10-K: Delek US Holdings Rebounds in 2025 with Strong Refining Margins

Delek US Holdings reported a significant turnaround in 2025, moving from a net loss to net income, driven by increased refining margins and strategic acquisitions in its logistics segment, despite ongoing geopolitical and commodity market volatility.

Summary

• Consolidated net income for 2025 was $43.3 million, a substantial improvement from a net loss of $520.9 million in 2024.
• Net loss attributable to Delek was $22.8 million, or $(0.38) per basic share, compared to a loss of $560.4 million, or $(8.77) per basic share, in 2024.
• Net revenues decreased by 9.5% to $10,722.9 million in 2025 from $11,852.2 million in 2024, primarily due to lower average prices for U.S. Gulf Coast gasoline (down 10.3%) and ULSD (down 6.4%).
• Cost of materials and other decreased by 17.7% to $8,873.6 million, mainly due to lower crude oil feedstock costs (WTI Cushing down 14.5%, WTI Midland down 14.7%) and a $356.1 million reduction from small refinery exemptions (SREs).
• Refining segment EBITDA increased by 606.8% to $800.7 million in 2025 from a loss of $(158.0) million in 2024, driven by higher crack spreads and SREs.
• Logistics segment EBITDA increased by 7.8% to $369.3 million, boosted by the Gravity and H2O Midstream acquisitions.
• Total debt was $3,283.3 million as of December 31, 2025, with $1,620.8 million in unused credit commitments.
• Returned $141.4 million of capital to shareholders in 2025 through dividends and share buybacks, with $464.2 million remaining authorization for repurchases.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, reflecting a strong operational turnaround in refining and strategic growth in logistics, despite a net loss attributable to Delek. The significant improvement in EBITDA and proactive debt management indicate a solid foundation for future performance, though geopolitical and regulatory uncertainties remain.

Positives

• Shift from a consolidated net loss of $520.9 million in 2024 to a net income of $43.3 million in 2025.
• Refining segment EBITDA saw a substantial increase of 606.8% to $800.7 million in 2025, up from a loss of $158.0 million in 2024.
• Significant reduction in Cost of materials and other by $1,908.2 million (17.7%), primarily due to lower crude oil feedstock costs and $356.1 million from small refinery exemptions.
• Logistics segment EBITDA increased by 7.8% to $369.3 million, driven by strategic acquisitions (Gravity and H2O Midstream).
• Successful acquisition of Gravity Water Intermediate Holdings LLC for $300.8 million, enhancing full-cycle water systems in Permian and Bakken Basins and diversifying the customer base.
• Acquisition of H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC for $229.7 million, expanding water disposal and recycling operations in the Midland Basin.
• Extension of the Inventory Intermediation Agreement with Citi to January 31, 2028, reducing commitment fees and increasing liquidity flexibility for all refineries.
• Expansion of Delek Logistics' natural gas processing plant in the Permian Basin with 110 MMcf/d capacity, expected to add $40.0 million in annual EBITDA.
• Return of $141.4 million to shareholders in 2025 through dividends and share buybacks, with $464.2 million remaining authorization for repurchases.
• Successful extension of long-term debt maturities with the sale of $700.0 million in 7.325% Senior Notes due 2033 by Delek Logistics.
• Improved crack spreads in 2025 compared to 2024 (Gulf Coast 5-3-2 up 16.2%, 3-2-1 up 15.5%, 2-1-1 up 18.1%).
• Favorable narrowing of the WTI Midland to Cushing differential.
• Strong liquidity position with $2,246.6 million, including $1,620.8 million in unused credit commitments and $625.8 million in cash.
• Compliance with all debt maintenance covenants as of December 31, 2025.
• Commitment to operational excellence, financial strength, and strategic initiatives, including ESG integration.
• No significant cybersecurity breaches or associated expenses, penalties, or settlements for 2023, 2024, and 2025.

