor, but the clock is going the other way also the RVO.

As a tailwind rather than headwinds for us so.

Speaker 3: Big picture, gasoline crack spread still low versus what we've seen last year, but it's not off the charts on a 5-3-2 basis, golf course versus historical at Q4.

Big picture gasoline cracks got spread still low versus what we've seen in the last deal, but it's not off the charts.

Three two basis Gulf coast versus historical at Q4, So we remain very optimistic about the future and I don't know Joseph if you have anything to add to that.

Speaker 4: So we are a remain very optimistic about the future, and I don't know Joseph, if you have anything to add to that. Yeah, just to wrap it up, so other than cross-springs, which is producing...

Joseph Israel: Yeah, just to wrap it up. Other than Krotz Springs, which is producing light products to the Colonial Pipeline, really the rest of our system is rack sales-based, and this is what provides us the access to blending and gives us the opportunity versus our average peer to participate in this opportunity. We are definitely looking into different things in the Q4 on butane blending, like you say, and then the sour heavy spreads will motivate us to look at the lower cost grades on the crude side as we're going into it and take, you know, the advantage of it.

Just just to wrap it up so other than Krotz springs, which is producing.

Speaker 4: live product to the colonial pipeline, really the rest of our system is racked.

<unk> product to the colonial pipeline really the rest of the system is Iraq field based and this provides us the axis to blending and gives us the opportunity versus allo average beer to participate in this opportunity soon.

Speaker 4: failed the base and this will provide us the access to blending and gives us the opportunity versus our average peer to participate in this opportunity. So we are definitely looking on different things in the fourth quarter.

We are definitely looking on different things in the fourth quarter on our butane blending like you say and then the.

Speaker 4: on a butane blending, like you say, and then the sour, heavy spreads.

Our heavy spreads.

Speaker 4: will motivate us to look at the lower cost grade on the...

We motivate us to look at.

The lower cost grades on the crude side as we're going into it and take.

Speaker 4: Coot side as we're going into it and take the advantage from it.

The advantage from it.

Paul Cheng: Joseph, do you expect the Q4 gasoline yield going to be higher than the Q3?

Speaker 12: I chose to do you expect the fourth quarter-gastening you're going to be higher than the third.

Joseph do you expect the fourth quarter gasoline, you're going to be higher than the third quarter.

Joseph Israel: I don't think so. We are a distillate mode, and we will probably be as close as we can to 42%.

Speaker 4: I don't think so. We have a distillate mode and we will probably be as close as we can to 42%.

I don't think so.

Distillate mode, and we will probably be as close as we can to 42%.

Paul Cheng: Okay. Even with the more butane blending and all that, you're not expecting the yield going to be higher?

Speaker 12: So even with more building branding and not that you're not

Okay, so even with a more butane blending and not that you're not expecting that you're going to be higher I.

Speaker 4: Agreed, it's not going to be enough, unless there is a significant change in gasoline distillate, economic later in the quarter, which how to believe.

Joseph Israel: Agreed. It's not gonna be enough unless there is a significant change in gasoline distillate economics later in the quarter, which is hard to believe.

I agree that it's not going to be enough on this there is a significant change in <unk>.

Gasoline distillate economics later in the quarter, which ought to believe.

Paul Cheng: Okay. A final one for me. Ones that you sort of fixed up, Big Spring, what's the longer-term normal refinery run that we should expect on an annual basis for your system? And also, what is the cash operating cost under let's call it the $4 Henry Hub? Any kind of guidance that you can give us, and what is the sustaining CapEx for the company going to look like?

Speaker 12: I'm a final one for me. One that you sort of fixed up brick spring, what's the longer term normal? We finally run that we should expect on any basis for your system. And also what?

Okay. A final one for me ones that you sold off fixed up.

Big spring, what's the longer time than normal.

We find when you run that we should expect.

On an annual basis for your system and also what do you see a cash operating cost and that's called yet they are both on a Henry hub.

Speaker 12: cash operating costs under cloud

Speaker 12: $4.00 Henry Hub, any kind of guy.

Any kind of guidance that you can give us and what is the sustaining capex for the company going to look like.

Speaker 12: and what is the sub-staining cap aches for the company?

Speaker 4: Yeah, I'll start with the big spring throughput. So in our plan, we're basically going back to where big spring

Joseph Israel: Yeah, I'll start with the Big Spring throughput. In our plan, we're basically going back to where Big Spring was in the past. We're not trying to reinvent the wheel. Fortunately, most of it, again, is low-hanging fruit. We gave very precise estimates how we were looking at things. 66.5 is the year-to-date throughput. We spoke about adding 5,000 barrels per day. I'm talking about calendar type of throughput. I'm not talking about peak. You're looking at 71, low 70s really on the ongoing as a new routine. We're talking about starting really in 2024, 2025. This is not something for the long run. It's really coming. With the 71, we are still leaving the normal 4% or 5% downtime for potential surprises, right?

