Delek US Holdings, Inc. (DK) Q4 2022 Earnings Call Transcript

Delek US Holdings, Inc. (NYSE:DK) Q4 2022 Earnings Conference Call February 28, 2023 3:00 PM ET

Company Participants

Rosy Zuklic - VP, IR

Avigal Soreq - President and CEO

Todd O'Malley - EVP and COO

Reuven Spiegel - EVP and CFO

Mark Hobbs - EVP Corporate Development

Robert Wright - Chief Accounting Officer

Conference Call Participants

John Royall - JPMorgan

Neil Mehta - Goldman Sachs

Kalei Akamine - Bank of America Merrill Lynch

Paul Cheng - Scotiabank

Jason Gabelman - Cowen

Roger Read - Wells Fargo

Matthew Blair - Tudor, Pickering, Holt

Operator

Good time everyone. Welcome to nan Fourth Quarter 2022 Delek US Earnings Conference Call. My sanction is Jamie and I will beryllium your usability for today's call. Please besides statement today's convention is being recorded.

At this clip I'd for illustration to move nan convention telephone complete to Rosy Zuklic, Vice President, Investor Relations. Rosy, you whitethorn begin.

Rosy Zuklic

Good afternoon. And invited to nan Delek US 4th fourth net convention call. Participants connected today's telephone will see Avigal Soreq, President and CEO; Todd O'Malley, EVP and Chief Operating Officer; Reuven Spiegel, EVP and Chief Financial Officer; Mark Hobbs, EVP Corporate Development, arsenic good arsenic different guidance members. Today's position worldly tin beryllium recovered connected nan investor relations conception of nan Delek US website.

Slide 2 contains our Safe Harbor statement. We'll beryllium making forward-looking statements during today's telephone an existent results whitethorn disagree materially from today's common. Factors that could origin existent results to disagree are included here, arsenic good arsenic successful our SEC filings.

With that, I'll move nan telephone complete to Avigal.

Avigal Soreq

Thank you, Rosy. Good afternoon, everyone. And convey you for joining america today. 2022 was nan champion woody ever for Delek US. Market information was beardown for refining and midstream, and we were capable to seizure opportunities on this. Full twelvemonth adjusted EBITDA was $1.2 billion. During nan 4th quarter, full results were strong. Adjusted EBITDA was $221 million, contempt unplanned downtime, chiefly astatine nan large outpouring refineries. Third we do much colour and cognition and nan action we are taking to guarantee safe and reliable operation.

As I said successful nan past shareholder returns is simply a cardinal privilege for us. During we returned $236 cardinal to shareholders pinch $172 cardinal successful nan 2nd half of 2022, adjacent to 10% of DK marketplace capital. Within authorities nan regular dividend this year, and we are pleased to denote an further 5% summation successful nan quarterly dividend to $0.22 per share. Looking forward, we are very excited astir our future.

On nan firm structure, we are actively evaluating strategical alternatives for logistics and unit to execute nan sum of nan parts objectives. On nan cognition side, we launched nan zero-based fund to amended our competitory position connected costs structure. We are proud of nan Delek refinery team. The squad vanished nan turnaround connected clip connected budget, and we are connected nan process of starting nan plant. This people an important milestone for Delek's turnaround story. We said, we do not person immoderate important planned downtime scheduled until precocious 2024. So we are good positioned to seizure marketplace opportunities during that time.

And now, I will manus it complete to Todd to speak astir operation.

Todd O'Malley

Thanks, Avigal. Fourth 4th crude throughput crossed nan strategy was astir 258,000 barrels per day. The reduced complaint was chiefly driven by unplanned downtime astatine nan Big Spring refinery during nan 4th quarter. Unplanned incidents make america regroup and reassess. We return steps to amended erstwhile and wherever we spot opportunities and attraction connected nan areas of nan business that we tin control. This is simply a privilege for us, not only for nan wellbeing of our employees, contractors and communities successful which we operate, but because we cognize that a safe and reliable cognition leads to financial stableness and protects nan environment.

A bully illustration is our Krotz Springs refinery, wherever our labor and contractors precocious achieved a information milestone of complete 5 cardinal man hours worked without a mislaid clip injury. As Avigal mentioned, we person conscionable vanished a important turnaround astatine our Tyler refinery. Refinery successfully completed nan turnaround pinch zero process and information incidents connected clip and connected fund successful difficult weather. This is simply a awesome accomplishment for Delek and I would for illustration to convey our labor for their difficult activity and our contractors for their partnership.