Negatives

• Consolidated net loss attributable to Delek of $22.8 million in 2025, despite overall net income.
• Net revenues decreased by $1,129.3 million (9.5%) in 2025, primarily due to lower average prices for U.S. Gulf Coast gasoline (down 10.3%) and ULSD (down 6.4%).
• Insurance proceeds decreased by $20.5 million (99.5%) in 2025 compared to 2024.
• Operating expenses increased by $104.7 million (13.6%), driven by higher outside services, variable expenses (natural gas, chemical, electric), employee costs, and maintenance.
• General and administrative expenses increased by $16.7 million (6.6%), mainly due to increased restructuring costs ($59.6 million) and incentive compensation ($14.0 million).
• Interest expense, net, increased by $32.3 million (10.3%) due to higher net average borrowings and hedge losses on interest rate swaps.
• Income from equity method investments decreased by $2.7 million.
• Other expense (income), net, shifted from a $6.3 million income in 2024 to a $6.3 million expense in 2025, primarily due to an $8.6 million impairment on two equity investments and a $2.1 million pension settlement.
• Income tax benefit decreased significantly from $107.9 million in 2024 to $6.8 million in 2025.
• Biodiesel facilities were idled in Q2 2024, and one facility (Cleburne, Texas) was agreed to be sold in Q4 2025, indicating challenges in this segment.
• A majority of the 2019-2023 RINs returned from EPA exemptions were expired and had no value, and the relief was insufficient to offset the 2025 compliance obligation.
• Lawsuits filed against the EPA regarding SRE decisions for 2024 and 2020, and the refund of expired RINs.
• Net cash used in investing activities was $697.9 million, leading to a net decrease in cash of $109.8 million in 2025.
• Goodwill impairment of $212.2 million in 2024 related to the Krotz Springs refinery reporting unit, and $14.8 million in 2023 for the Delaware Gathering reporting unit.
• Asset impairment of $11.6 million in 2025 related to software development costs.