Yeah, I'll start with a big spring throughput so.

And our plan will basically going back to big spring.

Speaker 4: was in the past. We're not trying to reinvent the wheel.

Was in the past, we're not trying to reinvent the wheel.

Speaker 4: and fortunately most of it again is low hanging fruit. So we gave very precise estimates how we were looking at things. So 66 and a half is the yield to date throughput. We spoke about adding 5,000 barrels per day. And I'm talking about calendar type of throughput. I'm not talking about peak. So you're looking at 71 low 70.

And Fortunately most of it again is low hanging fruit. So we gave very precise.

Estimates are we're looking at things, so 66 and a half is the year to date throughput, we spoke about adding 5000 barrels per day.

And I'm talking about condo type of throughput I'm not talking about peak. So you were looking at 71 low seventies.

Speaker 4: really on the ongoing as a new routine. And we're talking about starting really in 24, 25. So this is not something for the long run. It's really coming.

Really on the.

Ongoing as a new team and we're talking about starting really in 'twenty four 'twenty five so this is not.

Something for the long run it's.

It's really coming.

Speaker 4: And with 71, we're still leaving the normal 4% or 5% downtime for potential surprises, right? So we're going to run at the normal industry utilization rate.

And we.

With the 71 will be leaving <unk>.

The normal four 5% downtime for potential surprises right. So we're going to run at normal industry utilization rate.

Joseph Israel: We're gonna run it in the normal industry utilization rate. Can you please repeat your Henry Hub, please?

Speaker 12: Can you please repeat your way? Very hard. Yeah. Yeah, I'm just looking at not even just on the things that your total system.

Can you please repeat your we Henry hub.

Paul Cheng: Yeah, I'm just looking at not even just on Big Spring, but your total system.

Yeah, I'm just looking at not even just on like spring, but your total system.

Joseph Israel: Yeah.

Paul Cheng: For the facility, what is a normal average annualized run rate we can assume, and then also under that scenario, if we assume Henry Hub around $4, what will be a normalized annual cash operating cost in your refining system, and what is the sustaining CapEx we can assume for your refining system?

But sorry Chi.

That was yes, a normal a half page.

And the nice one way we cannot see them and then also on that that says if we assume Henry hub, a wrongful installer, what will be a normalized annual cash operating cost.

Finding system and one is desktops thing in Capex, we cannot see them.

Or you're finding.

Speaker 4: Our quarter, our OPEX was $5.48 per barrel for the system. And this happened with steel issues.

Joseph Israel: our quarter, our OpEx was $5.48 per barrel for the system. This happened with still issues in Big Spring. We spoke about the several things that affected us. $0.80 for the unplanned maintenance, $0.70 for the elevated utility cost, and $1 we gave for reliability. What I'm trying to say, Big Spring is probably more like $5.50 going forward than $8.37. You're looking at overall OpEx for the system under $5 per barrel. We think that this will happen even with the long-term Henry Hub pricing for natural gas and energy costs.

Oh quarter Opex was $5 48.

<unk> per barrel from the system and this happened with steel issues.

Speaker 4: in big spring we spoke about the federal things that affected us.

Big Spring, we spoke about the several things that affected us.

Speaker 4: 80 cents for the unplanned maintenance, 70 cents.

80.

For the unplanned maintenance 70 cents for the elevated utility pools into duo we gave fully reliability, what I'm trying to say big spring is probably more like 550 going forward than they 37, so youre looking at overall opex for the system $105.

Speaker 4: for the elevated utility cost and the dollar we gave for reliability. But I'm trying to say big spring is probably more like 550 going forward the 837. And so you're looking at all the Olympics for the system under five dollar per barrel. And we think that this is a will happen even with the long term and we have pricing for a natural gas and energy cost. OK,

Darryl.

We think that this is a.

It will happen, even with the long term Henry hub pricing for.

Natural gas and energy costs.

Paul Cheng: Okay. How about sustaining CapEx?

Okay.

How about sustaining capex.

Avigal Soreq: Obviously it's a bigger question because there is yields with turnaround and sometimes without turnaround. It's the question is the scope of the turnaround. I don't think we are gonna do a good service by just giving a number without context.

So.

Speaker 3: Obviously, it's a bigger question because there is issues with turnaround and sometimes without turnaround. The question is the scope of the turnaround. So I don't think we are going to do a good service by just giving a number without context.

