Delek US Holdings, Inc. Q1 FY2023 Earnings Call

Good morning, and welcome to the Delek US Holdings 2023 First Quarter Conference Call. All participants will be in a listen-only mode for the duration of the call. After today's presentation, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Rosy Zuklic, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the Delek US first quarter 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 2 contains our Safe Harbor statement. We'll be making forward-looking statements during today's call and actual results may differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. With that, I'll turn the call over to Avigal.

Good morning, and thank you for joining us today. We reported a strong first quarter. Adjusted EBITDA was $285 million, a first quarter record for Delek US. We generated $395 million cash from operations. In addition, we reduced consolidated debt by $281 million. Our team executed well in the quarter. We generated significant earnings in the Refining segment. This was achieved despite the Tyler refinery major plant turnaround during the quarter. With this turnaround behind us, we are well positioned to capture market opportunities as they present themselves. We do not have a major turnaround in our system scheduled until late Q4 of 2024. Our Logistics segment delivered strong adjusted EBITDA. This is the result of the investments we have made in our Midland businesses. As an example, compared with last year, we have more than doubled the volume in the Midland Gathering system. We remain focused on our key priorities. I will now take a few minutes to provide an update on each of them. First, returning value to shareholders and optimizing our balance sheet. During the first quarter, we used excess cash to do what we committed to do. At Delek US Holding, we paid down $327 million of debt. Given the strong performance, we started buying back our shares in the second quarter. Today, we have repurchased $40 million of DK shares. Also on May 2, our Board of Directors approved a 4.5% increase to the regular dividend. Second strategy is the vision to create long-term value for our shareholders. Our team is dedicated. We are working night and day on the sum of the parts initiative. We continue to make progress. We are committed to making long-term decisions that drive shareholder value. A key focus area since becoming CEO has been safe and reliable operation. We moved in the right direction during the first quarter. The Tyler turnaround was completed with zero recordable incidents and on time and on budget. As of the end of March, DK employees and contractors have worked a combined 4 million manhours with zero lost time injuries. We are being proactive in our approach to improve safety. We are developing and implementing plans that will drive improvement toward our long-term goal of top quartile safety and reliability performance. Our final key priority is improving efficiency in our cost structure. We remain focused on this goal. Rosy will provide additional updates on this effort. To accomplish our key priorities, we must ensure we have the right people in the right roles. Over the past several months, we have made strategic additions to our team that will position ourselves for future success. In March, we welcomed Joseph Israel as EVP of Operations. Joseph is a well-rounded industry veteran with over 25 years of energy experience and an improving track record of driving safe and reliable operations. Please join me in welcoming Joseph to the call today. Patrick Reilly has joined us as EVP and Chief Commercial Officer. He brings a wealth of experience from best-in-class businesses. His experience and background align well with our vision for future growth. We have also strengthened our team with Tommy Chavez joining us as SVP, Refining Operations. Tommy brings over 35 years of refining experience. Our team is strong and well positioned to execute our strategic plans. In closing, I would like to thank our entire team of over 3,500 employees. Their hard work and dedication are driving our success. I appreciate their efforts and look forward to a strong future together. I would also like to thank our investors and Board of Directors for their continued support. Now, I will turn the call over to Joseph, who will provide additional color on our operations.

