Earnings Call Transcript - DK Q2 2025

Operator, Operator

Thank you for holding. I am Jewel, and I will be your conference operator today. I would like to welcome everyone to the Delek U.S. second quarter earnings call. I will now turn the conference over to Robert Wright, Deputy Chief Financial Officer. You may begin.

Robert Wright, Deputy CFO

Good morning, and welcome to the Delek US second quarter earnings conference call. Participants joining me on today's call will include Avigal Soreq, President and CEO; Joseph Israel, EVP, Operations; and Mark Hobbs, EVP and Chief Financial Officer. Today's presentation material can be found on the Investor Relations section of the Delek U.S. website. Slide 2 contains our safe harbor statement regarding forward-looking comments. Any forward-looking information shared during today's call will involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included here as well as within our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks. Avigal?

Avigal Soreq, President and CEO

Thank you, Robert. Good morning and thank you for joining us today. Delek continued on its transformational journey during the second quarter by making progress on several key strategic initiatives. We have made excellent progress on our enterprise optimization plan. Given the progress we have made so far, we are increasing our guidance on EOP to $130 million to $170 million on a run rate basis. Sum of the Parts effort also continues to progress well. During the quarter, we completed our intercompany agreement, worked on raising liquidity at DKL and made great progress in increasing the economic separation between DK and DKL. As I always do, I will give an update on our key long-term priorities in more detail. First, safe and reliable operations. We have made further progress in improving the operations throughout our company and reported record throughput in the quarter. The Big Spring refinery had a strong quarter with a strong overall throughput and operational performance. We have continued to make reliability investments that will serve us well in the future. Tyler, El Dorado, and Krotz Springs also had strong operations during the quarter. El Dorado has shown additional benefit from EOP improvements. With most of our capital projects complete in the first half of the year, we look forward to capitalize on our operational EOP and strategic progress during the remainder of the year and beyond. Now I would like to discuss the progress we have made on our EOP efforts. As a reminder, we started EOP with an aim to improve DK cash flow by $80 million to $120 million starting the second half of 2025, with a focus on improving overall free cash flow generation through this cycle. The basis of this EOP improvement was further cost reduction, but more importantly, by making structural changes in the way we run our company. These structural changes are tied to our cost base, the way we run our refineries, the way we buy our crude, and the way we sell our products. During the quarter, we estimate approximately $30 million of this EOP cash flow improvement has flowed through our P&L. As you can see, we have already achieved our prior target of $120 million of run rate EOP benefits one quarter ahead of schedule. Today, we are further increasing our range of EOP improvement to $130 million to $170 million on a run rate basis, starting the second half of this year. I'm extremely proud of the team for adopting a culture of continuous improvement. While there is still more work ahead, I like the direction we are heading. We also continue to make progress towards our Sum of the Parts goals. With the commissioning of the DKL Libby 2 plant and the completion of intercompany agreements, we are making great progress in making DK and DKL economically independent. During the quarter, we increased the financial liquidity at DKL through a very successful high-yield offering. Both our intercompany agreements and the latest high-yield offering resulted in over $1 billion of liquidity at DKL. This financial flexibility will allow DKL to continue on its growth journey and complete the economic separation from DK. As I've highlighted previously, DKL has a strong runway of growth in both Midland and Delaware Basins. DKL is making great progress in developing its sour gas gathering and acid gas injection capabilities. These capabilities will provide DKL the ability to fully capitalize on all of its growth opportunities in the Delaware Basin. DKL is also having tremendous success increasing its crude gathering business, both in the Midland and Delaware Basins. During the third quarter, we see a material increase in volumes in both Midland and Delaware systems. Delek Logistics is on track to meet its 2025 EBITDA guidance of $480 million to $520 million. We continue to work on additional steps to unlock the value of approximately $400 million in third-party EBITDA at DKL so that it's fully reflected in DK's share price and DKL unit price. We'll complete the DK Sum of the Parts in a methodical manner that will create value for both DK shareholders and DKL unitholders. The final piece of our strategy is being shareholder friendly and having a strong balance sheet. During the quarter, we paid approximately $16 million in dividends and bought back approximately $13 million of our shares. Our strong balance sheet, improved reliability, and confidence in EOP have allowed us to continue the countercyclical buyback in 2025. We remain committed to a disciplined and balanced approach to capital allocation. Now I would like to make a comment about small refinery exemptions. As you know, SRE petitions are an important focus area for Delek as our pending petitions are worth more than our current market cap. The Supreme Court and the D.C. Circuit Court have made it clear that the EPA must thoughtfully address this problem. We believe the EPA understands the issues small refiners like Delek face in the absence of clear policy around SRE. As a reminder, since 2019, while our SRE petition has been pending, Delek has remained in full compliance. We are confident in a favorable outcome on our petitions based on the principle laid in the RFS law, ruling from the D.C. Circuit Court, and the EPA's understanding of the issues involved. In closing, I would like to thank our entire team for their hard work and dedication. We are optimistic about DK's trajectory in the second half of 2025 and beyond with strong momentum and promising opportunities on the horizon. I will now turn the call over to Joseph, who will provide additional color on our operations.