Obviously, it's a bigger question because there is his wisdom and around and sometimes without them at home. These days. The question is that the scope of the turnaround. So I don't think it's going to we're going to do a good service by just giving a number without context, so going back to all of my earlier comment about the capital my our commitment.

Paul Cheng: Okay.

Speaker 3: Going back to our earlier comment about the capital, our commitment is to be very disciplined with capital deployment like we demonstrate and that's what we're going to do, but it's very hard to say to pin to a number.

Avigal Soreq: Going back to my earlier comment about the capital. Our commitment is to be very disciplined with capital deployment like we demonstrate, and that's what we're gonna do. But it's very hard to say to pin to a number. I hope that you can appreciate it.

It meant to be very disciplined with capital deployment like we demonstrate it and that's what we're going to do but it's very hard to say to been to a number.

Speaker 12: Okay, you put this on the fence. Thank you.

Paul Cheng: Okay. We do. Yep. Understand. Thank you.

Yes, I understand thank you.

Avigal Soreq: Yes. Thank you.

Joseph Israel: Thank you, Paul Cheng.

Thank you Paul.

Yeah.

Speaker 1: Our next question comes from Roger Reed with Wells Fargo. Please go ahead.

Operator 2: Our next question comes from Roger Read with Wells Fargo. Please go ahead.

Operator: Our next question comes from Roger Read with Wells Fargo. Please go ahead.

Our next question comes from Roger read with Wells Fargo. Please go ahead.

Okay.

Speaker 13: Yeah, thanks. Good morning. Apologies for joining a little late, so if I'm asking a question that's been asked, please let me know. But maybe digging a little deeper into big spring and juxtapose that with the performance that Tyler does quarter.

Roger Read: Yeah, thanks. Good morning.

Yeah. Thanks, good morning.

Avigal Soreq: Morning.

Roger Read: Apologies for joining a little late. If I'm asking a question that's been asked, please let me know. Maybe digging a little deeper into Big Spring and juxtapose that with the performance at Tyler this quarter. Joseph, I know you were brought in to kind of improve operations. Is there a takeaway from what we see at Tyler coming out of the turnaround versus what you'd like to do at Big Spring in the coming, you know, let's call it months, quarters, years until its next scheduled turnaround?

Apologies for joining a little late so if I'm asking a question. That's been asked please let me know, but maybe digging a little deeper into big spring and juxtapose that with the performance of Tyler This quarter. Joseph I know you were brought in to kind of improve operations is there a takeaway from what we see.

Speaker 13: Joseph, I know you were brought in to kind of improve operations. Is there a takeaway from what we see at Tyler coming out of the turnaround versus what you'd like to do at Big Spring in the coming, you know, let's call it months, quarters, years until its next scheduled turnaround?

At Tyler coming out of the turnarounds versus what you'd like to do at Big spring in the <unk>.

Coming you know, let's call it months quarters years until its next scheduled turnaround.

Avigal Soreq: Yeah. Roger, with your permission, I will start, and then Joseph will add some comments around it. Tyler is a good way to see how good operation become after turnaround, in terms of both TRIR, MTBF and also capture. That's something that we obviously can take from one turnaround to another and improve as long as the time goes by. Joseph has a lot of energy around Big Spring, and maybe you wanna add around that, Big Spring. I think we spoke about it, but.

Speaker 3: Roger, with your permission, I will start and then Joseph will add some comments around it. Tyler is a good way to see how good operation become after turnaround.

Yeah logically the operation I will start and then Joseph will add some comments around it.

How long is the good way to see how good operation become after turnaround.

Speaker 3: In terms of both the T.I.R.A. and T.B.R.

In terms of both the MTBE.

<unk> and.

Speaker 3: and also capture. And that's something that we obviously can take from one turn around to another and improve as long as the time goes by. Joseph has a lot of energy out big spring and maybe you want to add around that big spring. I think we spoke about it.

And also capture and Thats something that we obviously can take from one tenant to another and improve as long as the time goes by.

Joseph has a lot of energy at Big Spring and maybe you want to hit the ground at Big Spring I think we spoke about it.

Joseph Israel: Yeah.

Avigal Soreq: You can repeat.

Yes.

Speaker 4: In title, I think the turnaround scope was excellent. It was right and beyond just

Joseph Israel: In Tyler, I think the turnaround scope was excellent. It was right. Beyond just maintenance, the team improved the vacuum tower bottoms and allowed better quality of VGO going to the FCC, providing us with better yields, and catalyst replacement on the reformer was exactly what we needed, and we see the results. The rest for the system and mainly for Big Spring is just all about the fundamentals. It's about the focus on the right things, and it's the culture, and it's the right people in the right place that we're leading it, and the processes and the procedures. These are not costly type of investments, but the efforts are bringing us fruits and allowing us to commit on a much better performance, especially in Big Spring going forward.