Risks

• Volatility in global oil markets, including geopolitical events (Russia-Ukraine War, Israel-Hamas conflict), OPEC+ decisions, and supply chain disruptions, can adversely impact business, results, and financial performance.
• Regional or global disease outbreaks could have a material adverse effect on business, financial condition, results of operation, and liquidity.
• A substantial or extended decline in refining margins would reduce operating results and cash flows and could materially and adversely impact future growth and asset carrying value.
• Increased costs of compliance with, or liability for violation of, existing or future laws, regulations, executive orders, and other requirements (e.g., environmental, fuel composition, safety, transportation, pipeline tariffs, employment, labor, cybersecurity).
• The availability and cost of Renewable Identification Numbers (RINs) and other required credits could have a material adverse effect on financial condition and results of operations, especially due to price volatility, inconsistent EPA administration, and inability to pass costs to customers.
• Increased supply of and demand for alternative transportation fuels, increased fuel economy standards, and increased use of alternative means of transportation could lead to a decrease in transportation fuel prices and/or a reduction in demand for petroleum-based transportation fuels.
• Intense competition in the refining and logistics industry from larger, integrated multinational oil companies and independent refiners.
• Decreases in commodity prices may lessen borrowing capacities, increase collateral requirements for derivative instruments, or cause a write-down of inventory.
• Acts of terror or sabotage, threats of war, armed conflict, or war may have an adverse impact on business, future results of operations, and overall financial performance.
• Legislative and regulatory measures to address climate change and greenhouse gas (GHG) emissions could increase operating costs or decrease demand for refined products.
• Increasing attention to environmental, social, and governance (ESG) matters may impact business, financial results, cost of capital, or stock price, including potential litigation.
• Vulnerability to disruptions to refining operations due to concentration in four facilities (Tyler, El Dorado, Big Spring, Krotz Springs).
• Physical effects of climate change and severe weather (floods, hurricanes, wildfires, freezing temperatures) present risks to operations, potentially causing business interruptions and increased costs.
• Environmental hazards and risks inherent in operations (spills, discharges, releases of hazardous substances) could lead to significant costs and penalties.
• The costs, scope, timelines, and benefits of refining projects may deviate significantly from original plans and estimates.
• Dependence on the logistics segment for a substantial portion of crude oil supply and refined product distribution networks for Tyler, Big Spring, and El Dorado refineries.
• Interruptions or limitations in the supply and delivery of crude oil, or the supply and distribution of refined products, may negatively affect refining operations and inhibit growth.
• Risks associated with significant investments in the Permian Basin, including potential for excess capacity and reduced rates for transportation services.
• Risks associated with investments in joint ventures, including limited control, financial obligations, and potential disagreements with partners.
• General economic and political conditions may adversely affect business, operating results, and financial condition, especially regional economic conditions in the Gulf Coast.
• Adverse effects of inflation, including higher interest rates, capital costs, supply shortages, and increased labor costs.
• Disruption of the supply chain could adversely impact the ability to refine, manufacture, transport, and sell products.
• Failure to retain or attract key talent could adversely impact business execution and competitiveness.
• Capital needs to finance crude oil and refined products inventory may exceed internally generated cash flows or other liquidity sources.
• Insurance policies may not cover all losses, costs, or liabilities, and insurance availability/cost may worsen.
• Ongoing study of strategic options to unlock and enhance stockholder value poses risks, including stock price fluctuations, difficulties in retaining personnel, increased expenses, and management distraction.
• Inability to successfully execute growth strategy through acquisitions, including identifying candidates, competition, financing, and integration risks.
• Potential failure in cost-sharing agreement with DOE's Office of Clean Energy Demonstrations for carbon capture projects.
• Future results may suffer if expanded operations are not effectively managed.
• Significant costs and liabilities for investigation and remediation of environmental conditions at facilities.
• Inability to obtain or maintain necessary permits and authorizations or comply with health, safety, environmental, and other laws and regulations.
• Tyler refinery's limited ability to distribute refined products outside its local market via pipeline.
• An increase in competition, and/or reduction in demand in the markets in which feedstocks are purchased and refined products are sold, could increase costs and/or lower prices and adversely affect sales and profitability.
• Compliance with and changes in tax laws could adversely affect performance, including potential reclassification of the logistics segment as a corporation for tax purposes.
• Adverse weather conditions or other unforeseen developments could damage facilities, reduce demand for products and services, and impair the ability to produce and deliver refined petroleum products.
• Operating results are seasonal, generally lower in the first and fourth quarters of the year for refining and logistics segments.
• A substantial portion of the workforce at refineries is unionized, and the company may face labor disruptions that would interfere with operations.
• Reliance on information technology in operations, and any material failure, inadequacy, interruption, cyber-attack, or security failure of that technology could harm the business.
• Loss of any key personnel could negatively impact the ability to manage business and continue growth.
• If the company is, or becomes, a U.S. real property holding corporation, special tax rules may apply to a sale, exchange, or other disposition of common stock, and non-U.S. holders may be less inclined to invest in stock.
• The business requires significant capital expenditures to maintain and improve refineries and logistics assets, which may not be adequately funded.
• The business is subject to complex and evolving laws, regulations, and security standards regarding privacy, cybersecurity, and data protection, which could result in claims, changes to business practices, monetary penalties, increased cost of operations, or other harm.
• If cost efficiency measures are not successful, the company may become less competitive.
• The price of common stock may fluctuate significantly, and investors could lose all or part of their investment.
• Stockholder activism may negatively impact the price of common stock.
• Future sales of shares of common stock could depress the price of common stock and could result in substantial dilution to stockholders.
• Dependence upon subsidiaries for cash to meet obligations and pay any dividends.
• The company may be unable to pay future regular dividends in the anticipated amounts and frequency.
• Provisions of Delaware law and organizational documents may discourage takeovers and business combinations that stockholders may consider in their best interests, which could negatively affect the stock price.
• Changes in the credit profile could affect relationships with suppliers, which could have a material adverse effect on liquidity and the ability to operate refineries at full capacity.
• Commodity and interest rate derivative activity may limit potential gains, increase potential losses, result in earnings volatility, and involve other risks.
• Exposure to certain counterparty risks which may adversely impact results of operations.
• From time to time, cash and credit needs may exceed internally generated cash flow and available credit, and the business could be materially and adversely affected if the necessary cash or credit is not obtained from financing sources.
• Debt levels may limit flexibility in obtaining additional financing and in pursuing other business opportunities.
• Debt agreements contain operating and financial restrictions that might constrain business and financing activities.
• Fluctuations in interest rates could materially affect financial results.
• The company may refinance a significant amount of indebtedness and otherwise require additional financing; there is no guarantee that the necessary funds will be obtained on favorable terms or at all.
• Goodwill and other intangible assets could become impaired and result in material non-cash charges to results of operations in the future.
• An impairment of long-lived assets or goodwill could negatively impact results of operations and financial condition.