Joseph Israel, EVP, Operations

Thank you, Avigal. Second quarter operations performance was strong from a safety, reliability, and optimization standpoint. Starting with reliability, record throughput results were set in Big Spring, Krotz Springs, and for the entire system. In terms of optimization, our refining teams have been successful in debottlenecking, improving liquid yield recovery, maximizing production value, and optimizing sulfur and benzene balances. Process efficiency improvement is well reflected in our numbers. Our realized refining margins increased by $0.96 per barrel compared to the second quarter of 2024, despite an $0.18 per barrel decline in the benchmark net margin. Our commercial team has reworked contracts and optimized our new logistics to expand market optionality. Overall, we made good progress operationally, and we are well positioned to meet or exceed our European goals. Starting with Tyler, total throughput in the second quarter was 74,000 barrels per day. Our production margin was $9.95 per barrel, and operating expenses were $4.58 per barrel. For the third quarter, our estimated total throughput in Tyler is in the 73,000 to 77,000 barrels per day range. In El Dorado, total throughput in the second quarter was approximately 81,000 barrels per day. Our production margin was $5.21 per barrel, and operating expenses were $4.38 per barrel. The El Dorado system is one of our top operational EOP priorities. In the second quarter, our estimated EOP impact on gross margin is $1.45 per barrel, which is in line with our approximately $2 per barrel run rate target. Plant throughput for the third quarter is in the 79,000 to 83,000 barrels per day range. In Big Spring, total throughput in the second quarter was approximately 76,000 barrels per day, reflecting our progress with people, process, and equipment. Our production margin was $9.65 per barrel, and operating expenses were $6.67 per barrel. In the third quarter, the estimated throughput is in the 69,000 to 72,000 barrels per day range. In Krotz Springs, we continue to demonstrate improved capacity capabilities since the major turnaround. Total throughput in the second quarter was approximately 85,000 barrels per day. Our production margin was $7.59 per barrel, and operating expenses in the quarter were $5.13 per barrel. Our plant throughput for the third quarter is in the 81,000 to 85,000 barrels per day range. Our implied system throughput target for the third quarter is in the 302,000 to 317,000 barrels per day range. Moving on to the commercial front. In the second quarter, supply and marketing contributed a gain of $26 million. Of that, approximately $19 million was generated by wholesale marketing. Asphalt contributed a gain of approximately $200,000. Both were positively impacted by seasonal trends and structural EOP improvements in our business. Approximately $7 million gain was attributed to supply. In summary, we delivered strong performance in the second quarter, driven by our operational excellence and strategic execution. Mark will now address the financial variance.