In terms of I think the turnaround scope.

Excellent it was right and beyond just maintenance the team improve the VAT.

Speaker 4: maintenance. The team improved the vacuum tower bottoms and allowed a better quality of regio going to the FCC providing us with better yields and catalyst replacement on the reformer was exactly what we needed and we see the results. The rest for the system and mainly for Big Spring is just all about the fundamentals.

Vacuum tower bottoms and allow the better quality of riggio growing to the FCC, providing us with embedded to the yields and catalyst replacement on the reformer was exactly what we needed and we see the results the rest for the system and mainly for big spring.

It's just all about the fundamentals and it's about the focus on the right things and it's come to the right people in the right place that we were leading in the processes and the procedures.

Speaker 4: And it's about the focus on the right things and it's the culture and it's the right people in the right place that we're leading it and the processes and the procedures. These are not costly type of investments, but the efforts are bringing us foods and allowing us to commit on a much later performance, especially in Bixbyn going forward.

So not costly type of investments but.

Therefore, bringing us foods, and allowing us to compete on a much better performance, especially in big spring going forward.

Speaker 13: Okay, and then just as a follow up, curious with Crosprings, you know, in terms of its product yield, I know it's historically had a little less of a clean diesel yield relative to its total distal yield. Any changes there or anything you're seeing in terms of how that product is being able to move into the market.

Roger Read: Okay. Just as a follow-up, curious with Krotz Springs, you know, in terms of its product yield. I know it's historically had a little less of a clean diesel yield relative to its total distillate yield. Any changes there or anything you're seeing in terms of how that product is being able to move into the market?

Okay, and then just as a as a follow up.

I'm curious with Krotz Springs, you know in terms of its product yield I know, it's historically had a little less of a clean diesel yield relative to its total distillate yield any changes there or anything you're seeing in terms of how that product is us being able to move into the market.

Avigal Soreq: No. Generally speaking, no. KSR is a refinery that basically is on the Colonial, so that's the deployment, that's the distribution channel we have. We had some improvement with it, but nothing that was a meaningful discussion. We're obviously seeing the fruits of our hard labor and the great commitment over there to a great operation and a great safety record and a great yield. We are very pleased with KSR, and we see the improvement over time. More to come.

Speaker 3: Now, generally speaking, KSR is a refinery that basically is on the colonial, so that's the deployment, that's the distribution channel we have. For the more, we had some improvements we did, but nothing that was the eminigful discussion. We obviously seeing the fruits of our hard labor and the great commitment over there to

No generally speaking cash salaries, a refinery that there basically is on the colonial so that the deployment that the distribution channel we have.

Yeah.

We had some improvement we did but there's nothing that the dwarf the meaningful discussion. We're obviously seeing the fruits of all the hard label and Theyre great commitment over there too.

Speaker 3: to a great operation and a great safety record and a great yield, so we are very pleased with KSR and we see the improvement over time.

To a great operation and a great day.

Safety Records and the great the yield so we're very pleased with <unk>.

And we see the improvement over time so.

Speaker 4: Yeah, the one thing to remember about cross-frame, given though it's a high-soluble diesel, you're stealing the gold, of course, there are plenty of customers that they see a lot of value in this product in different uses. And the other thing that could be only configuration is very special. We do almost 20,000 barrels per day of jet fuel.

More to come yes, the one thing to remember about Krotz spring, even though it's a high sulfur diesel oil spill in the Gulf Coast area, and you have plenty of customers.

Joseph Israel: Yeah. The one thing to remember about Krotz Springs, even though it's a high sulfur diesel, you're still in the Gulf Coast area, and you have plenty of customers that see a lot of value in this product in different uses. The other thing, the crude unit configuration is very special with almost 20,000 barrels per day of jet fuel in the crude unit. All in all, distillate yield in Krotz Springs is in the high 30s, which will allow them to compete long term.

See a lot of value in this product and different uses and the other thing the crude unit configuration is really space or with almost 20000 barrels per day with jet fuel.

Speaker 4: in the coodionate, all in all, distillate yield in crotch spring is in the high 30s, and which will allow them to complete longer.

In the crude unit all in all distillate yield in Krotz Springs is in the high Thirty's.

Which will allow them to compete long term.

Roger Read: Okay. Thank you.

Okay. Thank you.

Joseph Israel: Thank you, Roger.

Roger.

Yeah.

Speaker 1: Our next question is from John Royal with J.P. Morgan. Please go ahead.