Future Outlook

The company expects refining capacity rationalization to lower refined products inventory and crude oil demand to continue to rise, balancing the market over the next 6 to 12 months. Despite ongoing geopolitical instability and commodity market volatility, the company will continue to execute its business transformation focused on enterprise-wide opportunities to improve cost structure and enhance margin. Strategic initiatives include unlocking the 'sum of the parts' value of the existing business, identifying growth opportunities to enhance scale and diversify revenue streams, and maintaining a disciplined and balanced capital allocation framework. The company is also evaluating lower-carbon technologies and aims to conclude restructuring activities by the end of fiscal year 2026.

Management Comments

• "Our focus on safe and reliable operations is a pillar which underlines all of our business activities."
• "We continue to identify opportunities to mitigate market risk and focus on efforts that improve our overall cost structure while not compromising operational excellence."
• "We are operating in a mature industry (the production, logistics and marketing of hydrocarbons and hydrocarbon-based refined products), with increasingly difficult operational and regulatory challenges and, likewise, pressure on operating costs/gross margins as well as the availability and cost of capital."
• "More consolidation in our industry is expected from increased cost pressures due in part to the regulatory environment continuing to move towards reducing carbon emissions and transitioning to renewable energy in the long term; however, we believe we are uniquely positioned as a leader of operating and excelling in niche markets and could continue capitalizing on and growing our integrated business model."
• "The increased refining margins compared to the 2024 continues to demonstrate that demand for refined products continues to be stable."
• "We will continue to execute on our priorities of running safe and reliable operations, making further progress on our 'sum of the parts' and EOP efforts, and delivering shareholder value while maintaining our financial strength and flexibility."
• "We want to reward our shareholders with a disciplined and balanced capital allocation framework."
• "As we strengthen our relative financial position, we believe a balanced approach between shareholder returns and balance sheet improvement is appropriate."
• "Delek is dedicated to fostering a culture comprised of different and diverse backgrounds united in purpose, as outlined in our Opportunity and Inclusion Policy, Code of Business Conduct and Ethics, Employee Handbook, and Human Rights Policy."
• "Delek understands the importance of attracting and retaining top talent."
• "Delek is committed to its core value of safety and discipline, and strives to create a safe work environment through programs in personal safety, process safety, health and wellness, and facility and employee security."
• "Delek continuously assesses and enhances the confidentiality, integrity, and availability of its IT and OT assets."
• "The Board of Directors and executive leadership team at Delek are committed to investing the attention and resources necessary to maintain the privacy, security and integrity of our information, systems and networks and enhance the companys resiliency against cyber threats."
• "We have embedded responsible AI principles into our corporate framework. This ensures that any AI adoption supports long-term security, resilience, transparency, and trust."