Mark Hobbs, EVP and Chief Financial Officer

Thank you, Joseph. Referring to Slide 16. For the second quarter, Delek had a net loss of $106 million or negative $1.76 per share. Adjusted net loss was $33 million or negative $0.56 per share, and adjusted EBITDA was $170.2 million. On Slide 18, the waterfall of adjusted EBITDA from the first quarter of 2025 to the second quarter shows that there were two main drivers for the increase in EBITDA. First, a $141 million increase in refining was primarily driven by a higher margin environment in the second quarter relative to the first quarter, along with sequentially higher throughputs. Second, in the Logistics segment, we continue to have another strong quarter, delivering approximately $120 million in adjusted EBITDA, about a $4 million increase over our previous record of quarterly adjusted EBITDA achieved in the first quarter. These improvements were mitigated by slightly higher costs in the Corporate segment of $1 million compared to the prior period. Moving to Slide 19, to discuss cash flow. Cash flow provided by operations was $51 million. This includes our net loss for the period in addition to an inflow of approximately $51 million of timing-related working capital movements, which includes the impact of our inventory intermediation agreement as well as an outflow of $30 million of restructuring and other one-time charges. Investing activities of $163 million includes approximately $115 million for growth projects, primarily at DKL. Financing activities of $103 million reflects $13 million in share repurchases, approximately $16 million in dividend payments, and approximately $22 million in DKL distribution payments to public unitholders. On Slide 20, we show our actual progress under the 2025 capital program. Second quarter capital expenditures were $164 million. Approximately $119 million of this spend was in the Logistics segment. This includes the $115 million in growth capital at DKL, of which $48 million was associated with completing the Libby 2 gas plant. Primarily all of the remaining capital spend during the quarter was in the Refining segment, addressing plant sustaining capital initiatives. Our DK Refining and Corporate Capital spending outlook for 2025 remains consistent with prior guidance. Our net debt position is broken out between Delek and Delek Logistics on Slide 21. Excluding Delek Logistics, we spent approximately $74 million on cash return to shareholders and capital expenditures in the second quarter, while our Delek standalone net debt remained relatively flat, around $275 million at the end of the quarter. Moving now to Slide 22, where we cover third quarter outlook items. In addition to the guidance Joseph provided, for the third quarter of 2025, we expect operating expenses to be between $210 million and $225 million. Our operating expense guidance for the third quarter incorporates both higher expected throughput across our Refining segment as well as increased operating expenses associated with the ramp-up of our new Libby 2 plant at DKL. G&A to be between $52 million and $57 million. D&A is expected to be between $100 million and $110 million and net interest expense to be between $85 million and $95 million. With that, we will now open the call for questions.

Operator, Operator

Your first question comes from the line of Doug Leggate of Wolfe Research.

Keith T. Stanley, Analyst

It's Keith Stanley, stepping in for Doug Leggate this morning. Since Doug's schedule doesn't align with our timing, we'll start our first question with the SRE. You have shown confidence in a favorable outcome. Has your confidence increased as we approach the final decision? Additionally, if you receive the exemption, what do you envision as the best use of proceeds, and how might that enable DK to enhance its operational structure?

Avigal Soreq, President and CEO

Yes, absolutely, Doug. Thank you for the question. Listen, we are very optimistic about the small refinery exemption. The law is on our side. The D.C. Circuit Court is on our side. We are the only public refiners that all of our assets can apply to small refinery exemption. We have stayed in full compliance during the last six years that our petitions have been pending. And as you can easily calculate, it's bigger than our market cap. So it's very clear around the economical harm that we're experiencing because of that pending lingering issue. The EPA understands the issue and we are confident in a favorable outcome. With one comment about the last part of your question about what are the proceeds. I'm not going to comment around that. But I'm sure the EPA understands that we cannot compensate someone that stays in compliance, and we have been compliant. So I hope that that comment makes a lot of sense to you.

Keith T. Stanley, Analyst

My follow-up question is about EOP. You mentioned this last quarter, and it seemed like there were definitely opportunities for an upward revision, which appears to have been the case this quarter as well. Is there still potential for more upside and opportunities? What factors did you identify that contributed to the updated guidance? Lastly, do you see sustaining capital for refining at the target range of $130 million to $170 million if you can execute on this plan?

Avigal Soreq, President and CEO

Yes, Doug, that's very nice of you to ask that question because we are extremely, extremely proud of the EOP focus and the momentum we have here in our shop. EOP is not a project. It's a lifestyle. And when I'm saying it's a lifestyle, we have a weekly meeting about that. We have an ongoing project. We are auditing that, internal audit, external audit, and have accounting look it over. So it's a very tight process that allows everyone to take part and contribute to that. The whole essence of EOP is free cash flow, and reducing our breakeven point. We are very proud of that. As you probably saw in our press release and also in my prepared remarks, we increased the guidance of EOP from $120 million prior to this call to $130 million to $170 million. And the reason that we were one quarter ahead of time is that we see more projects coming in the queue for the EOP. So we are extremely optimistic and see a lot of value in it. Mohit, do you want to chime in?

Mohit Bhardwaj, Executive

Yes. Thanks, Avigal. So all I would say on EOP, as Avigal just mentioned, it's a free cash flow improvement exercise for the company. If you look at the second quarter, $30 million flowed through our financials, and that allows us to have a $120 million run rate. I just want to remind everybody that we started with the $80 million to $120 million guidance. Now to your specific question around where this improvement or higher confidence is coming from? So if you remember, the $120 million had two components to it. One was cost and the other one was margin. Our confidence in our margin improvement is increasing, and that is where most of the increase has come from. So if you look at the $150 million at the midpoint of the enhanced increased guidance that we have provided today.