Our logistics conception ran highly good this quarter. Our grounds net bespeak this, and nan large driver was nan successful integration of nan 3 carnivore Delaware assets. While DKL sees benefits from its guidelines business, we spot continued maturation opportunities successful nan Permian and Delaware footprints. Delek Logistics is good positioned to proceed its beardown way grounds of maturation and to beryllium a long-term, sustainable midstream player.

With that, I will move nan telephone complete to Reuven to spell done nan quarterly results.

Reuven Spiegel

Thank you, Todd. So pinch nan 4th fourth of 2022, Delek US admit they adjusted nett income of $61 cardinal aliases $0.88 per share. Net nonaccomplishment for nan play was $119 million, aliases $1.73 nonaccomplishment per share. During nan 4th we only reached besides returned $104 cardinal to shareholders successful nan shape of stock purchases pending.

And connected Slide 4, we item that we person adjustments this 4th of $243 million. The largest effect was relating to FIFO inventory impacts, which is again adjusting for this quarter. We judge presenting this accommodation amended align our EBITDA results pinch our peers. Adjusted EBITDA was $221 cardinal aft factoring successful these adjustments.

On Slide 5, we supply a waterfall of our adjusted EBITDA by segments from nan 4th fourth 2021 to nan 4th fourth of 2022. This is nan important betterment play complete play was chiefly by higher results successful refining. Compared to nan 4th fourth of 2021, nan Gold Coast marketplace cracks were 76% higher successful 2014, pinch chiefly drove nan lodgings.

On Slide 6 we coming nan rate travel waterfall. We withdrew $313 cardinal successful rate during nan quarter, mostly driven by 2 events that occurred precocious successful nan quarter. First we had $180 cardinal unfavorable timing effects associated pinch nan closing of nan modulation of an inventory intermediation statement Citi. This afloat magnitude was resulted successful a favorable rate travel successful nan first quarter. The 2nd point was an unfavorable moving superior rate flows effect associated pinch unplanned downtime astatine nan Big Spring refinery. $60 cardinal of this magnitude was a rate timing arena and resulted successful a favorable rate travel successful nan first 4th of 2022.

On Slide 7, superior expenditure for 2022 were $343 cardinal connected a consolidated basis. But during 2023 we person superior programme of $350 million. The clip of refinery turnaround is nan azygous largest superior disbursal and makes up a ample information of nan 80% of CapEx dedicated towards maintaining and sustaining nan integrity of our assets. The remaining 20% is dedicated for some projects chiefly successful nan logistics.

The past descent covers outlook items for nan first 4th of 2023. Before we move to Q&A, I wanted to springiness an update connected our costs simplification and process betterment efforts. We're executing changes successful nan statement and expect astir $30 cardinal to $40 cardinal of P&L improvements successful 2023 and an further $50 cardinal to $60 cardinal successful 2023. Annually, we expect nan tally complaint to beryllium astir $90 cardinal to $100 million. These improvements whitethorn beryllium little costs aliases improved markets.

I will now unfastened nan lines of questions.

Question-and-Answer Session

Operator

Ladies and gentlemen, astatine this clip we'll statesman nan question-and-answer session. [Operator Instructions] And our first mobility coming comes from John Royall from JPMorgan. Please spell up pinch your question.

John Royall

Hi, guys, bully afternoon. Thanks for taking my question. So possibly we tin conscionable commencement pinch an update connected conscionable a small much item connected really you're reasoning astir nan immoderate of nan parts connected lock. How do you benignant of thread nan needle betwixt gathering dependable streams of rate flows to brace pinch nan refining business but perchance needing to abstracted retired immoderate information of logistics and/or unit successful bid to recognize that valuation output?

Avigal Soreq

John, Avigal. Good day and convey you for joining our call. Our number 1 information obviously, is simply a to beryllium a friends investable institution successful shale. We demonstrated during nan 2nd half of nan twelvemonth pinch returning conscionable complete $170 cardinal of rate to invest, of which is 10% of nan marketplace cap. And that's sum [ph] of nan policies a subset of debt. So arsenic we said, connected nan property release, we're evaluating some opportunities successful retail. And successful nan logistics side, each 1 of those opportunity look a spot different, aliases should they opportunity wholly different.

So we cannot spell excessively overmuch into details, but we evidently looking really to beryllium capable to negociate nan assets we request and to support nan EBITDA we request and to support nan rate travel we need. We said that it is simply a bully opportunity for maine to present nan caller colleague, important workfellow present connected nan table, EVP of Corporate Development, Mr. Mark Hobbs, possibly you tin opportunity a fewer words?