Thank you, Avigal. I'm thrilled to join the Delek family. And I have no doubt our strong talent and competitive position across the system are positioning us well for future success. Our safe and reliable operations in the first quarter allowed us to leverage favorable market conditions and deliver strong results. I will now provide additional details about our operations in a slightly modified format with the objective to provide more visibility regarding our performance and plans going forward. Starting with our Tyler refinery. As Avigal mentioned, the team successfully executed a 49-day oil-to-oil major turnaround. Beyond routine maintenance and reliability upgrades, the scope included yield improvement projects, mainly around the FCC and DHT with an estimated $0.40 per barrel of margin capture improvement going forward. Turnaround cost was consistent with our plan at approximately $100 million. Due to the turnaround, total throughput in Tyler in the first quarter was approximately 35,000 barrels per day. Production margin in the quarter was $21.65 per barrel, and operating expenses were $8.70 per barrel, including approximately $1.25 per barrel of accelerated maintenance due to the turnaround. In the second quarter, the estimated total throughput in Tyler is in the 74,000 to 77,000 barrels per day range, and OpEx is expected to return to the normal range of $4.50 to $5.00 per barrel. In El Dorado, total throughput in the first quarter was approximately 77,000 barrels per day. Our production margin was $13.38 per barrel, and operating expenses were $4.47 per barrel. Estimated throughput for the second quarter is in the 78,000 to 81,000 barrels per day range. In Big Spring, total throughput for the quarter was consistent with plan at approximately 73,000 barrels per day. Production margin was $18.33 per barrel, and operating expenses were $5.80 per barrel, including approximately $0.60 per barrel of maintenance activities. The estimated throughput for the second quarter is approximately 70,000 barrels per day after completing maintenance work in the month of April. In Krotz Springs, total throughput was approximately 84,000 barrels per day. Our production margin was $15.47 per barrel, and operating expenses were $5.21 per barrel, including $0.35 per barrel maintenance in our reformer and our key units. Planned throughput in the second quarter is in the 80,000 to 82,000 barrels per day range. Overall, estimated system throughput in the second quarter is in the 301,000 to 311,000 barrels per day range compared to approximately 269,000 barrels per day in the first quarter. We continue to focus on safety, reliability, and environmental compliance as our top priorities, and we expect margin capture and cost performance to follow. As far as market conditions, it's a good day to be an inland refinery in the U.S. Gasoline is tight going into the summer and, specifically for Delek, crude oil pricing dynamics are favorable, and demand for our products is strong across our system. I will now turn the call over to Rosy for the financial variance.

Thank you, Joseph. Starting on Slide 4. For the first quarter of 2023, Delek US had net income of $64 million or $0.95 per share. Adjusted net income was $93 million or $1.37 per share, and adjusted EBITDA was $285 million. Cash flow from operations was $395 million. On Slide 5, we provide a waterfall of our adjusted EBITDA by segment from the fourth quarter of 2022 to the first quarter of 2023. The significant improvement over last quarter was primarily from higher results in refining. As Avigal and Joseph mentioned, during the quarter, we operated well and were positioned to capture favorable market conditions. In addition, corporate contributed a $16 million benefit over last quarter, primarily due to lower G&A costs. For your reference, we have provided a year-over-year waterfall slide in the backup. Moving to Slide 6 to discuss cash flow. We built $24 million in cash during the quarter. The $395 million in operating activities reflects the strong cash from operations. In addition, it includes approximately $180 million of the $240 million of cash associated with the two year-end timing events disclosed during the fourth quarter earnings call. Investing activities of $222 million are primarily for capital expenditures, the majority being for the Tyler refinery turnaround. Financing activities include the debt paydown during the quarter, partially offset by approximately $60 million cash inflow for the year-end timing events. On Slide 7, we show capital expenditures for the first quarter compared with our full year estimate. For 2023, capital expenses will be heavily weighted to the first half of the year. We still estimate the full year to remain at approximately $350 million. Net debt is broken out between Delek and Delek Logistics on Slide 8. During the quarter, consolidated net debt improved approximately $303 million, and Delek US, excluding Delek Logistics, improved $346 million. The last slide covers outlook items for the second quarter of 2023. In addition to the throughput guidance Joseph provided, we expect operating expenses to be between $195 million and $205 million; G&A to be between $70 million and $80 million; D&A to be between $80 million and $90 million; and we expect net interest expense to be between $70 million and $80 million. For interest expense, we have updated our guidance to include non-cash deferred financing costs. Before we move on to Q&A, a few updates. As Avigal mentioned, we have made progress on our cost reduction and process improvement efforts. During the quarter, we completed the first phase of this initiative. We realized $3 million of G&A cost savings, which is $12 million on a run rate basis. The next phase is scheduled to start in the second quarter, and we expect to see G&A improvements in the second half of this year. Part of our assessment on cost has been a deep dive to drive industry standard on G&A and OpEx classification. This quarter, we made an adjustment of approximately $6 million between these costs. This adjustment was retrospective. We have provided two years of history in our supplemental slides. Finally, during the quarter, we changed the benchmark for Krotz Springs refinery to better reflect its product mix. This was also a retrospective change. We have provided two years of history in our supplemental slides and detailed disclosures in the supplemental tables of the earnings release. We will now open the line for questions.

We will now begin the question-and-answer session. At this time, we will take our first question, which will come from Neil Mehta with Goldman Sachs. Please go ahead with your question.