Operator, Operator

Your next question comes from the line of Alexa Petrick of Goldman Sachs.

Alexa Petrick, Analyst

I wanted to ask, there's been great progress in EOP free cash flow generation. How do we then think about the allocation of that cash? Can you remind us of your strategy there, how you're balancing between capital returns and balance sheet efforts?

Avigal Soreq, President and CEO

Yes, absolutely, Alexa. Thank you for that question. We are very consistent with our capital allocation program. You can see that, first of all, we stated that we're going to maintain dividends throughout the cycle. We can definitely check that box very nicely. Then we said that we have a balanced approach between balance sheet and buyback. We have done that as well. So we are very consistent and confident about those abilities. We have executed buybacks in Q1 countercyclical. We have executed buybacks in Q2. We have done a buyback in Q3. As you can see, in the last 12 months, we have returned around $150 million to our shareholders, and we are leading versus our peers in terms of capital returns to investors. So we are very proud and consistent about how we look at capital, and we plan to maintain it. So thank you for that question.

Alexa Petrick, Analyst

And then maybe just as a follow-up, I know it's a bit early, but how is Q3 shaping up? What demand trends are you seeing? What's your view for crude differentials going forward? Any thoughts around the quarter ahead would be great.

Avigal Soreq, President and CEO

Yes, absolutely. We just seen a DOE report very recently, and we see still a positive trend in terms of diesel. Diesel is at a five-year low, and we see decent demand for diesel and gasoline. Gasoline had a slight drop of 1.2, you saw that as well. So in terms of inventory, we're in good shape. In terms of supply, we've seen more closures than we actually expected even in the last couple of weeks, shaking out to around 900 during 2025, which balances the openings that we have seen but doesn't compensate for an increase in demand. So when we put all of that together, we see a pretty structurally constructive market ahead of us in the short-term and also in the midterm, all the way probably until the end of the decade. We do not see the demand for gasoline and diesel coming off as people first feared. Mohit, do you want to chime in?

Mohit Bhardwaj, Executive

Yes, Avigal. I just want to add, Alexa, if you look at where PADD II specific inventories are. We've seen PADD distillate inventories are way below their five-year averages, which is a very relevant metric for us. And if you look at the utilization in PADD II, it has been very, very high. So despite very high utilization, we see inventories remaining low, and we expect demand to pick up as the agricultural season starts, and you would also see some turnarounds going forward. So as far as PADD II specific inventories are concerned, I think the outlook remains very optimistic, especially on the diesel side.

Operator, Operator

Your next question comes from the line of Matthew Blair of PTH.

Matthew Robert Lovseth Blair, Analyst

You mentioned some of the positive drivers in supply and marketing in Q2. I think the wholesale side, in particular was quite strong. Could you talk about how supply and marketing is trending so far in the third quarter? And do you think a positive EBITDA contribution is likely in Q3?

Avigal Soreq, President and CEO

Thank you, Matt. Thank you for that question. Obviously, the line of supply and marketing is part of the EOP effort. We have improved that with better logistics around it. We gained market access to new markets, and we made long-term contracts that allow us over time to improve that line. So we're obviously enjoying that. We had some seasonal help in Q2, and we are extremely optimistic about how the markets are positioning. And I don't know, Mohit, if you want to add more specifics.

Mohit Bhardwaj, Executive

No, I think you're right, Avigal. And Matt, if you look at our overall commercial strategy, DKTS, or what we call DK Trading & Supply, which is the line item that you're talking about, our commercial strategy is flowing through. But during the quarter, as you know, Q2 and Q3 are also seasonally stronger. So we did get some help from the market. But Avigal rightly described our strategy regarding our commercial operations. As we have said in the past, this has three components: wholesale, asphalt, and supply. We are ensuring that all three businesses that we can control are doing better through contract renegotiations to improve markets to enhanced market access and through our refineries making new products that we can sell through this refined and enhanced market access. And these results are showing through, and we look forward to continue improving this business going forward.

Matthew Robert Lovseth Blair, Analyst

Sounds good. And then just on the Sum of the Parts monetization, Slide 12 lists some various avenues and options for you. What do you think are the more likely options? And what are the less likely options? And then as far as timing, do you think investors can expect or hope for an economic separation of DKL by the end of 2025? Or is that looking more likely 2026 or even later?