Mark Hobbs

Sure Avigal. Thanks. And John that's a bully question. We've evidently been very vocal astir focusing connected immoderate of nan parts. And since I joined successful October nan company, my attraction has been solely connected evaluating and looking astatine options and opportunities crossed each of our business segments to unlock nan worth benignant of inherent successful our businesses.

I cognize you person Avigal mentioned midstream and unit but look what I would opportunity is we're reasoning astir this, 1 of nan things that we want to make judge that we that we lick for arsenic doing thing that's goes without mobility that's additive crossed our businesses and positions our businesses crossed each nan segments for early growth, to thrust further worth for our shareholders. That's really nan sole attraction here.

So you make a bully constituent astir cashflow and those types of things. But we really want to position each of our segments for further growth. And thing that we do will beryllium focused connected accretive maturation for business. I'll time off it there.

Reuven Spiegel

At this point, we don't person thing to announce. But obviously, erstwhile we do, we'll beryllium very transparent pinch everybody.

John Royall

Then understood, convey you. And past possibly willing -- switching to superior allocation. Good to spot there's a bump to nan dividend. But I don't deliberation we saw a 4th up guideline connected nan buyback. Should we publication into that that you won't beryllium guiding going forward? Or should we deliberation that possibly location whitethorn not beryllium 1 successful 1Q? How should we publication into that?

Avigal Soreq

So we will elaborate connected that conscionable a small bit. So our intent is portion information enactment wherever it is, is to beryllium balanced betwixt indebtedness simplification and buyback. Our extremity for nan remainder of 2023 is to beryllium connected nan buyback betwixt $75 cardinal to $100 billion. We demonstrated successful nan 2nd half of nan twelvemonth that we could beryllium prudent astir that. And we did nan do a buyback that we guideline for pinch a full return of again, complete $170 million. Our intent is to support doing to beryllium friends put to stock and that's nan benchmark that we put successful beforehand of ourselves.

John Royall

Thank you.

Operator

Our adjacent mobility comes from Neil Mehta from Goldman Sachs. Please spell up pinch your question.

Neil Mehta

Yes, thanks, guys. Appreciate nan time. Well, I conscionable emotion immoderate position connected wherever you consciousness you are from a refining operational perspective? And possibly you tin spell done each of nan assets, Tyler, El Dorado, Krotz and Big Spring. And wherever do you deliberation location are opportunities to proceed to amended seizure and thrust profitability higher arsenic nan past 4th was a tougher 1 than I deliberation group would person expected a mates months ago.

Todd O'Malley

Yeah. Hey, Neil, it's Todd. Thanks for nan question. Look, we're connected a travel here, successful position of getting to nan spot that we yet want to be. We cognize arsenic I said successful my prepared remarks that nan cardinal to occurrence is being safe, reliable, and environmentally responsible and operating our assets. I deliberation we've done immoderate bully things during '22 and I deliberation you and nan remainder of nan folks connected nan call, were capable to spot that reflected successful nan seizure complaint betterment passim nan year. As we've talked about, we've had a number of different initiatives crossed nan fleet to make improvements.

We've seen creep astatine a number of nan facilities. We've done immoderate catalyst reformulation and immoderate of nan others. That's decidedly bumped up yields, moreover successful Q4, and Krotz successful particular. So making that continuing to make that plus a sustainable and semipermanent viable plus successful our mix. Unfortunately, successful BSR we had a planned -- semi-planned outage. And honestly, we didn't do a awesome occupation coming retired of that. We've taken nan lessons learned, we've incorporated that into our operating structure. And we won't make that correction again.

So, I'm not going to spell into specifically astir each asset, because a batch of that worldly evidently is proprietary. But it's thing we're very, very highly focused on. We're looking astatine merchandise operation each day. We're looking astatine consequence slate each day. And we're looking at, nan Tyler facility, mounting nan modular for turnarounds. Again, we're conscionable coming retired of a awesome turnaround there. And nan first turnaround astatine that installation successful complete 8 years.

We've done it safely, nary information events, nary process information events. Challenging upwind conditions. And nan squad has done a phenomenal job. And I deliberation that that lays a very coagulated blueprint for what we're going to do connected a spell guardant basis. And I deliberation nan different point I'd mentioned is, we don't person immoderate existent awesome scheme activity now until Q4 of '24. So that gives america a really long, bully runway to beryllium capable to seizure nan beardown macro situation that we spot retired there.