Yeah, thanks so much and congrats on some good progress here this quarter. I want to start off in the Refining segment. It looks like even when you adjust for the G&A, it was better captures than expected in our model, in particular, was at Krotz, but in Tyler as well. And so just curious on anything you could talk about in terms of the refining business, if you're seeing underlying improvements. And now that we're in a little bit of a tougher margin environment than we were in Q1, do you think that strength in capture can flow through?

Hey, Neil. Good morning. It's Avigal. Thanks for the question, and thank you for the support. Yes, we have experienced good progress with our initiatives. First of all, we had a self-reliable operation, which is always a key driver. And I think that the team we have is extremely focused on that. So that was the focus. The execution of the turnaround was a great success and a focus on a few small projects that helped us well. That's a good opportunity for me to welcome Joseph live and allow him to give some more color around it. Please go with that, Joseph.

Hey, thank you, and good morning, Neil. Yes, the system executed well from a safety and reliability standpoint, like Avigal mentioned. Throughput capture OpEx for the four refineries were in the planned range, with Tyler obviously under turnaround. We sourced our domestic crude oil efficiently with more favorable Midland differentials and the right market structure. We blended low-cost butane in our gasoline. Moreover, on the distillate side, jet fuel demonstrated good capture this quarter for all refineries, including our sales. HSD and octane price stayed well to support our capture. So good quarter all in all, and we are looking forward to the next one.

And welcome, Joseph. Thank you. And that's the follow-up. You talked a lot about the path towards sum of the parts realization, and there was no update here. So can you talk a little bit about where we stand on the plan, and what are the different things that you've ruled in and ruled out?

Hey, Neil, again, thank you. So listen, I can tell you that the team and Mark is here as well, and he can chime in after I finish. He's extremely focused on working very extensively. We continue to make meaningful progress in our mind, but we all understand that these types of transactions take time. More than anything, we want to get it right. We do not want to make something quickly that is not right. I'm very optimistic about that. The progress is being done very well, and we are very satisfied with it. And we'll keep you posted. I don't know, Mark, do you want to say anything?

No, I think that was well articulated. Neil, we continue to work on it. We see opportunities out there for us that we're evaluating. As I said on our fourth quarter call, the thing that we're focused on is positioning all of our businesses to pursue accretive growth and have financial flexibility. So that continues to be a focus on anything and everything we do.

Just a quick follow-up on that, Mark. Is it fair to say that the area where you see the best opportunity to unlock value is still around logistics assets? Is that what you believe the market is undervaluing?

Yeah, I think that's a fair statement, Neil. I mean, we obviously have a value benchmark sort of a marker, if you will, out there, that trades sort of every day. We feel like that given how we're structured right now, we're not getting adequate look-through value to our midstream business.

Thanks, team.

And our next question will come from Manav Gupta with UBS. Please go ahead with your question.

Hey, guys. A little bit of a follow-up here. Krotz used to be one of your weaker assets. It's clearly one of the stronger assets at this point of time. Help us understand what has changed in the last 1.5 or 2 years to make this a much more competitive asset than it used to be?

Yeah, absolutely. Joseph, do you want to take it?

Yes, I'll start. Talking about reliability, again, Krotz is a very unique special place. It was just certified as a VPP plant. And I think the story is right there. So in Q1, we have seen great reliability, which was reflected in our yield. In addition, we have a new catalyst and the reformer that really helps our yields and provides small gasoline components. Butane blending is very efficient at Krotz Springs, and we produce a lot of jet fuel in our crude unit. So, when jet fuel is strong and recovering, Krotz Spring is going to perform well. So a great team and favorable market conditions give us good results.

And we cannot undermine the improvement of the Alky over the last few years. Krotz used to be a refinery without Alky. Alky pricing was good, and we see a nice return on our investments made years ago.

Makes sense, guys. A quick follow-up here. You mentioned a little bit of this, but it looks like you have made some improvements at Tyler during the Q1 turnaround, which is giving you more confidence in a higher capture. Help us understand what was executed and what gives you confidence that the capture at Tyler will improve and make it more competitive?

Thank you, Manav. Like we said in our prepared remarks, beyond just reliability projects and addressing risk, we have done some upgrades. I think the most significant one is a revamp of our vacuum tower, which helps the feed quality to the FCC. So the FCC is performing much better with better conversion and better yields. Additionally, we replaced the catalyst in the DHT to achieve much better liquid recovery and better swell. So we think this Q1 story is just a snapshot. We are here to capture those benefits in the future. Personally, I think $0.40 is probably on the conservative side.

