Delek US Books $1.13 Billion Net Income, Lifts Dividend 18%

Delek US (NYSE:DK) reported third-quarter net income of approximately $1.13 billion, or $18.22 per share, and raised its quarterly dividend by roughly 18% to $0.30 per share. The headline number deserves scrutiny: much of it rests on accounting gains tied to small refinery exemptions rather than cash from operations.

CFO Robert Wright said EBITDA was approximately $1.64 billion for the quarter. Adjusted net income came in at approximately $843 million, or $13.55 per share, with adjusted EBITDA of approximately $1.28 billion. Strip out a 50% renewable volume obligation adjustment and the impact of the small refinery exemptions granted during the quarter, and adjusted EBITDA falls to approximately $1.04 billion, with adjusted earnings of approximately $10.53 per share. Wright credited stronger refining margins and higher capture rates for the improvement on that basis from the second quarter.

What drove the refining performance?

President and CEO Avigal Soreq said all four refineries operated reliably during the quarter. Big Spring exceeded targets for reliability, crude slate flexibility, product yield and blending capabilities following its turnaround. The company has no planned turnarounds for the rest of 2026.

Delek raised its Enterprise Optimization Plan target to at least $250 million in annual run-rate improvement, up from an initial $100 million free cash flow goal. Soreq estimated the program contributed approximately $60 million to profit and loss in the third quarter. When analysts asked how much of the capture-rate improvement was structural rather than market-driven, Soreq pointed to more than 90 projects under the program. Mohit Bhardwaj, EVP of strategy and investor relations, said those structural changes underpin management's expectation of $700 million to $800 million in mid-cycle free cash flow. That figure remains a projection, not a result.

Supply and marketing margin was approximately $37 million, including $36.7 million from wholesale marketing, which Wright attributed to optimization and a strong market environment. The logistics segment generated approximately $143 million in adjusted EBITDA.

How much is exemption accounting?

Soreq said Delek received all four small refinery exemptions for the 2025 period and expects approximately $425 million in proceeds in the fourth quarter. He also said the company expects the EPA to continue providing relief to qualifying small refineries for 2026 and beyond — an assumption outside Delek's control.

At current RIN prices, Wright said the exemptions would produce a total accounting benefit of approximately $750 million to $800 million, comprising a $335 million realized gain and an approximately $274 million unrealized mark-to-market gain. Delek expects another $150 million to $200 million to be recognized over the next several quarters as it applies excess RINs against future compliance obligations.

Pressed on how many RINs Delek holds and whether it is current on obligations, Soreq said the company had remained in compliance and intended to continue doing so. Bhardwaj said Delek does not disclose its RIN buying strategy and manages the position around cash needs, compliance, price risk and taxes. The holders of the inventory, in short, remain undisclosed.

What about cash and capital returns?

Operating cash flow was $567 million, reflecting a net working capital outflow of approximately $809 million — most of it tied to the $425 million in exemption receivables. Excluding working capital, operating cash flow was approximately $1.38 billion.

Delek repurchased $50 million of shares in the quarter and expects to repurchase approximately $100 million more by year-end. On a standalone basis, excluding Delek Logistics, the company ended the quarter with approximately $22 million in net cash, a $224 million improvement from the second quarter. Wright guided to standalone interest expense of around $10 million per quarter after paying off the term loan.

Soreq declined to provide a 2027 buyback target or a specific cash balance goal, saying the company wants a strong balance sheet and shareholder returns without excess cash.

What comes next?

Delek Logistics raised its 2026 EBITDA guidance to $530 million to $560 million. Organic growth projects should add $60 million in annual run-rate EBITDA in 2027, on top of $15 million realized in 2026; the first sour compressor station and acid gas injection well are built and in commissioning. On deconsolidation, Soreq cited reducing ownership from 79% to 58% but gave no timetable for dropping below 50%.

Fourth-quarter guidance: total refinery throughput of 288,000 to 308,000 barrels per day, operating expenses of $225 million to $235 million, and G&A of $50 million to $55 million. Soreq cited elevated freight costs and low diesel inventories as market supports while flagging uncertainty around global events; Bhardwaj said management remained positive on distillate and jet fuel crack spreads.

One-line takeaway: the quarter is strong, but roughly a third of the headline rests on exemption accounting and regulatory relief continuing.