Neil Mehta

And convey you, that's awesome perspective. And really overmuch of nan situation astir captures has been much operations-driven, arsenic you talked astir versus marketplace conditions. Because, arsenic we deliberation astir nan play wherever Delek's refining profitability was outsized from 2011 to 2018. A batch of it was astir nan mediate and differential, which is now inverted. And truthful I deliberation nan finance organization is trying to fig retired what nan midcycle aliases uncovering situation looks for illustration successful an situation wherever nan crude markets are little favorable. So we'd emotion your position connected nan spell guardant crude markets and really that situation sets up for your kit. Thank you.

Todd O'Malley

Yeah, no, acknowledgment again, Neil. I'll return benignant of nan first half of nan question, past I'll fto Avigal measurement successful connected marketplace views. Look, I deliberation we've demonstrated complete nan past twelvemonth wherever Midland traded astatine a premium comparative to TI, nan net powerfulness of nan company. So I deliberation that's beautiful good established astatine this point. Again, we've evidently done things passim nan strategy to amended yields, by a catalyst reformulation.

We've done immoderate things passim nan system, looking astatine merchandise operation changes that springiness america amended netbacks. And will evidently proceed to do that. But again, I think, fixed nan synergies betwixt our logistics system, nan spot successful nan Permian Basin, conscionable from a request perspective, and really good albeit beryllium extracurricular of Q4 we ran during nan year, we're successful a bully spot arsenic we travel retired of nan Tyler turned around.

I'll fto Avial remark connected what our views are connected nan Midland differential connected a spell guardant basis.

Avigal Soreq

So, Hey, Neil, really are you?

Neil Mehta

Good, Avigal. Thank you.

Avigal Soreq

So nan Midland basin is evidently nan 1 nan prolific basin successful nan world, not conscionable successful nan U.S. And we person invested and demonstrated a batch of committedness to that. And I deliberation for nan semipermanent that nan finance was capable to beryllium itself and will beryllium be itself successful nan future.

Today, mainland is astir astatine nan commencement of nan twelvemonth was astir 5.7 cardinal barrels a time of accumulation rise, and we spot a bully summation successful our footprint of production. And we forecast that that's going to spell each nan measurement to 400 to 600 this year. So it's going to put america astatine nan adjacent to 90% capacity of nan tube that measurement astir nan permit.

Over time, successful nan Permian Basin a going to respond and going to show nan barren differential and going to fresh to our configuration. We evidently successful to person really betwixt 2 to 2.5 of our refinery we person much optionality. So this is thing we're ever looking connected that really we tin amended successful nan flex of equipment slide. But each nan time, I deliberation that nan -- already nan 2nd half of 2023 and nan opening of 2024 will it beryllium pivotal twelvemonth for Permian basin?

Neil Mehta

Okay, convey you, Avigal.

Operator

Our adjacent mobility comes from Doug Leggate from Bank of America. Please spell up pinch your question.

Kalei Akamine

Hey, bully morning, guys. This is Kalei connected for Doug. So acknowledgment for taking nan question. My first mobility is simply a travel up to John's question. And I want to understand really you guys position nan rate travel and nan free rate capacity for DK Refining erstwhile it's afloat burdened for each nan firm costs. If you're capable to locomotion america done those assumptions, I deliberation it would thief nan thoroughfare to understand whether nan halfway business tin guidelines by itself aliases not. And whether a separation of unit and/or logistics makes sense?

Avigal Soreq

Thanks for nan question. So it really depends what's nan result going to be, but we are not going to do immoderate transaction, that will put america successful a consequence for nan full rate travel of nan company. So let's make it clear. We are not going to make immoderate transaction that will jeopardize nan mothership, we're going to do immoderate any transaction that we're going to execute going to beryllium a transaction is good thought out. And we'll deliberation astir a different scenario. And we'll return into information downtown to nan refinery business, which we cognize it's a volatile business.

So we're not going to make conscionable transaction to cheque nan box. I've said that successful nan past, we're going to nan correct one. Luckily enough, we're grateful to person nan astir apt nan 1 if not nan champion successful nan manufacture to execute those deals, and we are assured we tin get 1 that you could each beryllium proud.

Kalei Akamine

Would you guys perchance look astatine this arsenic a multistep process? So successful nan lawsuit for DK, they get thing to get bigger done M&A. Would you see trading immoderate of nan refining retired that backmost to DK Corporate?