Industry Context

StockSavvy.ai notes that Delek's performance in 2025 reflects a broader recovery in refining margins, as evidenced by the significant increase in Gulf Coast crack spreads, which aligns with industry trends of stable demand for refined products. The strategic acquisitions in the logistics segment, particularly in water disposal and recycling in the Permian and Bakken Basins, position Delek to capitalize on the growing midstream services demand in key shale plays, diversifying revenue away from pure refining volatility. The company's emphasis on cost optimization and 'sum of the parts' strategy is a common theme among energy companies navigating the transition to lower-carbon emissions and increasing regulatory pressures, aiming to enhance long-term sustainability and shareholder value in a mature, consolidating industry.

Comparison to Industry Standards

• Delek's refining margins, as measured by Gulf Coast crack spreads (5-3-2, 3-2-1, 2-1-1), showed significant improvement in 2025 compared to 2024, indicating a stronger performance relative to the previous year's depressed market conditions.
• The company's ability to leverage WTI Midland crude discounts through its Permian Basin positioning provides a competitive advantage compared to refiners more reliant on higher-priced Brent-linked crudes.
• The expansion of Delek Logistics' natural gas processing capacity by 110 MMcf/d and water disposal capacity in the Permian and Bakken Basins positions it competitively against other midstream players like Plains All American Pipeline, L.P. (involved in Red River Pipeline JV) and MPLX (involved in Wink to Webster JV), by offering integrated crude, gas, and water services.
• The idling of biodiesel facilities in 2024 and the planned sale of one facility reflect challenges in the renewable fuels market, a common issue for traditional refiners attempting to diversify into biofuels without sufficient market support or favorable regulatory frameworks.
• The company's Complexity Index for its refineries (Tyler 9.4, El Dorado 10.1, Big Spring 11.6, Krotz Springs 8.5) indicates a moderate to high complexity, allowing for flexibility in processing various crude types and producing higher-value products, which is generally competitive within the PADD III region.

Management Changes

Corporate Governance

Legal Proceedings

• Delek is pursuing litigation against the EPA based on its August 2025 small refinery exemption decisions.
• In September 2025, Alon Refining Krotz Springs, Inc. filed suit against the EPA (case no. 25-1180) seeking review of the EPA's decision that the Krotz Springs Refinery was ineligible for an exemption for the 2024 compliance year.
• In October 2025, Alon Refining Krotz Springs, Inc., Delek Refining, Ltd., Lion Oil Company, LLC, and Alon USA, LP filed suit against the EPA (case numbers 25-1229, 1230, 1231, 1245) seeking review of the EPA's decision to refund expired RINs for the 2019-2023 compliance years.
• Separately, in October 2025, Alon USA, LP filed suit in the 5th Circuit Court of Appeals (No. 25-60584) with a protective petition in the D.C. Court of Appeals (case no. 25-1246) seeking review of the EPA's decision denying an exemption on the 2020 exemption petition of the Big Spring Refinery.
• The El Dorado refinery experienced a fire in its Penex unit on February 27, 2021, resulting in operational disruptions and additional costs. A settlement agreement with six injured employees was reached in October 2023.
• The Big Spring refinery experienced a fire in its diesel hydrotreater unit on November 29, 2022, causing operational disruptions and repair costs.
• The company has recorded an environmental liability of approximately $36.0 million as of December 31, 2025, primarily for remediation costs at refineries and terminals.
• The El Dorado refinery has been named as a de minimis potentially responsible party at one Superfund site.
• A consent decree was entered in June 2019 resolving alleged historical violations of the CAA at the Big Spring refinery, requiring capital expenditures for pollution control equipment until 2028.
• The EPA designated a portion of Howard County, Texas (surrounding the Big Spring refinery) as non-attainment for SO2 NAAQS in December 2020, leading to reduced SO2 emission limitations for the refinery by January 1, 2025.