Avigal Soreq, President and CEO

Yes. So Matt, that's another great question for us. We are working on steps of Sum of the Parts as we speak. So we are not standing still even for one second, and more to come. With that said, I can just take one step back and say what we did in the last 12 months, right? The last 12 months, we saw retail allow us to maintain a strong balance sheet and to conduct countercyclical buybacks. On the midstream side, we are making DKL economically independent, growing the EBITDA from below $400 million to $500 million of EBITDA 2025 guidance midpoint, increasing third-party business from 40% to 80%, which is a significant achievement. I don’t think that many companies like us have done that in the past. While we are doing all of that, we reduced our ownership from 79% to the low 60%, but increased the distribution DK gets. So that's another thing we are very proud of. In the end, we see that there are not many midsized midstream companies left, which gives a lot of merit for DKL, and we see the opportunities flowing our way. Another very important point to watch is the intrinsic value of the assets in DKL. We have just seen the Medallion system sold at a very good multiple. It's a sister system to our DPG that we mentioned, and we see volume going up in the prepared remarks. We have just seen last week, Northwind sell for also a very nice multiple, and that's a sister system to our DPG. So going forward, we've said many times in the past, the four outlets that we have to complete the Sum of the Parts. We are executing that as we speak and more to come. Thank you for that question.

Operator, Operator

Your next question comes from the line of Joe Laetsch of Morgan Stanley.

Joseph Gregory Laetsch, Analyst

So I wanted to ask a couple on the refining side. And Big Spring, you mentioned it had record throughputs and capture rates also look like they're pretty strong there as well. Could you talk to what you're seeing from that asset post the turnaround in the first quarter? And then as part of that, could you also talk to the path to achieving the, I think it was $5.50 per barrel OpEx goal at that refinery?

Avigal Soreq, President and CEO

Yes, absolutely. So thank you for the question. I'm extremely proud of the progress we have made in throughput and margin at Big Spring, and I will let Joseph, who is very close to it, take the credit here.

Joseph Israel, EVP, Operations

Yes. Big Spring has been on a very positive journey, as you all know. We focused first on risk mitigation and reliability with very good results. Going from '23 to 2024, to remind you, throughput increased by 10% and the favorable trends continue in '25 with a record high throughput here in the second quarter. So safe and reliable operations really allow us to focus now on process efficiency and commercial optimization. To be more specific, we are maximizing liquid yield recovery and product value in Big Spring, mainly going after the high octane, Arizona spec type of gasoline and improving asphalt grades. We also optimize benzene and sulfur balances. All of that is very visible in our gross margin improvement. Considering the leadership team, capabilities, and execution thus far, we are very bullish about the plant's forward outlook.

Joseph Gregory Laetsch, Analyst

And then shifting to El Dorado. It had a nice step up quarter-over-quarter in capture rates from a throughput margin perspective, but still lags some of the other refineries within the system. Could you expand a bit on Slide 9, which shows margin improvements? And then between logistics, cost improvements, and product yield, where are you in that improvement process? And is there more to go there?

Joseph Israel, EVP, Operations

It's very similar to the Big Spring story as far as EOP and structural improvements. It's all about liquid yield recovery and product value. In El Dorado, we are targeting jet fuel, which is a new product there, as well as high octane gasoline components after replacing a couple of unit catalysts. Additionally, premium asphalt is a big priority for El Dorado. We expect the trends to continue, and we like the outlook for the plant.

Operator, Operator

Your next question comes from the line of Jean Ann Salisbury of Bank of America.

Jean Ann Salisbury, Analyst

I wanted to ask about the net crack metric that I think is new here and how it's constructed and if that's a metric that you'll continue to track yourselves against.

Avigal Soreq, President and CEO

Yes, absolutely. Mohit, do you want to take it?

Mohit Bhardwaj, Executive

Yes, Jean Ann, thanks for the question. So the way we define a net crack, and we can obviously discuss offline as well, is that we take Gulf Coast 532 on a WTI basis, and we take out RVO, and we take out backwardation, the CMA impact on it, and we also take out Midland Cushing to get to our net margin number, which is the right way to look at our business because we are a completely inland refiner, and we are mainly run on TI-exposed crudes.

Jean Ann Salisbury, Analyst

And then I kind of wanted to go back to a comment that was made earlier. But do you think that the recent sale of Northwind is a good read across to your assets, especially the AGI capability that you're building? And I guess on that, do you think that once you have the AGI capability up and running, that's kind of what it takes to make it attractive for sale?