Perfect, guys. I'll leave it there, but I do want to say one thing. We are seeing that the way you report earnings has improved a lot. There's a lot more consistency. The feedback we're getting from shareholders is that this is exactly what they wanted. So all those who are involved in making it a lot more consistent and easier to understand reporting, I would like to congratulate them. Thank you.

Manav, point taken. Thank you.

And our next question will come from John Royall with J.P. Morgan. Please go ahead with your question.

Hi, good morning. Thanks for taking my question. I'd also like to echo Manav's comments on the reporting. I think it's been much easier to get through on earnings days. So my first question is on capital allocation and specifically being out of the buyback market in Q1, despite a big quarter from a cash flow perspective, I assume it had to do with the turnaround, but any color on that? And then the $40 million pace for Q2-to-date is pretty robust. Is there some catch-up there? Should we think of that as a good pace going forward? And I think $75 million to $100 million was something you had said for the full year. Maybe if you could just comment on that if that's still a good number?

Yeah. Thank you, John, for the question. Obviously, I will take a broader look at our capital allocation. Obviously, we cannot lose sight of the fact that we are increasing dividends for three or four quarters in a row now. So we see that dividend going through the cycle, and we are committed as much as we can to continue that through the cycle. So, that's point number one. Point number two, around the buyback, we obviously wanted to make sure that we are clearing any risk from our profile this year of a major and pretty significant risk with the Tyler turnaround behind us. As you probably know, we take ourselves as a first-tier return-to-shareholder company, and we are there. You can see us at the 19% over the last 12 months, which is where we want to be. We want to be very competitive and provide a good return to our investors, both in the short term and the long term. I'm not going to change the guidance we provided today on the $75 million to $100 million, but I will say that we are actively looking at that, and we use the buyback as a flexible tool when we have a solid outlook for margins and operations. We're still going to do it. That's something we are going to keep looking at. And obviously, if something changes, we'll come back.

Great. Thanks, Avigal. And then, maybe on the cost reduction program, maybe just a little more detail on the $12 million captured of the $30 million to $40 million you expect this year? What are the key sources of what you've captured so far and this year as a portion of the program in general?

Yeah, absolutely, John. I will let Reuven, our CFO, comment on that, if it's fine.

Thank you, Avigal. First of all, our guidance we gave in the fourth quarter for the year was $30 million to $40 million savings with a run rate of $90 million to $100 million based on Q4/Q1 '24. That number is divided around 65% between OpEx and 35% between G&A. The $3 million that we have materialized in the first quarter are initiatives that we took late in the fourth quarter, early in the first quarter, and will impact obviously the run rate of $30 million to $40 million for this year. There are additional efforts to be implemented throughout the year. Some of them are IT-related and some of them are not. The initial effort was around G&A organization and structure. As we progress in the second and third quarters, it will be more focused on operations.

Thank you.

And our next question will come from Doug Leggate with Bank of America. Please go ahead with your question.

Thank you. Thanks for taking my question. Let me add my welcome to Joe. It's nice to see you back, Joe.

Thank you.

I would like to revisit the sum of the parts question, Avigal. If midstream is indeed an issue, what options are you considering? The balance sheet is certainly a concern, but could you share your thoughts on how this might play out as you review the situation?

Yeah. So, Doug, it's a great question, but I'm not going to give too much detail about that. All I'm going to say is that we have a line of sight that is going to be very accretive to both DK and DKL. I'm sure you're going to be very happy.

Okay. And retail, is that part of the discussion as well or not?

So, we want to tackle first what moves the needle the most, right? So we have priorities. The priority is to do what is most meaningful as a first priority. That's how we work here to ensure that we are being as meaningful as possible in creating value for shareholders.

Understood. Just one last one on this topic. Timing, when would you expect to be able to reveal your plan to the market?

So, I'm more aggressive than you, and I want it sooner than later. We are on the same side of the equation. However, this is not a simple, plain vanilla situation. It requires work and detailed planning. So, we share the same urgency and optimism.