Operator 2: Our next question is from John Royall with JPMorgan. Please go ahead.

Operator: Our next question is from John Royall with JPMorgan. Please go ahead.

Our next question is from John Royall with Jpmorgan. Please go ahead.

Speaker 11: Hi, good morning. Thanks for taking my question. So my first one is a follow-up on the capital allocation question. You're sitting today at zero parent net debt, which you've spoken about, which is a great spot to be in. And I'm wondering how capital allocation could be impacted by a lower crack environment. And if you're willing to lever up a little from here, should the environment deteriorate, just in the interest of keeping capital returns at a strong pace?

John Royall: Hi. Good morning. Thanks for taking my question. So, my first one is a follow-up on the capital allocation question. You're sitting today at 0 parent net debt, which you've spoken about, which is a great spot to be in. I'm wondering how capital allocation could be impacted by a lower crack environment, and if you're willing to lever up a little from here should the environment deteriorate, just in the interest of keeping capital returns at a strong pace.

Hi, good morning, Thanks for taking my question.

So my first wanted to follow up on the capital allocation question, you're sitting today yet.

Zero parent net debt, which you've spoken about which is a great spot to be in.

I'm wondering how capital allocation could be impacted by lower crack environment.

And if you're willing to lever up a little from here should the environment deteriorate just in the interest of keeping capital returns at a strong pace.

Speaker 3: So John , thank you for the question. We're going to remain disciplined. Obviously there is, when, once we feel, first of all, we want to maintain dividend with all the cycle that's one thing we need to check the box. If we believe that the allocation capital to buy back, we will not be able to, we will not be shy to do so like we did in the past. We'll do that again. And we're obviously looking at the opportunity that presents themselves in the market. So we have all the tool box.

Avigal Soreq: John, thank you for the question. We're gonna remain disciplined. First of all, we want to maintain dividend through the cycle. That's one thing we need to check the box. If we believe that allocating capital to buyback, we will not be shy to do so like we did in the past. We'll do that again, and we're obviously looking at the opportunities that present themselves in the market. We have all the toolbox to deploy on the right opportunity, and keeping a good return to shareholder is a very high priority for us.

So.

John Thank you for the question, we're going to remain disciplined obviously, there as well once we feel first of all we want to maintain dividend well the cycle. That's one thing we need to check the box.

If we do believe that the that the allocation capital to buyback, we will not be able to we will not be shy to do so like we did in the past we will do that again and we are obviously looking at the opportunity that presents itself themselves in the market. So we have all the toolbox.

Speaker 3: to deploy on the right opportunity and keeping a good return to shareholders is a very high priority for us.

To deploy on the right opportunity and keeping a good return to shareholder is a very high priority for us.

Speaker 11: Great, thanks, Abby Gallen. And then last quarter, you had mentioned just very broad. We, you had some very high returning and presumably relatively quick hit projects and refining that you may think about for next year. And I think you touched on it again on this call. And can you maybe just give us some color around what those projects are and just expand on those opportunities a little?

John Royall: Great. Thanks, Avigal. Last quarter, you had mentioned just very broadly, you had some very high returning and presumably, relatively quick hit, projects in refining that you may think about for next year. I think you touched on it again on this call. Can you maybe just give us some color around, what those projects are and just expand on those opportunities a little?

Great. Thanks, Ravi gallon then.

Quarter.

You had mentioned just very broadly you had some very high returning and presumably.

Relatively quick hit projects in refining that you may think about for next year and I think you touched on it again on this call and can you maybe just give us some color around what those projects are and just expand on those opportunities a little yes.

Speaker 3: Yeah, so we again we don't want to get ahead of ourselves and to give exactly because we didn't finish the planning process around it and proving them with our both of the recto But we definitely have some very encouraging a project on the table

Avigal Soreq: Yeah. We again don't want to get ahead of ourselves and to give exactly because we didn't finish the planning process around it and approving them with our board of director. We definitely have some very encouraging project on the table, and we'll disclose them once we can. Again, number one thing about capital is discipline, right? Discipline and return to shareholders. We're maintaining very disciplined about the way we deploy capital and want to be good steward of our shareholders. Joseph, you wanna add around it?

So we again, we don't want to get ahead of ourself and to give exactly because we didn't finish the planning process around it then improving them with our board of director.

But we definitely have some very encouraging a project on the table and we'll disclose them once the once we can but again number one thing about capital discipline discipline and return to shareholders. So we are maintaining very disciplined about the way, we deploy capital and want to be good stewards of our shareholders' Joseph.