Mark Hobbs

Yeah, this is Mark Hobbs. Thanks for nan question. We would look astatine things arsenic a multistep process. But thing we do is Avigal said, there's a batch of different options connected nan array for america correct now. But thing we do, arsenic I mentioned successful my earlier remarks, will beryllium done successful specified a measurement that it sets up each nan different businesses to proceed to succeed, proceed to person nan expertise to run efficaciously done nan cycles. And truthful that involves moving assets and strategical assets between, our midstream institution backmost to nan refining company. And we're going to measure each nan different options.

Kalei Akamine

Got it. I admit it. We'll support our eyes unfastened for that for my 2nd question. I deliberation we'd admit immoderate specifications successful your costs cutting plans, for example, really overmuch from each bucket, nan buckets being gross margin, optics and corporate? And should we understand nan costs cuts arsenic being an EBITDA description aliases are location immoderate offsets to revenues?

Avigal Soreq

So I think, let's talk astir nan OpEx budget, do you want to return it?

Todd O'Malley

No, absolutely. I conscionable missed nan past portion of nan question. The zero-based fund --sorry.

Kalei Akamine

The 2nd portion of nan mobility was, should we understand nan costs cuts to beryllium an EBITDA description ? So for example, if you're talking astir $100 cardinal of costs cuts, does that construe into $100 cardinal of higher EBITDA? Or are location immoderate offsets from little revenues because you're getting free of definite costs centers that mightiness beryllium gross generating?

Todd O'Malley

No, actually, arsenic we spot nan scheme correct now, moreover though location could beryllium a onetime restructuring cost, we're going to spot nan $100 cardinal are expected to beryllium sustainable, conscionable want to make it clear that it's connected a run-rate basis. So we're going to admit $30 cardinal to $40 cardinal this year, astir apt 50 to 60, adjacent year. And connected nan run-rate bases astir $100 million, which will beryllium a nonstop publication to EBITDA.

Kalei Akamine

Perfect, and if I tin conscionable sneak.

Rosy Zuklic

Sorry, Kalei, conscionable to make sure, it's not conscionable purely costs successful nan consciousness that it's going to travel retired of nan G&A line, it could beryllium successful nan shape of --

Todd O'Malley

I mentioned connected nan referred remarks that is some separator betterment and costs reduction.

Rosy Zuklic

Yeah, that's right. I conscionable don't cognize that that. Kalei I conscionable want to make judge they picked up connected it, because you specifically asked costs. And truthful conscionable to beryllium clear, it is not going to conscionable beryllium purely coming retired of nan G&A line, it could beryllium coming retired of nan shape of accrued separator arsenic well.

Kalei Akamine

Got it. I admit that. If I could sneak 1 very past 1 in. Can you connection immoderate colour connected nan onetime items that deed cashflow this quarter? And which 1 of those items will reverse if they will aliases not?

Todd O'Malley

Well, connected nan G&A, we had $17 cardinal of onetime, of which $13 cardinal are already portion of nan restructuring costs that I've mentioned to your erstwhile question. That will let america to beryllium connected way and our extremity for nan 4th fourth is for nan G&A corporate, I mean, institution G&A to beryllium successful nan mid-70s.

Kalei Akamine

I was reasoning much astir nan items that affected rate travel present successful nan 4th quarter. It seems for illustration location was astir $400 cardinal immoderate overseas what looks for illustration [multiple speakers]?

Todd O'Malley

Well, 240 of them were a timing issue. And we received nan 240 during the, I mean, really successful January. The different $200 cardinal are really nan FIFO effect aliases nan inventory impact. So if you comparison each that together, that would person put america successful a affirmative number.

Kalei Akamine

Got it. I admit it. Thanks, guys.

Avigal Soreq

Thanks, Kalei.

Operator

And our adjacent mobility comes from Paul Cheng from Scotiabank. Please spell up pinch your question.

Paul Cheng

Hey, guys, bully afternoon. Can I conscionable possibly spell backmost into nan earlier question? I think, will it beryllium imaginable that you tin abstracted retired nan $100 cardinal by different awesome bucket. Like really overmuch is connected nan headcount simplification saving? How overmuch is connected nan separator improvement? And wherever nan separator betterment you expect that benignant of separation?

Avigal Soreq

Yeah. Hey, Paul, it's Avigal, really are you? So I would conscionable a ballpark number 30% to 40% of nan G&A and 50% to 60% really 70% successful nan OpEx ballpark?

Paul Cheng

So G&A is astir 30% 40% and 60% 70% is successful nan OpEx aliases separator improvement? And really each these that, really do you reducing your headcount, and if you do by really many?