We will monitor this closely. My follow-up question is for Reuven. It’s more of a housekeeping matter. We previously discussed this with Rosy, but it would be beneficial for everyone to hear. Your cash flow was strong, but the working capital changes weren't detailed in the release. We're trying to understand the actual cash flow for the quarter and, more importantly, how much of the working capital will be reversed in the future. Is this a one-time benefit, or is it indicative of a more consistent improvement? So, what is the actual cash flow regarding the working capital?

All right. So, thank you for the question. I think the one number to remember is on the fourth quarter call, we mentioned that we had a timing issue with the intermediation agreement with Citi and $180 million was supposed to come in, in January, and it did come in. I think that is the number that should be taken out of the reported number because that was the fourth quarter event that reconciled itself in the first quarter. Other than that, what impacted the working capital cash flow was the Tyler turnaround and, negatively, the higher capital expenditures expected in the first quarter.

And below the operating line, Reuven?

$140 million. The difference ends up in the financing activities, right?

Yeah.

Yeah.

Got it. Okay. Thank you so much.

Yeah, thank you. Appreciate it.

And our next question will come from Matthew Blair with Tudor, Pickering, Holt. Please go ahead with your question.

Hey, good morning. Thanks for taking my question. Joseph, it looks like southwest cracks are still at new five-year highs, whereas most other regions are roughly around five-year averages or even a little bit below. Could you talk about the drivers supporting the strong margin environment in the southwest? And is that something that you can capitalize on in Q2, or does the Big Spring maintenance in April take you out of the picture there?

Yeah, thanks for the question. Actually, we are very optimistic about what we see on the demand side. We see strong netbacks and a strong pull from our racks, and the demand in our side of the world looks solid. There is a different discussion between the macro and the micro, and the micro in our inland is solid and robust, and we see that reflected in the results.

Yes, I can add that the southwest market is likely the strongest in the country right now. Fortunately, that's where much of our business is located. You can observe it when comparing Iraq to the Gulf Coast, and we are benefiting from this as it relates to refining, not specifically through the Big Spring number, but certainly in our profitability. Regarding the dynamics for the second quarter, specifically with Big Spring, we believe the fundamentals are favorable in terms of inventory. Gasoline is tight as we head into summer. There are still concerns over global economic trends, but we can't predict future trends with certainty. The advantage of our system is its insulation within our niche markets. We've experienced strong demand going into April, and the marketing uplift truly shows our location advantage. We continue to utilize our strengths, such as crude pricing, octane capabilities, and our new asphalt capabilities as we enter the second quarter.

Okay. Sounds good. And then, on the retail side, it looks like your same-store volumes were down 1.7% in Q1. Do you have a rough number on what that's looking like so far in Q2?

So, we are not going to give a forecast for Q2, but on the other side, merchandise was higher. So all in all, retail is doing well.

And our next question will come from Paul Cheng with Scotiabank. Please go ahead with your question.

Hey, guys. Good morning.

Good morning.

I have two questions. First, about trading and supply: in the first quarter, there was a loss of about $18 million compared to $105 million last year. Is this a real loss, or does it relate to one side of the trades? You report a loss, but is there a hedge gain from the physical market that offsets that? I’d like to know if this is a genuine loss or just a matter of accounting practices. If it is a real loss, what caused it? My second question is for Avigal: how critical is M&A acquisition to your strategy over the next three years in refining, logistics, and retail? Regardless of its importance, what financial metrics will you consider when evaluating potential targets? Thank you.

Yeah. So Paul, with your permission, I will start with the strategic question, and then we'll talk about the tactical aspects. M&A is obviously a tool that has served Delek very successfully in the past. However, with M&A, we're going to proceed only if we're disciplined. By disciplined, I mean it needs to be accretive for investors. We are not going to pursue M&A just to check a box. It must make sense, be strategic, synergistic, and drive value for shareholders, period, end of story. That will guide us. Obviously, on the refining side, it's more accretive versus retail, which is 10x. We are not likely to pursue M&A on the retail side because it isn't accretive. On the strategic front, I don't have all the technical details in front of me, Paul, but I can tell you that there is nothing unusual regarding that. It primarily relates to how we separate refining and the other assets. I can ask Rosy to look into that and follow up with more detail. I don't have the specifics in front of me.

Can I ask that on refining, if you do go into any acquisition, is there a particular region that you would be interested in, or are you not really focusing on the region?

So again, we are not specific; the general rules we have are that any assets must be accretive, and we are not going to rush ourselves, Paul. We’re going to make sure it’s meaningful for the long term and can enhance the share price. So there is no rush. However, if something comes up that fits, we won't be shy about it.