Speaker 3: and we'll disclose them once we can. But again, number one thing about capital is discipline. Discipline and return to shareholder. So we maintain very disciplined about the way we deploy capital.

Speaker 4: and want to be good to you out of our shareholders. Just a few more add up. I'll just say that there are only no cycle return type of project.

Joseph Israel: Yeah. I would just say that, they are all a low cycle return type of projects, you know, that fund themselves in less than 24 months. They are all about liquid yield recovery, and this is the type of project you will expect us to look very closely.

Yeah, I would just say that they're all at low cycle return type of projects.

Speaker 4: you know, let them fund themselves in a lesson 24 month. They are all about liquid teal to recovery. And this is the type of project you will expect us to look very closely.

The fund themselves and less than 24.

Months now all about liquid yield recovery.

And this type of project you will expect us to.

Look clearly closely.

John Royall: Great. Thank you very much.

Great. Thank you very much.

Avigal Soreq: Thank you, John Royall.

Thank you Jill.

Operator 2: Our next question comes from Jason Gabelman with Cowen. Please go ahead.

Operator: Our next question comes from Jason Gabelman with Cowen. Please go ahead.

Speaker 1: Our next question comes from Jason Gabelman with Cowan, please go ahead.

Our next question comes from Jason <unk> with Cowen. Please go ahead.

Speaker 14: Yeah, hey, morning. I just wanted to extend my thoughts and hope everyone's families are safe.

Speaker 15: Yeah. Hey, morning. Just wanted to extend my thoughts and hope everyone's families are safe. I wanted to ask first about the supply and marketing line item, and I know you provided some incremental guidance around that new line item last quarter to help us forecast something that was perhaps more ratable. It's been a bit volatile last quarter to this quarter and not necessarily in line with what was forecast. I'm wondering how much of that is just around trading, and it seems like, I think Q2 was a stronger trading quarter in that line, and Q3 was weaker. Should we expect to see that in this new line item where the trading impacts kinda offset quarter to quarter and the underlying results trend in line with what you've guided to?

Jason Gabelman: Yeah. Hey, morning. Just wanted to extend my thoughts and hope everyone's families are safe. I wanted to ask first about the supply and marketing line item, and I know you provided some incremental guidance around that new line item last quarter to help us forecast something that was perhaps more ratable. It's been a bit volatile last quarter to this quarter and not necessarily in line with what was forecast. I'm wondering how much of that is just around trading, and it seems like, I think Q2 was a stronger trading quarter in that line, and Q3 was weaker. Should we expect to see that in this new line item where the trading impacts kinda offset quarter to quarter and the underlying results trend in line with what you've guided to?

Yeah, Hey, good morning, just wanted to extend.

My thoughts and hope everyone's families.

Our safe.

I wanted to.

Speaker 14: ask first about the supply and marketing line item, and I know you provided some incremental guidance around that new line item last quarter to help us forecast something that was perhaps more rateable. It's been a bit volatile last quarter to this quarter, and not necessarily in line with

First about the supply and marketing line item and I know you provided some incremental guidance around that new line item last quarter to help us forecast something that was perhaps more ratable, it's been a bit volatile.

Last quarter, the linked quarter and not necessarily in line with what was forecast and I'm wondering how much of that is just around trading and it seems like I think <unk> was a stronger trading quarter in that line in <unk> was weaker so should we expect to see that in this new line item where the true.

Speaker 14: What was forecast and I'm wondering how much of that is just around trading and it seems like I think QQ was a stronger trading quarter in that line and 3q was weaker So should we expect to see that in this new line item where?

Speaker 14: uh... the trading impacts kinda offset quarter-to-quarter of the underlying results trend in line with uh... with with what you've got to have a follow-up thanks

<unk> impact is kind of offset quarter to quarter on the underlying results trend in line with with what you've guided to I have a follow up thanks.

Speaker 15: I have a follow-up. Thanks.

Jason Gabelman: I have a follow-up. Thanks.

Speaker 3: Yes, thank you for the question and thank you for the warm words. First of all, we all understand that Rossi changed the world of marketing and not trading because of a reason. We are looking at that as a risk reduction.

Avigal Soreq: Yeah. Thank you for the question, and thank you for the warm words. First of all, we all understand that Rosie changed the world of marketing and not trading because of the reason. We are looking at that as a risk reduction tool and not adding risk to the table. We need to remember that. Obviously, when oil prices goes up, there is a bit of a volatility to reduce risk and take risk off the table. As Joseph mentioned a few times on the call, wholesale has a volatility, and especially asphalt with the prices goes up. We are looking at that line, how to reduce risk and how to deploy product and how to get as long as a sustainable income as much as we possibly can.