Avigal Soreq

Well we are not going to get circumstantial astir it. You astir apt understand that if they're delicate discussions, but we want to person nan astir smart, efficient, and evidently a safe and reliable company. So we're not going to jeopardize information connected reliable connected that. We're going to do it nan correct way. And we get proposal from best-in-class erstwhile we person a awesome institution going forward.

Paul Cheng

I person to apologize. This 1 wants to spell backmost into nan refining reliability. And thought if you look astatine wherever you are, do you deliberation nan reliability issues we spot not needfully is not conscionable to Big Spring, but overall. Is it asset-based issue, intends that you request to walk CapEx aliases conscionable nan process rumor aliases taste rumor aliases that you're conscionable not having capable of nan timing aliases nan accomplishment group wherever that you whitethorn request to get immoderate thief from outside.

Todd O'Malley

Yeah, Paul, look, I deliberation if you look astatine everybody successful nan industry, we each struggled during COVID. There evidently costs cuts, rationalization connected staffing crossed nan industry, for illustration we for illustration everybody other are coming retired of nan backmost extremity of that now. I deliberation obviously, we've conscionable conducted a awesome turnaround astatine Tyler. We've done that successfully connected clip connected fund and challenging conditions.

So I deliberation we really person nan group successful place, it's conscionable really benignant of playing drawback up to immoderate of nan -- immoderate of nan issues that were caused by COVID successful position of nan mediocre separator environment. So, you look astatine what we did passim nan mostly of nan year, different than nan Big Spring arena that we had. And we ran nan strategy very, very well, all-time grounds precocious utilization supra nameplate capacity.

So, I deliberation you should dainty this much arsenic a one-off connected a spell guardant ground arsenic opposed to thing that's systemic successful nan company.

Paul Cheng

So fundamentally that you believe, if there's a reliability issue, yes. When it's conscionable because during nan pandemic, you guys whitethorn beryllium postponing and deleting immoderate of nan attraction activity arsenic specified that now conscionable playing drawback up connected that.

Todd O'Malley

I deliberation everybody's done manufacture experience. That's not unsocial to us. And I deliberation I'll time off it astatine that.

Paul Cheng

Okay. And I deliberation last short one, this is astir apt for Reuven . Can you stock that what is nan RVO connected nan equilibrium expanse astatine nan extremity of nan year? And besides if location is immoderate meaningful effect connected nan 4th fourth consequence owed to nan mark-to-market connected indebtedness liability?

Robert Wright

Paul, this is Robert Wright, Chief Accounting Officer. As you know, we don't disclose that level of accusation wrong our financial statements.

Paul Cheng

Can you show america that what does that, immoderate meaningful effect connected nan 4th fourth P&L owed to mark-to-market liability?

Robert Wright

Yeah, location was nary effect beyond marketplace rent value volatility.

Paul Cheng

Okay, we do. Thank you.

Avigal Soreq

Thank you, Paul. You bet.

Operator

[Operator Instructions] Our adjacent mobility comes from Jason Gabelman pinch Cowen. Please spell up pinch your question.

Jason Gabelman

Hey, everyone. Good afternoon. Thanks for taking my questions. I wanted to inquire nan first 1 connected nan immoderate of nan parts unlock that you're going through? And nan main mobility is, I want to understand if nan contours of nan benignant of aliases nan goals I should opportunity are nan same, which is really to deconsolidate DKL from DK. I cognize connected nan past net call, guidance suggested that was a driving unit of why we want to do this immoderate of nan parts valuation unlock. Is that still nan case? And additionally, connected nan anterior call, location wasn't immoderate mention of nan unit footprint being portion of nan imaginable options that you're exploring. So did thing alteration betwixt that clip and now we're now unit is successful is successful play? Thanks.

Avigal Soreq

And convey you, Jason. So our extremity end is to beryllium a bully share, and a bully institution for investor. And arsenic I said successful nan past, location is much than 1 measurement to spell astir it. Obviously, we said successful nan erstwhile telephone that we judge that pinch immoderate actions astir DKL, we tin get there. And we still judge that that's nan case.

We did put successful nan property release, a remark astir retail. And our belief successful unit is either you spell -- either you tin spell large each nan way, each you're almost not relevant. So obviously, we're ever reasoning ourselves, what is nan champion plus guidelines we should hold, and really to bring nan champion return to shareholders. So you request to beryllium very happy that everything is connected nan table. And we each dream and we are definite that you will beryllium very proud and happy pinch nan woody that we are going to extremity up showing you.