Okay. Thank you.

You bet. Thank you.

Thank you, Paul.

And our next question will come from Jason Gabelman with Cowen. Please go ahead with your question.

Good morning. Thanks for taking my questions.

Good morning.

I want to first go back to capital allocation. You paid down a lot of debt in Q1. Does that get the parent balance sheet in an appropriate place excluding MLT debt, or do you want to pay down additional debt? And kind of on the topic of the balance sheet and capital allocation, you had previously discussed a 1:1 ratio between buybacks and debt paydown. Is that kind of the right split moving forward, or do you have a different allocation plan going forward? Thanks.

Yeah. Thank you for the question. I will start, and Reuven will continue. So, on the DK side, we probably have the best balance sheet among our peers with only $200 million of debt. Most of our debt, as you well know, is on the DKL side and has a completely different level of income against it. So it's two different ball games, and we cannot lose sight of our debt. Obviously, we have a very high level of third-party income. This philosophy underlies our strategy. We said in the past, and we are sticking to it, especially in a higher interest environment, that we will balance our approach between reducing debt and buybacks. We demonstrated in the last four months that we are not shy about doing buybacks, and if the market continues to be favorable, we will use that tool in the future as we did in the past. Reuven, maybe you can add some detail?

Yeah. As you recall, during the fourth quarter, we had to increase our debt because of the intermediation agreement timing. So going into the first quarter, we had two priorities. One was to pay down that debt. The other was to support the elevated capital expenditure level of the first quarter, which were mainly from the Tyler turnaround. Once we realized we could accomplish that and had a very strong quarter, we did an additional $60 million of debt paydown over the original plan, which brought us to the $300 million range. We also started the buyback program and bought back $40 million.

Got it. And just one clarifying question on that. So going forward, do you expect to maintain a balance between buybacks and debt paydown, or does it swing back the other way, just given that the Q1 debt paydown was so high?

Yeah. So, we haven't changed our philosophy. However, if market conditions change, our approach could also shift. We want to ensure excellent returns to shareholders and be a first-tier company in this respect, which we strive for. We see buybacks as a priority. Clearly, with interest rates where they are, we will effectively balance both endeavors.

Okay. Understood. And my follow-up is on corporate expenses. Those came in a lot lower than expected in Q1. What drove that? It doesn't seem like you expect that to repeat in the second quarter. So just wondering what the variance was in the first quarter. Thanks.

Yeah. Reuven, do you want to take that?

Yeah, so it's actually a composition of three numbers. As part of our cost reduction efforts, we reviewed every line item, and we reclassified $6 million from G&A to OpEx, which aligns with industry practices and our peers. Additionally, there were $3 million of timing expenses. The last component was the $3 million that is directly related to the cost efficiency steps that we have taken late in the fourth quarter and early in the first quarter, which will impact G&A for the remainder of the year with a positive run rate of about $12 million.

Great. Thanks.

Thank you.

And our next question will be a follow-up from Paul Cheng with Scotiabank. Please go ahead with your follow-up.

Hey, guys. Real quick. Avigal, when you're looking at logistics, have you guys ever considered doing something similar to what some of your peers have started to roll up, such as spinning off or taking out minority public unitholders? And second, do you have a number you can share on what the RIN expense was for the quarter? Whether that's a meaningful number? And also can you talk about what your hedging strategy will be going forward?

Yeah. Thanks, Paul, for the follow-up. Let's address them one by one. Regarding acquiring assets, we recognize why some peers took that route. But we believe we have a more meaningful and accretive plan for everyone going forward. We've seen others attempt this, and some haven't succeeded as they expected. We believe we can pursue a more strategic approach that benefits both DK and DKL. As for the RIN, we typically don't provide specific guidance or information, but this quarter, we are happy to note the enhanced clarity we’ve begun to provide on our financials. We will continue to work on that.

All right. Thank you.

You bet. Thank you for your question.

And that concludes our question-and-answer session. I'd like to turn the conference back over to Avigal Soreq for any closing remarks.

Yeah. So thank you to the investors, the Board of Directors, and mainly our employees for a great quarter and great execution. Our first priority is to have safe and reliable operations and to deliver a great return to shareholders, and we are committed to doing so. Thank you for your time and effort. I appreciate it.

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