Yeah. Thank you for the question and thank you for the warm Walt.

First of all.

We all understand that the halsey changed to the world of marketing and not trading because of the reason we are looking at it on that as a risk reduction.

Speaker 3: a tool and not adding risk to the table, so we need to remember that.

And not adding risk to the table, so we need to remember that.

Speaker 3: Obviously when oil prices goes up there is a bit of a volatility, with useless risk and take risk of the table. And as Joseph mentioned a few times on the call.

Obviously when oil prices goes up there is a bit of a volatility to reduce risk and take risk off the table and as Joseph mentioned few times on the call.

Speaker 3: wholesale has a volatility and especially asphalt with prices goes up. So we are looking on that line how to reduce risk and how to deploy product and how to get the as long as a sustainable income as much as we possibly can. It's going to be more volatile than pure capture as you can imagine, but we are not deploying just huge.

Wholesale has the volatility and especially asphalt with the prices goes up so we're looking on deadline, how to reduce risk and how to deploy product and how to get the longest.

Sustainable income as much as we possibly can is going to be more volatile than pure capture rate as you can imagine, but we are not growing.

Avigal Soreq: It's gonna be more volatile than pure capture it, as you can imagine. We are not deploying just a huge trading position into the market. We are trying to see how we can reduce risk.

Growing just the huge.

Speaker 3: trading position into the market. We are trying to see how we can reduce.

Trading position into the market, where time to see how we can reduce risk.

Speaker 14: Okay, to be clear, it's not necessarily that the derivative impacts in one quarter will tend to reverse in the subsequent quarter, because that's what seemed to happen in 2Q to 3Q.

Speaker 15: Okay. To be clear, it's not necessarily that the derivative impacts in one quarter will tend to reverse in the subsequent quarter, because that's what seemed to happen in Q2 to Q3.

Jason Gabelman: Okay. To be clear, it's not necessarily that the derivative impacts in one quarter will tend to reverse in the subsequent quarter, because that's what seemed to happen in Q2 to Q3.

Okay and to be clear, it's not necessarily that the derivative impacts in one quarter, we will tend to reverse in the subsequent quarter because thats, what it seemed to happen into Q3 Q.

Joseph Israel: Right. When we talk derivatives, we talk about hedging what is outside of the natural inventory range, right? Above or under. When we haven't been reliable, like in the Q3 in Big Spring, we spoke about the outages and the fact that we are fixing it in, the future will be much better there. What happens is when you build inventories and oil price is going up, we are having very good, dynamics on the cost of goods side, right? We are making money on the physical side. The hedging are there to keep you on the crack of the day. This is what we are asked to do by our investors, and these are the type of derivatives.

Right so.

Speaker 4: When we talk the revatives, we talk about hedging watches outside of the natural inventory range, right? Above go under.

When we talk derivatives, we think about hedging what is outside of the natural inventory range right above wonder.

Speaker 4: When we haven't been reliable, like in the third quarter in Big Spring, we spoke about the outages and the fact that we are fixing it and the future will be much better there. What happens is when you build inventory, then oil price is going up.

When we haven't been reliable.

In the third quarter and Big Spring, we spoke about the outages and the fact that we are fixing it.

The future will be much better there what happens is when you build inventories and oil price is going up.

Speaker 4: And we are having very good dynamics on the cost of good side, right? We are making money on the physical side. The hedging out there to keep you on the crack of the day. This is what we are asked to do by our investors. And these are the types of derivatives. We kind of put this in an episode of a video video.

We are having very good dynamic.

The dynamics on the cost of good side, you're right, we are making money on the physical side. The hedging goes due to keep you on the crack of the day. This is what we have asked to do by our investors and this is not the type of derivatives.

Speaker 15: Okay.

Jason Gabelman: Okay.

Joseph Israel: I'm sure it makes sense to you, right?

Okay. It makes sense to euro.

Speaker 14: Yeah, all right. Yeah, that's a really helpful color. And my follow up is sorry, I'm going to go back to the strategic.

Speaker 15: Yeah. All right. Yeah, that's a really helpful color. My follow-up is, sorry, I'm gonna go back to the strategic unlock of value. If I, if I look on your slide, you say, you know, you have a clear strategy and on plan to meet our objectives. When I think about what your objectives were when you put the strategic unlock forward, it was primarily around deconsolidating DKL's debt. Is that still the objective as we sit one year later? When you say you're on plan, you know, it's been a year since you laid out kind of the plan and I just wonder. It implies perhaps there is some timeline that you have in mind. I just I'm gonna push again to see if you can elaborate on what you're thinking in terms of timeline. Thanks.