Jason Gabelman

Okay. And past my travel up. There's 2 speedy ones, I'll inquire them together. On costs cuts, nan 60% to 70% OpEx reduction. Is immoderate of that related to power costs aliases is that each underlying? And past separately, past quarter, you sewage it to deliberation $100 cardinal to $150 cardinal successful indebtedness reduction. Doesn't look for illustration that materialized this quarter. Can you talk why that was and wherever you spot gross indebtedness levels going complete nan people of nan year? Thanks.

Avigal Soreq

Yeah, so. So regarding nan energy, if it's -- if location is an power constituent to that, truthful it's nan depletion of nan price. So we are not going to show you that we're going to trim nan costs by $1 cardinal and stake connected nan earthy state goes down. So that's not real. So that's not, that's what nan marketplace gave us. And that's what we tin do ourselves. So that's to reply nan first.

So we are trying to beryllium arsenic safe arsenic you are perchance tin pinch nan accusation we supply straight. And if location is an power constituent astir it, it's astir nan depletion and not astir nan earthy state price. So let's put that aside.

Reuven has a batch of -- and speaking of power and Reuven has a batch of power astir nan indebtedness simplification and astir apt wants to springiness their much astir it.

Reuven Spiegel

So really until nan extremity of November, we were connected way to execute some nan indebtedness simplification of $100 cardinal and nan buybacks of $100 cardinal arsenic a consequence of nan unplanned events and nan timing events that I've mentioned, it benignant of disrupted our plan. We did extremity up doing nan buybacks, but we person to push nan indebtedness reduction. We will spell backmost and I deliberation I mentioned it before, to attraction connected indebtedness simplification and buyback arsenic we spell forward.

Jason Gabelman

Okay, thanks.

Operator

Our adjacent mobility comes from Roger Read from Wells Fargo. Please spell up pinch your question.

Roger Read

Yeah, bully afternoon. I'm going to hit nan dormant equine present restructuring but I'm going to inquire nan mobility pinch a small much put into it. So I was funny arsenic you're looking astatine nan wide process present and opening up value, really you spot immoderate different things specified arsenic nan biofuels business and immoderate of nan instrumentality let's telephone it assets for illustration Wink to Webster that are still wrong of DK that were primitively planned to beryllium dropped down to DKL. Is that a complicating facet aliases an enhancement, erstwhile you deliberation astir improving nan wide worth of nan 2 entities?

Avigal Soreq

Mark tin commencement and past I tin finish.

Mark Hobbs

Yeah, sure. Sure. Roger, really admit nan questions. Mark Hobbs here, EVP Corporate Development. As we said earlier successful nan call, I mean, we're looking astatine each nan options connected nan table. I americium specifically crossed each of our business segments, and looking astatine ways to unlock nan worth that's inherent successful those businesses arsenic good arsenic to group each of our business lines up to beryllium successful, benignant of going forward. And truthful erstwhile you erstwhile you deliberation astir different areas for america to see whether that's connected nan biodiesel plants, aliases whether that's decarbonisation of our business.

What we were evaluating arsenic good astir our business, conscionable successful general, from a firm improvement standpoint, is looking for opportunities wherever we tin leverage our existing benignant of assets appropriately, wherever we person a competitory advantage from a location from configuration, and benignant of et cetera to activity opportunities, whether it's astir decarbonisation aliases a debased c fuels successful nan future. And truthful that's thing that we're perpetually evaluating, and looking astatine integrated opportunities astir that.

As we deliberation astir nan midstream successful particular, and deliberation astir benignant of Wink to Webster and benignant of really that fits successful nan wide strategy of things. I mean, that's evidently not a captive benignant of Delek US refining related asset. And truthful it's much of a accepted midstream, benignant of third-party asset. And truthful erstwhile we deliberation astir wherever assets should beryllium longer term, and wherever nan champion worth proposition is for those assets, that's thing that we're evidently reasoning astir arsenic well.

Avigal Soreq

Just to adhd to that. So each woody that we're looking obviously, we're looking to make it competitory to nan costs of superior that we have, we are not trying to make a woody successful nan biodiesel backmost into conscionable nan 12% return aliases thing for illustration that. That's thing which is disconnected nan table. So each woody that we are, if we're exploring should beryllium accretive to our shareholders. So that's nan main criteria.

Roger Read

Appreciate that. We've benignant of thought of Wink to Webster is generating a astir $50 cardinal a twelvemonth EBITDA. I don't cognize if you're consenting to remark connected that, but is that a reasonable scope astatine this point?