Avigal Soreq, President and CEO

Yes. So as we have said many times in the past, all options are on the table, and we are very much committed to ensuring that our unitholders and shareholders get the full value of what they have. Obviously, we are working very hard to complete all of that and maximize the value along the way. But the recent sale just shows the full potential in our asset. So having your neighbor selling at a high price is a good thing if you are living next door, and we are very happy about it. Mohit, do you want to add anything?

Mohit Bhardwaj, Executive

Yes, Jean Ann, and I know that you understand the midstream business well. So I'll just say that as far as Northwind is concerned, it is primarily a treating operation. We have a much more comprehensive operation in our DKL that includes gathering, treating, processing. So we have a much more complete suite of products there, especially concerning gas. We believe it's a good benchmark, but we also have a better business.

Operator, Operator

Your next question comes from the line of Jason Gabelman of TD Cowen.

Jason Daniel Gabelman, Analyst

I wanted to first go back to the EOP program. I’m trying to understand a couple of things. One, how much was actually reflected in 2Q results? I know you referenced a run rate exiting the quarter, but wondering how much on a gross basis was kind of realized in 2Q? And then how should we think about the amount of the margin capture uplift that's captured in the supply line versus the site unit margins that you referenced? Or should we think about that kind of moving back and forth depending on how the environment shapes up?

Avigal Soreq, President and CEO

Yes. Thank you. That’s a very nice question from you. Obviously, EOP, we said it very clearly in order to make it easier for everyone, the $30 million benchmark we outlined. We are very proud of the progress we are making. As you know, that is generally agnostic to market conditions; the $30 million we outlined is very simple to calculate. It allows for easier visibility in our presentation. So that's a straightforward way to see the improvement in the capture rate and regarding trading and supply. The other part of the business is also evident. You see that our G&A is now in the low 50s versus the low 60s in Q2 of 2024. I believe that answers most of your question. But if you have anything else to add, Mohit?

Mohit Bhardwaj, Executive

Yes, I would just reiterate what you said, Avigal. So Jason, for the second quarter, $30 million was actually included in our financials, and that entire amount flowed through the second quarter financials. And as Joseph mentioned, $10 million of that was at El Dorado, and the rest was distributed between our DKTS, the trading, and supply line item and the cost improvements that we made.

Jason Daniel Gabelman, Analyst

And then my follow-up is hopefully a quick one, just on financing cash flows, which were a benefit in the quarter. You referenced several outflows from that bucket, but I'm wondering what contributed to the net inflow from the financing cash flow line item?

Avigal Soreq, President and CEO

Yes. So Jason, in reality, what the story here is very simple. EOP is all about improving free cash flow, which is a very, very important element in our equation, and I will let Mark elaborate on that.

Mark Hobbs, EVP and Chief Financial Officer

Yes, yes. Thanks, Avigal. Jason, I want to step back and talk about just because you're focusing on EOP and where you can see that in our results. And so I want to be very clear that, as Avigal mentioned, that we're seeing this already show up in our results. I want to be specific around this. Despite a slightly lower margin environment versus the second quarter of last year, our EBITDA has increased to over $170 million this quarter versus only $107 million last quarter, and our cash flow from operations was approximately $100 million higher than what we generated in the second quarter of last year. Keep in mind that of the $164 million of CapEx in the second quarter, about $115 million of that was for growth CapEx, largely at DKL for high-return projects like Libby 2, which will benefit us going forward. And as Avigal mentioned in his prepared remarks, our CapEx in 2025 is very much first-half weighted. As we go through the year, with lower CapEx and even more EOP benefits coming through, we feel very good about our positioning going forward. Regarding the financing on the cash flow statement, we've made efforts to improve our balance sheet on a consolidated basis. We had a successful high-yield offering at DKL, which allowed us to pay down our revolver after we made the Gravity acquisition. We've been investing $100 million in the Libby 2 gas plant thus far in the first half of the year. This oversubscribed high-yield offering added critical liquidity to our balance sheet at a favorable rate, and it was an eight-year piece of paper. So we're very happy with that.

Operator, Operator

That concludes our Q&A session. I'll now turn the conference back over to Avigal Soreq for closing remarks.

Avigal Soreq, President and CEO

Yes. So I want to thank my friends around the table, our Board of Directors, our investors, and most importantly, our employees that make our company unique and great as it is. And we'll talk again in the next quarter. Thank you.

Operator, Operator

This concludes today's conference call. You may now disconnect.