Jason Gabelman: Yeah. All right. Yeah, that's a really helpful color. My follow-up is, sorry, I'm gonna go back to the strategic unlock of value. If I, if I look on your slide, you say, you know, you have a clear strategy and on plan to meet our objectives. When I think about what your objectives were when you put the strategic unlock forward, it was primarily around deconsolidating DKL's debt. Is that still the objective as we sit one year later? When you say you're on plan, you know, it's been a year since you laid out kind of the plan and I just wonder. It implies perhaps there is some timeline that you have in mind. I just I'm gonna push again to see if you can elaborate on what you're thinking in terms of timeline. Thanks.

Yeah, Alright, yeah, that's a really helpful color.

And my follow up is sorry, I'm going to go back to the strategic unlock of value. If I. If I look on your slide you say you have a clear strategy and on plan to meet our objectives. When I think about what your objectives were when you put the strategic unlock forward it was.

Speaker 14: uh... a lot of value if i if i look on your slide you say you know you have a clear strategy around plan to meet our objectives when i think about what your objectives were when

Primarily around deconsolidation DCF decals that is that still the objective as we said one year later and when you say you are on plan.

Speaker 14: You know, it's been a year since you laid out kind of the plan and just wonder, it implies perhaps there is some timeline that you have in mind. So I'm going to push again to see if you can elaborate on what you're thinking in terms of timeline. Thanks.

Been a year since you laid out kind of the plan and.

Yeah.

It implies perhaps there is some timeline that you have in mind. So I, just I'm going to push again to see if you can elaborate on what youre thinking in terms of timeline. Thanks.

Avigal Soreq: Yeah. You're absolutely correct. That's the goal, and we're gonna achieve it. I'm not gonna commit to a time. Committing to a time, I impact the deal, and you don't want me to do that. You want me to make the right deal on the right timing and to bring value to shareholders. We are not just gonna rush for a deal, but we are decisive. Our state of mind is not wavered, and we're gonna make it and we're gonna make it right.

Yeah. So.

Speaker 3: You're absolutely correct, that's the goal, and we're going to achieve it. I'm not going to commit to a time, committing to a time I impact the deal, and you don't want me to do that. You want me to make the right deal, on the right timing, and to bring value to shareholders. We are not just going to rush for a deal, but we are decisive. So our state of mind is not wavered, and we're going to make it, and we're going to make

You are absolutely correct that's the goal.

We're going to achieve it I'm not going to commit the time committing to a timely impact the deal and you don't want me to do it do we want you want me to make the right deal on the right timing.

We're bringing value to shareholders. There is no. We are not just going to have a rational but we have a decisive so I'll state of mind is not waiver and we're going to make it we're going to make it and we're going to make it right.

Speaker 15: Yeah. Okay. Understood. I wasn't asking quite to commit to a time as much as it says you're on plan, which implies there is some internal timeline that you have in mind. Just was wondering if that was a fair read. I'll leave it there. Thanks.

Jason Gabelman: Yeah. Okay. Understood. I wasn't asking quite to commit to a time as much as it says you're on plan, which implies there is some internal timeline that you have in mind. Just was wondering if that was a fair read. I'll leave it there. Thanks.

Speaker 14: Yeah. Okay. Under understood. I wasn't asking quite to commit to a time as much as it says you're on plan, which implies there is some internal timeline that you have in mind. And just was wondering if that was a fair read, but I'll, I'll leave it there. Thanks. Thank you. Appreciate it.

Yeah, Okay understood I wasn't asking quite to commit to a time as much as it says you're on plan, which implies there is some internal timeline.

In mind and just was wondering if that was a fair read but I'll I'll leave it there. Thanks.

Avigal Soreq: Thank you. Appreciate it.

Appreciate it.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to Avigal Soreq for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Avigal Soreq for any closing remarks.

Speaker 3: This concludes our question and answer session. I would like to turn the conference back over to Abigail Surig for any closing remarks. Yes, Sarah, thank you for leading us today. I want to thank my colleagues around the table here for a great quarter, to our board of directors, and for most our employees and investor for being with us. And we'll go back next quarter and report again. Thank you so much, have a good day.

This concludes our question and answer session I would like to turn the conference back over to Africa Zurich for any closing remarks, yes. Thank you for letting us today I want to thank my.

Avigal Soreq: Yes. Sarah, thank you for leading us today. I want to thank my colleagues around the table here for a great quarter to our board of directors, and for most our employees and investor for being with us. We'll go back next quarter and report again. Thank you so much. Have a good day.

My colleagues around the table here for a great call down to our board of directors and full and for most of our employees and invest all footwear for being with US and will go back next quarter and report again. Thank you so much of a good day.

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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