Related Party Transactions

• Revenues from equity method investees were $109.7 million in 2025, compared to $121.7 million in 2024, primarily from asphalt sales.
• Cost of materials and other from related parties was $172.1 million in 2025, compared to $200.9 million in 2024, primarily from pipeline throughput fees and asphalt purchases.
• Intercompany transactions with Delek Logistics and its subsidiaries are eliminated in consolidated financial statements.
• Agreements with Delek Logistics include service agreements, crude oil purchases, and asset transfers, such as the DPG Dropdown and the planned acquisition of Tyler refinery tank and El Dorado tank and terminal assets.
• Delek Logistics repurchased 243,075 common units from Delek for $10.0 million in 2025 under a Common Unit Purchase Agreement, with $140.0 million of authorization remaining.

Stakeholder Impact

• Shareholders: Positive impact from capital returns ($141.4 million in 2025), improved net income, and increased refining EBITDA. Potential for further value unlocking through 'sum of the parts' strategy. Risks from stock price volatility, dilution from future sales, and potential negative impacts from stockholder activism.
• Employees: Commitment to a safe and healthy working environment, diversity, inclusion, talent management, leadership development, and wellness programs. Unionized workforce at refineries could face labor disruptions.
• Customers: Stable demand for refined products, diversified logistics services. Potential impact from supply chain disruptions or changes in fuel specifications.
• Suppliers: Changes in credit profile could affect relationships and payment terms.
• Creditors: Increased debt levels ($3,283.3 million total debt), but compliance with covenants and sufficient liquidity. Potential for increased interest costs due to variable rates.
• Communities: Environmental initiatives, waste minimization, water stewardship, and community relations through the Delek Fund for Hope. Risks from environmental hazards and regulatory non-compliance.

Next Steps

• Continue execution of Enterprise Optimization Plan (EOP) efforts to enhance margin and cash flow.
• Further 'sum of the parts' efforts, including potential monetization of investment in Delek Logistics to unlock value and reduce Delek's ownership.
• Identify and evaluate investment opportunities that fit the sustainability view and integrate into the current asset footprint, including strategic investments or joint ventures in renewables or carbon capture and incubator investments in new technologies.
• Seek relief from the EPA for the hardship imposed by the RFS for the 2025 compliance year.
• Monitor lawsuits against the EPA regarding SRE decisions and expired RINs.
• The El Dorado Purchase (rail facility assets) is expected to close on January 1, 2026.
• The Tyler Tank Purchase is expected to close on April 1, 2026.
• The El Dorado Terminal Purchase is expected to close on October 1, 2027.
• Reuven Spiegel's Executive Employment Agreement extended to June 30, 2026.
• Board of Directors to consider quarterly dividends.
• Continue share repurchase program with $464.2 million remaining authorization.
• Continue to evaluate the potential future impacts of the OBBBA legislative changes as additional guidance becomes available.
• Continue to assess and enhance the confidentiality, integrity, and availability of IT and OT assets.
• Continue to monitor the use of AI throughout the business and embed responsible AI principles.
• Conclude restructuring activities by the end of fiscal year 2026.

Key Dates

Recommendation

Delek US Holdings demonstrated a strong operational turnaround in 2025, driven by improved refining margins and strategic expansion in its logistics segment through key acquisitions. The company's commitment to shareholder returns via dividends and buybacks, coupled with a robust liquidity position, provides a solid foundation. However, persistent geopolitical instability, commodity market volatility, and ongoing regulatory challenges related to RINs and environmental compliance introduce notable uncertainties. While the company is actively mitigating these risks and pursuing long-term value creation, the inherent volatility of the refining industry and the pending legal challenges warrant a cautious 'hold' stance for seasoned investors, allowing for further observation of sustained performance and resolution of regulatory issues.

Keywords

Petroleum Refining, Logistics, Midstream, Crude Oil, Refined Products, Renewable Fuels Standard, RINs, Permian Basin, Bakken Basin, Water Disposal, Water Recycling, Energy Industry, EBITDA, Crack Spreads, Capital Allocation, Shareholder Returns, ESG, Cybersecurity, Environmental Regulations, Debt Management, Acquisitions, 10-K