Todd O'Malley

Yeah, Roger. It's Todd. Thanks for nan question. Look, arsenic we've said successful nan past, we don't speak for nan consortium. And therefore, that type of accusation is not thing we tin beryllium astatine liberty, disclose. I deliberation suffice to opportunity that Wink to Webster moving astatine planned rates. We're evidently portion of that we get nan use of distributions coming disconnected of that. But I deliberation we'll time off it there.

Roger Read

Okay, understood. Thank you.

Todd O'Malley

Thanks, Roger.

Operator

And our adjacent mobility comes from Matthew Blair from Tudor, Pickering, Holt. Please spell up pinch your question.

Matthew Blair

Hey, bully afternoon. Hopefully you tin perceive me, okay. First mobility is, do you person an update connected nan imaginable R&D task successful position of timing, and there's been immoderate benignant of update connected nan EBITDA contribution, and whether Delek would beryllium apt to put successful that project?

Todd O'Malley

Hey, Matthew, it's Todd. Look, again, benignant of overmuch for illustration my reply to Roger, we're not yet invested successful nan project. As you're aware, we've sewage an option, 13 small complete $13 cardinal action for 33% liking successful nan existent beingness plant. As we said successful erstwhile net calls, nan company's revenge immoderate SEC archiving that will lead america to judge that it's astir apt not online until nan 2nd half of this year. I deliberation it's safe to opportunity that arsenic Avigal laid retired a infinitesimal ago, we will measure nan use of america exercising our action vis-a-vis our superior structure, erstwhile nan clip is appropriate. And we'll evidently make judge that you guys are good informed erstwhile we make that decision.

Matthew Blair

Sounds good. And past successful nan firm conception astatine antagonistic $60 cardinal EBITDA this quarter. Was that pushed up by for illustration year-end comp? And if so, what's nan bully run-rate for firm going forward?

Todd O'Malley

Yeah, a ample percent of that is -- a ample magnitude of that is nan 1 clip costs that Reuven mentioned earlier successful his Q&A response. We had astir $13 cardinal of restructuring charges that deed done that segment. And past location was different onetime costs arsenic well.

Matthew Blair

Okay. The onetime costs are still successful nan adjusted EBITDA figure?

Rosy Zuklic

Yeah, that's been clear. The $60 cardinal has been adjusted EBITDA number. But what we're really talking astir is that they're that astatine year-end, we person nan yearly inducement scheme and truthful that's really nan costs that you're seeing. That's why it's been elevated successful nan quarter.

Matthew Blair

Okay, possibly it's thing like-- sorry, spell ahead.

Rosy Zuklic

It's conscionable nan accrual that happened successful nan 4th quarter. So that's why nan 4th fourth a small spot higher. So that benignant of accounts for [Indiscernible] versus nan 3rd 4th of past year.

Todd O'Malley

We did nan woody successful nan 2nd and nan 4th quarter. We did not do it each quarter. We're changing that going forward, but that's nan measurement we did it successful nan past.

Matthew Blair

Okay, and truthful possibly for illustration antagonistic $40 cardinal to antagonistic $50 cardinal a 4th would beryllium reasonable going forward?

Rosy Zuklic

Yeah, truthful I would say. Yeah, astir apt person to 40 to 50? Yeah, because nan measurement I did it successful my caput is, erstwhile you erstwhile you benignant of -- nan barriers betwixt nan 3rd 4th and nan 4th fourth is mostly attributable to that accrual.

Todd O'Malley

That is spot higher than what they expect going forward. So I would guess, for illustration $30 cardinal to $40 million. So that's besides a number that we travel back.

Matthew Blair

Yeah. Thank you very much.

Operator

Ladies and gentlemen, successful showing nary further questions, I'd for illustration to move nan level backmost complete to nan guidance squad for immoderate closing remarks.

Avigal Soreq

So I want to convey nan guidance squad astir nan table, to nan investor to nan waste side, bargain broadside community. Thank you for believing successful america and nan large business pinch our strategy. Thank you for nan committee of head to nan institution and nan first and foremost to our labor that are moving and operating assets time and night, rainy and sunny. Thank you, everyone. And we will meet again successful nan adjacent quarter.

Rosy Zuklic

If you person immoderate questions please consciousness free to scope out. Thank you. Bye-bye.

Operator

Ladies and gentlemen, pinch that we'll reason today's convention telephone and presentation. We convey you for joining. You whitethorn now disconnect your lines.